Two of the UK’s most prominent anti-poverty organisations have calculated how far short current levels fall and are calling for a new law to make sure Universal Credit’s basic rate is always at least enough for people to afford the essentials. They say it’s extraordinary that the basic rate of Universal Credit is not based on how much it costs to afford essentials like food, bills and vital household items.
This would be the first time since the welfare state was created that social security rates would be based on what people need, and how much those things actually cost.
The gap between this calculation and how much is currently provided through the welfare system demonstrates why millions of people are going without these essentials.
Universal Credit should be the safety net for people in hard times such as losing a job or the breakdown of a relationship. It is vital for people in need of longer-term support, such as disabled people or single parents of very young children only able to work part-time. However, this safety net is failing people and is not adequate.
This shortfall is a key driver behind increasing levels of hardship and, at the sharpest end, growing numbers of people experiencing hunger, unable to heat their homes and turning to food banks.
The Essentials Guarantee would be enshrined in law and set regularly, based on an independent recommendation, to make sure, that while in receipt of Universal Credit, everyone will be able to afford essential costs and maintain their health, wellbeing and dignity. This includes water bills, gas and electric, travel expenses, food items such as bread, rice and vegetables, and hygiene and cleaning products like toothpaste and washing up liquid.
The charities’ research found that this standard allowance is £35 less than a conservative estimate for what a low-income single person would need to cover everyday essentials; £66 less than what a low-income couple would need.
Using an indicative shopping basket of essentials including food, clothes, utility bills and toiletries, JRF and the Trussell Trust found a single person needs at least £120 per week – £200 a week for a couple – just to afford essential items.
This comes as a new survey reveals 66% of people think the basic rate of Universal Credit is too low. 67% said they didn’t think they would be able to afford the essentials if they were on Universal Credit, and 69% support increasing the rate. Almost three quarters said they support the Essentials Guarantee.
The UK Government made the right decision to raise benefits by inflation in April; a necessary move to stop social security rates falling even further behind what is required to afford the essentials.
However, these rates are currently at their lowest-ever level relative to earnings, at only 13% of average earnings. Between 2017 and 2019, destitution rose by over half, with 2.4million people experiencing it at some point during 2019.
Right now, 90% of low-income households receiving Universal Credit are currently reporting going without essentials, according to JRF’s research. Last year the Trussell Trust’s food banks distributed more than 2.1m emergency food parcels..
Already-insufficient amounts in Universal Credit can be reduced further by automatic deductions. People may not even realise up to a quarter of their weekly allowance can be clawed back to address errors in the system like an accidental overpayment. Over half the people using Trussell Trust food banks are in this position.
The Essentials Guarantee would also make sure deductions like this would never pull support below this level.
Over two thirds of people in poverty (69%) would gain from the Essentials Guarantee which would benefit everyone in receipt of Universal Credit. It would also lift around 1.8 million people out of poverty altogether, including 600,000 children.
JRF Chief Executive Paul Kissack said:
“We should all have peace of mind that – if we lose our job, need to care for a sick family member or break up with a partner – basic support will be there for us. Our social security system is meant to give us that peace of mind. But with millions of low-income households going without essentials like food and heating, and foodbank use at record levels, it is plain that the system is failing.
“Twenty years ago, as a nation, we started moving towards a lasting cross-party social settlement that older people shouldn’t have to skip meals to save money or sit in a cold home. Today we need a similar settlement for working-age people – a new guarantee that the basic social safety net will always allow families to afford the essentials.
“Most people are astonished to learn that the level of Universal Credit is not actually based on any calculation of essential costs. In other words, the so-called ‘safety net’ floats completely free from the economic reality of people’s lives. It is time to build a system that is needs-tested – where the support people get is linked to the actual costs of essentials. A system where every family has enough money to get by, and as a nation we confine to history the scourge of people having to skip meals or switch off essential appliances just to get by.”
Emma Revie, chief executive at the Trussell Trust, said:
“Thousands of people across our country face hunger every single day because Universal Credit payments do not cover the costs of the essentials we all need to survive.
“People who are having to turn to our food banks continue to tell us they are skipping meals and can’t afford to heat their homes and cover their bills. We all deserve the dignity of staying warm, fed and protected from poverty and the UK public agrees, as our poll shows. We know with the right financial support, people would not be forced to experience hunger.
“That’s why the time is now for the UK government to urgently change the law so that the standard allowance of Universal Credit will always cover our essentials. By pledging this the government will be taking a crucial step towards ending the need for food banks.”
