CUTTING Universal Credit could create an income crisis among the poorest households, Citizens Advice Scotland (CAS) has warned.
In March the Chancellor announced an extra £20 a week to support people claiming Universal Credit through the coronavirus pandemic – but this was only introduced as a temporary measure to be in place for 12 months.
Now CAS says if this extra cash is not retained beyond March 2021, thousands of claimants in Scotland will find their incomes unable to match their cost of living.
The consumer organisation analysed Universal Credit CAB cases from people in complex debt, which refers to the level of support someone needs taking into account the amount owed against their income.
They found without that additional £20 a week, eight out of 10 CAB complex debt clients would have a “negative budget”.
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Currently 58% face a negative budget – but if the cash boost is not extended, this figure will rise to 80%.
Mhoraig Green, the social justice spokesperson for CAS, said the increased Universal Credit payments have “clearly had a positive impact in protecting the finances of some vulnerable people”.
She went on: “The uplift protected more than one in five of our complex debt clients on Universal Credit from falling short on paying their bills and meeting their living costs.
“It’s essential it’s retained permanently, otherwise there is a real risk more people on Universal Credit will face an income crisis, unable to meet their living costs, while our shellshocked economy is still dealing with the fallout of the pandemic.
“The fact that more than half of these clients still face negative budgets show wider issues in our social security system and economy, but the Chancellor was right to introduce the increase in March, and retaining it permanently will give people vital certainty for the months and years ahead.”
The Joseph Rowntree Foundation also wants to see the temporary increase made permanent. Modelling by the organisation shows around 16 million people across the UK live in households which will face an overnight income loss equal to £1040 if the extra cash is withdrawn.
They say 700,000 more people would be driven into poverty, while 500,000 people already living in poverty will be pushed into deep poverty. This measure means a person is more than 50% below the poverty line.
Now 50 charities, food bank providers, housing organisations, benefit advisers and disability groups have warned the Chancellor that if the “lifeline” £20 is cut he risks pushing more people into poverty.