£20 may not seem like much. Certainly to Tory MPs like Andrew Rosindell, who took to Politics Live to defend the government’s £20 cut to Universal Credit, it’s a luxury that most people just like to have and don’t really need.
Of course, outside of Westminster politicians, £20 a week matters. For those on Universal Credit, it can make up 5% or more of their entire income. For many, it can be the difference between making ends meet that month and not.
The effects of Downing Street’s decision to forge ahead with ending the £20 uplift of Universal Credit are well documented. Studies from the Joseph Rowntree Foundation and the Resolution Foundation have found that the cut could push anywhere between 500,000 and 1.2 million people into poverty, including between 200,000 and 400,000 children. The Trussell Trust has estimated that the move could increase food bank usage among UC claimants by 20%.
The UK already has one of the lowest support packages in Europe, as UC only accounts for 18% of someone’s average earnings. And as is often the case with this kind of approach to policy, the cut makes little fiscal sense – these huge increases in poverty will cause extra spending for other government services, from hospitals to schools and councils, as they are forced to deal with the consequences.
Despite interventions by Labour MPs and every former Conservative Secretary of State for Work and Pensions since the party came to power in 2010, the government has stuck to its decision. Even the warning from Macmillan Cancer Care that more than 100,000 people with cancer are struggling to pay for basic essentials already without cuts to Universal Credit fell on deaf ears. In Boris Johnson’s mind, ‘the emphasis has got to be on getting people into work and getting people into jobs.’
That view is underpinned by an argument regularly trotted out by conservatives – that denying people a basic standard of living and a safety net is the only way to encourage people them work; that benefit users are a burden on the system and cutting their support to the point where they can barely afford to feed themselves and their families is the only way to ‘motivate’ them.
There’s little evidence that this works – in fact, many assessments suggest the opposite is true. One DWP-backed study from 2016 found that for every pound cut from the income of the long-term unemployed, the chances of them finding work reduced by 2%. Its authors said that the extra burdens of increasing debt, childcare, and fighting to make ends meet that month made making time to look for jobs harder. Indeed, analysis from LSE has suggested that it is the widespread availability of good jobs rather than cuts to unemployment benefits that reduces unemployment most effectively.
The logic itself is odd, particularly since while UC includes unemployment support, a huge array of other people need it too. There are 1.6 million UC claimants who can’t or have been told not to work – because they have a child under the age of one, they’re disabled, or, as was highlighted by Macmillan, they’re currently too sick. They will all be affected by these cuts too, even though all the ‘motivation’ in the world won’t help them take on jobs they aren’t supposed to be looking for in the first place.
On top of that, there’s the 39% of UC claimants (or over two million people) who have to claim for Universal Credit despite being in work. And that’s where this cut to UC fundamentally highlights one of the saddest facts about modern poverty: work doesn’t always pay.
Even before the pandemic worsened things, some 14 million people lived in poverty in the UK. The Jospeh Rowntree Foundation says that around 56% of households living in poverty in 2018 had at least one member in work, compared with 39% 20 years before. We all saw headlines about nurses being forced to use foodbanks during Covid, but across the entire system, one in seven of all people who use food banks are in a working household. Whatever metric you use, it’s obvious that work doesn’t deliver the way it’s meant to.
What’s causing this problem? For a start, wages have stagnated badly over the last few years. Mass unemployment has made the pandemic an outlier, but before Covid wages in real terms were still just lower than their 2008 pre-crash peak, and had been stagnant for over a decade. In previous decades, pay tended to increase by 2% in real terms each year, following the trend of increasing economic growth.
Then there’s the fact that many are chronically underpaid and underemployed. This comes in different forms. There’s the gig economy, which employed 4.7 million people already in 2019 (the most recent data). Many gig economy employees will be working full time, but the pay doesn’t match even their basic legal rights: the Bureau of Investigative Journalism found one in three Deliveroo drivers made less than the national minimum wage of £8.72 an hour. Around 860,000 workers are on zero-hours in the UK, meaning they have no assured income for any given month.
But the issue is throughout the economy, not just at the extremes. Most outsourced cleaners in UK hospitals I spoke to for a previous Tribune article were on so few legally-set hours that they reported needing every hour of overtime they could get to make ends meet – or risk going into debt that month.
Lower wages, less hours and more precarious employment work together to mean that the average amount of money coming in for families is going down. And the reduced influence and power of trade unions only makes the problem worse.
As take-home pay has gone down in real terms, the cost of living is only increasing. Rising costs for renting, insurance, food, childcare, and more means a growing burden on working people: one calculation for the Times found that the cost of living per person had increased by over 760% in the years 2010-2020. That has only been worsened by a decade of austerity: cuts to services like child care, social care, and Local Housing Allowance have offset the costs onto those who can least afford it.
There are also problems with the way Universal Credit is set up. Low-income families who both work and claim Universal Credit end up taking home as much money as someone without a job because UC reduces as they earn more from work. Most Universal Credit claimants only get to keep 37p in every extra pound they earn; some keep even less. The system hurts underemployed and underpaid workers the most.
It used to be the case that getting a job was enough to give people stability and security; it was the defence against poverty for normal people. But in the precarious, underpaid, underemployed modern economy, being in a job can mean little for your income. Despite that, we have politicians that still talk about ‘getting a job’ like it’s the solution to every problem – and until they learn to focus on the nature of jobs, rather than solely on the total figures in our employment and unemployment charts, security and safety will remain luxuries extended to fewer and fewer people.