A cross-party group of MPs has urged ministers to retain the £20 a week universal credit Covid top-up for at least another 12 months, saying failure to extend the payment would help trigger a spike in poverty not seen since the Thatcher era.
The Commons work and pensions committee also cautions ministers against making one-off payments of £500 or £1,000 instead of retaining the coronavirus boost, saying such a move would risk fraud and create financial problems for vulnerable claimants.
A “steady income” in the form of a regular weekly uplift was the best way to support low-income households with the extra pandemic costs over the next 12 months because so little certainty exists about when the economy might recover from the crisis, it concludes
“Removing the increase now, while the impact of the pandemic is still being keenly felt, would plunge hundreds of thousands of households, including children, into poverty,” it says. “For the millions already living in poverty, it would drag them down into destitution.”
There are six Conservative backbench MPs on the 11-strong committee, which produced a swift report in advance of the government’s decision on making the £20 top-up permanent, in early March. Last week the all-party parliamentary group on poverty also recommended the top-up be retained.
Committee chair Labour MP Stephen Timms said: “Removing the extra payment in March would represent a failure by government – failure to recognise the reality of people struggling. Without regular support, hundreds of thousands of families will be swept into poverty or even destitution. Government must end the uncertainty and commit to extending this lifeline.
“The chancellor faces difficult decisions about public finances. He may find it hard at present to make the increase permanent. But the pandemic’s impact on the economy and livelihoods will, sadly, be with us for some time. An extension for a year should be the bare minimum.”
Removing the Covid boost would help trigger the biggest year-on-year rise in poverty rates since the 1980s, the report says. Removing the £20 uplift in 2021-22 would mean a further 1.2 million people will fall into relative poverty (defined as those in a household with less than 60% of median income), 400,000 of whom are children.
The report adds that the least well-off families will be hardest hit by the withdrawal of the £20 boost. About 60% of the UK’s single-parent families will lose out. The north of England, Wales, the West Midlands and Northern Ireland would be the worst hit areas.