It has been predicted that prolonging the four-year freeze to working-age benefits will “increase poverty more than any other policy” introduced by the Tory Government since 2015.
The Work and Pensions Select Committee (WPSC), a cross-party group of MPs, has received evidence showing that a family of four receiving Universal Credit will be over £800 a year worse off by 2020, when the controversial freeze is set to end, “even if both parents are working full-time on the National Living Wage”.
And analysis of figures from the House of Commons Library shows that affected households will have incomes between £888 and £1,845 lower in 2019-20, in real-terms, than they would have had if the freeze wasn’t in place.
Evidence compiled by the WPSC found that ending the benefit freeze – for all frozen benefits other than child benefit – a year earlier than originally intended would lift 200,000 people out of poverty.
“Households have seen significant actual cuts to their real income because of the various caps and freezes since 2010: a single earner couple with two children’s income will fall by 0.7% in real terms, and an out-of-work lone parent with one child by 6.7% in real terms, between 2010/11 and 2019/20.”
Witnesses told the Committee that that the main issue driving poverty and destitution “is that working-age benefits are paid at far too low a level now and have been for a number of years”.
They added: “Obviously, that has been exacerbated by the benefit freeze, so they are losing value year on year.”
The UK’s largest food bank network Trussell Trust says the only way to alleviate poverty and ease demand on food banks is to “ensure incomes, from both work and benefits, can meet people’s living costs”.
The charity recommended that the benefits freeze be lifted and benefits uprated in line with inflation, “in particular, Child Tax Credits and the Child Element of Universal Credit should be uprated in line with inflation to reflect the additional, inescapable costs upon families.”
Writing to the Work and Pensions Secretary Amber Rudd, the Committee said “the current freeze was originally designed to save £3bn… the Treasury would still make in-year savings of £2.5bn in 2019/20, even if the freeze was ended a year early.”
The latest monthly public borrowing figures show a budget surplus of £14.9bn in January 2019, £5.6bn more than the surplus in January 2018. This has led to the Committee calling on Chancellor Philip Hammond “to consider ending the benefit freeze a year early”.