The North East case for maintaining the £20 Universal Credit uplift

Author - Tom Kennedy

Date published:

As part of the government’s financial support package during COVID-19, Universal Credit payments for nearly all claimants have been temporarily increased by £20 per week, in order to provide additional support for those who lost their jobs and are finding work in the pandemic-affected economy. Along with the furlough scheme, this increase to Universal Credit payments is due to expire at the end of September this year, as the Chancellor charts a path towards more sustainable public finances, following record borrowing during the pandemic.

With the uplift set to end, there is now an ongoing campaign for it to be retained which includes cross-party MPs, charities, think-tanks and businesses organisations, including the North East England Chamber of Commerce. There are a number of arguments for retaining the uplift made by different organisations, but the North East stands as one of the regions with the most to lose by the coming changes. This is why the Chamber recently signed a letter asking Government to maintain the £20 uplift, along with the Bishop of Durham, North East Child Poverty Commission, Voluntary Organisations’ Network North East (VONNE), Northern TUC, Youth Focus: North East, NE Youth, North East & North Cumbria Child Health and Wellbeing Network, Citizens Advice and Children North East.  

The pandemic has had a huge economic impact up and down the country, but the proportion of the population in the North East currently claiming Universal Credit is higher than the national average. Across the entire of the UK, 5.6% of the population were claiming Universal Credit per the most recent Labour Market Statistics release from the Office for National Statistics. In the North East, this figure is 6.3% meaning that the drop in support will have a disproportionately larger impact on this region than in other areas of the country. With 9.3% of the total population currently claiming Universal Credit, Middlesbrough has the 8th highest claimant count of all local authorities in the country. The macro-economic impact of the end of the uplift, will be approximately £5 million a week being taken out of the regional economy. There is little doubt that this will reduce total demand across the region, damaging local businesses and their recovery from COVID-19. You will struggle to ‘level up’ regions such as the North East, by taking out a greater proportion of money from the region than you do from wealthier areas.

Research carried out by the Centre for Microsimulation and Policy Analysis (CeMPA) concluded that failing to maintain the uplift will increase the overall UK poverty rate and mean over 700,000 people will see their incomes fall below the level corresponding to ‘relative poverty’ in the UK. The impacts of experiencing poverty are long-lasting and significant. They include lower educational attainment and career prospects, as well as lower general health outcomes. We also know that the North East had the joint-highest poverty rate and the second-highest child poverty rate in the country, before the pandemic arrived. These pre-existing inequalities risk dealing permanent damage to our region’s citizens and stalling a post-COVID economic recovery, and support to avoid ever-more people entering poverty should be a Government priority.

With the pandemic wreaking economic havoc over the past year, the uplift in Universal Credit has provided people with an increased level of support while they find new work, and will continue to do so throughout the recovery. Pulling that increased level of support and removing valuable funds from the regional economy, before the economy recovers to its pre-pandemic levels, jeopardises the recovery itself. This risks more people falling into poverty and failing to find work, more so here in the North East than in wealthier parts of the country. In the long term, measures that were implemented to address the pandemic and its economic impacts can perhaps be re-examined, but for now, the argument to maintain the £20 uplift, especially in the North East, is clear.

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