- Joseph Rowntree Foundation issues a stark warning ahead of the cut to Universal Credit scheduled for 6 October – the same day as the Prime Minister’s speech at Conservative Party Conference.
- New analysis looks at the impact of the Universal Credit cut by local authority.
On Wednesday, as the Prime Minister delivers his speech to the Conservative Party Conference, his government will be imposing the biggest ever overnight cut to social security. This will reduce the incomes of around 5.5 million families by £1,040 per year.
In the Greater Manchester Combined Authority area – the host city of this year’s Conservative Party Conference – around 312,000 working-age families (26%) are facing this historic cut to Universal Credit and Working Tax Credit.
If the Government presses ahead with the cut, it would:
- Pull half a million people into poverty, including 200,000 children.
- Fundamentally undermine the adequacy of our social security system at precisely the moment when families are facing considerable increases in the cost of their energy bills, prices on the shelves are going up and National Insurance is set to rise in April 2022.
- Reduce the main rate of out-of-work support down to its lowest level in real terms since around 1990 and its lowest ever level as a proportion of average earnings.
The Government themselves have admitted this week that families may struggle to meet basic costs, like food and heating, by increasing the funding available for local authorities to give grants to families in emergency situations.
The support available through their newly announced Household Support Fund is temporary and discretionary and is typically reserved for one-off emergency situations such as a broken fridge. This scheme does not come close to meeting the scale of the challenge facing families.
Who will be impacted by the cut?
New analysis finds that in 35 local authorities across Great Britain 50% or more of working-age families with children will be impacted by the planned cut.
JRF has consistently warned that:
- Working families make up around 60% of families who will be affected by the cut to Universal Credit and Working Tax Credit.
- Families with children (particularly single-parent families), those containing someone who is disabled, and Black, Asian or Minority Ethnic (‘BAME’) families, will be disproportionately impacted by the reduction in Universal Credit or Working Tax Credit.
- The cut will have the most severe impact in Yorkshire and the Humber, the North East, North West and West Midlands, although no region will be left unscathed by this decision.
Katie Schmuecker, Deputy Director of Policy & Partnerships at the Joseph Rowntree Foundation, said: “The Prime Minister is abandoning millions to hunger and hardship with his eyes wide open. The biggest ever overnight cut to social security flies in the face of the Government’s mission to unite and level up our country.
“When the increase to Universal Credit was introduced, the Chancellor said it was to “strengthen the safety net” – a tacit admission a decade of cuts and freezes had left our social security lifeline to wear thin and threadbare for families in and out of work relying on it. This planned cut would reverse the progress made and leave it wholly inadequate.
“People’s bills won’t get £87-a-month cheaper from Wednesday and families are already anxious about how they will get through a looming cost of living crisis. This decision is set to plunge half a million people into poverty and shows a total disregard for the consequences. The Prime Minister cannot say he has not been warned, he must abandon this cut.”
Table 1: Top 10 Labour and Conservative majority local authorities with the highest percentage of working-age families with children impacted by the cut
| Top 10 Labour majority local authorities affected | Top 10 Conservative majority local authorities affected | ||
| Local Authority | % of all working-age families with children impacted by the cut | Local Authority | % of all working-age families with children impacted by the cut |
| Newham | 64 | Pendle | 58 |
| Leicester | 62 | Walsall | 53 |
| Manchester | 61 | Great Yarmouth | 52 |
| Bradford | 61 | North East Lincolnshire | 50 |
| Oldham | 60 | Southampton | 49 |
| Birmingham | 60 | East Lindsey | 48 |
| Blackburn with Darwen | 58 | Dover | 45 |
| Kingston upon Hull – City of | 58 | North Lincolnshire | 44 |
| Sandwell | 58 | South Holland | 44 |
| Tower Hamlets | 58 | Nuneaton and Bedworth | 44 |
Of local authorities with no majority party, with the highest percentages of working-age families with children impacted by the planned cut, Middlesbrough (60%) and Burnley (58%) are both coalition-led councils. Blackpool (57%) is Labour minority and Thanet (55%), Peterborough (55%) and Stoke-on-Trent (55%) are all Conservative minority.
Table 2: Families impacted by £20-per-week reduction to UC/WTC in October 2021
| Family type | Families on UC or WTC losing £20 per week in October 2021 | ||
| Number of families (millions) | Proportion of families who lose | % of all working-age families of that type who lose | |
| All working-age families | 5.5 | 100% | 20% |
| Families with someone in work | 3.5 | 64% | 16% |
| Families without someone in work | 2.0 | 36% | 33% |
| Single without children | 2.3 | 42% | 18% |
| Couples without children | 0.6 | 10% | 8% |
| Single-parent families | 1.1 | 20% | 61% |
| Couple-parent families | 1.5 | 28% | 25% |
| Families where someone is disabled | 2.8 | 50% | 35% |
| Families where no one is disabled | 2.7 | 50% | 14% |
| BAME families | 1.1 | 20% | 25% |
| Non-BAME families | 4.4 | 80% | 19% |
Source: Microsimulation by JRF using the IPPR Tax and Benefits Microsimulation Model and the OBR’s March 2021 forecasts. Breakdowns may not sum to totals due to rounding.
Making this decision with his eyes wide open:
- The cut is opposed by six former Conservative Work & Pensions Secretaries, the Northern Research Group of Conservative MPs, the One Nation Group of Conservative MPs, all the devolved administrations, numerous cross-party committees in all nations of the UK. Iain Duncan Smith recently said, “the extra £20 has returned to UC some of the investment that was cut from my original design.”
- 100 organisations are urging the Prime Minister not to cut Universal Credit. Among the signatories of the joint open letter to the Prime Minister are leading voices on health, education, children, housing, poverty, the economy and other aspects of public policy. (published 2 September)
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