Reforming Universal Credit to ensure we can all afford the essentials in hard times
Helping people to maximise their income and managing their money well is important and something we’re working hard on with our Money Advice Service in partnership with Musselburgh CAB.
However, if you’re on an inadequate income, budgeting only goes so far. Sometimes, nothing can make the sums add up.
This is the reality faced by the majority of people who turn to us and other foodbanks for help.
Losing your job, needing to care for a sick family member, breaking up with your partner – everyone’s circumstances can change. When unexpected circumstances strike most people would expect our social security system to support them – and for this support to be based on an objective calculation of what things cost.
However, levels of income offered by our social security system, including Universal Credit, do not provide an adequate safety net for people who need it.
The basic rate of Universal Credit, which was created to cover people’s essential living costs such as food, utilities and essential household goods is currently at its lowest level in real terms for nearly 40 years. The rates have never been linked to any objective measure or set based on the cost of what households need.(1)
As a result, there is a significant shortfall between many people’s living costs and their incomes. Foodbanks should not have to plug this gap.(1)
Research by the Trussell Trust & Joseph Rowntree Foundation (JRF) has found that:
- 90% of low-income households on UC are currently going without essentials, such as food, a warm home, functioning essential appliances, or toiletries.(1)
- Support has eroded over decades and the basic rate (‘standard allowance’) of UC is now at its lowest ever level as a proportion of average earnings.(1)
- 66% of the public think the basic rate of UC is too low.(1)
- Almost half of households see their payments reduced by deductions and caps. For example, a household can lose 25% of their standard allowance to repay debts to DWP.(3)
Analysis suggests that the minimum amount a single adult needs is £120 per week to cover essential costs (excluding housing and council tax).(1) The Universal Credit (UC) standard allowance for a single adult over 25 years is £85.
Without an adequate safety net, what was a short-term setback can last for longer making it harder for people to get back on their feet.
Going without essentials has a cost: to the individual, and to wider society. People need support for longer, they’re living with constant mental strain and their capacity to bounce back is reduced putting pressure on stretched health, education and social services.(1)
What is being done?
The Trussell Trust, the Joseph Rowntree Foundation and supporters are calling on the UK government to make sure that the basic rate of Universal Credit is at least enough to afford the essentials we all need. This policy would enshrine in legislation:
- An independent process to regularly determine the Essentials Guarantee level, based on the cost of essentials (such as food, utilities and vital household goods) for the adults in a household (excluding rent and council tax);
- That Universal Credit’s standard allowance must at least meet this level; and
- That deductions (such as debt repayments to government) can never pull support below this level.
Such a policy would directly address material hardship by embedding a protected, minimum level of support based on an objective assessment of essential costs. It would alleviate in-work poverty for those receiving UC, without altering existing financial incentives to work. And it would directly benefit 8.8 million low-income families, including 3.9 million families with children, by ensuring no one has to go without essentials to make ends meet. (1)
By embedding a legal minimum in our social security system, the Essentials Guarantee will have a real impact on millions of people whose lives are devastated by not being able to afford essentials like food and heating.
It will mean that if any of us need to turn to Universal Credit due to sickness, caring for a family member, relationship breakdown or job loss, we can be confident we can at least afford the essentials.
How can you help?
Please take action now and join our Guarantee the Essentials Campaign. Together we can send a clear message to all MPs that the basic rate of Universal Credit must at least be enough to afford the essentials we all need to get by.
Find Out More:
Sign the Trussell Trust petition here.
Read the full report from the Joseph Rowntree Foundation here.
Thank you for your support
References:
- Joseph Rowntree Foundation; The Trussell Trust (2023). An Essentials Guarantee: Reforming Universal Credit to ensure we can all afford the essentials in hard times.
- https://www.jrf.org.uk/report/guarantee-our-essentials Polling carried out by the YDS on behalf of Thinks Insight and Strategy for JRF (2022).
- Trussell Trust (2022). Debt to Government, deductions and destitution.