Planned ‘cut’ to Universal Credit rate will affect more than 18,000 Thanet claimants

Families on Universal Credit will see their payments reduce, meaning less money in homes and the Thanet economy

A planned ‘cut’ to Universal Credit will affect some 18,504 claimants in Thanet, according to Kent County Council data.

A further estimated 3,300 will be hit by the same cut to Working Tax Credits although some of these may have moved to UC now.

Last March the government increased the standard allowance in Universal Credit and the basic element in Working Tax Credit for one year. Both had an uplift of £20 per week on top of planned annual uprating..

It means for a single Universal Credit claimant (aged 25 or over), the standard allowance has increased from £317.82 to £409.89 per month.

The temporary measure, which was in response to the coronavirus pandemic, was confirmed to last for one-year and is due to come to an end on April 6.

But, with the pandemic continuing and the country again in lockdown, there have been calls to postpone the reversal of the benefit increase. Labour MPs intend to table an Opposition Day Motion in Parliament on Monday demanding the cut is scrapped.

If it goes ahead families receiving UC and the working tax benefit will see incomes reduced by around £1,040 for the year.

Thanet council Cabinet member for finance, Rob Yates, says the cut will result in hardship for families and a massive reduction of some £19million going into the local economy.

Cllr Yates said: “The planned reduction of Universal Credit would, at this time of great uncertainty, be devastating to the 18,504 people in Thanet on Universal Credit. When awarded the extra £20 a week in April 2020, we made sure that the extra income was disregarded when calculating their Council Tax and Housing Benefit, so it really meant an extra £20 per week.

“If this goes ahead, some Thanet families will have £1,000 less per year to spend, which equates to Thanet having £19m less spending power. This will take £1,000 out of the pockets of our local residents and damage our local businesses.”

“On a personal level, I am angry that this safety net is being pulled whilst unemployment continues to rise and the majority of businesses are still closed.”

‘£Millions lost’

Cllr Yates says each household on UC losing the extra £20 they were given from April 2020 would mean £19,244,160 less paid out by the government to Thanet claimants for a whole year.

Added to this would be £3,432,000 cut from Working Tax Credits – although this is less precise because data does not factor in how many of those claimants would by now have moved to UC.

MP agreement

North Thanet Conservative MP Sir Roger Gale says he would also like the uplifted payments to continue. He said: “I have already expressed to Treasury Ministers my view that give the original justification for the uplift – which was always intended to be temporary and has already been extended – it should be extended further to recognise the ongoing effects of the pandemic upon incomes.”

Working UC claimants

KCC data (up to October 2020) shows that 22.5% of the over 16 population in Thanet is currently claiming UC and around a third of those claimants – some 6,072- are in work.

Universal Credit is a payment to help with living costs for those on a low income or who are out of work. It can be claimed if the claimant is employed but they have a low income. Many people have seen their income reduce due to coronavirus measures. Many may have been furloughed and their income fallen to 80% of their usual wage.

Claimants may have had working hours reduced or have lost their jobs, or have been unable to work.

Rising claims

Across Kent from the week beginning 16 March 2020, one week before the national lockdown, there were 4,976 new claims. Following the announcement of the national lockdown from 23 March 2020, weekly new claims significantly increased to 20,567 and peaked at 22,360 (week ending 2 April 2020).

This then began to stabilise although in the 4 weeks to 8 October 2020 there were still 8,223 weekly new claims.

County Councillor Karen Constantine has written to South Thanet MP Craig Mackinlay urging him to vote against any cut.

She said: “Millions of parents have lost their jobs or substantial amounts of income due to Covid-19. These cuts will increase pressure on already tight household budgets.

“This winter, food banks are expecting to give out an emergency parcel every 9 seconds – and the Trussell Trust have said cutting Universal Credit could increase already skyrocketing food bank use by a further 10%.

“In that context, it is unthinkable to take £20 a week, or £1000 a year, from Britain’s poorest households as unemployment continues to rise. Research from the Resolution Foundation has shown this cut would see the poorest households lose 7 per cent of their disposable income.”

She has also written to Kent County Council leader Roger Gough to ask for a food and poverty plan to be put in place.

The county council does have a helpline to assist Kent residents who are struggling (see below) and gave out 20,000 food vouchers to vulnerable families during the October half term.

Poverty and unemployment

Cllr Constantine said: “Thanet is an area that consistently ranks high in UK studies of poverty. It is only poverty that is driving the need for food banks and free school meal vouchers. More than a third of Thanet children are living in poverty. That figure climbs to 51% in our most deprived wards, a figure which is still a growing. A figure that demands KCC to take action to reverse child poverty.

“Thanet now has 10.2% unemployment, above the national and Kent average. We are marred by poor employment opportunities which ‘bakes in’ deprivation and ensues little or no social mobility.

“Even before the Covid pandemic, universal credit rates in Thanet were climbing sharply, and many more people are now finding gaping holes in the so called ‘welfare safety’ net.”

A Joseph Rowntree Foundation report says there is a need to strengthen the benefits system, saying: “ At a minimum, we need the temporary £20 per week increase to Universal Credit and Working Tax Credit to be made permanent, extending this same lifeline to people on legacy benefits such as Jobseeker’s Allowance and Employment and Support Allowance.”

The foundation also says low incomes wages need to be improved, there needs to be more low cost housing and ‘bold action’ to retrain workers and create good quality new jobs.

PM Boris Johnson

During the week, when questioned about the proposed cut, Prime Minister Boris Johnson said: “I think that what we want to see is jobs, we want people in employment and we want to see the economy bouncing back.

“And I think most people in this country want to see a focus on jobs and growth in wages than on welfare, but clearly we have to keep all of these things under review.”

Many UC claimants are already in work.

However, it has been reported that the PM has since held a meeting with Chancellor Rishi Sunak and Therese Coffey, the Work and Pensions Secretary, to discuss the issue.

The Labour motion on Monday may have the backing of some 50 Tory MPs in the Northern Research Group (NRG)  who are calling for the uplift to stay in place “until lockdown is lifted.”

If the temporary rise is ended it is likely to be announced in the Budget on March 3.

If you are struggling

The KentTogether helpline offers support with food, collection of medication and prescriptions and other urgent needs during the pandemic, 24 hours a day. You can get help by visiting www.kent.gov.uk/kenttogether  or calling 03000 41 92 92.

Organisations offering food delivery:

Organisations offering food collection

Organisations offering shopping services

Other services

  • Citizens Advice – 0344 411 1444 CA is offering services via telephone, email, web chat and video chat.
  • GRASS Cliftonville – 01622 851200 (Offers a voucher scheme to support eligible families with shopping. Must live in Cliftonville West to apply)