Universal Credit and Working Tax Credits

Holly Lynch Excerpts

Wednesday 15th September 2021 Commons Chamber

[Holly Lynch (Halifax) (Lab)]

As we have heard, the Government’s plan to scrap the £20 UC uplift is causing a great deal of worry and concern for millions of working people across the UK and thousands of my constituents in Halifax. As the Leader of the Opposition outlined at today’s Prime Minister’s questions, this cut is punishing countless essential key workers, who through the weeks and months of lockdowns performed essential and frontline roles, while remaining exposed to the economic uncertainty caused by the pandemic.

The Government may seek to present this as a post-pandemic return to normal, but only yesterday the Health Secretary made it clear in his statement that we are not yet at normal, that the need to manage the risks of the colder winter months was very real, and that further measures may continue to be sought as part of a plan B, as we all keep a very close eye on the data. Instead, this is in reality the biggest overnight cut to a benefit rate in the history of the welfare state, and it is having to be shouldered by working people.

According to analysis from the Joseph Rowntree Foundation, on average 21% of all working age families in Great Britain will experience a cut of more than £1,000 to their yearly incomes, with the midlands and the north of England hardest hit. In Halifax, it is estimated that 56% of working families with children will be affected by the cut. The relationship between this cut and the financial resilience and wellbeing of those families, and the knock-on effect for the fragile, recovering, local economy, is desperately real. Those families do not have the money, meaning it is not spent in local shops or with local service providers. This is a double blow, coming at exactly the wrong time for families and for the economy.

Universal credit is an in-work benefit, and the prevalence of low-paid work is the elephant in the room here. I have long campaigned for an end to the youth rates of the minimum wage, which devalue work undertaken by young people. The Labour party would put a stop to that injustice. A report last year from the Government’s own Social Mobility Commission concluded that there are now 600,000 more children living in relative poverty than there were in 2012. Evidence published earlier this year by the Child Poverty Action Group, also based on Government figures, revealed that after housing costs are accounted for, about 3.8 million children, nearly a third of all children in the UK, are growing up in poverty.

Do this Government believe these cuts will impact negatively or positively on these utterly depressing numbers? Polling published by Save the Children shows that three quarters of families with children on UC have a child under 10, and that 47% of UC claimants do not think they will be able to get by on a budget of £20 less a week. This cut will mean that during the formative years of children’s lives many families will have to make fraught decisions, where they are faced with making a choice about which essentials they can and cannot afford to pay for.

The comments made by the Secretary of State for Work and Pensions about £20 being the equivalent of two extra hours of work per week do not reflect the reality of the situation in my constituency. My office has received a number of often frantic representations from people who have limited capability for work and limited capability for work-related activity, and are therefore not expected to undertake the work commitments expected of other UC claimants. These individuals are not required to work, let alone work extra hours, and yet are also having their payments cut. One constituent contacted my office, saying:

“Until I was forced on to UC, I was receiving ESA…My partner moved in with me and as he was working full time, we were moved onto UC in October 2017. However; my husband suddenly fell ill in April 2019 and was assessed as having limited capability for work. I have two teenage children who also live with us. I have heard the government discussing the withdrawal of this temporary support…today. Their response is that UC is designed to encourage claimants back to work and that they can make up the loss; but I’ve not heard anything about those of us who are unable to go to work due to ill health and what support there is in place for people like my husband and I who cannot work and who need to provide care for each other and financially support our family.”

As we have heard from so many today, the planned cut of the £20 to UC is nothing but a further development in this Government’s self-defeating attitude towards working people. Instead of lifting people out of poverty, they are content to allow the UC system to see claimants remain in a perpetual cycle of in-work insecurity.