Wed 3 March 2021

The Chancellor is pushing for a reduction in Government assistance that would have a direct impact in his back yard

The Chancellor is set to reduce support for his own constituents by £5 million if the Government does not renew the uplift to Universal Credit.

Last year, it was announced that the standard allowance for those on Universal Credit, plus the basic element in the Working Tax Credit, would be increased by £20 a week – or £1,000 a year – to help individuals to cope with the financial pressures of the Coronavirus pandemic.

However, this increase in support is set to expire on 31 March, with the Government so far failing to promise an extension or any replacement programme. In response, the Labour Party has introduced a vote in the House of Commons today, calling for the uplift to be extended – which Prime Minister Boris Johnson has instructed Conservative MPs to abstain on.

The vote is not binding, but it signals the mood of the Government towards an extension of the Universal Credit payment boost. This reportedly follows pressure from Rishi Sunak, who is wary of the cost to the UK taxpayer.

However, reducing Universal Credit support would hit Sunak’s own constituents in Richmond, North Yorkshire. The latest Government statistics from November show that 6,608 people in Sunak’s constituency are claiming Universal Credit in roughly 5,000 households, meaning that he would be stripping at least £5 million in annual support from these individuals, if he presses ahead.

Sunak’s seemingly generous response to the COVID-19 pandemic earned him widespread praise last year – leading to speculation that he could be a future leader of the Conservative Party. However, the Chancellor has been more hawkish in recent months, first refusing to extend furlough support to high-tier areas of the north of England in October, and then instituting a public sector pay freeze for non-NHS workers.

In November, the Office for Budget Responsibility predicted that Government borrowing would be £394 billon for the current financial year – a peacetime record – and Sunak has repeatedly emphasised the need to reduce the size of the UK’s debt in future years. “Our economic emergency has only just begun,” the Chancellor said during his Spending Review in November.

Yet, a second-wave of austerity is not widely popular in the Conservative Party. The internal Northern Research Group – consisting of 65 backbench Conservative MPs – sent a statement yesterday to the Chancellor urging him to retain the Universal Credit uplift, calling it a “a real life-saver for people throughout this pandemic. To end it now would be devastating”.

It is believed that this position is also held by Work and Pensions Secretary Thérèse Coffey – responsible for managing the Universal Credit programme. Several Conservative MPs are expected to rebel and support Labour’s proposition this evening. Given that Tory MPs have been instructed to abstain, Labour’s vote will gain a comfortable majority, unless the Government changes approach.

Meanwhile, some Conservative MPs have been urging Sunak to stay the course, with Bim Afolami telling BBC’s Westminster Hour that “As Conservatives, we know that work is the best way out of poverty. It’s time we reminded ourselves of that”.

As has widely been pointed out, 2.2 million people are forced to claim Universal Credit despite being in work, due to their low-pay. The Joseph Rowntree Foundation, meanwhile, has estimated that 500,000 more people will be driven into poverty, including 200,000 children, if the Universal Credit uplift is scrapped.

This stands in stark contrast to the eye-watering sums of money earned by private sector consultants during the Coronavirus pandemic. Indeed, a Government official today revealed that the Test and Trace operation is spending, on average, £1,000 a day on each of its roughly 2,300 external consultants. Compared to these sums, £20 a week doesn’t seem like too much to ask.

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