Universal credit cut set to leave millions with less than half of ‘acceptable’ living standards income

Millions of families are set to be left with less than half of the income required to have an acceptable standard of living following the planned cut to universal credit in three months’ time, new research finds.

A report by the Joseph Rowntree Foundation (JRF) warns that the £20-a-week benefit cut, due to take place at the end of September, would reduce the value of out-of-work welfare support to its lowest recorded level relative to what the public thinks is an acceptable income.

Separate research by the Trade Unions Congress (TUC) meanwhile reveals that over a million children in key worker households live in poverty, prompting calls for a halt on the scaling back of universal credit.

It comes amid mounting disquiet among Tory MPs over the government’s reluctance to extend the measure – first introduced at the onset of the pandemic – despite the impact of the crisis continuing to reverberate.

The JRF’s findings are based on the charity’s ‘Minimum Income Standard’ (MIS) for the UK, which is based on discussions with members of the public about what they think is needed to achieve an acceptable standard of living, and acts as a benchmark of minimum living standards.

For a working age couple with two young children this is £482 per week, excluding rent/mortgage, childcare and council tax. For a working age couple without children it is £356 and for a single working age adult without children it stands at £213.

The research, carried out by Loughborough University’s centre for research in social policy, estimates that around 2 million people living in out of work households are likely to be living on incomes below half of the MIS if the planned cut to universal credit goes ahead.

It finds that the cut would reduce the value of this support to 55 per cent of MIS for a couple with two young children, and just 33 per cent of MIS for a single working-age person without children.

The report notes that some working parents have in recent years been able to get closer to MIS due to increases in the National Living Wage, the universal credit uplift and increased support for childcare in the benefit system.

However, the researchers warn that this risks being “reversed” for most families who have benefited if universal credit is cut.

Describing the findings as “deeply concerning”, Iain Porter, policy and partnerships manager at the JRF, said it would be a “terrible mistake” for ministers to go ahead with the planned cut, which he warned would leave “millions of families unable to meet their needs.”

“Social security should be strong enough for all of us when we need a lifeline, but cuts and freezes in recent years have left it to wear thin and threadbare. We urgently need to restore public confidence by investing in adequate social security support for families when they need it,” he added.

It comes as TUC research, produced by Landman Economics, revealed that over a million children of key workers are currently living in poverty, with more than a quarter of youngsters with parents or carers in key worker jobs not having enough to live on.

Key worker families in the North East have the highest rate of child poverty (29 per cent), followed by London (27 per cent), the West Midlands (25 per cent) and Yorkshire and the Humber (25 per cent), the research finds.

The TUC said the main reasons for key worker family poverty were low pay and insecure hours, and is called on ministers to cancel the £20 weekly cut, warning that universal credit was not enough to guarantee families avoid poverty.

The union’s general secretary Frances O’Grady said: “Every key worker deserves a decent standard of living for their family. But too often their hard work is not paying off like it should. And they struggle to keep up with the basic costs of family life.

“This isn’t just about doing right thing by key workers. If we put more money in the pockets of working families, their spending will help our businesses and high streets recover. It’s the fuel in the tank that our economy needs.”

Director of policy and campaigns at Action for Children, Imran Hussain, said: “The planned £20 a week cut to universal credit in October is likely to throw more children into poverty. The Government should think again and choose to back the low paid.”

Over the weekend, the Northern Research Group (NRG), which represents around 50 MPs, called on ministers to keep the increase in place, describing the emergency payments as a “life-saver” for people during the Covid-19 pandemic.

The government has been approached for comment.