One in three new Universal Credit claimants falls further into debt during pandemic, report says

The Resolution Foundation (RF) said that of the more than three million additional claimants since last March, 31 per cent had either taken out new loans or seen their existing debts increase. Polling by YouGov for the RF found that 61 per cent expected to struggle or to fall behind on their bills in the coming three months – around double the national average. The findings will add to the pressure on Rishi Sunak to extend the GBP20-a-week uplift in UC, which he announced at the start of the pandemic and is due to end at the end of March.

Many of the so-called “red wall” Tory MPs who took traditional Labour strongholds in the 2019 general election are urging the Chancellor not to cut off support to hard-pressed families while much of the economy remains shut down. Karl Handscomb, a senior economist at the RF, said that with unemployment set to rise throughout 2021, it was essential to maintain support for family incomes. “As the pandemic reaches its 11th month – a depressing duration few expected last March – the income shock from with moving onto Universal Credit has evolved into mounting debts and arrears on essential bills,” he said.

“Cutting the incomes of six million families in just two months’ time, when public health restrictions are still likely to be widespread, makes no sense politically, economically, or in terms of raising people’s living standards.” The YouGov polling found that 45 per cent of families who had begun claiming UC at the start of the pandemic reported a fall in their income of at least a quarter, while one in three – 34 per cent – said it had dropped by at least 40 per cent.

Around one in five – 21 per cent – said they had fallen behind on paying essential bills. – YouGov interviewed 6,389 UK 18 to 65-year-olds, of whom 371 were in families receiving UC.

Fieldwork was carried out online between January 22 and 26.

A Government spokesman said: “We are committed to supporting the lowest-paid families through the pandemic which is why we’re spending hundreds of billions to safeguard jobs, boosting welfare support by billions and introducing the GBP170m Covid Winter Grant Scheme to help children and families stay warm and well-fed during the coldest months.”

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