£20 cut leaves black hole in families’ finances

Published on: 
09 December 2021
Written by: 

Bea Pitel

Campaigns officer

Just over a month ago, the government went ahead with the decision to cut millions of parents’ universal credit by £20 a week. There was a loud public outcry against this devastating cut, which we warned would pull 300,000 more children into poverty. Evidence is now emerging about how it is affecting families who were already struggling to keep their heads above water.

Our Early Warning System project gathers information from frontline benefits advisers, and they have been telling us about what the removal of the £20 means for the families they support. The evidence is extremely worrying and stark.

A mother reported being unable to afford to feed herself and her daughter after the £20 cut and is worried about her ability to cope with furniture and fuel costs in the coming months.

After leaving her abusive husband, a mother-of-one has had to move cities, leaving everything behind. She needs every penny of her universal credit. Losing the £20 has made things much harder at this critical time, especially as the costs of food and fuel have risen.

A woman with a degenerative illness stopped work after 25 years as a schoolteacher. After the £20 cut, her rent and council tax add up to more than her monthly universal credit award, leaving her with no money for food, bills and other essentials. She has had to sell her belongings, borrow money from family and use a food bank. She asked, 'How can the government expect me to live on this. Does anyone care about the way I am living?'

Under public pressure to abandon the £20 cut, the chancellor made some welcome changes to universal credit at the October budget. Parents on universal credit who are in paid work now get to keep more of the money they earn (they now only lose 55p reduced from 63p for every pound they earn). These changes will help many low-income workers. However, there has been no help for people who cannot currently work, whether because they are caring for young children or because of ill health or disability. And these changes are of limited help to those who can’t increase the hours they work – because of lack of affordable local childcare or the instability caused by insecure work for example.

The evidence from our Early Warning System project highlights that, as living costs rise, families are facing a black hole in their finances because of the £20 a week cut. There are 4.3 million children growing up in poverty and families urgently need more to live on. We are calling on the government to ensure every child has a good start in life by investing in children’s benefits, increasing the eligibility for free school meals and removing the two-child limit and benefit cap.