Six million people will lose out if the Government becomes the first since the Great Depression to cut unemployment benefits during a crisis, Labour has claimed.
MPs heard that 5.8 million people are in receipt of Universal Credit (UC) while Chancellor Rishi Sunak has warned unemployment is predicted to rise to a peak of 7.5% – or 2.6 million people – in the second quarter of 2021.
Shadow work and pensions secretary Jonathan Reynolds said analysis of the Spending Review documents shows the proposed £3 billion “restart” programme, to help people who have been unemployed for more than 12 months find new work, “won’t actually get up to scale until 2022”.
He also expressed concerns about plans to remove the £20-a-week boost to Universal Credit next April, introduced in response to financial pressures associated with Covid-19.
No government since the Great Depression has cut unemployment benefits during a crisis. So how can the biggest economic crisis for 300 years be the time to do so?Jonathan Reynolds
Speaking in the Commons, Work and Pensions Secretary Therese Coffey said the UC increase will be looked at again “in the new year”.
She added that a number of schemes are already under way when responding to concerns over the timing of the “restart” programme.
Ms Coffey told Mr Reynolds: “It will take a little bit of time to contract for the long-term unemployment programme.
“But I can assure him, compared to the last financial crisis just over a decade under the Labour government, we’ve actually acted far more quickly in getting these employment contracts into place because we need to make sure people do what they can to try and remain connected to the labour market.”
Mr Reynolds countered: “Last week, the Chancellor said this was the biggest economic crisis for 300 years, and he’s right.
“So what I cannot understand is how those same Spending Review documents show the Government cutting Universal Credit next April – a £1,000-a-year cut taken from six million families just when they need it most.
“Secretary of State, no government since the Great Depression has cut unemployment benefits during a crisis. So how can the biggest economic crisis for 300 years be the time to do so?”
The Great Depression emerged in 1929 and ran into the 1930s.
Ms Coffey responded: “As (Mr Reynolds) knows, the Government did introduce a raft of temporary measures to support those hardest hit, including the furlough scheme, self-employed income support scheme and the £20 UC uplift.
“The Chancellor has confirmed the UC uplift until March 2021 and it’s right that we wait for more clarity on the national economic and social picture before assessing the best way to support low-income families moving forward.”
The Government earlier dismissed calls for statutory sick pay to be raised to ensure people who need to self-isolate can do so.
Labour’s Margaret Greenwood (Wirral West) said current statutory sick pay of £95.85 per week is too low.
Work and Pensions minister Justin Tomlinson replied: “Those required to stay at home by the NHS Test and Trace could be eligible for the additional £500 financial support for those on UC, working tax credits, employment support allowance, jobseekers’ allowance, income support, housing benefit and pension credit – and this is just part of our wider, targeted safety net.”
Another Work and Pensions minister, Mims Davies also confirmed that 5,468 work coaches have been recruited to join jobcentres across the UK, and said the Government is “on track” to meet its target of 13,500 by March.