In Depth

Universal Credit cut: a guide to financial aid alternatives

Boris Johnson defends £20-a-week cut by arguing that taxpayers should not ‘subsidise’ low pay

Nearly six million unemployed and low-paid workers are facing a £1,040 hit to the yearly incomes as the Universal Credit  benefit uplift is removed today.

According to analysis by the Joseph Rowntree Association, more than 500,000 people, including 200,000 children, will be pushed into poverty by the £20-a-week cut. Polling last week by Savanta ComRes for The Independent on Sunday found that just 19% of respondents supported the ending of the uplift, introduced last year to help poorer households cope with the Covid pandemic.

But while ongoing gas price hikes are further increasing the cost of living, Boris Johnson has defended the cut. The prime minister told ITV’s Robert Peston yesterday that taxpayers should not have to “subsidise” low pay and that the market should catch up with higher wages. 

Advice for affected households

Citizens Advice recommends that anyone claiming Universal Credit should carry out a benefit check “to help you verify you’re getting all the support you’re entitled to”. These checks can be done using online benefits calculators or at a local Citizen’s Advice Office.

People eligible for Universal Credit may be able to claim extra amounts if, for example, they have children; have a disability or health condition that prevents them from working; or need help paying rent.

Other financial support

According to the government website, a range of other types of support are available for people with financial difficulties. These include:

In addition, Chancellor Rishi Sunak last week announced a £500m hardship fund to help those facing severe poverty pay for food, clothing and bills. Ministers have said the Winter Hardship Fund will “support millions” of households, via small grants for food, clothing and utilities that will be distributed through local authorities. 

The new fund will run for an “unspecified period” over the winter months, said The Guardian, with £421m available to English councils, and the remaining £79m for Scotland, Wales and Northern Ireland.

Welfare charities have criticised the fund as a “temporary sticking plaster” that will do little to lessen the financial wounds left by the Universal Credit cut. 

The fund’s existence is “tantamount to an admission that the Universal Credit cut will make many people destitute”, wrote benefit system policy expert Tom Pollard in the same paper. One-off payments will do “next to nothing to address their underlying problems”, he added.

The Universal Credit cut also coincides with the end of the furlough scheme, introduced in March last year to help employers retain staff during the pandemic.

The main benefit available for anyone losing their job after a period in work is the New Style Jobseeker's Allowance (JSA). People who are unemployed, or who work less than 16 hours a week, may be eligible for the allowance, and may be able to claim the benefit alongside Universal Credit. 

The JSA is a “contribution-based benefit”, according to the government, so claimants must have paid enough National Insurance contributions in the last two full tax years to qualify. The benefit is worth £59.20 a week for under-25s, and £74.70 a week for older age groups, and can be claimed for up to six months.  

Alternatively, people who have a health condition or disability that prevents them from working can apply for the new-style Employment and Support Allowance (ESA).

For further help, food bank referrals can be made through Citizens Advice, or find local food banks through The Trussell Trust website.

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