The next Prime Minister is facing calls to immediately increase Universal Credit payments to stop vulnerable people spiraling further into poverty as fuel bills rise again this winter.
The poorest in society will suffer three major blows to their income in the year to October 2022, according to a report commissioned by former Prime Minister Gordon Brown.
As well as losing £20 a week to Universal Credit, benefits are failing to keep pace with inflation – and a jump in the energy price cap is expected this autumn.
It means some families are up to £1,600 a year worse off because of the cost of living crisis – even after government help is taken into account.
Poverty expert Professor Donald Hirsch, who has written the report, says the package of measures offered by the government falls far short of what low-income households need – and that urgent measures are required.
He told Sky News that “exceptional measures” are needed, such as an “emergency increase in Universal Credit”.
“We’re living in different times than we’ve ever known, and people this winter are going to be desperate,” he said.
Liz Truss has promised to cut taxes immediately if she becomes prime ministerwhile Rishi Sunak has said he will help families by scrapping VAT on energy bills.
But Prof Hirsch said none of the candidates’ plans to cut taxes come close to compensating for the rising cost of living.
Prof Hirsch’s research suggests that an unemployed couple with two children will miss out on £1,300 a year, with larger households suffering greater losses.
That’s despite working-age households on Universal Credit and other means-tested benefits getting £1,200 in extra help – including reductions in energy bills and council tax, as well as £650 straight into their bank account.
The report warns that this flat rate approach disadvantages larger families, and Brown said: “We are facing a humanitarian crisis the likes of which the UK has not seen for decades.
“As the cost of living continues to skyrocket, families on the brink of making ends meet can’t bridge the gap.”
Writing in The Observer, the former prime minister warned failure to act risked “condemning millions of vulnerable and innocent children and pensioners to a winter of abject poverty”.
Mr Brown is urging Boris Johnson, Mr Sunak and Mrs Truss to agree an emergency budget this week – saying time is running out to update the Universal Credit payment system before the next energy price rise.
He stressed the urgency of the matter and also suggested that Parliament should be recalled if they do not.
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“Living in Survival Mode”
The report has been endorsed by 56 charities, faith communities and politicians – and also includes first-hand experiences from those affected by rising bills.
One of them is Lowri, who receives Universal Credit and cares for her father and daughter. Her food and fuel bills have doubled and she has had to sell her daughter’s bike to make ends meet.
She said: “I’ve spent the last five years living in survival mode, just surviving every day, worrying about money constantly. I’m emotionally and mentally exhausted living like this.
“It’s not living, it’s just existing. There’s just no way people are going to be able to pay all their bills, and all we do is exist to pay bills. Terrified is an understatement.”
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The projected deficits in the report are based on figures drawn at the end of 2022, and there are fears families will be in an even worse financial position when Ofgem, the energy regulator, makes its announcement about the increase in the energy price cap.
A government spokesperson said: “We understand that people are struggling with rising prices, which is why we have acted to protect the eight million most vulnerable British families through at least £1,200 in direct payments this year, with extra support for pensioners and those who claim disability benefits.
“Through our £37 billion support package, we are also saving the typical employee over £330 a year through a tax cut in July, allowing people on Universal Credit to keep £1,000 more of what they earn and cut fuel tax by 5p, saving a typical family £100.”