Hammond acts to soften the blow of Universal Credit

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THE Government will spend £1.5 billion in an effort to ensure that new Universal Credit claimants do not fall into penury while waiting for their first benefits payment.

The announcement came during the Budget, delivered by the Chancellor of the Exchequer, Philip Hammond, on Wednesday.

Responding to growing pressure from charities and church leaders, including bishops in the House of Lords, Mr Hammond said that the seven-day waiting period that followed an application would be scrapped, and that one-month advance loans would be available within five days of applying. These and other measures will cost a total of £1.5 billion, he estimated.

Only last week, bishops in the House of Lords had pressed the Government to reform the welfare state, arguing that the delays and the benefits freeze were causing suffering for poorer families.

The Bishop of Durham, the Rt Revd Paul Butler, related “heart-breaking” stories about the impact of delays for claimants of Universal Credit.

One young mother, who relies on a Hartlepool church to feed her each week, reported that she waited seven weeks for her first Universal Credit payment. “She told one of my clergy that she took paper napkins from McDonald’s because she was unable to afford toilet paper. Can any of us here imagine the stress and indignity of such a situation?”

People forced to wait for a month or more often were forced into costly personal debt or rely on loan sharks, Bishop Butler warned. And the decision not to increase Universal Credit in line with inflation would push a further 400,000 children into poverty, the Joseph Rowntree Foundation had said.

Finally, it was an affront to Christian values to limit Universal Credit payments to only the first two children. “Children are a blessing and not a burden. We hold that the third, fourth, or fifth child is no less precious than the first,” Bishop Butler said.

Mr Hammond said during his Budget speech that, while Universal Credit was a “long- overdue and necessary reform”, there were “genuine concerns” about how it was working, which was why he had decided to rework the system.

The Bishop of Birmingham, the Rt Revd David Urquhart, who convenes the Lords Spiritual, welcomed the news that changes to Universal Credit “will help to reduce the financial strain on new claimants”. The Chancellor could have gone further, however. The planned cuts to the work allowance would “still push many low income working families into poverty”. (See Bishop Urquhart’s full response to the Budget below).

Matthew Reed, chief executive of the Children’s Society, said that the changes did not go far enough. “Cutting [the waiting period] by a week and extending advance payments — which immediately get families into debt — simply does not go far enough and it will leave too many parents desperately trying to find a way to feed their children and pay for other essentials.

“We believe that the longest anyone should have to wait to receive their entitlement to Universal Credit is two weeks and that, from then on, claimants should get payments weekly if that’s what they want.”

There was also no response from the Chancellor to growing pressure to end the freeze on benefits. As inflation continues to rise, many campaigners have called on the Government to abandon the four-year freeze on most in-work benefits, which began last year.

The Bishop of St Albans, Dr Alan Smith, secured a debate in the House of Lords last week to press his case. “We are at risk of failing a substantial number of children and some of the most needy people of this country,” Dr Smith told peers.

Instead of increasing welfare spending, the largest reforms mentioned in Mr Hammond’s Budget concerned housing. Stamp duty was abolished for first-time buyers on homes worth up to £300,000, and the Government will now spend £44 billion on support for more housing, through loan guarantees and by boosting construction skills over the next five years.

Three billion pounds will be spent preparing for Brexit, an extra £2.8 billion will go to the NHS in England to tackle extra pressures during the winter, and £10 billion will go into capital investment in hospitals.

The speech contained warnings about the state of the economy: GDP growth is now expected to be only 1.5 per cent this year, rising to just 1.6 per cent by 2022.

Nola Leach, the chief executive of the Christian lobby group CARE, accused the Chancellor of ignoring single-earner families and urged him to introduce a transferable marriage tax allowance.

Simon Kirkland, a political adviser to Christian Aid, decried the measures Mr Hammond announced on tax avoidance as “too little, too late”, and called for full transparency from multinationals and British overseas territories.

“The Government is tinkering around the edges of tax avoidance, and shying away from the kind of change that could prevent the UK and developing countries from losing billions of pounds in revenue each year,” he said.

 

Full response to the Budget from the Bishop of Birmingham, the Rt Revd David Urquhart, Convenor of the Lords Spiritual:

“The Chancellor’s Budget has gone some way to deal with the immediate problems facing our economy, housing and NHS, but it could have gone much further to help the many at the sharp end struggling to get by.

Across the country churches support and are in touch with those who experience poverty or financial difficulty as a result of low pay, illness, or debt. The Budget statement provided an opportunity to make a difference to the lives of the most disadvantaged at a time when the cost of living is rising. The country faces substantial financial challenges and the growth forecast downgrades are worrying. But whilst the Chancellor has limited room for manoeuvre, there is more that could have been done to alleviate the situation of those who are struggling to manage. Deficit reduction is important, but should be achieved in ways that promote fairness, generosity, and sustainability. Bishops frequently raise these issues in the House of Lords and in meetings with ministers, and will continue to do so.

“The country is in the midst of a housing affordability crisis, which is deepening household debt and feeding a sense of intergenerational unfairness. We all need to think big in response to this. The target for reducing rough sleeping is right, and I welcome the investment in pilots in my own region of the West Midlands. Help for first time buyers is also very welcome, as is the extra investment to increase housing supply and the removal of unnecessary barriers to housing development. But they need to be matched with attention to other policies that might drive a rise in homelessness. More can be done to improve access to genuinely affordable housing for families on low incomes, not only through investment in social housing, but going further than the Chancellor announced to help those on low incomes in private rented housing. This would help prevent the rise in rent arrears and numbers of vulnerable homeless people across the country, and would complement the Government’s Homelessness Reduction Bill and other policies to reduce rough sleeping.

“Like many others in the church, I strongly support the principle of simplifying the benefits system and encouraging people into work through Universal Credit, but the overall system will need to be properly implemented and funded if it is to retain its credibility. The reduction in the waiting time and other changes to Universal Credit are welcome and will help to reduce the financial strain on new claimants. Though the waiting period could have been cut further, I hope that what was announced today will have an immediate effect, not least on the number of food bank referrals. Looking ahead, existing pre-planned cuts to the work allowance will still push many low income working families into poverty. This is why so many had called for these cuts to be reversed in today’s Budget and it is disappointing that the Chancellor has not acted.

“I welcome the projected rise in employment. However children living in working families comprise two-thirds of those considered to be in relative poverty and those rates will only rise for low income and workless families unless necessary changes to Universal Credit and other benefits are introduced.

“The Chancellor mentioned the importance of helping families cope with the rising cost of living. It is disappointing that he did not take the opportunity to review the freeze in working age benefits. Rising costs have already eroded the living standards of low income families who rely on benefits and tax credits to top up their earnings, and many more are likely to fall into poverty if no adjustment is made. Children’s benefits at least ought to be given the same protection from rising prices as is given to the basic state pension.

“Tax avoidance by multinational companies affects the poorest countries in the world, as well as funds available for schools, hospitals and other public services here in the UK. The Government already has the power to require UK-based multinationals to publish their tax arrangements in every country. Now more than ever we need a corporate tax system that promotes trust and accountability here in the UK, and justice and proper investment overseas.

“The extra funding emphasis on research and development and on transport to connect city regions outside London is welcome, and I look forward to further details, including for my own West Midlands region, in the forthcoming Industrial Strategy document.”

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