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CAS response to Autumn Statement: Universal Credit cut would plunge people into income crisis

Citizens Advice Scotland has expressed disappointment that the Chancellor today failed to confirm whether the temporary £20-per-week increase to Universal Credit will be made permanent beyond March 2021.

Introduced in March this year as a measure to help people whose income was hit by the COVID-19 crisis, the £20-per-week UC increase has allowed many households to keep their heads above water whilst the economic impact of COVID-19 has continued.

Responding to the Chancellor’s statement, Mhoraig Green said:

“We are disappointed that the Chancellor did not use today’s Spending Review to provide clarity on whether the £20 weekly increase to Universal Credit will be retained beyond March.

“Our own analysis of complex debt cases in Scottish CABs has shown that removing the £20 uplift will push more than 1 in 5 of these clients into a negative budget, where they are unable to meet their living costs. Cutting this support could plunge many people into an income crisis.  

“We urge the UK Government to urgently resolve the omission from today’s statement by confirming that the £20 increase to UC will be made permanent in the annual benefits uprating announcement that is expected before the end of the month.

“While our shell-shocked economy is still dealing with the fallout of the pandemic and unemployment is predicted to increase, strengthening our social security safety net and in turn our overall economy – rather than weakening it through continued uncertainty – should be the priority of government.”

Note to editors:

The number of people claiming Universal Credit in Scotland has increased 85% since the start of the pandemic (from 256,083 people in February to 473, 457 in October). Despite welcome support aimed at supporting the unemployed back into work, with the Bank of England predicting a period of suppressed employment forecasts; the vital and underpinning role of our social security system cannot be underestimated. Cutting the increase to Universal Credit will be a personal financial crisis for many, as well as having a wider negative economic impact.

Over the summer, Citizens Advice Scotland analysed Universal Credit CAB cases from people in complex debt. Complex debt refers to the level of support someone needs, whether that is due to the size of their debts in comparison to their income, or the number of separate debts they have.

The Charity found that removing the £20 a week increase will result in 80% of these CAB complex debt clients being unable to meet their living costs (in a negative budget). The £20 a week uplift has so far reduced the number of CAB complex debt clients unable to meet their living costs by more than a fifth (22%).

Analysis by the Scottish Government has shown that removing the increase will cut over £450m to people receiving UC in Scotland; pushing 60,000 Scots into relative poverty, including 20,000 children.

Evidence shows that the economic recovery from COVID-19 hinges on households and their ability to continue to consumer Removing the £20 a week increase will not only result in increased poverty and financial hardship but a reduction in consumption; evidence shows that those with lower incomes have a higher marginal propensity with the majority of their income going back into the primarily local economy.

Making the £20 increase to Universal Credit permanent is supported by the Work & Pensions Committee, Treasury Committee, Lords Economic Affairs Committee, a former Conservative Work and Pensions Secretary, a number of backbench Conservative MPs, as well as opposition parties and faith leaders.

The annual benefits uprating announcement usually takes place at the end of November to allow for time for the manual uprating that is necessary for legacy benefit uprating.

 

ENDS

 

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