Rishi Sunak called to act as Covid ‘recovery threatened’ for UK with benefit cut

Paul Scully grilled by host on Universal Credit cuts

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Various organisations have teamed up to warn the UK’s Covid recovery is being “threatened” due to the cut to Universal Credit and the freezing of Local Housing Allowance, and many Britons will be adversely affected by the changes.

Charities and housing associations, including the Big Issue Ride Out Recession Alliance, Crisis, The Mortgage Works, Nationwide Building Society, the National Residential Landlords Association, Propertymark, StepChange Debt Charity and Shelter, are bringing awareness to the impact on the public.

In a joint statement, the group called for the Government to rethink its proposed changes to the benefit system.

The group said: “The UK Government must complete and publish a full assessment of the impact on renters of their decisions to freeze Local Housing Allowance and cut Universal Credit, which risks pushing many households into poverty, problem debt, and homelessness.

“In the wake of the pandemic, we saw bold and swift action from the Government to prevent a housing debt crisis including restoring Local Housing Allowance rates to the 30th percentile of market rents and increasing the Universal Credit Personal Allowance.”

In their argument, the group highlighted the Department of Work and Pensions’ (DWP) figure that the number of private rented households in receipt of the housing element of Universal Credit increased by 107 percent between February 2020 and February 2021.

As of February 2021, over 55 percent of these households (858,606) have a gap between their housing cost support and the rent they had to pay, which lead to 858,606 households being affected, according to statistics from the DWP’s StatXplore website.

Furthermore, the group explained why cutting and freezing certain benefits at the same time would lead to renters being hit hardest financially.

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“The UK Government has confirmed that where such shortfalls exist, the median amount is £100 a month. This points to a need for continued support for families and individuals to cover the cost of rents,” they explained.

“Yet since April this year, Local Housing Allowance has been frozen in cash terms, and later this year, Universal Credit will be cut by £20 a week.

“Whilst the Institute for Fiscal Studies has described changes to Local Housing Allowance as ‘arbitrary and unfair’ we have seen no assessment from the UK Government of the impact either of these policies will have on the capacity of recipients to cover rent payments.”

Representing multiple stakeholders over the issue, the organisations’ outlined what action needs to be taken by Mr Sunak to address the impact on renters.

They said: “As organisations representing landlords, letting agents, tenants, people facing homelessness, and debt advice services, we are united in calling on the UK Government to complete and publish a full assessment of the impact of both of these policies on the ability of renters to meet their housing costs.

“We believe that the UK Government should reverse its decisions to cut Universal Credit and to freeze Local Housing Allowance.

“To apply policies like these without doing any meaningful impact assessment is, we argue, lacking the necessary foresight and consideration of the impact they will have on people’s security of tenure and well-being and for many will threaten their chance of recovery.”

Back in April 2021, the Government increased Universal Credit payments by £20 a week to help those struggling financially early into the pandemic.

During his Budget announcement earlier this year, Rishi Sunak announced the uptick on Universal Credit would only last up to the end of September.

As part of the November 2020 Spending Review, it was announced that Local Housing Allowance rates would be frozen.

In reaction to the latter, the Institute of Fiscal Studies said: “It is entirely coherent to decide that the state should reduce its support for low-income renters but doing it in this fashion is arbitrary and unfair, and its consequences will only become more bizarre over time.”

Speaking to Express.co.uk, a Government spokesperson said: “Universal Credit has provided a vital safety net for six million people during the pandemic.

“The temporary uplift is part of a £400billion support package and has been extended beyond the ending of restrictions, while we will be maintaining nearly £1 billion of additional housing support through Local Housing Allowance rates.

“Our focus now is on our multi-billion pound Plan for Jobs, which will support people in the long-term by helping them learn new skills and increase their hours or find new work.”

Furthermore, the department emphasised that the Government has taken “unprecedented action” during the pandemic to support renters, including by increasing Local Housing Allowance.

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