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18 January 2021updated 25 Jul 2021 11:48am

It would be morally indefensible – and politically foolish – to cut Universal Credit

The reversal of the £20-a-week increase in Universal Credit would cost six million families £1,040 a year.

By Anoosh Chakelian

The government’s decision to raise Universal Credit by £20 a week at the start of the pandemic was both welcome and practical. It provided officials with a ready-made benefit system that only needed to be tweaked to reach those most affected by Covid-19’s economic impact.

Ever since then, however, a question has become ever more urgent: will the money – planned for 12 months only – be taken away at the next Budget on 3 March? To date, the government has not suggested otherwise. Having argued that current borrowing is unsustainable, the Chancellor, Rishi Sunak, reportedly intends to reverse the increase and provide only a one-off £500 payment. 

[Hear more from Anoosh on The New Statesman Podcast]

The extra funding is worth £1,040 a year to six million families, who will face the sharpest drop in living standards in a generation if the cut goes ahead, the Resolution Foundation has warned. Poverty and inequality charities and think tanks, the Labour Party and campaigners including the footballer Marcus Rashford have been urging the government to retain the increase in Universal Credit. 

Labour will use an opposition day debate today to highlight the issue – in an attempt to flush out Tory MPs who are in favour of the increase in a (non-binding) vote. Although Tory MPs have been told to abstain by Boris Johnson, the issue is a headache for the Conservative Party beyond this afternoon’s debate.

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The Northern Research Group of 65 Tory MPs, for example, has called the uplift “a real life-saver for people throughout this pandemic” and warned that ending it would be “devastating” for families “already struggling to stay afloat”. There are also reports that the Work and Pensions Secretary, Thérèse Coffey, and other cabinet ministers oppose Sunak and are pushing to extend the payment.

As millions more people applied for benefits last year, Universal Credit has become a priority issue for many more MPs, Conservative and otherwise. Not only has the increase in the benefit been vital to millions of claimants, but many constituents are relying on social security for the first time ever.

As the New Statesman has reported, these newcomers to the system are more likely to have had higher incomes and owned homes than the existing claimant base – and are therefore more politically influential among Conservative MPs. During the rebellion of Tory MPs against the tier system last December, for example, the South Dorset MP Richard Drax said he “cannot vote to see more of my hard-pressed constituents moved from independence to Universal Credit”.

The divisions among Tory MPs and cabinet ministers show how Universal Credit’s generosity is becoming an increasingly politically salient issue. Meanwhile, the Conservative Party press office has weaponised against the Labour Party Keir Starmer’s plan to “scrap” Universal Credit in favour of another system – describing the payment as “vital support for millions of people”. This trend will be the driving force behind any U-turn at the Budget. 

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