MPs voted to end the benefits freeze by agreeing to increase income-related benefits by inflation on Monday.
While a welcome move, new analysis by Citizens Advice shows that almost 4 in 10 households that seek debt advice and receive these frozen benefits would still not have enough money to cover their costs by 2024 – even if these rises were to continue in future years.
Citizens Advice has helped people such as Sheila, 64, who works part time and receives Universal Credit. Her payments can change on a monthly basis, making it hard for her to budget and cover her monthly costs. She is trapped in council tax and rent arrears, and has had to resort to a foodbank.
“Quite often I don’t have any electric, so I’m very cold. I can’t even make a hot water bottle to keep warm, or make a hot drink. I have to stay under the duvet.
“Even in the months when I am paid my full Universal Credit and wages it’s still really hard to afford everything, including food.
“It’s all swings and roundabouts, I just don’t have enough money coming in to pay the council tax and rent arrears, the actual council tax, buy food and top up my gas and electric.”
The analysis from Citizens Advice found that the number of people who are unable to cover their living costs has increased since the benefits freeze began in 2016. In the first five months of the current financial year, 40% of the people the charity helped with debt who claim income-related benefits didn’t have enough money to cover their living costs – an increase of 25% since the freeze came into effect.
Citizens Advice is continuing to call for the government to help address this problem by increasing income-related benefits by the Consumer Prices Index (CPI) plus 2% for four years, and to recalculate Local Housing Allowance, which determines housing benefit for private tenants. This will help provide families with financial security and protect people from further hardship.
It also argues that changes to benefit levels need to be accompanied by wider reforms to ensure the benefits system as a whole provides people with the right support. This includes ensuring Universal Credit gives people enough to live on by reviewing areas such as the amount of money retained by working claimants, and deductions for those dealing with debts or repaying advance payments.
Dame Gillian Guy, Chief Executive of Citizens Advice, said:
“Our evidence shows that increasing numbers of people simply don’t have enough money to make ends meet. While a step in the right direction, increasing benefits by inflation will not go far enough to help solve this problem.
“The benefits system was created to support people in times of need. The government should show it’s serious about meeting this ambition by properly investing in working-age benefits, and making sure fewer families are left in a downward spiral with no way to pay their bills.”