Universal Credit and the £20 uplift
The COVID-19 pandemic has left many single parent families vulnerable to financial uncertainty. In March 2020, the Government announced a temporary uplift of £20 per week to the standard allowance in Universal Credit and the basic allowance of Working Tax Credit in response to the unprecedented effects of the pandemic. Gingerbread supports calls to maintain this uplift beyond the current deadline of April 2021 and is calling on government to extend the uplift to legacy benefits
In March 2020, the Government announced a temporary £20 per week increase to standard allowance in Universal Credit and the basic element of Working Tax Credit. This was in response to the huge financial uncertainty of the coronavirus pandemic and help people cope financially with the unprecedented effects of changes to employment and living costs.
The COVID-19 pandemic has led to many more single parents claiming Universal Credit. Between March and August 2020, around 230,000 single parents enrolled onto Universal Credit – meaning there are now more than a million single parents in now in receipt.
The uplift is due to come to an end in April 2021, but there is growing pressure from charities including Gingerbread as part of the #KeepTheLifeline campaign for the Government to extend the additional payment until at least 2022, and ideally make the change permanent. We want to see the uplift kept so that single parents aren’t placed under further financial pressure when the effects of the pandemic are still being felt.
The impact of the £20 uplift on single parents
For single parents who have been able to fully benefit from the £20 uplift to Universal Credit, it’s been a lifeline. Research by Gingerbread and the debt charity StepChange has found over a quarter of single parents (27%) said the uplift has had a positive impact on their finances, while just under a fifth (19%) of couple parents said the same. The uplift has tended to benefit those most in need of support – with the benefits being felt more by single parents who earn less than £28,000.
“It (the £20 uplift) does help because obviously the amount you get with Universal Credit is not supposed to be money that you’ve got loads to spend; it’s meant to be just enough… so it does massively help because, when money is tight, any extra does help. It resulted in less stress when you do the food shopping… Especially because over COVID-19, for a little while, you couldn’t always get all the cheapest brands…it was quite basic things that were hard to get hold of and you just had to buy what you could”.
As a result, single parents much more worried about the uplift coming to an end. Research by Gingerbread has found single parents are more than twice as likely to say they are concerned about the removal of the £20 uplift than couple parents.
The Benefit Cap and legacy benefits
While the £20 uplift has been a boost to many single parents’ finances, unfortunately many single parents have not been able to benefit from the extra payments.
Universal Credit is subject to the Benefit Cap, meaning if your payments exceed the monthly threshold, the payment will be capped. The remainder also can’t be used as a ‘top up’ for future payments. For a single parent, the cap is set at a weekly payment of £384.62, or £442.31 if you live in London.
Despite the £20 uplift being brought in to support households struggling as a result of COVID-19, the Benefit Cap has remained in place. As a result, the amount of single parent families hit by the cap has almost doubled since the uplift was introduced. And this is during a time when finding work or moving home have been made much harder due to the pandemic, lockdowns, and economic downturn.
A sizeable number of single parents are also still in receipt of ‘legacy benefits’, such as Employment and Support Allowance (ESA), which haven’t been increased in line with Universal Credit. To receive the £20 uplift, the government has encouraged those on legacy benefits to move onto Universal Credit – but it’s not always advantageous for single parents to do so.
Claimants moving from a legacy benefit onto Universal Credit still have to manage the 5 week wait for their first payment. Many single parents don’t have the means to survive 5 weeks before payments without taking on debt, such as Advance Payments (which need to be repaid through Universal Credit once payments start), or other means of borrowing.
Some single parents would also be worse off on Universal Credit, even with the £20 uplift in place. Research has found that around 600,000 working single parents currently receiving tax credits would be an average £16 per week worse off if they moved onto Universal Credit.
Gingerbread’s campaigning calls
We are calling on the Government to do the following:
- Agree to the #KeepTheLifeline campaign and maintain the uplift beyond April 2021
- Increase or suspend the Benefit Cap so that more families can benefit from the £20 uplift
- Extend the £20 uplift to legacy benefits so single parents in receipt of older benefits can be supported to cope with the ongoing financial pressures of the COVID-19 crisis