Universal Credit cut: ‘People will resort to loan sharks just to afford food & heating’

Manchester is sending a message to the Government urging it to keep the £20 Universal Credit uplift in place.

Politicians and not-for-profit groups from across the city are warning that removing the extra payments introduced during the Covid-19 pandemic this week will have a catastrophic impact on the lives of some of the city-region’s least well-off residents.

Ministers are being warned that the uplift showed that the benefits system was not generous enough and with the cost of living rising and winter coming taking the £20 away again is unwise.

What is the Universal Credit uplift and what effect will removing it have on Greater Manchester?

The Government introduced a £20 a week uplift to Universal Credit in April 2020 as the country went into lockdown and found itself bracing for the impact of the Covid-19 pandemic.

However, the Government is now preparing to take this away again to coincide with the winding-back and ending of other coronavirus measures such as the furlough scheme.

Manchester City Council says its own research shows around 58, 339 households will be affected, with a combined loss of benefits totalling £59.6m a year.

People receiving the lowest standard Universal Credit allowance, £344 a month, will see their payment slashed to £257.33 - a cut of almost 25 per cent.

The uplift is scheduled to end this week, on Wednesday 6 October.

Who is urging the uplift to be kept and why?

Manchester City Council’s deputy leader Cllr Bev Craig has written to secretary of state for work and pensions Therese Coffey urging her to reconsider the plan to remove the weekly uplift.

She said people on the lowest incomes would find themselves struggling even to buy essentials on the lower rate of Universal Credit if £80 per month was taken away from them

She said: “We are urging the Government to think again about this cut to Universal Credit which couldn’t come at a worse time and will have a serious impact on so many Mancunians and take £60m a year out of the city’s economy.

“£20 a week doesn’t sound much but when you think that this adds up to £1,040 a year you get a better idea of the crucial difference it makes to people who are struggling to cope.

“It’s not something people are spending on luxuries – it’s helping pay for essentials such as food and fuel, especially as gas and electricity prices rises.

“No one should be forced to choose between putting food on the table or heating their home.”

Not-for-profit organisation Greater Manchester Poverty Action (GMPA) is also pleading with the Government not to cut the uplift and says the decision to do so now does not make sense given the current cost of living.

The organisation said ministers need to recognise the benefits system is simply not generous enough to allow people to make ends meet and that has been the case for some time.

GMPA’s CEO Graham Whitham said: “We are looking at around £160m of Universal Credit being taken away from us until the end of March, which is when the Government’s new hardship fund has to be spent by.

“This is an acknowledgement by the Government that the benefits system isn’t generous enough, which is really bad policy in itself.

“Living costs will be going up over the coming months and it doesn’t make any sense to be taking that uplift away. The rationale for it just isn’t there.

“The extra money has made a massive difference, particularly when people are anxious and stressed anyway.

“Finances are already really tight and people are very concerned about the uplift being taken away. We’ve had years of cuts to benefits so people haven’t been able to save to protect themselves from financial shocks.

“There will be no options for people, they will be driven into the arms of loan sharks or go into debt just to meet everyday living costs, never mind anything unexpected like the washing machine or cooker breaking.

“People are just about making ends meet and this could tip them over the edge. This really is make-or-break stuff.

“We are urging MPs across Greater Manchester, regardless of which party they are in, to recognise the impact of the £20 uplift and the consequences that getting rid of it will have.”

What support is available?

Manchester City Council has continued offering extra £150 hardship payment to those most in need who are receiving council tax support. So far in 2021-22 this has provided £5.9m of aid to 40,000 Manchester people, the town hall says.

A £100,000 budget to help support carers has also been retained and is now funded by the council.

Demand remains high for the Welfare Provision Scheme which has paid out more than £375,000 so far in 2021/22.

The council has also provided £1m funding for discretionary housing payments, adding to £1.969m provided by Government. As of the 22 September, £1.968m had been paid out.

Citizens’ Advice Manchester has also urged anyone facing financial difficulties to get in touch and speak to its team of advisors.

The Government is providing around £500m to be distributed among local authorities, but Mr Whitham made clear he expected the allocations to Greater Manchester’s town halls to be inadequate.

What has the Government said?

The Government is arguing that with the economy opening up after almost 18 months of Covid-related restrictions, the focus now needs to be on getting people back into work.

However, business secretary Kwasi Kwarteng has now acknowledged that the uplift’s removal, added to rising energy costs, is creating a very difficult situation.

Mr Kwarteng says he is in talks with Chancellor Rishi Sunak and other ministers over the issue.