The chancellor is under the traditional pre-budget pressures – from his party, from the opposition and from countless interests and causes, all making their case for Treasury largesse. But in this pandemic budget, Rishi Sunak must prioritise those who need a helping hand the most.
The chancellor faces the dual challenge of responding to immediate economic plight and preparing the ground for when his short-term interventions, above all furlough, come to an end. Placing last year’s increase to universal credit on a permanent footing will serve both ends.
Amid all the uncertainty caused by covid, low earning households have shown huge resilience – working in difficult conditions, either from home or on a site where their safety could have been compromised. Families have balanced childcare and schooling, and for many, these pressures have occurred within a backdrop of job uncertainty, reduced hours, and reduced pay.
For millions of low-income working families, last year’s uplift to universal credit has been an essential lifeline through 2020. But it is due to end in April, alongside furlough, when the reality is the economic insecurity created by the pandemic will last for years. The chancellor needs to change course.
In a new Fabian Society report, we analysed how the planned cut to universal credit will reduce the living standards of households over the coming years. Most people think of the benefits system as being there for the unemployed. But we found that overwhelmingly the people who will be hit by the cuts in the medium term are working families and disabled people.
Indeed, of three quarters of a million people who will be pushed into poverty by the planned cut, 95% will be in working or disabled households. They have done nothing wrong to deserve a huge hit to their incomes. But making the cut will strip £1,000 per year from six million families.
The vast majority of these households contain people who are either in work or disabled. For most there is no expectation that they should be seeking work or trying to increase their earnings. If the chancellor cuts their living standards it will raise fundamental questions of justice. And if he attempts to justify his cut as an incentive for people to seek work, he will be deceiving himself or deceiving the public.
Some politicians like to pretend that social security is just for the workshy, but the truth is that millions of working households need benefits and tax credits to make ends meet, as do disabled people who are out of work through no fault of their own.
This budget is the chance for the chancellor to show he understands how hard it is to make ends meet for people on low incomes in pandemic-hit Britain.
Who loses? is the second output of Social Security Solutions, a Fabian Society research project supported by a grant from the Standard Life Foundation. The report can be found here.
