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UK's universal credit in focus as calls grow for new hardship payment

Mhari Aurora
·2 min read
People in universal credit have been getting a £20-a-week temporary rise in the benefit since March last year. Photo: PA
People in universal credit have been getting a £20-a-week temporary rise in the benefit since March last year. Photo: PA

UK’s work and pension secretary has hinted the government may announce a decision over £20-a-week temporary rise in universal credit which is ending in April.

Therese Coffey told BBC Breakfast on Monday: “I can assure you that we are in active consideration of the options on how to best support people during this time and I hope we will be able to come to a decision soon.

“We are working very closely with the Treasury so that we can make sure that we have the best decision which I hope the prime minister will be able to announce shortly.”

Her comments come as calls for not withdrawing the temporary increase grew over last week. Chancellor Rishi Sunak is under pressure from MPs of both parties to extend the rise rolled out in March last year.

The Centre for Policy Studies (CPS), a think tank, meanwhile, has called for a “coronavirus hardship payment”. It said changing the payment nomenclature could make it simpler to reduce and remove it as the pandemic wanes.

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“The government has backed themselves into a corner with the £20 uplift in Universal Credit – it’s much harder to take something away once it’s in place,” the CPS said in its report.

“Replacing the uplift with a clearly defined temporary support mechanism, combined with other reforms, would offer the intended financial support while making it easier to prepare claimants for its eventual withdrawal.”

The think tank proposes the hardship payment to be combined with a one-off 2.5% increase of universal credit (currently due to rise by 0.5%), in line with state pension rate, which would mean an extra £100 a year for a single claimant over 25.

The new payment would prevent people from seeing a sudden fall in their income while restrictions are still in place, and would last another six months, the report said.

It would then have a three-month “phasing out” period when payments would be cut in half.

READ MORE: COVID-19 grants could trip up tax bills for self-employed

The report said maintaining the uplift would be “poorly targeted” as families on universal credit currently receive a smaller percentage of their income than if they were a single claimant.

The new payment would add a further £6bn ($8bn) to the annual welfare bill, something the think tank describes as “far from optimal”, but they said it would be “unreasonable” to end the financial support in April while restrictions are still in place and the furlough scheme is due to come to an end causing severe financial worry for many.

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