Universal credit cut will push workers into poverty, warns Tory former minister

Next month's £20-a-week cut in universal credit risks pushing working people into poverty, a senior Conservative MP has warned.

The government says the £20 top-up was always a temporary measure to help people through the pandemic.

It says recipients will be helped back into work and to earn more.

But former work and pensions secretary Stephen Crabb says the government risks repeating the mistake it made in 2015 when it froze working age benefits.

"I was part of the team that took that decision to freeze benefits - and wages didn't go up in the way that we believed they would. Levels of poverty increased," he told BBC News.

"We should seek to learn the lessons of that rather than just repeat it."

The then Chancellor George Osborne said low-paid workers would be better off despite the four-year freeze, thanks to tax changes and increases in the minimum wage.

But Mr Crabb - who was Welsh Secretary at the time - said it had amounted to a "real-terms cut" in benefits, which had been "a contributing factor to the rise of in-work poverty".

Employment reached record levels before the pandemic, but the UK also saw a significant increase in the number of households with at least one adult in paid work falling into relative poverty, according to the Institute for Fiscal Studies.

There are 5.9 million people receiving universal credit payments across the country, according to the latest government figures - almost double the three million making claims before the pandemic.

While some are seeking jobs and others are unable to work, 40% of claimants are already employed.

A growing list of Conservatives are calling for the £20 universal credit top-up - which will disappear on 6 October - to be made permanent.

West Midlands metro mayor Andy Street told the i paper he was "very concerned" about the potential impact of the cut - and Amber Valley MP Nigel Mills said the government "would be in trouble" if there was a Commons vote on it.

Labour plans to force a vote on the cut on Wednesday, but the result will not be binding on the government.

Labour's Shadow work and pensions secretary Jonathan Reynolds said: "Today, Labour is giving Conservative MPs the chance to do the right thing. They must choose between their blind loyalty to the prime minister and looking after their constituents.

"This cut will be a hammer blow to working families and will dampen our economic recovery."

The Resolution Foundation think tank said workers would have to put in an nine extra hours a week to make up for the loss of £20, once pension contributions, childcare and travel costs had been taken into account.

Catherine, a mature student training to be a primary school teacher, is a client of Pembrokeshire Action to Combat Hardship, a food bank in Stephen Crabb's constituency.

She says the prospect of losing so much weekly income is "quite scary".

"Do we put the heating on, or do we put a jumper on? Can we manage to make this week's shopping to stretch a bit further?"

Catherine is in receipt of student finance as well as universal credit, as a single parent. She says the "stereotype" that people on benefits are not making an effort, is "absolute rubbish".

"I'm doing everything I can to better my prospects for myself and my family. I've paid into the system in the past I will pay into the system in the future."

"Almost half of people on universal credit have only known this level of benefit. The idea of this being people going back to a level of benefit they were used to - that's completely false."

He suggested that introducing the £20 top-up was effectively a "recognition that the current level of working age benefits was too low".

And with 40% of people on universal credit using it to top up their wages, he feared the "very sharp" cut would hurt "people who are trying to do the so-called 'right thing' by going out to work".

"As a Conservative that is deeply problematic for me," the Preseli Pembrokeshire MP added.

A government spokesperson said the universal credit uplift had achieved its aim of helping claimants through the "economic shock and financial disruption of the toughest stages of the pandemic".

"Universal credit will continue to provide vital support for those both in and out of work and it's right that the government should focus on our Plan for Jobs, supporting people back into work and supporting those already employed to progress and earn more," the spokesperson added.