130,000 Londoners will be in poverty if Universal Credit uplift ends - Essex research shows

New research by University of Essex reveals the impact of removing the £20 weekly uplift to Universal Credit.

• Research by the Centre for Microsimulation and Policy Analysis at the University of Essex shows that the plan to end the uplift to Universal Credit and Working Tax credits at the end of the month will plunge 130,000 more Londoners into poverty – hitting some of the most disadvantaged groups
• More than 1m Londoners are on Universal Credit
• Across the country the poorest people will see their incomes reduced by five per cent, with fuel bills also set to rise
• Retaining the uplift and removing all benefit caps would keep 70,000 London children out of poverty

The Mayor of London, Sadiq Khan, has urged the Government to extend the uplift to Universal Credit and Working Tax credits to prevent 130,000 more Londoners being plunged into poverty.

The £20 uplift is due to finish at the end of September and new research has exposed the full extent that this cut will have on the poorest Londoners, with the rise in fuel bills set to impact even further. Last month, more than 1m Londoners were on Universal Credit.

The research, by the University of Essex and commissioned by City Hall, has found:

• Withdrawing the £20 a week uplift to Universal Credit and Working Tax credits will put 130,000 more Londoners into poverty, with some of the most disadvantaged groups, including 60,000 lone parents, being hardest hit.
• The number of Black Londoners living in poverty would grow by eight per cent compared to six per cent for all ethnic groups
• The poorest 10 per cent of Londoners will be the hardest hit with an 8 per cent decrease in their incomes.
• London will be worse affected than the rest of the country, but the whole of the UK will be poorer as the poorest 10 per cent of people will see their incomes cut by five per cent.
• Keeping the £20 a week uplift to Universal Credit and Working Tax credits and going further by removing all the benefit caps would cut child poverty in London by 10 per cent, keeping more than 70,000 children out of poverty.

The increase was brought in by the Government to help households deal with the impact of COVID-19 and has prevented many thousands of Londoners from falling into poverty. The Mayor is calling on Ministers to continue this lifeline, and go further by removing all benefit caps to help cut poverty in London and across the UK and extend the £20 increase to legacy benefits – including Employment Support Allowance, Jobseeker’s Allowance and Income Support - to benefit Disabled Londoners.

The furlough scheme is also due to stop at the end of September, and a rise in unemployment from those no longer supported by the scheme is expected to result in even more people falling into poverty

There are already 531,000 fuel poor households in London, and with the price cap on standard tariff energy bills set to rise next month and a sharp rise in gas wholesale costs, that number could increase significantly

Funding has been made available for heating and insulation improvements through the Mayor’s Warmer Homes programme. The Mayor has also provided nearly £10m to the London Community Response, which is funding voluntary and community organisations providing ongoing support to low-income Londoners as well as enabling Debt-Free London’s debt advice service to offer support 24 hours a day, seven days a week. The Mayor has pledged a further £150,000 to support food partnerships across London to take action to address food insecurity and continues to lobby Government to better support those in greatest need.

The Mayor of London, Sadiq Khan, said: “The Government’s decision to increase Universal Credit and Working Tax credits enabled many Londoners to make ends meet during this incredibly challenging period. Cutting this support now would have a devastating impact on hundreds of thousands of Londoners, on top of the forthcoming rise in fuel bills.

“With so much talk about ‘levelling up’, we must not forget that our capital has some of the most deprived communities anywhere in the UK and ending the uplift will hit many Londoners hard.

“I urge Ministers to do the right thing – to not only retain the uplift, but go further and remove the benefit cap to help cut poverty in London and across the country.”

Matteo Richiardi, Professor in Economics, & Director of Centre for Microsimulation and Policy Analysis, said: “The £20 weekly uplift was introduced to fight the Covid crisis, but proved effective against poverty more generally. We should not dismantle what works well. If the uplift is cancelled, one million people and 450,000 children in the whole of the UK will be pushed back into poverty. These figures include 380,000 lone parents / children with lone parents, 180,000 living in households with a couple and two children; 205,000 living in households with a couple and three or more children, and over 150,000 living in households with at least one disabled person."