Will the government U-turn on cuts to universal credit?

To strengthen the safety net, I’m increasing today the universal credit standard allowance, for the next 12 months, by £1,000 a year,” Rishi Sunak told a No 10 press conference at the onset of the pandemic – just several days before England’s first lockdown.

As the crisis raged on well beyond the initial 12 months of support offered, the chancellor, however, was initially reluctant to extend the £20-a-week uplift. The Treasury considered other models, including a one-off (thus less expensive) £500 payment to families.

But under severe pressure from anti-poverty campaigners and MPs across the political divide, including many Tory backbenchers, Mr Sunak eventually announced a six month extension to the support — until September 2021.

While the extension calmed tensions at Westminster, it merely delayed a potentially explosive political row over the continuation of the support that is likely to prominently feature over the summer months, especially when MPs return from the summer recess.

The Resolution Foundation warned earlier this week that the decision to cut the incomes of the poorest families by five per cent overnight when the support ends was “bad economics, as well as bad politics”.

“This huge cut will fall not on the families that have amassed large savings during the crisis, but on poorer families who have been more likely to take on additional debt,” chief executive Torsten Bell added.

For the time being, the government appears adamant that the uplift will not be extended again, with the work and pensions secretary Therese Coffey telling a committee this week it will be “phased out” from September. The Department for Work and Pensions would begin communicating with claimants beforehand, to make them aware “they will start to see an adjustment in their payments”, she added.

Boris Johnson echoed the cabinet minister’s comments, telling MPs: “The ambition of this government and if you ask me to make a choice between more welfare or better, higher paid jobs, I’m going to go for better, higher paid jobs”.

Quizzed on whether the government would review the decision to end the uplift before the end of the current extension period, he went on: “Of course we keep everything under constant review but I’ve given you a pretty clear steer about what my instincts are”.

But as the summer months progress, it seems inevitable that disquiet will grow in Westminster, with MPs likely to receive correspondence from universal credit claimants in increasing numbers ahead of the date for the end of support. Just last week, six former Conservative work and pensions secretaries from different wings of the party urged the chancellor to make the £20 uplift permanent, saying the increased payments had prevented thousands of families from becoming destitute during the crisis.

Whether the government remains resolute in its position remains to be seen, but don’t rule out a last minute U-turn.