Snatching £20 from the poorest is bad policy and bad politics

The government's plans to end the Universal Credit uplift will plunge 500,000 into poverty.

Image by stux via Pixabay

What does £20 mean to you?

For some, it might be a takeaway or a couple of bottles of wine. For others, it’s something squirrelled away every month to spoil the grandchildren at Christmas. Others still will see a petrol tank top-up or a new school bag for someone who left theirs on the school bus because they had their eyes glued to a phone. 

For some families, £20 is what has kept their heads above water for the past year and a half. When the pandemic hit last March, Chancellor Rishi Sunak unveiled a £20-a-week uplift to Universal Credit and the basic element of Working Tax Credit. He said at the time: ‘I cannot promise you that no one will face hardship in the weeks ahead, so we will also act to protect you if the worst happens.’

Unfortunately, Covid-19 was not to be a matter of weeks but the Chancellor’s analysis was otherwise sound. Hardship, if not destitution, is what millions would have faced had the government not stepped in with the job retention scheme, support for the self-employed, assistance to businesses and a strengthening of the social safety net. He was right, too, that the state had a duty to protect its citizens and the extraordinary times necessitated extraordinary levels of borrowing and spending. 

I don’t make a habit of saying nice things about ministers — our job, as Richard Littlejohn once observed, ‘is to sit at the back and throw bottles’ — but the economic response to Covid showed the current UK Government at its best. Ideological convictions were set aside as Tories marshalled the power of the state to manage the economy, suppress mass unemployment and homelessness, and nationalise the wage bills of thousands of companies. 

However, it was the speedy uplifting of Universal Credit that was the most commendable response. The Tories, not generally thought of as the party of welfare claimants, recognised that families in poverty and those teetering above the threshold could not make it through a pandemic and an economic coma without additional support. Of course, the reason they needed more help in the first place was because of Conservative and Liberal Democrat shredding of the social safety net. Everyone remembers the scale of the financial mess the Coalition inherited and some will agree that a programme of austerity was needed to restore order to the national accounts, but the books were too often balanced on the backs of the poor.  

As well as a counter-Covid measure, the £20 uplift was a tacit admission by Whitehall that it had cut too far during the 2010s. In years to come, PhD theses may be written on whether the pandemic strong-armed the Conservatives back to their pre-Thatcher position as a party of One Nation. An early indicator will be what happens to the uplift, which is due to expire at the end of this month. The Chancellor wants to scrap it and last week Thérèse Coffey, the Secretary of State for Work and Pensions, wrote to the chairs of the Commons, Holyrood, Senedd and Stormont welfare committees to confirm the government was pressing ahead on that basis. It is a reckless and short-sighted decision. 

Welfare is an emotive issue. Many are concerned about how much is spent on it, who receives financial support and under what conditions. That taxpayers are so vigilant with their money is only natural. But we should bear in mind that the UK welfare system provides the third-weakest social safety net in the OECD, ahead of only Greece and Australia. Nor is Universal Credit a lavish benefit. In Scotland, the modal monthly payment is between £300 and £400. The families reliant on this benefit, those for whom £20 a week is the difference between eating or skipping meals, are not bilking the system and living high on the hog. These are among the poorest households in the country, a category that will expand overnight if the uplift is clawed back. The Joseph Rowntree Foundation calculates that half a million Britons — 200,000 of them children — will be plunged into poverty without the uplift. 

Now, keeping the uplift in place would not be cheap. When I wrote in June that Rishi Sunak should commit to retaining it, I was upfront about the estimated annual price-tag: £6.4 billion. However, bearing in mind what we know about the link between poverty and social dysfunction, there is a strong economic case, as well as a moral one, for investing now rather than paying a larger price down the road. Other suggestions have included extending the uplift for another six months, when the economy should be in ruder health, and ending the policy but giving households a £500 lump sum, equivalent to another half-year of uplift, to manage the transition. 

Neil Gray, the convener of Holyrood’s Social Justice and Social Security Committee has been a leader on this issue the whole way through, warning the Treasury at every juncture just how damaging removal of the uplift would be. I asked him if any of the alternatives would work. He said: ‘The best option would be for the government to make the uplift permanent. Introducing a one-off payment would pose challenges. It does not provide long-term income security. It risks making claimants’ lives more difficult as they will have to manage their budgets and, in the longer term, those claimants will still face challenges with budgets when any one-off payment is spent. 

‘There are also practical concerns. If this payment was restricted to those who have benefitted from Universal Credit to date, it would not help any new claimants. This could be particularly painful to anyone who has been left unemployed in the wake of a pandemic that they bear no responsibility for.’

This strikes me as more or less correct. Retaining the uplift for the long term is far preferable to halfway-house options that only delay problems. Yet if the government is determined to do away with the uplift, doing so without a compromise measure to cushion the blow for the most desperate families would leave ministers looking not only callous but extreme.

Gray is an SNP MSP, albeit one who has approached this matter in an admirably cross-party fashion, and this is no profligate spree by spendthrift socialists. Among those calling for the £20 uplift to continue are Iain Duncan Smith, the centre-right think tank Bright Blue, and the Scottish Conservatives. When Left and Right are as one in warning against a course of action, a rethink is urgently needed.  

There are, of course, political dimensions. In the north of England, where the Tories breached Labour’s Red Wall in 2019, the party still has to convince hard-pressed communities that it has changed and understands their needs and concerns. Hoicking away £20 a week in the run-up to Christmas is bad policy and terrible optics. It is, as I have argued before, the very opposite of the levelling-up agenda.

The same goes for Scotland. I asked Gray what, if anything, the Scottish Government could do to mitigate withdrawal of the uplift. He told me: ‘In its manifesto the SNP had a number of commitments to changing the social security system in Scotland, including changes to the Scottish Child Payment and bridging payments, Carers Supplement and Best Start Foods. My committee will be keen to scrutinise the government’s proposals on these as they are presented to the parliament.’

Should the uplift be rescinded, it is inevitable that attention will turn to the Scottish Government and what powers and resources it has to soften the harsh economic consequences. Finance Secretary Kate Forbes will be only too happy to sweep in and do all she can to offset the impact of a Westminster cut to the incomes of 413,000 Scottish families. It wouldn’t matter much to those affected that any intervention by Holyrood would only be possible thanks to the Treasury’s generous subsidising of higher public spending in Scotland. Symbolism will always be more powerful than statistics.  

In England, the government’s stance on the uplift is ill-conceived and short-termist. North of the border, it is both — and something more: another example of Downing Street failing to understand Scotland and giving the SNP an unearned opportunity. 

Originally published in the Scottish Daily Mail on September 6, 2021.

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