Labour: Tories “running out of time to do the right thing” on Universal Credit

Jonathan Reynolds has declared that the government is “running out of time to do the right thing” and reverse its decision to press ahead with the £20-per-week cut to Universal Credit and Working Tax Credits.

Following the publication of a report today by the all-party parliamentary group on poverty, chaired by Tory backbencher Kevin Hollinrake MP, the Shadow Work and Pensions Secretary urged the Chancellor to rethink the cut.

Commenting this morning on the growing pressure facing Rishi Sunak to extend the uplift, Reynolds said: “Britain had the worst recession of any major economy because of the government’s incompetence and indecision.

“Even the government’s own MPs do not support the Chancellor’s planned cut to Universal Credit, taking £1,000 a year from millions of families already struggling in this pandemic.

“The government is running out of time to do the right thing, give certainty to families and secure our economy, by cancelling their disastrous cut to Universal Credit.”

The Chancellor introduced the increase last year. It is not available to those on legacy benefits: child tax credit; housing benefit; income-related employment and support allowance; income-based jobseeker’s allowance; and income support.

It took the standard rate for a single claimant on Universal Credit for those over 25 from £317.82 to £409.89 a month, and has been described by charities as a “lifeline” for households struggling with the economic fallout of the pandemic.

The additional support is currently set to be withdrawn in April, affecting 6.2 million families across the country. Around half a million more people, including 200,000 children, will be pushed into poverty as a result of the cut.

The report published today asks the government to retain the increase, worth £1,040 per year, and calls on the Chancellor to widen the boost to include the two million people on legacy benefits. It also urges the suspension of the benefit cap.

Challenged recently on the planned reduction to the benefits, at a time when the Office for Budget Responsibility has forecast that unemployment will peak at 7.5%, Dominic Raab insisted the uplift was “always a temporary measure”.

Cutting Universal Credit and Working Tax Credits will disproportionately impact those households on low incomes, with around 60% of those expected to lose out being in the bottom 30% of the income distribution.

Around 60% of all single-parent families in the country will be affected and over half of the households that face the significant drop in their incomes when the support is withdrawn at the end of March include someone who is disabled.

The paper released by the all-party parliamentary group on poverty today reported that if the uplift is withdrawn, nearly 700,000 households, caring for more than 800,000 children, will be unable to meet the cost of everyday living.

Labour forced a vote in parliament last month calling on the government to maintain the increased rate. It passed with 278 votes in favour and none against after the Prime Minister ordered Conservative MPs to abstain.

65 northern Tory MPs, many representing ex-Labour ‘Red Wall’ seats, ahead of the debate publicly called on Downing Street to extend the increase in social security payments during the pandemic.

But only six Conservatives, not including Hollinrake, rebelled to vote with Labour. With no MPs opposing the motion on the night, Labour had to force a ‘division’ in the House of Commons to have the results of the vote properly.

Boris Johnson described the non-binding vote as a “stunt”. Labour has repeatedly used opposition day votes to highlight difficult issues for the government – such as, in October, the extension of free school meals.

Labour leader Keir Starmer said the Prime Minister’s response was “pretty pathetic”. “He’s saying: ‘I don’t want to say yes, and I don’t want to say no. So we’re going to abstain.’ He’s got no view on whether it should stay in place or not.”