Maeve Sherlock on a chance for ministers to help relieve the worry besetting those suffering Covid’s economic impact
As the economic consequences of Covid-19 escalate, our welfare state is needed as never before. Sadly, it is not proving up to the job.
Recent figures showed 2.1 million people claiming unemployment benefits in April – an increase of 856,000 in a month. And with 8.4 million people – a quarter of the UK workforce – still on furlough, this could escalate further. With many of the new claimants having not applied for benefits before, they are now discovering that we have one of the weakest ‘out of work’ safety nets in the developed world.
As the pandemic has raged, staff at the Department for Work and Pensions (DWP) have worked flat out to process unprecedented numbers of claims – something for which they should be commended. The government, meanwhile, has made changes to Universal Credit (UC) with the suspension of sanctions, uprating of basic payments, and the suspension of the Minimum Income Floor.
Welcome as those changes were, it was nevertheless astonishing that no action was taken to address one of the glaring weaknesses of UC: the five-week wait for the first payment. Ministers have said that ending this wait wasn’t really considered. So, on Tuesday, I will once again ask the Lords DWP Minister when the government is going to act on this critical issue.
The negative impact of the five-week wait was well documented before the Coronavirus crisis. The Joseph Rowntree Foundation estimated that two in five families on UC cannot meet their basic living costs during that time. The Trussell Trust found that in areas where UC has been rolled out for at least a year, food banks have seen a 30% increase in demand; and this rises to 48% after two years. No wonder it is running a 5WeeksTooLong campaign.
The impact of the wait is increasing day by day, as more people are forced onto UC. The only defence that ministers offer when pressed is to say that claimants can have an advance. But that must be paid back over a year, leaving people with less to live on each month. Many can’t afford that or are afraid of getting into debt. The Resolution Foundation found that, on average, those going onto UC will have seen their disposable income almost halved.
Most claimants don’t have savings to last them five weeks. Neither can they afford to live on less than the full amount of UC in order to pay back a debt they should not have had to take on.
Since its introduction, the five-week wait has been the single biggest driver of housing arrears, short-term debt, and foodbank usage in our country. It should not exist at all, but it is particularly damaging in the current crisis. Indeed, the Covid pandemic has confirmed that the UK’s social security net has many other holes.
This is why Labour is calling on the government to act quickly to implement the following changes: remove the £16,000 savings limit in UC; suspend the benefit cap; abolish the two-child limit in UC and tax credits; uprate legacy benefits to match the UC increase; and end the five week wait by converting UC advances into grants instead of loans.
We can’t yet stop the virus attacking people and our way of life. But we can do the decent thing and ensure that nobody is worrying about going into debt, how they will pay their rent, or feed their children.
Baroness Maeve Sherlock is Shadow DWP Minister in the House of Lords. She tweets @MaeveSherlock
Published 1 June 2020