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8 July 2021

How Universal Credit is one of the least generous welfare systems in Europe

Even with the temporary £20 increase, Universal Credit represents just 18 per cent of average weekly earnings.

By Katharine Swindells

The £20-a-week increase in Universal Credit, which was introduced in April 2020 in response to the Covid-19 crisis, will be “phased out” this autumn, the government announced yesterday

Universal Credit is worth less than a fifth of the average earnings, even with the uplift
Standard rate unemployment benefits for a single person, as a percentage of previous earning

From October, the standard Universal Credit payment for a single person aged over 25 will drop by £87 a month (or £1,040 a year). The revised monthly rate, of just under £325, is an increase of just £1.50 from pre-pandemic levels. 

But even with the temporary increase, Universal Credit offers just a fraction of the unemployment benefits provided by other European countries. The majority offer a proportion of previous earnings with a minimum benchmark; the Nordic countries offer as much as 90 per cent of previous wages.

In comparison, the flat-rate payment offered by the UK is equivalent to just 18 per cent of average weekly earnings. When the uplift is removed, it will be worth 14 per cent of average earnings.

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Stephen Timms, the Labour chair of the work and pensions committee, yesterday challenged Boris Johnson on the impact the policy would have on Universal Credit’s six million claimants, warning that it would see 500,000 people fall below the poverty line.

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Work and Pensions Secretary Thérèse Coffey said that the government’s aim was to “focus strongly on getting people into work and jobs”. But critics pointed out that 37 per cent of Universal Credit claimants are already in work.

[See also: Adults in England’s most deprived areas almost four times more likely to die of Covid-19]