Rishi Sunak said in his Budget speech that the benefit uplift introduced last April to mitigate the impact of coronavirus on household finances, which was due to end on 31 March, will remain in place until September.
He said working tax credit claimants would receive equivalent support over the next six months through a one-off payment of £500, due to the way that system works operationally.
Around 446 people were still making new claims every hour in the first week of 2021, and a total of 4.5 million people have made a claim for the benefit since the start of the public health crisis.
The decision to extend the extra benefit support is welcomed by many, but there are concerns that six months is not long enough, particularly as at that point the furlough scheme will have ended and unemployment is expected to be near its highest.
Sir Keir Starmer, the Labour leader, accused Mr Sunak of “deferring the problem”, saying: “If this had been a Budget to rebuild the foundations it would have fixed our broken social security system.
“Instead, the chancellor has been dragged kicking and screaming to extend the £20 uplift in universal credit – but only for a few months.”
Emma, a universal credit claimant from Kent, told The Independent that while she was relieved the extra £20 per week would continue beyond March, six months was not long enough to give her family financial stability.
Her husband, a wine and beer wholesaler, was put on furlough last March and – apart from two months between September and December – has been out of work and on 80 per cent of pay since.
Emma said he was hoping to return to work in June, but she explained that even if he is able to, this would only give the family two months to “try to get back on top of things fully”.
“The way prices have ramped up, plus the winter we’ve had, we’re going to be playing catch-up for a while before we can say, ‘Right, we can deal with this now,’” she added.
Shadow chancellor says universal credit should be replaced
“My kids are going back to school this month so I’ve had to buy them new school uniforms – that’s another extra cost that has already put us back this month.
“I am worried. It’s still going to be a strain, and half of the trouble is the not knowing, it’s the uncertainty of everything.”
Carrie, a qualified librarian from Brighton who lost her part-time job in a university library in November, said that even with the current £20 uplift, she was struggling to get by.
“Those of us who have lost their jobs during the pandemic have been unable to continue paying their bills or buy food with universal credit because it just isn’t enough,” she told The Independent.
Carrie, 35, has been relying on food banks despite the weekly £20 uplift
Asked how she felt about the chancellor’s announcement of a six-month extension, the 35-year-old said: “I am terrified about how I’m going to cope because I’m already not coping. I’ve been relying on the generosity of friends, food banks, and quite literally bartering with my debtors. I cannot lose another £20 a week.”
Experts also highlighted that the 2.2 million people on legacy benefits – most of whom are sick or have a disability – did not receive an uplift at all, despite the fact that many are struggling to afford basic essentials during the pandemic.
Kevin Watkins, chief executive at Save the Children, said he was disappointed that the uplift would continue for “only another six months”.
“While the extension will provide some help for families in the short term, children and their struggling parents across the UK will continue to face the prospect of having their incomes slashed in a few months’ time – just as furlough is ending, when people are most at risk of losing their jobs,” he said.
“It also provides no support to the 2 million people receiving so-called legacy benefits, who missed out on the first benefits uplift and have been left to struggle throughout this crisis with no additional help.
“This pandemic is far from over, and we know that families need long-term support that allows them to plan and budget effectively.”
Lisa Scullion, professor of social policy at the University of Salford, said the extension was welcome, but that it was “clear that for many people, this is just not going to be enough”.
She added: “And what about benefit claimants who didn’t receive the increase, such as those on legacy benefits? In our research, they were most likely to have experienced some of the more severe financial strains.
“Keeping the £20 uplift as a permanent measure and extending it to all benefit claimants is vital. But without addressing fundamental issues about payment levels, the system will continue to leave people struggling.”
Frontline staff and volunteers at Citizens Advice have supported more than 375,000 people with one-to-one advice on universal credit since last March.
Alistair Cromwell, acting chief executive of the charity, described the six-month extension as a “stopgap” that “kicks the can down the road, only to leave millions facing a financial cliff edge in the autumn”.
“We urge the government to think again. The universal credit uplift must be kept for at least a year to help people pick up the pieces from this crisis,” he added.