One-off UK Covid benefit may stop people working, says minister

The work and pensions secretary, Thérèse Coffey, has said she is opposed to making one-off £500 or £1,000 universal credit payments in April in lieu of retaining the £20-a-week Covid top-up, warning that it could disincentivise claimants from taking a job.

The one-off payments have been considered by the Treasury as it seeks to find a way of ending the temporary benefit uplift, due to end by April, while at the same time keeping in place a level of support for struggling families while the pandemic continues.

Appearing before the work and pensions select committee, Coffey refused to say whether the Department for Work and Pensions (DWP) budget submissions to the Treasury included retaining the uplift, which would cost an estimated £6bn a year.

She said discussions were ongoing within government about the future of the top-up, and no decision had yet been reached. “I’m conscious the committee may want some kind of revelation – there isn’t a revelation to make,” she said.

As well as a broad consensus among opposition parties, charities and campaigners that retaining the £20 uplift is essential to prevent a rise in poverty levels, increasing numbers of backbench Tory MPs have called for it to be made permanent.

Coffey sidestepped a question by the Tory MP Nigel Mills on whether she personally thought keeping the £20 uplift was the right decision, although she said an internal government analysis had shown that retaining it would not provide a disincentive for people to work.

Mills replied: “If the money was there you would like to keep this – that was the sound of what you said.” Coffey admitted a one-off payment would “not be one of the department’s preferred approaches on providing that financial support … we are not sure that is the best way to deliver that”.

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Pressed by Mills on whether there were “big downsides” to a one-off payment, Coffey replied: “There is an element of complexity. We don’t know how long the economic aspects of the pandemic will still be going. Previous experience is that a steady sum of money would probably be more beneficial to claimants and customers.”

She added: “But how can I put it? I wouldn’t say no to a one-off payment if in the end that was the decision that was taken because it still would be financial support. But as I say, there’s a variety of ways we continue to try and consider the financial support to help people during these times.”

Mills suggested that if a £1,000 payment was on offer in April, universal credit claimants would not be “rushing out to take a job or increase their hours”. Coffey agreed. The prospect of such a payment might attract fraudulent applications.“There’s a number of reasons why there’s a simplicity to the one-off [payment] but actually there’s quite a lot of complexity.”

The Labour MP Neil Coyle accused Coffey of “suppressing” a DWP study of links between benefit reforms and rising food bank use. The study, whose existence was revealed by the Guardian in August 2018, is still unpublished. Coyle said ministers had promised publication in October 2019, nearly 18 months ago.

Coffey said she did not have an answer as to why the report had not been published. The DWP’s permanent secretary, Peter Schofield, said he would write to the committee to update it on the report’s progress.

Coyle replied: “This does play into a wider public perception that the government is failing to tackle child poverty, and food poverty in particular. The government will keep being embarrassed by campaigns like Marcus Rashford’s if you fail to address this problem.”

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