Continuing with planned cut to £20 uplift of universal credit will ‘overwhelmingly hit incomes of working and disabled people’, says Fabian Society

New analysis also finds that more than 750,000 people will be pulled into poverty in the medium term which raises 'fundamental questions of justice and morality’

Continuing with the government’s planned cut to the £20 weekly uplift of universal credit will ‘overwhelmingly hit the incomes of working and disabled people’, a new report from the Fabian Society has said.

In a follow up to its December 2020 report, that examined the impacts of cutting the £20 uplift from April 2021 in the context of a possible surge in unemployment, the Fabian Society looks beyond the immediate timeframe to examine the enduring impact of the cut over the medium term, once the Covid-19 increase in unemployment and universal credit claims has returned towards normal levels, and when universal credit is fully rolled-out to everyone currently on legacy benefits.

Taking these scenarios into account, the Fabian Society estimates that the cut will take £6.4bn from family incomes each year, and that -

• 87 per cent (£5.5bn per year) will be taken from working or disabled households;
• households where someone has a disability will be hit by 57 per cent of the cuts (£3.7bn);
• families with children will be hit by half the cuts (£3.2bn);
• households where someone is a carer will be hit by 12 per cent (£700m).

In addition, the report finds that the planned cut will have significant impacts on poverty over the medium term, with the number of people taken below the poverty line as a result increasing by 760,000 of which -

• only 40,000 (5 per cent) will be in households where no one is working or disabled;
• 490,000 (64 per cent) will be from working households and most of these (440,000) will be working families with children - either couples in work with children (300,000) or single adults in work with children (140,000).

As a result, despite welcoming the temporary uplift as helping to sustain millions of households with zero or low earnings through the pandemic, the Fabian Society calls for it to be made permanent -

‘Ministers are planning for it to disappear just as the government’s main unemployment-prevention measures also come to an end in April…

Many people who are working or disabled will see a cut in their incomes of around £1,000 per year, even though in most cases there is no expectation that they should be seeking to work or to increase their earnings. This raises fundamental questions of justice and morality. The Chancellor should cancel the cuts and place the 2020 increases on a permanent footing.’

The new report, Who Loses?: The impacts of planned universal credit cuts across society, is available from fabians.org.uk