Benefit claimants face ‘sinking ship’ situation, warns CAP

National debt help charity Christians Against Poverty (CAP) is releasing the Shipshape or Sinking Ship? report which uses academic indicators to assess people’s financial and mental wellbeing.

This report looks at how the social security system is locking many people in poverty, and highlights the need to keep the £20 a week Universal Credit uplift – a lifeline due to be cut by the Government in October.

Speaking about the report, CAP’s UK Chief Executive, Paula Stringer, said:
“The end of COVID-19 restrictions doesn’t mean an end to the impact it’s having on people’s personal finances. With all the challenges millions of families have been facing, they will be carrying forward the financial impact for years to come in the form of household debt.

“The Government is planning to make one of the biggest overnight cuts in history, by reducing Universal Credit and Tax Credit claimants’ money by £20 a week and continuing to ignore those on legacy benefits.

“The Shipshape or Sinking Ship? report has found that the social security system is already a major driver of deficit budgets and lower wellbeing, and the Government is about to make the problem so much worse by cutting benefits like Universal Credit. Removing £20 a week from claimants at this stage is equivalent to destroying the lifeboats on a sinking ship, leaving those aboard desperately fighting for survival – we fully expect this action to result in a sharp rise in debt and poverty.

“The UK has so much to gain from giving people the resources they need to achieve high levels of wellbeing. High financial and mental wellbeing contribute to improving communities and help boost the economy. Helping people improve their wellbeing results in them feeling in control, confident and optimistic about the future, which leads to more jobseekers finding employment, more positive and active communities and a stronger economy.

“CAP clients with an income of less than £900 per month had an average financial wellbeing score of just 42 out of 100 and a mental wellbeing score of 19 out of 35, the UK average score being 26. Removing another £87 a month from Universal Credit claimants’ incomes will push those affected into further debt and poverty, and have a significant impact on their financial and mental wellbeing.

“The planned cut to Universal Credit is significant because two in five (40%) CAP clients in receipt of this benefit receive less than £900 of income a month, meaning a monthly reduction of £87 is equivalent to removing 10% of their total income.”

CAP client, Richard*, has been relying on the social security system after his marriage broke down, he became homeless, was diagnosed with a tumour, and lost his well-established job, all in quick succession.
Now awaiting six months of treatment for the tumour, which has been delayed because of the COVID-19 pandemic, Richard shares how he reached this point and his fears for the future:
“I felt like I was in a sinking ship and I was putting plywood in different places, but the water was still coming in. I was still sinking.

“Without the debt, there has definitely been a respite. Being able to speak to Lin [Christians Against Poverty Debt Coach] took some of the load away from me and gave me the ability to start thinking straight.
“But I’m stuck. It’s really difficult as I can’t work with my health issues.
“I didn’t realise my payments were due to reduce in April, and now will again in October. It will be a lot worse if my payments are cut by £20 a week. It’s already made worse by the deductions that are taken.
“I’m not asking even to be able to live comfortably, it’s just about surviving. Even that’s too difficult.”
– * Name changed to protect the anonymity of CAP client.

Paula continued, “We’re asking the Government and MPs from all political parties to do the right thing, support our recommendations and start fixing the boat by not taking £20 a week off those who are already living with deficit budgets and struggling to survive.”

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