Britons face ‘significant drop in income’ as furlough and Universal Credit uplift ends

Sajid Javid grilled on Universal Credit and National Insurance

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Both policies were introduced as part of a wider social security package to support struggling households at the beginning of the pandemic last year. While the Government rolls back these measures, some experts believe that removing access to these essential pillars of support is happening too fast and too soon. Figures released by the Insolvency Service outlined that employers in the UK planned only 12,687 job cuts in August, which is a fall of 11 percent since July. This represents the lowest figure for proposed job cuts in the last seven years, which suggests the job market is returning to form despite furlough’s eventual end.

However, according to research carried out by the Institute for Public Policy Research (IPPR), a hidden “jobs gap” of up to 2.1 million threatens to prevent a smooth transition to a full-employment labour market as the economy returns to pre-pandemic levels.

The think tank says that despite there being nearly a million current vacancies alongside shortages of workers in some key occupations, many Britons are likely to be met with insecure work, low pay and “underemployment” in their future.

The IPPR is pushing the Government to invest more in the welfare state and “keep and tweak” the furlough scheme until the UK economy returns to form.

Clare McNeil, the IPPR’s Associate Director for Work and the Welfare State, is one of the many cautioning the Government about proceeding forward with its plans without the correct provisions in place to help most vulnerable people.

Speaking exclusively to, Ms McNeil shared her concerns about removing furlough as a means of support.

“There’s still quite a lot that’s unknown about how this will unfold,” she explained.

“The Resolution Foundation estimates there will be as many as 900,000 people still on the scheme by the end of September when it’s due to end.

“In terms of what will happen to unemployment after that, there are so many factors that will be an influence.”


The Bank of England projected that unemployment will reach 4.1 percent by the end of the year, which obviously is a far better position than we thought we might be in.

“It could range as high as 5.5 percent. Still, that’s a lot lower than the estimates the bank projected at the end of 2020.”

Noting the staggering rise in vacancies, Ms McNeil was skeptical of how optimistic a sign that is for the future.

She said: “We have got record high rates of vacancies at the moment. The big question is the extent to which there will be the sort of jobs in the market for those people that are coming off furlough.

“It will come down to the extent to which there’s a difference between the sorts of skills that people have and the skills that are needed.”

According to the welfare expert, the pandemic has exacerbated inequalities between the young and old, who are the most economically vulnerable demographics in the UK.

Ms McNeil added: “It is definitely the youngest and the oldest that are most vulnerable.

“The under 25s and over 65 age groups are the most represented among those who are on the scheme. That’s what the picture looks like at the moment and there is quite a lot of uncertainty still.”

Aside from furlough, the end to the £20 Universal Credit uplift is likely to be the primary factor which will affect Britons’ incomes over the coming months, according to Ms McNeil.

“For those people who are coming off it who don’t move into employment after having been on furlough that will be a significant drop in income,” she explained.

“We do have one of the least generous social security systems in the developed world. The pandemic has highlighted that.

“The Chancellor has painted this £20 increase as though it’s one of the recessionary measures.

“In fact, it doesn’t even bring the system into line with where it should have been before the benefits freeze was introduced.”

Contrary to the public’s perception, Ms McNeil outlined that the withdrawal of pandemic support affects those in employment and not just those out of work.

She added: “As many people have pointed out, this is also going to affect people who are in work.

“Our argument to the Government is that you should be supporting people who are out of work as well as those who are working people.”

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