We can’t always deal with what life throws at us on our own. So that’s what Universal Credit should be there for, to at least prevent us from going without the essentials – right?
Well, you would think so in a country like ours, but sadly it is far from the case.
In January 15,000 people were made redundant in the retail sector alone, leaving people threatened by a financial bombshell. For many people this will have been the realisation of a great fear: no longer having the means to support their family and afford the most basic essentials.
This is just one example of the many ways in which life can knock us off course. It could be needing to care for a sick relative, a relationship breaking down, or getting stuck in a low-paid job because it’s the only one you can find with the flexibility to fit around looking after your children. These are things that could happen to any one of us.
It is at these moments that we should all be able to call on Universal Credit if we need to, to help get us through.
But it shocks a lot of people to learn that Universal Credit is not based on an assessment of how much money you need to be able to afford a basket of essential items. This is also true of the legacy systems that went before it, right back to William Beveridge and the founding of our modern welfare state.
The bare minimum Universal Credit should achieve is making sure people are able to buy enough food to eat, enough energy to keep their lights on, clothes and heating to keep themselves warm and basic household items like cleaning products and toothpaste. But it doesn’t even guarantee people can afford these essentials.
This failing is coming back to haunt us now, as the realities of the cost-of-living emergency collide with family finances that were already at breaking point.
A survey in November found nine in ten households on Universal Credit are going without at least one of life’s essentials. Last year saw our partners at the Trussell Trust give out 2.1 million food parcels.
[See also: Universal Credit must be scrapped]
This is not just the rising cost of living at work, but a social security system that has been allowed to erode over decades.
The basic rate of Universal Credit is now at its lowest ever level as a proportion of average earnings. It covers just 13 per cent of a typical worker’s earnings. From April it will be £85 per week. That’s £85 to cover essentials such as food, utility bills, travel and household items. It’s little wonder so many are going without.
In the absence of a proper safety net, what might otherwise be a knockback can become a paralysing blow. Being unable to afford the basics erodes social connections. The stress, fear and shame that go with it take a heavy toll on people’s mental health. Living with hunger, cold, damp and mould undermine both physical and mental health. The cost is enormous, not just to individuals but to public services such as the NHS and schools too.
This is why the Joseph Rowntree Foundation has teamed up with the Trussell Trust to call for an “Essentials Guarantee” in Universal Credit.
We would like to see it made law that the basic rate of Universal Credit can never fall below the amount needed to cover life’s basic essentials such as food, energy, toiletries and cleaning products. It should be linked to an actual assessment of what are the basic essentials and how much they cost, arrived at through an independent process.
Importantly, we also argue that deductions from Universal Credit should not take someone’s payment below the level needed to guarantee those essentials. For example, almost half of households receiving Universal Credit (45 per cent) currently face unaffordable reductions to their basic payment to repay debt – most commonly debt to the DWP to repay an advance they had to take out to try and make ends meet while waiting five weeks for their first Universal Credit payment.
To give an idea of how far short of the essentials Universal Credit currently falls, we costed up a basket of goods – taking a very conservative view of what counts as essential. Even this most pared-back version of an Essentials Guarantee amounts to £120 per week for a single person, a full £35 per week more than the basic rate will be from April.
This idea is widely supported by the public: our polling finds almost three quarters back an Essentials Guarantee being built into Universal Credit – including six in ten 2019 Conservative voters and more than eight in ten 2019 Labour voters.
A basic rate that is so obviously failing to cover the essentials means Universal Credit is built on an unstable foundation. Everyone gets the basic rate – whether or not you have children, or you’re working or you’re disabled. Making sure it’s enough to cover the necessities would benefit two-thirds of people in poverty and help 1.8 million move out of poverty altogether.
Twenty years ago we decided as a country that older people shouldn’t have to miss meals or sit in cold homes, so we set about improving our system of support for pensioners. We were very successful – the rate of pensioner poverty fell dramatically. Now it is time for a similar settlement for working age people. That way, losing your job won’t mean losing the ability to live a life we would call decent.
For more information on the Essentials Guarantee, and to read our full report, visit Guarantee our Essentials: reforming Universal Credit to ensure we can all afford the essentials in hard times | JRF