The government’s decision to cut the £20 uplift for Universal Credit (UC) is going to have a catastrophic effect on many people across the United Kingdom.
This decision has coincided with the end of the furlough scheme at the start of October. Furlough had been supporting workers throughout the pandemic but many will be left without income support when the system ends. It has acted as a life support for those who would have ordinarily been made unemployed as a result of the pandemic.
Many of those who had been on furlough will now be unemployed and an increase in unemployment will invariably lead to an increase in UC claimants and, with that in mind, Rishi Sunak felt inclined to strip back the amount of money available for those who need it.
The Universal Credit system has been long criticised for a number of reasons.
The five-week wait to setup time is a long and drawn out process. It means that you will miss out on upto a month of possible payments and this risks pushing people into debt, according to The Big Issue. The magazine notes that UC recipients were more likely to fall behind on debts as a result of this situation, forcing people into poverty-stricken situations where they may become reliant on food banks. Applying for UC could also end any tax credits that somebody is entitled to.
The Scottish government has been critical of UC’s influence on homelessness within the country. They have attributed this to the general setup of the scheme and the five-week waiting time.
When the government did make the £20 top-up, however, the majority of the public were in full support. Last year, 59% of people supported making this measure permanent because they saw it as a way of trying to bridge the poverty gap. People saw it as an opportunity to bring the country together in a time of national crisis, lowering the inequality threshold.
“’There’s a clear link between poverty and poor health. Those with the lowest incomes, including many who have lost jobs and income due to the pandemic, will be hit the hardest if the Chancellor lets the £20 per week increase in Universal Credit expire,” Dr Jennifer Dixon had said.
The £20-a-week uplift allowed many people an added breathing space when it came to managing their finances. It meant that they could more comfortably afford the necessary food and drink for that given week. People on UC now risk losing at least £80 per-month. Given the frivolous spending of the governmental budget, particularly over the pandemic period, cost-cutting on the most vulnerable does seem unnecessary and callous.
However, people are being given a substantial warning before this side of the welfare system grinds to a halt.
If you have lost your job after being on furlough, or if you are simply in need ot work, you should be actively updating your CV, looking on job websites and scouring out possible places of employment. Proactivity is always the best solution to these issues.
If you are young, volunteering schemes and training courses are an excellent way to boost your employability appeal. This is not as easy when you have a family and others are dependent on your support.
In that situation, it might make sense to sign yourself up to a recruitment agency. This can help because it won’t just be you desperately searching for employment. Recruitment agencies can also open up doors that you might not have found yourself.
This could also affect your flexibility on debt solutions. IVA solutions usually want at least £100 in spare monthly income. However, any UC claimants look set to LOSE close to that amount per-month. With that in mind, an IVA debt solution would become very difficult but a Debt Relief Order (DRO) could be a viable alternative.
A tough winter ahead
Everybody who is affected by this will have to act in some way. This could be with more stringent budgeting or by finding more work. Irrespective of the path taken, it promises to be a very difficult few months for many of those who have been relying on that uplift to pay for the basic necessities.
If you are struggling to cope with all of this mentally, the Samaritans can help you out. Call 116 123 if you feel like you need to talk to someone about your mental struggles and they will be on hand to listen.
We are here to offer free debt advice as well so please don’t hesitate in giving us a call if you fear that you will slip into a problematic situation with money that you owe. We might be able to find a way to help you through your problems.
Do not hesitate to call us at 0800 088 2303.