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Explained: The battle over UK welfare and benefits amid COVID-19 pandemic

·Business Reporter, Yahoo Finance UK
·4-min read
Old empty wallet in the hands .Vintage empty purse in hands of women . Poverty concept, Retirement. Special toning
The temporary measure, which was put in place during the COVID-19 crisis, helps unemployed and low-income workers and is set to end on 12 April. Photo: Getty

Some Conservative members of Parliament are set to vote against UK Prime Minister Boris Johnson on Monday over plans to withdraw the emergency increase to benefits for around 6 million people.

Stephen Crabb, former work and pensions secretary, and Paul Maynard, former transport minister are among those expected to vote against the government, the Financial Times revealed. The rebellion in the Commons is expected in the “low double digits.”

The opposition day debate was first triggered by Labour leader Keir Starmer after Johnson hinted last week that the universal credit benefits will soon come to an end.

The temporary measure, which was put in place during the COVID-19 crisis, helps unemployed and low-income workers and is set to end on 12 April.

It is available to people over the age of 18, in most circumstances, but under the state pension age, and with savings of less than £16,000 ($21,655). The state-paid benefit for working-age people was boosted by £1,000 a year in March (a £20-a-week increase) to support workers and those who might lose their jobs during the pandemic.

Under the current plans, around 6.2 million families on universal credit could lose out if benefits are not extended, with a further half a million, including 200,000 more children, being pulled into poverty, the Joseph Rowntree Foundation warned.

However, Johnson and chancellor Rishi Sunak are reluctant to increase benefits again due to concerns that the measures will become permanent.

The Prime Minister told MPs on Wednesday last week that he would "rather see a focus on jobs and a growth in wages than focusing on welfare".

“The best thing is to get people into employment,” he added.

In a bid to settle the row, the finance minister is said to be mulling plans to provide a one-off payment to all universal credit recipients. But this has been met with criticism as a one-off payment could trigger demands from other interest groups.

If the government is forced to make the current rate permanent, it will mean a further £6bn of annual spending. This will then have to be paid for via tax rises, cuts or borrowing elsewhere.

READ MORE: Labour attacks ‘devastating’ benefit cuts plan as Sunak ‘mulls’ £500 grant for claimants

On Sunday foreign secretary Dominic Raab told the BBC that although the measure was designed to look after the most vulnerable it was “always temporary.”

“We’ve got a March budget well before the end of the temporary uplift in universal credit, which is a chance to look at this in the round,” he said.

The coronavirus pandemic caused employment to fall at its fastest pace in a decade last year from close to record highs a year ago. Since February 2020, just as the pandemic first hit, the number of payrolled employees dropped by more than 800,000.

Meanwhile the claimant count— including those claiming unemployment- and low pay-related benefits — rose by 64,300 to reach 2.7 million. These numbers are set to exacerbate this year as Britain continues through its third national lockdown.

Claims for universal credit have also surged since the start of the pandemic due to the financial impact of the crisis, with recipient numbers increasing in the poorest towns in England.

Johnson and Sunak have been warned that removing benefits will go against the PM’s pledge to “level up” the country.

READ MORE: UK unemployment rises as universal credit claims hit 2.5 million

Last year, claims for universal credit in the most deprived 10% of areas increased by 8.5 percentage points from February to October. The average increase across all English local authorities, except London, was 6.3% percentage points.

“Instead of protecting family incomes to help secure the economy, the chancellor is winding down economic support and hitting families with a triple hammer blow of pay freezes, a cut to universal credit and tax rises,” Jonathan Reynolds, the shadow work and pensions secretary, said.

“I urge Conservative MPs to put party politics aside and vote with Labour to stop this hit to millions of people already struggling to get by.”

Chancellor Rishi Sunak is due to spell out any extension, or a new rise in universal credit, in his Budget on 3 March, where he will try also to rein in a budget deficit of nearly £400bn.

The vote in the House of Commons on Monday is non-binding and has no force in law.

WATCH: What is universal basic income?