Child Poverty and the Universal Credit Cut
Over the past decade, a series of UK government policies have led to large cuts to social security entitlement. These cuts have been the primary driver of rising child poverty in Scotland and across the UK. In March 2020 a series of measures was announced by the UK government to protect household incomes in the face of the large labour market disruptions caused by COVID-19. Alongside the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme, a key policy was raising the Universal Credit standard allowance and Working Tax Credit maximum amount by £20 per week.
Analysis by CPAG, commissioned by Action for Children, shows the importance of this £20 increase in mitigating the damage caused by social security losses over the previous decade for a typical working family.
The UK Government is now cutting universal credit and tax credit by £20 a week. Universal credit claimants will start to see this drop in income from the first week in October, at the same time as they are being hit by soaring fuel bills and the removal of much of the pandemic support that has been in place over the last 18 months.
An estimated 220,210 households with children in Scotland will have their income cut by £1040 a year as a result of these cuts pushing 22,000 children into poverty.
We strongly support calls on the UK Government to reverse this cut. This money has been a lifeline for families across Scotland and the rest of the UK.
More than a £20 cut for some families
£20 cut will also have the effect of reducing the income threshold for universal credit. Analysis by CPAG suggests that 8000 children in Scotland will lose entitlement to universal credit completely. Because of this, they will also lose entitlement to other benefits that depend on receipt of universal credit for entitlement including: Scottish child payment, best start grants, best start foods and funeral expenses payments.
Mhari is 23. She and her partner have a two year old son. Mhari works part-time and her partner works full time at the National Minimum Wage, earning just over £1900 between them. They get £19.45 per week from universal credit (UC) and are entitled to £10 per week Scottish Child Payment. If UC is cut by £20 per week they will lose entitlement to both their UC support and Scottish Child Payment. This means their household income will drop by £1531 per year. They will lose an £18 every four weeks Best Start Foods payment card and they will not be entitled to the Best Start Grant early learning payment, worth £250, when their two year old turns three.
This highlights that for some families the £20 cut to UC will result in a much larger loss in overall household income.
Action is now needed
The DWPs plans to cut universal credit by £20 has been described as a “breach of the UK government’s international human rights obligations”. The primary responsibility lies with UK government to reverse this cut. However, The Scottish Government also has an obligation to progress the realisation of rights in Scotland and a statutory requirement to meet its own child poverty targets.
The cuts to universal credit and tax credit makes further immediate investment in the Scottish child payment, and other sources of support to families, even more urgent. We welcome the commitment to double the Scottish child payment as soon as possible. The crisis facing families across Scotland means that the doubling of the Scottish child payment must happen as a matter of utmost urgency and at the very least fully included in the 2022/23 Budget.
The Child Poverty Action Group (CPAG) in Scotland works for the one in four children in Scotland growing up in poverty. We collect evidence from families living in poverty and campaign for solutions to bring about a society where children have a fair chance in life free from hardship. We provide training, advice and information on social security to frontline workers to make sure families get the financial support they need.
CONTACT : Ed Pybus | Policy and Parliamentary Officer
Mobile: 07903 638 226 |Main: 0141 552 3303 | Email: [email protected]