Universal credit claimants could be £670 worse off next year, says think tank

19 October 2023 , 11:55

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The news comes as many households face the prospect of further struggles due to uncertainty over future support. (Image: PA Wire/PA Images)

The New Economics Foundation, a think tank, has found that people on universal credit could be up to £670 worse off next year, even if benefits rise with inflation. This comes as many households face the prospect of further struggles due to uncertainty over future support.

If cost-of-living payments end by April next year, 40% of all families would fall short of the "minimum income standard", a benchmark for a decent standard of living after housing and childcare costs. This is an increase of 10 percentage points since 2019.

The poorest quarter of households are set to see their incomes fall £430 below the minimum standard in the coming months. A single person over 25 on universal credit could see their financial support decrease by £670 in April 2024 compared to last year.

A single parent with one child on universal credit could experience a drop in income of £350. Meanwhile, a couple over 25 with two children will see their benefits increase by just £35.

Eligible folks on means-tested benefits will get three cost-of-living payments this year, totalling £900 by November. However, the Government hasn't confirmed if these payments will continue.

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Charities have written an open letter to Conservative MPs expressing their deep concern. They're worried that Chancellor Jeremy Hunt might raise benefits by a lower figure, which could affect millions of low-income families.

Sam Tims, a senior economist at the New Economics Foundation, said: "The social security system should provide a safety net for us all but universal credit is leaving people without enough to afford the essentials like food and clothes."

He added: "Raising benefits in line with inflation should be a guaranteed bare minimum, but in practice all it means is that rates are returned to an inadequate baseline that does not reflect the actual costs people face."

"If the government proceeds with cutting the cost-of-living payments, low income households will fall even further behind. The government must commit to ensuring that, at the very least, benefits cover people's essential costs."

When asked about poverty during Prime Minister's Questions on Wednesday, Rishi Sunak said: "I am proud of our record supporting people with the cost of living."

"Thanks to the actions we have taken, we have paid half of the typical family's energy bill last winter, frozen fuel duty and boosted the national living wage to record levels, and eight million people across the country are now receiving direct cost-of-living payments worth £900."

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Steve Charnock