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Universal Credit set to be worth less than it was in 2013

Shocking new analysis from CAS shows that Universal Credit will fall below its 2013 value in real terms if plans to end the £20 uplift are not reversed.

The £20-per-week uplift to UC was introduced by the UK government last spring in recognition that people needed extra help during the pandemic. The government now plans to cut the uplift from April onwards.

The cut would see Universal Credit worth less this year in real terms than it was when introduced in 2013, because the benefit has not kept pace with inflation, ultimately being worth 11.5 per cent less in 2021.

For some claimants, the monthly standard allowance will fall by as much as 25 per cent.

Publishing the figures today, CAS is urging the Chancellor to keep the £20 uplift in his Budget on 3 March.

CAS spokesperson Nina Ballantyne said:

“More people than ever are claiming Universal Credit. Currently 480,000 people in Scotland claim it, but many of them have families to support so the numbers of people who rely on it is very significant and includes children.

“The pandemic has caused redundancy and reduced hours, and this looks set to continue for much of the year. Now is the time to strengthen the safety net for these families, not cut it.

“Universal Credit has always failed to keep up with the cost of living, and it makes no sense to make cuts during a pandemic. Without proper support, we’ll see increases in poverty and foodbank use, and a strain on other public services like the NHS.

“The £20 uplift has been an essential boost to struggling families. The reasons it was introduced still exist, so there is no logical case for removing it. Taking it away now would be a real blow to our most vulnerable people, just when they need the most help.

“The Government still has the opportunity to make the uplift permanent in the Budget. This would give people some peace of mind, and we once again urge the Chancellor to make this commitment.”

ENDS

Notes to editors:

At the start of the pandemic, the UK Government increased UC for all claimants by £20 a week

The Government has described the £20 uplift as a temporary measure that responds to the economic emergency of the pandemic.

But our calculations show that in reality only the uplift has returned Universal Credit to its real-terms value upon its introduction 8 years ago. As a result of a freeze on benefit rates between 2015 and 2019, Universal Credit has fallen far behind the rate of inflation, with the proposed cut leaving people with over a tenth (11.5%) less in real terms compared to 2013.[1]

If the £20 uplift is removed, the value of Universal Credit will drop by as much as a quarter (25%). This means its value over a tenth (11.5%) less in real terms than it was when UC was first introduced in 2013.

If the uplift is not made permanent, monthly standard UC allowance rates will drop:

  • By a quarter for single claimants under 25, from £342.72 to £257.33
  • By a fifth for single claimants over 25, from £409.89 to £324.84
  • By 17% for joint claimants under 25, from £488.59 to £403.93
  • By 14% for joint claimants over 25, from £594.04 to £509.91

The Government has described the £20 uplift as a temporary measure that responds to the economic emergency of the pandemic.

But our calculations show that in reality the uplift only returned Universal Credit to its real-terms value upon its introduction 8 years ago. As a result of a freeze on benefit rates between 2015 and 2019, Universal Credit has fallen far behind the rate of inflation, leaving people with over a tenth (11.5%) less in real terms compared to 2013. [2]

Actual Universal Credit Standard Allowance rates compared to their value if uprated with inflation.

 

Couple over 25

Couple under 25

Single person over 25

Single person under 25

 

Actual

In line with inflation

Actual

In line with inflation

Actual

In line with inflation

Actual

In line with inflation

2013

£489.06

£489.06

£387.42

£387.42

£311.55

£311.55

£246.81

£246.81

2020

£594.04

£573.18

£488.59

£454.06

£409.89

£365.15

£342.72

£289.27

2021

£509.91

£576.05

£403.93

£456.33

£324.84

£366.98

£257.33

£290.72

 

[1] All inflation figures calculated with the Bank of England’s Inflation Calculator. Figures do not include additional elements such as housing, childcare, or work allowance.

[2] All inflation figures calculated with the Bank of England’s Inflation Calculator. Figures do not include additional elements such as housing, childcare, or work allowance.

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