A plan to slash universal credit will have the biggest impact in the poorest towns in England, the government has been warned, after it emerged that claims for the payment have increased far more in the most deprived areas during the Covid pandemic.
The research by Bright Blue, a liberal Conservative thinktank, will heap further pressure on Rishi Sunak, the chancellor, to extend a £20-a-week increase in universal credit introduced last March. It is set to be withdrawn in April and many Tory MPs are privately worried that the cut will undermine Boris Johnson’s pledge to “level up” the country, and are pushing for the increase to be made permanent.
Claims for universal credit in the most deprived 10% of areas increased by 8.5 percentage points from February to October last year. However, the increase was far lower in the most affluent 10%, where the average increase was 4.8 percentage points.
London boroughs saw an average 8.3 percentage-point increase in those of working age claiming universal credit in the first eight months of the pandemic. The average increase across all other English local authorities was 6.3% percentage points. Local authorities outside London that had seen the biggest increases included coastal towns and post-industrial communities such as Blackpool, Middlesbrough and Hull.
Labour will hold a vote over extending the universal credit increase in the House of Commons on Monday. Sunak is said to be examining the idea of offering those who lose out a £500 one-off payment to avoid extending the universal credit increase and stave off a Tory rebellion.
There are 114 Conservative MPs – including the prime minister, Dominic Raab and Iain Duncan Smith – who have majorities smaller than the number of people in their constituency who will be affected by the cut in April, according to Labour analysis. It includes nine of 10 seats the Conservatives gained from Labour at the last election.
Anvar Sarygulov, senior research fellow at Bright Blue, said: “The pandemic really has made ‘levelling up’ a lot harder. There is also a clear relationship between local authorities experiencing higher rates of claimants and having lower levels of education and skills among their population. These English local authorities are therefore less likely to be able to bounce back quickly with increased employment outcomes. This really does threaten to undermine government attempts to ‘level up’ so-called left-behind areas of the country over the long term.”
Jonathan Reynolds, the shadow work and pensions secretary, said: “Instead of protecting family incomes to help secure the economy, the chancellor is winding down economic support and hitting families with a triple hammer blow of pay freezes, a cut to universal credit and tax rises. I urge Conservative MPs to put party politics aside and vote with Labour tomorrow to stop this hit to millions of people already struggling to get by.”
Under the current plans, 6.2 million families on universal credit and working tax credits will lose £1,040 a year. About 500,000 more people, including 200,000 more children, will be pulled into poverty, according to the Joseph Rowntree Foundation. About 60% of all single-parent families will be hit. Helen Barnard, director of the Joseph Rowntree Foundation, said: “The government cannot delay any longer making a decision about the future of the £20 uplift to universal credit. Eleventh-hour decisions only lead to greater stress and sleepless nights for people struggling every day to stay afloat. The chancellor has said the economy is going to get worse before it gets better and our evidence shows it is those with the least who are often suffering the most.”
The government said: “We are committed to supporting the lowest-paid families through the pandemic and beyond to ensure that nobody is left behind. That’s why we’ve targeted our support to those most in need by raising the living wage, spending hundreds of billions to safeguard jobs, boosting welfare support by billions and introducing the £170m Covid winter grant scheme to help children and families stay warm and well-fed during the coldest months.”