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Furlough and Universal Credit uplift saved working families

Government financial support provided a lifeline to workers struggling with in-work poverty during the coronavirus pandemic.

A new report from the Institute for Fiscal Studies (IFS) has highlighted the importance government intervention and support schemes offered the UK working population over the past 18 months.

The furlough scheme and £20 uplift in Universal Credit were identified as key policies that helped to support peoples’ incomes and prevented a significant deterioration in living standards.

The support schemes provided over the past year have also helped material living standards return to pre-pandemic levels.

The furlough scheme’s impact:

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Research from preventative poverty charity, the Joseph Rowntree Foundation (JRF), highlighted that prior to the pandemic, there were around 14.5 million people in the UK trapped in poverty.

A further 2.4 million people were experiencing destitution, a number that was rising sharply even before the pandemic hit.

Rebecca McDonald, senior economist at JRF, told HR magazine that when politicians take bold action, as they did during the pandemic, it can protect living standards and keep families afloat.

She said: “The scheduled £20 per week cut to Universal Credit will impact families who are in work as well as those who aren’t, as we know that work is not always the reliable route out of poverty that it should be.

“High housing costs, unaffordable childcare and other costs mean many working families are still struggling to make ends meet and relying on Universal Credit to support their incomes.

McDonald said single parents find it particularly hard to find flexible work that enables them to balance work and childcare and are therefore more likely to rely on Universal Credit to top up their earnings.

She said: “The furlough scheme undoubtedly prevented a much larger wave of unemployment by keeping workers attached to their jobs during the economic disruption caused by the pandemic.

“At the same time, the pandemic highlighted the many workers in poor-quality, insecure employment who were disproportionately likely to lose their jobs.”

McDonald advised the government to prioritise the creation of more high-quality, fairly paid jobs to protect workers in insecure jobs.

"Before the pandemic, far too many people were locked in poverty and destitution," she said"

"We cannot build back better by choosing to return to a status quo in which rising reliance on food banks was the norm. The government can start by reversing the scheduled cut to Universal Credit in the autumn."