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9 February, 2021 Open access

£20 benefit ‘uplift’ must be maintained for another year ‘at the very least’, say MPs

Removing the extra payment next month would represent a 'failure by Government', warns Chair of Work and Pensions Select Committee

The £20 benefit 'uplift' must be maintained for another year 'at the very least', the Work and Pensions Committee has said in a new report.

Published as part of its inquiry into the DWP's response to the coronavirus outbreak, and following evidence sessions held last week with frontline support organisations and policy experts and the Secretary of State and Permanent Secretary, the new report, The temporary increase in Universal Credit and Working Tax Credit, focuses in particular on the £20 'uplift' to universal credit and working tax credit that was introduced at the start of the Covid-19 pandemic and is due to expire at the end of March 2021.

However, while the report acknowledges that continuing with the increase would come at a 'substantial cost' (around £6.4 billion in the next financial year), the Committee warns that removing the payment while the effects of the pandemic are ongoing would ‘plunge' hundreds of thousands of households, including children, into poverty while dragging those already in poverty ‘down into destitution’.

As a result, the Committee says that -

'... if the Chancellor cannot yet commit to making the increase permanent, he should at the very least extend it for a further 12 months. The Government should then announce its future plans for the rate of universal credit no later than the Autumn Statement 2021, to give claimants enough time to plan and budget.'

In addition, referring to reports in the media last month which suggested the Chancellor had drawn up plans to give nearly six million people a one-off £500 benefit payment as an alternative to maintaining the uplift, the Committee says -

'We share the Secretary of State’s view, echoed by evidence from front line support organisations, that a steady income is the best way to support people. Like her, we are concerned that one-off payments could increase the risk of fraud. We are also concerned about the risks that one-off payments can create for some vulnerable people, including people with some mental illnesses.

We were encouraged to hear from the Secretary of State that one-off payments are not DWP’s preferred approach, but they nevertheless seem to be an option that the Government is actively considering. We urge the Government to abandon any plans for a one-off payment to claimants of universal credit and working tax credit.'

Chair of the Work and Pensions Committee Stephen Timms said today -

'Removing the extra payment in March would represent a failure by Government – failure to recognise the reality of people struggling. Without regular support, hundreds of thousands of families will be swept into poverty or even destitution. Government must end the uncertainty and commit to extending this lifeline.

The Chancellor faces difficult decisions about the public finances. He may find it hard at present to make the increase permanent. But the pandemic’s impact on the economy and livelihoods will, sadly, be with us for some time. An extension for a year should be the bare minimum.

We must also hope that Rishi Sunak will listen to the groundswell of arguments against one-off payments as an alternative, including from his cabinet colleague at our Committee last week. There is broad agreement that a steady income is necessary to support people.'

For more information, see Universal Credit £20 weekly increase must be extended to prevent hundreds of thousands falling into poverty from parliament.uk