Rishi Sunak's £6bn climbdown on universal credit: Chancellor is to extend £20-a-week Covid-19 boost after Tory backlash
Rishi Sunak is poised to extend the £20-a-week boost to Universal Credit after a Tory backlash.
The Chancellor is said to be 'resigned' to continuing the uplift, despite warning it will cost £6billion a year.
The U-turn, which is set to be confirmed at the Budget in March, came as former government poverty tsar Dame Louise Casey claimed the Conservatives risked regaining their reputation as the 'nasty party' if they ended the benefit boost while the pandemic was raging.
Dame Louise said it would be 'too punitive' to cut £20 a week from family budgets at the end of March. Downing Street rejected the 'Nasty Party' jibe, pointing out that the Government has poured £280billion into Covid support.
Rishi Sunak is poised to extend the £20-a-week boost to Universal Credit after a Tory backlash
But Whitehall sources acknowledged that the Universal Credit boost was now set to continue. Other Covid support, including the furlough scheme, which is due to finish at the end of April, could also be extended if the pandemic keeps sections of the economy in lockdown.
But decisions on that will not be taken until closer to the Budget on March 3.
The 'temporary' 12-month increase in Universal Credit was put in place last year as part of the wider package to support people through the pandemic.
In recent weeks Mr Sunak has been fighting a rearguard action against calls to extend it beyond March when it is due to finish.
He warned Tory MPs that any extension could become permanent, blowing another £6billion-a-year hole in the public finances – a gap equal to adding 5p to fuel duty. Mr Sunak also argued that there were 'better ways' to tackle unemployment and low pay than increasing benefits.
Mr Sunak also argued that there were 'better ways' to tackle unemployment and low pay than increasing benefits. Pictured: Labour leader Keir Starmer visits a food bank distribution centre in London on January 18
But he failed to head off a Tory revolt, which included backbench MPs and Cabinet members. A Treasury insider last night conceded the battle was lost, adding: 'We gave it a good shot.' But the source warned that extending the uplift would only postpone the argument, saying: 'Unless you are prepared to make it permanent, with all the costs and signals that would involve, you are going to come to another cliff edge later.'
A decision on how long to extend the benefit boost for has not yet been taken.
Boris Johnson ordered Tory MPs to abstain on a Labour motion on Universal Credit this week, cutting a rebellion by Conservative MPs to just six.
But behind the scenes, ministers have faced a growing revolt. The 50-strong Northern Research Group of Conservative MPs said this week that ending the boost now would be 'devastating' and called for it to be extended until restrictions are lifted. And Work and Pensions Secretary Therese Coffey let it be known she is opposed to cutting Universal Credit at a time of rising unemployment.
In a BBC interview, Dame Louise said while she understood the Chancellor's reluctance, he needed to consider the effect it would have on people's lives. 'To remove that £20 a week – it's too punitive, it's not the right thing to do, and I think they just go back to being the nasty party,' she said.
The PM's press secretary Allegra Stratton said: 'There is no way that this party and Government can be called the nasty party when you look at the £280billion support put in place during the pandemic. When you crunch that money you will find a lot of it has gone towards the less well-off in society.'