The UK is facing a cost of living crisis, and the cost of living crisis for those with the lowest income will increase significantly in the coming months. Millions will suffer a triple blow Increases in the price of food and energy bills, cuts in benefits, and increases in taxes.In general, low-income families will see By April, the annual pressure exceeded 1,700 pounds.
So far, the most important driver of this tightening is that 1,040 pounds a year Universal Credit (UC) will expire at the end of September and will affect people’s wallets in October and beyond. Britain’s safety net is already one of the weakest In advanced economies and Britain’s own post-war history. However, this will be exacerbated by the biggest overnight benefit cut in 70 years, disproportionately hitting families in the Northeast, West Midlands, Yorkshire and the Humber.
The best way to understand the impact of UC reduction is to look at it from the perspective of the actual needs of different British families. This helps Joseph Longtree Foundation (JRF) ‘Minimum Income Standard (MIS). The most recent New Economics Foundation (NEF) The model shows that when housing price increases are cancelled, 21.4 million people, including 7 million children, will live in families that cannot afford basic living expenses.
Not only that, those who are lower than MIS are also significantly lower. Even before the impact of rising energy prices, UC cuts will allow ordinary single adults below MIS to receive only 54% of the income needed to make a living, while the average couple with two children will only receive 63% of the income. The income they need (because different family types have different median incomes, but also different levels of demand). This means choosing between necessities such as food, clothes or a warm home every week.
Using MIS as a framework, we can systematically examine the path to a stronger safety net in the UK. NEF’s new model uses a series of sample packages for reforming UC to understand their impact on different households. All models have been predicted to 2026/27, when UC is expected to be fully launched to best measure the long-term effects of different reforms. And the cost of each package is roughly the same as the increase of £20 that year (£7.5 billion in 2026/27) to compare roughly similar investment levels in the system.
In addition to the fact that the 20 GBP rise still exists, we also simulated the following non-exhaustive list of reform examples:
- Increase the amount of support provided by the family for each child by £27
- Remove the support ceiling that restricts the amount that families can receive (
Welfare ceiling and two-child restriction), and provide the main adult with a weekly salary increase of £12
Supporting elements - Decrease the rate of decline in the benefit extraction for every pound of income, from
63% to 50% - Extend the work allowance (the threshold at which the rate of decline takes effect) to all claimants and increase the value of the work allowance for those who have already applied
Reach one hour at the minimum wage
