Universal Credit and Working Tax Credit

Debbie Abrahams Excerpts

Monday 18th January 2021 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab) [V]]

Universal credit has significant design flaws going back to its inception in 2012, but drastic cuts in social security spending in 2015 added to that. By the beginning of the pandemic last year, approximately £33 billion had already been cut in support for working-age people, with single parents and disabled people particularly affected.

Universal credit claimants have been driven into debt and rent arrears, and the increase in food bank demand is attributed to UC’s introduction. The associated poverty is driving negative impacts on health. For example, a peer-reviewed report published in The Lancet last March showed that people who moved on to universal credit experienced clinically significant psychological distress as a result. Another report from The BMJ showed that the hostile and demeaning universal credit system worsened physical and mental health.

As the covid crisis hit, not everyone could work from home and the low-paid and vulnerable sectors, such as hospitality and leisure, have been most affected, driving the increase in UC claimants. We know that not only is this health crisis far from over, but neither are the impacts on the economy and jobs. People need reassurance that in their time of need an adequate safety net is there. In my constituency, more than half of the 14,633 claimants now claiming UC are doing so as a result of the pandemic. Many have contacted me about the debate, but not just those relying on UC have written to me, which reflects the recent poll showing that 74% of the public support the increase in UC and want to see it extended.

I chair the APPG on universal credit, and we held an inquiry into the impact of covid on claimants last spring and made a number of recommendations to the Chancellor in November, including retaining the £20 per week uplift, as well as extending it to legacy benefits and replacing the five-week wait with an initial non-repayable starter payment.

We know from Save the Children that potentially 200,000 more children will be living in poverty if the uplift is not extended. The Resolution Foundation has estimated that by 2024 an additional 730,000 children will be living in poverty, but even if the uplift continues, people are still struggling. We know that one in five on UC always run out of money, compared with 8% of those not reliant on UC. We know that half a million people have accrued rent arrears since the start of the pandemic, with an average of £730 debt. The ban on evictions also runs out at the end of March. Covid saw those already struggling to stay afloat bear the brunt of the economic and health burden. We cannot—we must not—let them down. We must extend the UC uplift.