Universal Credit is now an even bigger ticking timebomb

A thinktank has delivered a stark analysis of the state of UK social security. It has highlighted the inadequacy of Universal Credit. And potentially, it could spell disaster for hundreds of thousands of people.

Coronavirus support schemes

The Resolution Foundation has released a report into government support for workers comparing the various schemes that have been available to people whose jobs are at risk. It looked at things like the Job Support Scheme. This pays 67% of someone’s wages. It means the person will lose the other 33% unless their employer makes up the shortfall. But as it noted:

a 67 per cent replacement rate is broadly in line with similar short-time work schemes in other European countries

The devil of these schemes is in the detail. The Resolution Foundation said:

it should be kept in mind that the Job Support Scheme is far narrower in scope than many of the European schemes… which apply to a much wider swathe of the economy, rather than just sectors that have been officially ‘shut down’ by government restrictions.

So, many people may not be entitled to help from the Job Support Scheme at all. That means they may have to apply for Universal Credit. But this is what the thinktank found to be most problematic.

Universal Credit: the other option

It noted that versus the other government-backed job schemes, Universal Credit paled in comparison. It noted:

the welfare system… would only replace a fifth of the newly unemployed worker’s lost income.

The New Statesman‘s George Eaton summed the problem up:

On Universal Credit, the median worker will receive just *30%* of their previous earnings (falling to 23% after planned cuts).

The UK has one of the least generous welfare systems in the developed world. pic.twitter.com/ayaaMbispM

— George Eaton (@georgeeaton) October 11, 2020

But the inadequacy of the UK’s social security system is nothing new.

Social security chaos

Charities and thinktanks have repeatedly criticised Universal Credit. This includes increases in foodbank use where the government has rolled it out; increasing debt, rent arrears, and potential homelessness, and it not initially paying people enough to live on.

Since the start of the pandemic, groups have warned that Universal Credit is now even less fit for purpose. The government seemed to partly listen. Because in April, it increased payments by around £20 a week. But now, it could remove that extra money next April.

But the problems with UK social security stretch back further than this. For example, in 2018, a committee of the Council of Europe called welfare payments like Employment and Support Allowance (ESA) “manifestly inadequate”. Previously, a UN committee said UK governments had committed “grave” and “systematic” violations of disabled people’s human rights.

A potential disaster?

The challenge with social security now is that countless more people are suddenly going to be hit. The Resolution Foundation said:

it is vital that the Government does not go ahead with the planned cut to Universal Credit by £20 per week in April. Otherwise this cut will cause incomes of the poorest households to fall by as much as 7 per cent. Cutting benefits for millions of families at a time of rising unemployment is a bad idea.

As the Joseph Rowntree Foundation (JRF) warned, up to 700,000 more people could spiral into poverty if the government fails to keep the £20 a week increase. That, coupled with the still looming potential of mass unemployment, paints a bleak picture for 2021.

Featured image via Videoblogg Productions