Internal government analysis shows impact of cutting universal credit will be ‘catastrophic’, report claims 

According to a report in the Financial Times (paywall), the government’s own internal analysis of its decision to cut universal credit from the start of October (by ending the temporary £20-per-week uplift introduced during the pandemic) says the impact will be “catastrophic”. The paper says: 

A well-placed Whitehall official said the government’s own analysis highlighted the deep impact of reversing the change. “The internal modelling of ending the UC uplift is catastrophic. Homelessness and poverty are likely to rise, and food banks usage will soar. It could be the real disaster of the autumn.” 

One minister warned that the political backlash over universal credit, which is claimed by 6m people, was likely to be more serious for prime minister Boris Johnson than the debate about social care. 

“There’s no doubt that this is going to have a serious impact on thousands of people and colleagues are really worried, I think it will definitely eclipse social care as a political problem. It’s not just red wall MPs who are fearing a major backlash from the public.” 

The paper does not quote directly from the internal analysis. But it is not hard to guess what it will say because there is plenty of information already in the public domain to show what impact that cut will have. For example, this is from a Joseph Rowntree Foundation analysis published last month. 

This cut will impose the biggest overnight cut to the basic rate of social security since the foundation of the modern welfare state. 

Our analysis has shown that 6 million low-income families will lose £1,040 from their annual income, creating serious financial hardship and leave 500,000 people to be swept into poverty – including 200,000 children. Families with children will be disproportionately impacted and worryingly, 6 in 10 of all single-parent families in the UK will be impacted. 

The government is rightly saying that it wants to support people back into work as we emerge from the crisis. But working families make up the majority of families who will be affected. 

The JRF also said that 21% of all working-age families would be affected by the cut and that in 140 constituencies (including 36 Tory ones) more than one in four families would be affected. 

  • Union body publishes impact on local working families if universal credit cuts go ahead
  • Most families hit by £1040pa cut are in work, say anti-poverty campaigners
  • Many of those affected by cut will be key workers, warns TUC
  • Cutting universal credit is “levelling down”  

The TUC has today (Friday) warned that under 11,000 workers across Dorset (44% of those receiving Universal Credit) will be hit hard by the government’s planned cut to universal credit.

Majority of those hit by autumn cuts are working families 

185,000 workers across the South West region are currently receiving universal credit – the equivalent of 2 in 5 of all universal credit recipients. They will all be hit by the £20pw cut. 

Working tax credits is also being slashed in October, having been raised by £20pw in early 2020.  

This means that the majority of those affected by the £20pw cut to benefits this autumn will be families who are working, according to the Joseph Rowntree Foundation. 

Key workers and low-paid among hardest hit

Low-paid key workers will be among those worst affected and the TUC believes this will put further pressure on employers to provide decent pay rises. 

Recent TUC research published this summer showed that one million children in key worker households are currently growing up poverty – with many currently relying on in-work benefits like universal credit to boost poverty wages.

In addition to stopping the planned £20pw cut to universal credit, the TUC is calling on the government to increase the minimum wage to £10 an hour, and urgently bring forward an employment bill to tackle insecure work.

South West TUC Regional Secretary Nigel Costley said:

“Everyone should have enough money to live on, yet many are struggling to make ends meet in Dorset.

“But finding a decent job on good pay can be really difficult here. Local workers often move from one insecure, low-paid job to the next. Universal credit is therefore a lifeline them.

“If the universal credit cuts go ahead many working families – and key workers – up and down the region will be forced to get by on much less every week. This is levelling down – not levelling up as we were promised.  

“Ministers must abandon this cruel cut that will hit low-income working families. We need a social security system that helps people get back on their feet – not one that locks them in poverty.

“We need decent jobs on decent pay for every worker in Dorset. 

“That means increasing the minimum wage, investing to create good green jobs, tackling the scourge of insecure work, and giving all key workers a proper pay rise.

“Simply cutting universal credit is not the way to create decent work.

Number of workers receiving universal credit by parliamentary constituency (excludes those to be transferred over from the working tax credit)

ConstituencyNumber of people in work receiving UCTotal number of people receiving UC% of UC recipients in work
Mid Dorset and North Poole2,2064,76146.3%
North Dorset2,3945,52643.3%
South Dorset3,7418,55143.7%
West Dorset2,6346,15042.8%
South West184,983439,61242.1%

Source: TUC analysis of Stat Explore data using May 2021 data

-Information on relative levels of wealth and deprivation in parliamentary constituencies can be found here:

– The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together the 5.5 million working people who make up our 48 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living.


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