JRF - What does a “very difficult winter” look like for low-income families?
New analysis on the planned £20-a-week cut to Universal Credit and the rising cost of living.
A lower-income couple with two young children where one adult is working full-time is going to need to find an additional £31-a-week to cover the cost of living and falling benefit rates from October, according to new analysis by the Joseph Rowntree Foundation.
In an interview yesterday, the Business Secretary warned “it could be a very difficult winter”. This comes amid growing concern across the political spectrum that the rising cost of living is about to put immense strain of low-income families.
If the Government proceeds with cut to Universal Credit as planned, changes to the energy price caps, and inflation means that at the same time this couple family are trying to compensate for the £20-a-week they had before the cut, they will soon need to find an additional:
£3 for energy (assuming pre-payment meter)
£8 for other living costs
= an additional £11 per week from October.
On top of this, the same family would need to find an extra £2.50 to cover the increase in National Insurance Contributions from April 2022 because of the Health and Social Care levy. This would mean in total this family may need to find an additional £13.50 per week or £710 per year (around the entire clothing and footwear annual budget for this kind of family) as well as losing £20 a week from Universal Credit. For this family, the extra costs alone equate to around 3.5% of their weekly gross earnings.
Peter Matejic, Deputy Director of Evidence & Impact at the Joseph Rowntree Foundation, said:
“Millions of low-income families are incredibly anxious about how on earth they are supposed to make ends meet from next month. Ministers rightly recognise this is shaping up to be a very difficult winter, yet there is little sign of them taking the decisive steps that are necessary to avoid real hardship for low-income families.
“The growing concern about the cost of living reinforces why cutting Universal Credit makes absolutely no sense. Social security is a key defence in protecting families from precisely these sorts of economic shocks, but the Government is on course to impose the biggest ever overnight cut to the system and leave families with an inadequate lifeline.
“The Prime Minister urgently needs to keep the £20-a-week increase to Universal Credit in place. Rising child poverty, soaring demand for food banks, people worrying about keeping their homes and covering the cost of bills, flies in the face of uniting and levelling up our country.”
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