Universal Credit cut and coming economic storm may blight the lives of a generation unless we act swiftly – Christine Jardine MP

In the midst of a news cycle where images of escalating despair in Afghanistan have shared space with joyous celebrations from the Paralympics, a report warning of a dire winter for millions of UK families slipped out almost unnoticed.

The UK could face a wave of unemployment when government support introduced during the Covid pandemic is withdrawn at the end of September (Picture: Philip Toscano/PA)

A stark analysis by the well-respected Joseph Rowntree Foundation (JRF) claimed that as many as one in three families in some parts of UK are about to be hit with what it calls the biggest overnight cut in benefits since the foundation of the welfare state.

On October 6, Universal Credit will be cut by £20 a week – a loss of more than £1,000 a year – as the so-called ‘uplift’ introduced in March 2020 is ended.

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Almost like that first morning when you feel autumn in the air, notice that there are suddenly more leaves on the ground and the wind is a fraction colder, the report is perhaps the first hint of the economic winter ahead.

An estimated six million families, 34,000 of them in Edinburgh and more than 5,000 in my constituency of Edinburgh West alone, will feel it first.

Many of them are families who were already struggling under the strain of our broken welfare system before the pandemic struck.

The uplift introduced in March 2020 recognised that the existing rates of Universal Credit were too low to help families when they needed it.

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But this cut piles more economic misery on those already struggling most, and before we have time to build the recovery which we all need.

And for many of them, people who were previously used to life in stable jobs in growing industries or had built successful businesses, the impact of this cut comes on top of seeing their economic security disappear overnight in 2020.

Throughout the past year-and-a-half, my advice surgeries have regularly involved people dealing with the Byzantine world of the Department of Work and Pensions for the first time.

Some, who thought they had reached a point in their lives where they were secure and comfortable, now face a dramatically changing world of work and the prospect of new careers rather than retirement.

We have negotiated many crossroads in this crisis and we are about to face another.

Because at the same time as this cut in welfare, we will see furlough withdrawn and the end of all government support.

The UK government will no doubt point to the most recent unemployment figures – 4.7 per cent – and claim that it is not as bad as we feared.

But that figure masks the reality of an economy which has fared worse than any other in the G7 and could face a wave of unemployment when the support is withdrawn at the end of September.

That is when the Coronavirus Job Retention Scheme, which was tapered off in this past month, ends completely.

More than a million people still on furlough face an agonising wait to discover whether their employer will be among the one on five which the British Chambers of Commerce claims are considering redundancies when that date comes.

We could face the unedifying prospect of a public services, food banks and mental health services already under strain coping with a surge in demand.

Moreover if the government goes ahead with this planned Universal Credit cut and the ending of support, we could create a generation of young people who are being left behind. Many thousands whose economic life chances and mental health have been permanently scarred.

The government's refusal to listen to calls to extend furlough before now has already cost thousands of jobs and pushed shops, hairdressers and companies up and down the country out of business.

Worst still is their refusal to bring the millions of excluded self-employed and small business owners under the umbrella of government support.

As that September deadline approaches, what we need is for the Chancellor of the Exchequer to recognise that business needs certainty, and families need to be secure in knowing that they can feed their children.

What we have lacked throughout this crisis is long-term planning and a clear vision of how we are going to repair and rebuild our ailing economy. We cannot delay that any longer.

In its report this week, the JRF estimated that the Universal Credit cut alone could force 500,000 people – almost half of them children – into poverty.

And while the government repeats the mantra of wanting to encourage people back into work, it should note that the JRF estimates that working families make up the majority of those who will be affected.

The foundation also warns that every measure shows that our social security system has become increasingly inadequate for those who depend on it.

The uplift of £20, although little more than a sticking plaster on those problems, was vital to those who received it.

And there are many steps to be taken between more jobs being created, and actually getting one of those jobs. Training, childcare, confidence.

No matter which way you look at it, the picture is not an attractive one.

It needs change, that long-term strategy that I mentioned and a willingness to think out of the box. To be radical.

I have written before about my belief that the time has come to rethink our welfare state for the 21st century. That if ever there was a demonstration of why we should investigate how to guarantee a minimum basic income for all, it has been the pandemic.

The Labour government in Wales is about to launch a trial, every other political party save the Conservatives is committed to the idea, and many of their own members are open to the argument.

But we are running out of time. If we do not act soon, it may be too late to save this generation.

Christine Jardine is Scottish Liberal Democrat MP for Edinburgh West

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