The financial outlook is poor for 83% of UK households who receive Universal Credit this Christmas, finds researchers at the University of Bristol.
The report found that households that were often in a difficult financial situation before the pandemic have seen their situations deteriorate further over the past 18 months.
Nearly three times as many households in receipt of Universal Credit struggle to pay for food and/or bills compared to all working age households, while twice as many have to borrow to pay for essentials.
The report, titled Bleak expectations, found that for every household that saw its financial situation improve since the start of the pandemic, two households saw their financial situation get a little or a lot worse.
The picture is especially stark for Universal Credit recipients, with seven in ten households seeing their financial situations get worse even before the £20 Universal Credit cut took effect.
The government’s Autumn Budget saw two policies announced to benefit low earners, including an increase in the national living wage and changes to Universal Credit. However, the researchers estimate that three-quarters of families on Universal Credit will lose more from the withdrawal of the temporary £20 a week uplift than they gain from the Budget changes.
Lead Author, Professor Sharon Collard, Chair in Personal Finance at the University of Bristol, said: ‘Whilst Christmas is back to normal for many people, a quarter of households are really struggling and see no prospect of things getting better. There are seven million families who took a financial hit during the pandemic, their savings were used up and many used credit cards to pay for essentials such as food and bills. They do not see things getting better for them, and their ability to recover is being undermined by their poor financial position.’
Mubin Haq, CEO at abrdn Financial Fairness Trust, who commissioned the report, added: ‘Today’s report paints a bleak picture for those reliant on Universal Credit. Even before the £20 a week cut, the majority had seen their financial situation deteriorate during the pandemic. Now they see a grim future ahead of them, with government measures in the latest spending review failing to provide any reassurance. We find too many are unable to pay for food and other daily essentials and faced with rising food and fuel prices, those on Universal Credit feel their finances will decline even further this winter. The holes in our safety net need fixing if we are tackle the problems caused by rising inequality and make Britain financially fair for everyone.’
Photo by Liv Bruce