The recent focus on additional funding for health and social care has failed to overshadow another government policy decision with significant implications for our nation’s health.
The £20 a week increase to Universal Credit rates, announced on 20 March 2020 in response to the pandemic, aimed to provide greater financial support to families in that uncertain time. Set to be phased out in October, the reduction in support for around 5.5 million families would represent the largest overnight cut to benefits since World War II.
For individual families, the relative scale of the £20 per week cut will vary depending on circumstances. For a couple with one child, it represents 10% of their basic entitlement. For a single person aged under 25, it represents 25%. Basic entitlements would be reduced to the equivalent of only £117 per week for a couple where at least one person is over the age of 25, and as little as £59 per week for a single person under the age of 25 (these amounts do not include other elements that provide support with specific costs such as housing or childcare).
Our analysis has shown how these cuts are concentrated in local authorities in England with lower healthy life expectancy. Across all working age people, the cut to Universal Credit equates to an average income fall in the 10% of areas with the lowest healthy life expectancy that is twice that in the 10% of areas with the highest healthy life expectancy (equivalent to £207 v £105 per person per year). This is because a greater share of families tend to receive Universal Credit in areas with poorer health. Healthy life expectancy in the 10% of areas with the highest share of people receiving Universal Credit is 7.8 years lower than that in the 10% of areas with the smallest share of recipients (59.8 years v 67.6 years). The cut to Universal Credit is set to widen health inequalities rather than see them “level up.”
It is well known that living in poverty is bad for your health. Insufficient resources can leave people unable to afford the essentials—such as a warm home or enough food—damaging their health. But poverty can also introduce stress and strain into everyday life, from concerns about that lack of resources, to being unable to participate fully in society. Such stress can contribute to a higher allostatic load, which in turn is associated with multiple chronic diseases. For children, research suggests that any exposure to poverty in childhood is associated with worse health outcomes. Joseph Rowntree Foundation have estimated that scrapping the increase will push 500,000 people into poverty, including 200,000 children.
While some may argue that this support was only ever temporary, the pandemic, and associated economic uncertainty is far from over. Even if further significant increases in restrictions are avoided, many poorer families have been more likely to build up debt trying to cope through the pandemic. The mixture of a cut to income and debt hangover could lead to significant financial difficulty. The government may have a Plan B in their Winter Plan to reduce spread of covid-19 but there is no sign of one to alleviate a worsening of incomes. A focus on increasing employment or work hours won’t be sufficient.
And that is not to mention that pre-pandemic, UK benefit rates were some of the least generous across western European countries representing only 12% of the average wage, compared to 59% and 68% for Germany and France respectively. To ensure that everyone has the opportunity to live a healthy life it is vital that the social security system can provide an adequate standard of living. As research by the Centre for Research in Social Policy has shown, the pre-pandemic system has left many families, whether working or not, with an income below what is required for a minimum acceptable standard of living. Keeping the £20 uplift would be a step in the right direction towards providing a more adequate safety net.
There is perhaps a sense of déjà vu with the incumbent government intent on overseeing a significant cut to benefits received by millions of working age families and a party conference season likely to be dominated by talk of the cuts. It was only in 2015 that the then Chancellor George Osborne u-turned on his plans to cut Working Tax Credit (part of the system Universal Credit is replacing). However, this time, the crunch point is set to happen at the end of this month and the total cut to spending—considered over a full year—is almost twice as large. Action is needed much sooner.
There is strong public support for making the increase permanent. Our polling has shown that 51% of people support the move, while only 20% outright oppose it. Among Conservative voters, 40% support making the uplift permanent with only 33% against. And government finances have been improving beyond expectations earlier in the year, potentially providing the funds to maintain the £20 increase. Making the uplift to Universal Credit permanent would mean greater protection for incomes in areas with the worst health. Despite the Health Secretary recognising the need to address health inequalities to level up the economy, this cut runs counter to the task of levelling up health and would leave poorer areas further behind.
David Finch, assistant director of our Healthy Lives team at the Health Foundation.
Competing interests: none declared.