Many claiming universal credit for the first time during the pandemic could not put aside enough money to save £10 a month, eat healthily or regularly or pay their bills – because the payment was inadequate to cover basic living costs, a shocking study has found.
A survey of thousands of people who signed on after losing their job during lockdown reveals that, even with the temporary £20 universal credit uplift, many still struggled to cope without borrowing from family members, running up credit card debt or relying on food banks.
Two-thirds of claimants reported suffering financial strain. One-in-six said they had skipped a meal in the previous two weeks, and more than 60 per cent said they would be unable to repair or replace electrical goods if they broke, or save £10 a month.
Carried out by researchers at five universities for the Welfare at A Social Distance project, the study urges a re-think of the social security system. “Our evidence suggests that even with the £20 uplift benefit levels are inadequate. In the longer term there is a need for a wider consideration of the adequacy of the benefits system,” it says.
Just one-in-five new claimants were aware that universal credit rates had been raised because of the Covid-19 top up, suggesting that many will be hit hard by the planned £1,050 a year reduction in benefits from April.
While reserving praise for the Department for Work and Pensions (DWP) for processing millions of new claims in rapid time, nearly half of new claimants described experiencing difficulties while applying.
A series of in-depth interviews undertook fro the project found many people having to pursue low-paid work fro the first time surprised at the dramatic shrinking of their incomes. “I didn’t even know people worked for fucking £9.30,” one new claimant told researchers. “I didn’t know what £9.30 was.”
The Covid-19 crisis has pushed around three million additional people to claim universal credit since March. According to the Resolution Foundation, people moving onto the benefit typically saw their income dip by 47 per cent.
Kate Summers, a London School of Economics fellow who led the report, said: “We should think more ambitiously about what ‘success’ means within our social security benefits system. Yes, the benefits system held up through the first wave of the pandemic, but fundamental issues remain in terms of the adequacy of payment levels, and people’s ability to access and understand the system.
“Many people who were new to the benefits system last year hoped and planned for their claims to be short term. As the pandemic has continued, the system is unlikely to provide adequate support in the medium and longer term, as people’s capacity to cope financially is eroded.”
Jonathan Reynolds, Labour’s shadow work and pensions secretary, said: “This crisis has laid bare the inequalities in our society, including our inadequate social security system which has driven people further into debt and insecurity.”
He added: “For now, Rishi Sunak must take action to secure our economy by cancelling his economically illiterate cut to universal credit. Going forward, Labour would replace universal credit with a fairer more compassionate system.”
A government spokesperson said: “Universal credit has delivered during this pandemic, providing vital support to millions, and will play a crucial role as we build back better.
“We’re committed to supporting the most in need – that’s why we’re spending hundreds of billions to boost welfare support and have introduced the £170m Covid Winter Grant Scheme to help children and families stay warm and well-fed during the coldest months.”