RISHI Sunak is being urged to introduce an uplift to Universal Credit to prevent people falling into destitution this winter, with warnings it would be “extraordinary” to suggest the country cannot afford to boost financial support for the vulnerable.
The call comes ahead of the unveiling of the autumn statement this week, which was delayed following the chaos of his predecessor Liz Truss’s disastrous mini-Budget.
Chancellor Jeremy Hunt has said he will make “eye-watering” decisions to fill a so-called black hole in the nation’s finances, suggesting painful public spending cuts and tax hikes are on the horizon.
But the National Institute of Economic and Social Research (NIESR) has warned this will only risk more economic pain and the Government should increase borrowing instead and ensure support to the hardest hit households.
The SNP has called for the introduction of new tax measures which it said could raise billions of pounds without “hammering those already struggling to make ends meet”.
Among the measures the NIESR suggests includes a variable price cap to cut energy bills for lower-income households, rather than the current price cap which benefits wealthier households the most, along with a £2 billion support fund to help with housing costs.
The charity has also called for an uplift to Universal Credit to be introduced at a higher level than the extra support of £20 per week which was introduced during the pandemic – and subsequently taken away.
Speaking at a press conference ahead of the autumn statement, Professor Adrian Pabst, deputy director of NIESR, said: “We are proposing a Universal Credit uplift of £25 per week, for at least 12 months which would cost £2.7bn.
“Because otherwise a lot of the people will slide into destitution – destitution being extreme poverty where you cannot afford the most essential necessities – food, clothing, energy and so on.
“Those two things together – the housing support fund and the uplift – would only cost £4.7bn, that is 0.2% of GDP. And it seems extraordinary to suggest that this country cannot afford 0.2% of GDP to help the most vulnerable.”
Campaigners have backed calls for the Universal Credit uplift and warned more had to be done.
Peter Kelly, director of The Poverty Alliance, said: “This present cost of living crisis is part of a decades-long injustice where wages have been squeezed and our social security deliberately cut time and time again.
“Last year, the UK Government decided to cut Universal Credit by £20 a week – robbing people of essential support just when they needed it most and threatening to condemn 800,000 to poverty. At the very least, the new Chancellor must commit to raising all benefits in line with inflation in the autumn statement.
“But he can do much more. An uplift of £25 a week seems more than modest given the circumstances people are facing this winter, especially because we know that the Government help to date simply won’t cover people’s rising costs.”
John Dickie, director of the Child Poverty Action Group in Scotland, said: “There is no question that the Chancellor’s number one priority must be to prevent poverty and destitution. Children are the most likely to be pushed into poverty by the current crisis so he must also focus on restoring the value of family benefits – starting by scrapping the two child limit and boosting child benefit with a £20 uplift.”
SNP shadow chancellor Alison Thewliss warned that with a recession looming and an “out of control” cost of living crisis, the UK Government must deliver “real and targeted support” this week to protect households and businesses.
As well expanding Sunak’s windfall tax scheme to include all firms with excess profits, the SNP called for the introduction of a new tax for when firms buy back their own shares from the marketplace to increase demand and price, a practice which was illegal until 1981. A 1% tax on share buybacks – similar to that recently introduced in the US – could raise £225 million in a year and if it was a 25% tax it could raise £11bn a year, the party said.
Another measure of scrapping the controversial non-dom tax status could raise more than £3.2bn each year, it added.
Thewliss said: “If the UK Government actually made the right economic choices then some of the most vulnerable in society could be protected and so too could public services from swingeing cuts.
“The looming threat of austerity 2.0 is a pernicious Tory political choice – not an economic necessity.
“The Chancellor must abandon those dangerous plans and instead set out key tax policies that will protect struggling households and businesses.”
