Rishi Sunak could plunge more than 3 million people into poverty if he proceeds with a planned benefits cut next spring, a leading leftwing thinktank has warned.
A new study by the Fabian Society found that returning welfare payments to pre-pandemic levels – following a year-long boost – would drive a further 1.1 million people below the poverty line.
If the government were to remove the £20 supplement to universal credit, with mass unemployment on the horizon, the impact would be three times as severe – with 3.2 million people in poverty.
‘It could get much worse’
At the onset of the Covid-19 crisis, the chancellor announced £6 billion of spending for a one-year increase in universal credit – but did not specify whether he planned to continue with the boost past March in last week’s spending review.
The Fabian report will ratchet up the pressure eon Sunak to make the temporary spike permanent. According to the think-tank, in the event of mass unemployment, 22 per cent of Brits would be living in poverty, while the number of children living below the breadline would rise to 850,000.
Andrew Harrop, general secretary of the Fabian Society, said: “If ministers reverse the temporary benefit rises that sustained millions of low income households this year the consequences will be enormous for families, reducing spending power and driving people into poverty.
“But it could get much worse. When furlough and other support measures come to an end in the spring, unemployment is expected to grow and many more families will turn to benefits.
“After so many redundancies on the high street this year, there is a chance of unemployment rising to levels last seen in the 1980s and 1990s. Alongside the planned benefit cuts this will push an extra 3 million people into poverty. The government must act now and put the 2020 benefit uplift on to a permanent footing.”
More than 15 million already in poverty
The worrying report comes after it emerged that close to 700,000 people in the UK – including 120,000 children – have been pushed into poverty by the Covid-19 economic crisis.
The pandemic has plunged the total number of people in the country living in poverty to more than 15 million – 23 per cent of the population – according to thinktank the Legatum Institute.
Young workers were the hardest hit by the economic crisis, alongside those working in decimated sectors like hospitality and retail. Elderly people were the least badly hit.
Of the 700,000 newly plunged into poverty, just over half had incomes up to 25 per cent below the poverty line. A further 16,000 were up to 50 per cent below, and 270,000 had fallen into “deep poverty” – categorised as more than 50 per cent below the poverty line.