Removing £20 universal income increase could cause ‘income crisis’, says CAS

Removing £20 universal income increase could cause ‘income crisis’, says CAS

Potentially thousands of Universal Credit claimants in Scotland will find their incomes unable to match their cost of living unless the £20 increase to the benefit is retained beyond next March, Citizens Advice Scotland (CAS) has warned.

The charity analysed Universal Credit CAB cases over the summer from people in complex debt. Complex debt refers to the level of support someone needs, whether that is due to the size of their debts in comparison to their income, or the number of separate debts they have.

It found that without the additional £20 a week announced in March, 8 in 10 of these CAB complex debt clients would be in a negative budget. Instead, the additional money has reduced the numbers of these clients who are in a negative budget by more than a fifth.

A negative budget is where a debt adviser assesses that a client cannot meet their living costs.

Although 58% still face a negative budget now, 80 per cent would be in a negative budget without the extra cash.

The Chancellor announced the £20 per week increase to Universal Credit in March as part of the package of measures in response to COVID-19, but offered no further guarantees that the uplift would remain after the end of the current financial year.

Figures published last week show 474,000 people in Scotland are claiming Universal Credit.

CAS is releasing the analysis ahead of Challenge Poverty Week 2020, which begins on Monday 5 October.

Mhoraig Green, CAS social justice spokesperson, said: “Universal Credit has faced a real test during Covid 19 as millions of people applied for support, and while there are still some structural issues that must be fixed, the decision to increase the basic payment by £20 per week has clearly had a positive impact in protecting the finances of some vulnerable people.

“The uplift protected more than 1 in 5 of our complex debt clients on Universal Credit from falling short on paying their bills and meeting their living costs.

“It’s essential it’s retained permanently, otherwise there is a real risk more people on Universal Credit will face an income crisis, unable to meet their living costs, while our shellshocked economy is still dealing with the fallout of the pandemic.

“The fact that more than half of these clients still face negative budgets show wider issues in our social security system and economy, but the Chancellor was right to introduce the increase in March, and retaining it permanently will give people vital certainty for the months and years ahead.”

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