Stepping back from the cliff edge

Together we can build an alternative to universal credit

What does it feel like to fall off a cliff? We’ve had 25 of our members commit suicide in the last 18 months, we fear more this winter.” 

Jennifer Griffiths, co-director of Excluded UK, gives a stark warning of what’s to come as the government makes the biggest overnight cut to social security since the second world war with the end of the £20 Universal Credit uplift, and ends the furlough scheme.

In Looney Tunes cartoons, when Wile E Coyote jumps off a cliff, there’s usually a few seconds where the character is suspended in mid-air with his legs running, before gravity takes its toll. Many families are in this position now. For while universal credit was cut on 6 October, it will still be a few weeks before families feel the true bite of their next payments coming in at £1040 per year less.

According to the latest NEF modelling, government policy will leave 21.4 million people – 32% of the population, including 7 million children – living in households that do not have enough to afford the basics, the level known as the Minimum Income Standard.

Politically, we’re in limbo until the autumn budget this month. Will the government take action to mitigate the fallout from the universal credit cut? The Conservatives clearly want to change the narrative to making work pay”. Rumours of a change to the universal credit taper rate (the percentage someone on UC loses from every £1 of earnings) from 63% to 60%, and a potential rise in the minimum wage, reflect this. NEF analysis shows the impact of a taper rate cut wouldn’t come close to making up for losses people experience from the cut of the £20 uplift.

Talk of a high-wage, high-productivity” economy sounds appealing. But high-wage high-productivity economies tend also to have high levels of social security. It’s like trying to create a Scandinavian economic model without the strong social security infrastructure that makes them work. We cannot talk about high wages without also talking about high welfare. They are not mutually exclusive. Trade unions have been making this case in recent years and progressives need to be confident in advocating for both.

While we may have lost the parliamentary battle to stop the £20 cut, the Keep The Lifeline campaign has essentially won the public argument exposing the inadequacy of social security as it is. Recent polling shows the majority of people did not support cuts to universal credit but we now have to start winning the next argument: what does a more adequate system look like instead?

Sooner or later, we as progressives need to do better than something better”. For NEF, that better is a Living Income.

You’ll often hear opposition politicians say they’ll scrap or replace universal credit, only for their sentence to trail off a cliff edge too, failing to say what they’ll replace it with.

Sir Keir Starmer last week said Labour would like to see it replaced by something better”. Sooner or later, we as progressives need to do better than something better”. For NEF, that better is a Living Income.

A Living Income is a bold reimagining of income support that will deal with the challenges and opportunities presented by the post-Covid world and economy we’re living in. It is a highly responsive and tailored system that combines good jobs with no-strings support when you need it most and sets a level below which no one can fall.

The idea draws on some of the principles of a universal basic income, which has been promoted by Mayor of Greater Manchester Andy Burnham, the Liberal Democrats and is soon to be piloted by the Welsh Government. It inserts a weekly universal cash payment into the system to replace the regressive personal tax allowance.

But a Living Income would also provide tailored support to those in need of additional help to cover the costs of disability, housing, care work or parenting. The outcome would be a security blanket for the nation, ensuring everyone can afford a decent standard of living.

The idea is sometimes referred to as a Minimum Income Guarantee, which has received government support in Scotland. Scottish Labour offered a Minimum Income Guarantee in May with Pam Duncan Glancy MSP telling a recent NEF event that a Living Income is essential”.

Her UK counterpart, Labour’s Jonathan Reynolds MP, Shadow Minister for Work and Pensions, also speaking at the event, said there was still more work to do before Labour could outline its full vision for a better’ social system, but gave his absolute commitment that I will work with NEF on the Living Income”.

That work is to now make and win the argument to gain broad public support for a more generous social security system. NEF is building a coalition of organisations to help shift the debate towards a Living Income. Together we can build an alternative to universal credit that ends the cost of living crisis for good.

Join the Living Income campaign

Photo: Ella Carman

If you value great public services, protecting the planet and reducing inequality, please support NEF today.

Make a one-off donation

£5 £10 £25 £50 £100

Make a monthly donation

£3 £5 £10 £25 £100