Research from the TUC has revealed that the number of in-work Universal Credit claimants has risen by 1.3 million since the pandemic began and the trade union federation has warned that households are facing a “perfect storm” this April.
The analysis of Department for Work and Pensions figures, published this morning, showed that over 2.3 million workers were in receipt of UC at the end of last year compared to just over one million on the eve of the pandemic in February 2020.
The 130% growth in the number of in-work recipients means that one in 14 (7.2%) of adults in employment are now claiming UC. The TUC has warned the benefit will fall further behind the cost of living as energy bills and taxes rise.
“Millions of low-paid workers face a perfect storm this April. At the same time as energy prices and national insurance contributions shoot up, Universal Credit is falling in value,” Frances O’Grady said today.
Boris Johnson announced his plan for social care last year, which included raising £12bn a year largely funded through a hike in National Insurance contributions in April. MPs backed the 1.25 percentage-point increase in September.
The government announced that the energy price cap will rise to £1,971 in April, an increase of £693 for the average household. Rishi Sunak set out plans to mitigate the impact in a House of Commons statement last week.
But the TUC general secretary criticised the measures today, calling on the Chancellor to do more: “The support package announced for the Chancellor last week is woefully inadequate. Universal Credit urgently needs boosting and we need further action to reduce fuel costs for those battling to make ends meet.
“Oil and energy companies shouldn’t be making bumper profits, while many struggle to heat their homes. If ministers fail to do what is necessary, more households will be pushed below the breadline.”
One in eight workers (12%) said they will struggle to afford the basics in the next six months in polling carried out by the TUC before the energy cap announcement. One in six (17%) of workers earning below £15,000 per year said the same while three in ten (29%) reported that they will struggle to afford more than the basics.
18% of families with children under 11, 21% of disabled workers, 14% of key workers and 14% of workers from a Black or minority ethnic background reported via the survey that they will struggle to afford the basics in the next six months.
The Chancellor outlined a package he said is worth £9bn. The measures include a so-called “discount” on energy bills of £200, to be repaid in £40 instalments via bills over the next five years, a council tax rebate for some households and a discretionary fund for local authorities of nearly £150m.
Rachel Reeves accused Sunak of choosing to “shield” oil and gas companies with the government’s “buy now, pay later” scheme for addressing rising household energy bills, which the Shadow Chancellor warned “loads up costs for tomorrow”.
Ed Miliband said on Friday that the government is compounding price-rise difficulties by “not acting at the scale the crisis demands” and described the package put forward by the Chancellor last week as “wholly inadequate”.
The TUC has called on the government to increase to UC to 80% of the real living wage, introduce a windfall tax on energy companies to reduce household energy bills and boost the national minimum wage to least £10 per hour.
Prices are rising at their fastest pace for 30 years and post-tax incomes are now forecast to fall 2% this year after the rise in cost of living is taken into account, representing the biggest fall in take-home pay since records began in 1990.
The Bank of England increased interest rates from 0.25% to 0.5% last week in a bid to slow the pace of price rises but forecast that inflation could still reach 7.25% in April. The Institute for Fiscal Studies has said however, despite this and Sunak’s plan, the average earner is still likely to be £400 worse off than last year.