Cut to £20-a-week Covid boost will lead to big rise in poverty, UK charities warn

Around 700,000 people, including 300,000 children, will be “cut adrift” into poverty at a time of surging unemployment and plummeting living standards if the government cuts the £20-a-week pandemic uplift to key social security benefits, charities have warned.

The letter reflects growing pressure on the chancellor Rishi Sunak, who failed to say whether he would protect the £20 increase, which benefits around 16 million people, when he outlined his latest Covid-19 support package last week, despite warning that the UK faced a winter of business failures and rising unemployment.

The £20 a week boost, worth £1,040 a year to households on universal credit or tax credits, was introduced by the government in April as a 12-month temporary measure to help some low-income families cope with the extra costs of coronavirus.

In a letter to the chancellor, 50 charities say that scrapping the uplift would cut a lifeline to struggling families just as they faced a major squeeze on living standards. “We are therefore urging you to make the uplift permanent and stop families being cut adrift whilst they need help to stay afloat,” it says.

Those on the lowest incomes will be worst affected, the letter warns, with 500,000 people who are already struggling below the poverty line likely to be pushed to near-destitution income levels known as “deep poverty”. Single parents, disabled people and black and minority ethnic households would be disproportionately hit.

The letter also calls for the £20 uplift to be extended to 1.5 million people on older benefits such as employment and support allowance, which were excluded from the chancellor’s Covid benefits uprating in April. “It is simply not right that those on legacy benefits, who are mostly sick or disabled people and carers, and so have been most at risk during this pandemic, have not been thrown an equivalent lifeline.”

The scale of the potential financial shock faced by many families if the Covid boost is not renewed is illustrated by an analysis by the Joseph Rowntree Foundation, which estimates that, depending on circumstances, many minimum-wage households moving on to benefits after next April would see their monthly incomes halved.

Although the letter welcomes government plans to boost skills training it says these must be accompanied by a benefits system that “offers the certainty and security people need to help them stay afloat so that they are equipped to grasp every new opportunity and are protected from the damaging long-term consequences of financial hardship”.

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Signatories include the Joseph Rowntree Foundation, Trussell Trust, Save the Children, Barnardo’s, Child Poverty Action Group, Shelter, Oxfam GB, Salvation Army, and a further 100 charities under the Disability Benefits Consortium. The bishops of Durham and Portsmouth have also signed the letter.

The cost of keeping the £20-a-week uplift would be £9bn a year, the charities say. This would come after years of cuts and freezes that have pushed the main rate of unemployment benefit to its lowest level since 1990. Even with the £20-a-week uplift the average benefit income of a family with children is £2,900 a year less than in 2011.

Overall, 14.4 million people in the UK were living in poverty in 2018-19, of which 4.5 million were children. About 4.5 million people – 7% of the population – were in deep poverty, and 7.1 million people (11%) were in persistent poverty, meaning they had lived below the breadline for at least two of the last three years.

A government spokesperson said: “We’ve invested an extra £9bn in our welfare system to help those most in need through the pandemic, including by increasing universal credit and working tax credit by up to £20 a week, as well as introducing income protection schemes, mortgage holidays and additional support for renters.

“The government is also focused on supporting people by helping them get into work. This includes launching the kickstart scheme, a £2bn fund to create hundreds of thousands of new, fully subsidised jobs for young people.”