BISHOPS have lent their support to calls on the Government to fix Universal Credit, after analysis was published illustrating the “poverty-producing” results of cuts to the benefit.
The report, Austerity Generation: the impact of a decade of cuts on family incomes and child poverty, warns that cuts to the benefit system inherited by the Coalition Government in 2010, and to its flagship reform, Universal Credit, are set to “damage the life chances of hundreds of thousands of children”. Child Poverty Action Group, which published the report, is calling on the Chancellor to mount a “full-scale rescue mission for Universal Credit”, which once promised to lift 350,000 children out of poverty.
The analysis, conducted by the Institute for Public Policy Research, suggests that, were Universal Credit to be fully implemented by 2020, there would be a million more children in poverty than there would have been had it been introduced as promised. It is “an indication of the extent to which Universal Credit has been hollowed out and its promise of poverty reduction abandoned”, the authors write. They estimate that, as a result of all benefits cuts since 2010, 500,000 more children will be in “severe poverty” in 2020.
The analysis was “deeply worrying because it shows that the poorest families — single parents, larger families and those with disabled children — will be worst affected by the introduction of Universal Credit,” the Bishop of Durham, the Rt Revd Paul Butler, said on Monday. “Instead of reducing poverty, as intended, it predicts that one million more children are likely to be pushed into poverty.
“I hope in the Budget the Chancellor will seriously look at how this policy can return to its original aims, starting by protecting families and children from the rising cost of living.The health of a good society is seen in how best we care for children and the very vulnerable.”
Universal Credit was initially welcomed by charities, including the Joseph Rowntree Foundation, which continues to support it in principle (News, 27 October). But it has warned that cuts to the work allowance (the amount families can earn before their support starts to be withdrawn) are projected to push 340,000 people into poverty by 2020. Other changes in recent years include the benefits freeze and the restriction of child benefit to two children per family. Last year, the Office for Budget Responsibility confirmed that it was “now less generous on average than the tax credits and benefits system it replaces”, and last month the Bishop of Manchester, Dr David Walker, expressed concern that it was now being used by the Government to save money.
Among the worked examples set out in the IPPR report is that of a couple with two young children, with one full-time and one part-time earner on the “national living wage”. They are expected to be £1200 worse off a year as a result of cuts to Universal Credit. Lone parents with children will be £2380 worse off. “Families already at the greatest risk of poverty will lose most: not just lone parents but families already on low incomes, larger families, families with young children, and families where someone is disabled,” the report says. The only families likely to benefit from the changes to UC since 2013 are those with up to two children, using “significant amounts” of childcare (which is subsidised), it suggests.
CPAG says that poverty-tackling policies cited by the Government — the introduction of the “national living wage”, increases in the personal tax allowance, and the extension of free childcare — “do not come close to compensating” for the effect of cuts.
“Rather than investing in our children, government policy has been creating an Austerity Generation whose childhoods and life chances will be scarred by a decade of political decisions to stop protecting their living standards,” the charity’s chief executive, Alison Garnham, said. “The Universal Credit we see today is not the Universal Credit that was sold to everyone a few years ago. . . This month’s Budget is an opportunity for the Chancellor to mount a full-scale rescue mission for Universal Credit.”
The Chancellor will present the Budget on 22 November. CPAG is calling on him to restore work allowances, put a stop to the benefit freeze, and pledge to give children’s benefits the same protection from rising prices as is given to the basic state pension.
“Whilst the concept of UC is good, its outworking is already causing significant problems,” the Bishop of St Albans, Dr Alan Smith, said. “If the Government does not take urgent action it is likely that the huge progress made in the health, education, and prospects of a significant number of young people will be squandered. We cannot afford to fail our young people in this way.”
The report suggests that, by 2020, the Government will spend £27 billion less on social security than a decade earlier, “an unprecedented reduction”. The Government currently spends £264 billion on welfare: 34 per cent of all government spending.
Latest statistics suggest that 29 per cent of children live in relative poverty, and 27 per cent in absolute poverty (both measured after housing costs). These percentages fell in the early years of New Labour, but the Institute for Fiscal Studies expects the former to rise sharply by the end of the decade, to 36 per cent, reversing this progress and returning to 1960s levels. Tax and benefit reforms will account for 40 per cent of this rise, with the remainder due to stronger earnings growth among middle-income households, causing a bigger gap between the poor and higher earners. It expects the number in absolute poverty to rise to the same level as in 2013/14, as a result of an increase in poverty in families with three or more children.
IFS research suggests that the proportion of children in workless households has fallen to levels last seen in the early 1980s. A workless household is 2.5 times as likely to be in absolute poverty than a working household. However, children living in working families comprise two-thirds of those considered to be in relative poverty. Working families stand to lose on average £930 a year from cuts in the legacy tax credit system, or £420 a year in the Universal Credit system.