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Bolstering Universal Credit is crucial right now

by Debbie Horne, CAS Senior Policy officer (Social Justice).

This column was first published in the Herald on 6 January. 

We’re starting the year focusing on one of the most important issues for the Citizens Advice network: Universal Credit. Universal Credit is the main working-age means tested benefit in the UK and it should play a vital role in our social security safety net.

Almost half a million people in Scotland are now claiming Universal Credit: an 85 per cent increase since the start of the pandemic in March.

Over the same time period, Citizens Advice Bureaux (CAB) across Scotland have provided a staggering 110,485 pieces of advice to people on Universal Credit. More than double the advice given on Universal Credit in the financial year ending March 2019.

For all the uncertainty that exists right now, one thing the Citizens Advice network can be sure of is that Universal Credit will continue to be one of our biggest areas of advice over the course of 2021.

Major decisions on the future of Universal Credit payments will be made in a few short months. It’s essential that this year the UK Government acts to strengthen social security, rather than cutting holes into the safety net.

A key part of strengthening the safety net is making permanent the £20 a week uplift to Universal Credit payments announced at the beginning of the pandemic. The increase is presently due to end in March. It’s not yet clear whether the UK Government plans to make the £20 increase permanent; currently saying this is a decision for the Spring Budget.

The nearly half a million people in Scotland who currently receive Universal Credit face an annual cut of £1,040 from their income in less than three months’ time.

Scottish Government analysis has shown that this cut would push 60,000 people into relative poverty, with one in three of these being children. The consequences of cutting this vital lifeline cannot be overstated.

Last year, we looked at CAB clients on Universal Credit who had received complex debt advice between April and August. A complex debt issue is where someone owes multiple debts. We found that if the £20 a week increase was cut from their Universal Credit payments – a huge 80% of these clients will be unable to meet their basic living costs.

The additional £20 a week lifts one in five of these clients into a positive budget where they are able to meet basic living costs. Removing the £20 increase would cut the rope that is currently keeping the income of these clients afloat.

Even with the £20 a week uplift, 58% of the same group of CAB clients remain in a negative budget unable to meet basic living costs. It’s clear that the issue of adequacy in our social security system needs to be addressed; any cut to current levels risks could plunge many people into an income crisis.

We also know that unprecedented numbers of people have had to claim Universal Credit for the first time as the economic damage from the pandemic has unravelled. One in four people seeking Universal Credit advice from CAB are homeowners, who receive no housing support for 39 weeks. A third are in part- or full-time employment and 27% live in the most affluent areas of Scotland.

The reality is that any of us might find ourselves relying on the social security system and when we do the support should be adequate. That’s why we’re calling on the UK Government to urgently commit to making the £20 a week increase permanent and to end the current uncertainty.

Back in July, we used this column to talk about the gaps in our safety net that people fall right through. Those such as students who, in the majority, are excluded from getting any Universal Credit. Also, those with No Recourse to Public Funds, who unable to work and earn due to Covid have found that a system they have contributed to through taxes offers no support in return. The Government must start addressing these gaps in the safety net.

We also need to fix the hole in the Universal Credit safety net that comes in the shape of the five-week wait. When you claim Universal Credit, you wait at least five weeks for your first payment. During this time, you can get an advance payment, but this is just a loan, which must be repaid through future deductions from your Universal Credit.

In the week before Christmas, a West of Scotland CAB advised a distressed client who after waiting five weeks for their first payment of Universal Credit received significantly less than they were expecting. The Trussell Trust report that waiting five weeks for Universal Credit is one of the most common reasons for people having to receive support from their foodbanks. The government needs to end the five-week wait by providing an early non-repayable payment to those applying for Universal Credit.

In these uncertain times, bolstering our safety net is essential. No-one can predict exactly what this year holds but what we do know is that people already need and will continue to need the support of government through Universal Credit. This year, the rhetoric of building back better must change from words into actions.

The first steps to achieving this is keeping the £20 a week increase to Universal Credit and committing to closing the gaps in our safety net.