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Wednesday, September 1, 2021
The Government plans to remove the £20 per week uplift for those receiving universal credit from October. Introduced to counter the stresses and strains of the pandemic its removal is being seen by many as premature and potentially catastrophic for those who’ve relied on the buffer since its introduction. In this brief article we evaluate the impact of this reduction in benefit and what can be done to support those in work earning a minimum wage.
One of the first Covid-19 support measures introduced to help members of the public on low incomes was the £20 per week uplift in universal credit. 18 months after its much-welcomed introduction the Chancellor Rishi Sunak has confirmed, like the furlough scheme, it will be removed.
Whilst it’s appreciated that support for employers such as the furlough scheme could not carry on forever and a suitable end point was required, the removal of the universal credit uplift is a pill less easy to take for those continuing to struggle to make ends meet.
Why is this important to note for those managing staff?
It’s estimated that some 40% of universal credit recipients are in gainful employment, around 2.3 million individuals. These are workers earning a minimum wage and finding it hard to meet the costs of living.
Rental costs have risen due to the shortage of suitable properties, food has risen in price due to the disruption in the supply chain and fuel prices are on the rise with petrol, gas and electricity all increasing.
This cocktail of cost is hitting all households but those on the lowest income will naturally be impacted hardest of all. The Joseph Rowntree Foundation, a charity that campaigns against poverty, advised that as many as a 1/3 of working age families across all areas of the country will fall into debt as a result of the reduction in universal credit.
Of course, there’s no suggestion that employers should feel obliged to fill the benefit gap but awareness of the situation and how it may impact the performance and wellbeing of staff is important to note.
Money matters can be very personal, private affairs for most of us and that’s as true for those on the lowest salary as it is of the top earners.
What action can we take if we have staff on a low wage?
Communicate with ALL staff advising of your awareness of the reduction in universal credit.
Provide a confidential line of support either with a suitably trained member of HR/ finance and/or access to support organisations such as
Citizen’s Advice – https://www.citizensadvice.org.uk/debt-and-money/budgeting/budgeting/get-help-with-bills/
Step Change – Charity specialising in debt issues https://www.stepchange.org/debt-info/debt-and-my-career.aspx
In addition, offer reassurances on the opportunity to discuss any concerns but be clear on what you are and are not willing to do.
Consistency – whatever you decide to do to support a member of staff through this challenging situation remember the importance of being “fair to all” and not being selective over any direct assistance. Examples being; increasing the pay or hours of a member of staff to overcome the shortfall.
Whatever you do, the most important step is to let staff know that you are aware of the changes and open to help through signposting and being available to support their wellbeing and work with them to reduce the stress of the situation.
Universal credit was introduced by the Conservatives in 2013. The main purpose of implementing a single payment system was to streamline the benefits process. Instead of a variety of means-tested benefits like housing and income-based job seeker’s allowance, it wrapped them into one single monthly payment. Access to universal credit is via an online portal where applications and amendments can be actioned, statements read, and advisers contacted via message boards.
Written by Robert Gibson, Senior Consultant - Employment Law
Robert is a Senior Consultant at Samuel Phillips and specialises in employment and business matters. He advises in relation to employment and shareholder disputes, including pensions and related issues.
