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One million Brits claimed “universal credit” welfare payments in two weeks

Thursday, April 2nd 2020 - 08:50 UTC
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Between March 16 and March 31, 950,000 people successfully applied for universal credit payments, up from about 100,000 in a normal two-week period Between March 16 and March 31, 950,000 people successfully applied for universal credit payments, up from about 100,000 in a normal two-week period

Almost one million people have claimed “universal credit” welfare payments in the UK in the past two weeks, exposing the massive economic hit from Boris Johnson's coronavirus lockdown.

Between March 16 and March 31, 950,000 people successfully applied for universal credit payments, up from about 100,000 in a normal two-week period, according to government figures.

Universal credit is designed to help people if they become unemployed or are on low incomes, and the surge in claims coincides with the period since the prime minister first imposed dramatic restrictions on businesses and public activities.

The rise in claims will intensify the debate in the UK over the government's response to the crisis. Criticism has been growing over Mr Johnson's handling of the health emergency but until recently, the government and the Bank of England had won praise for their swift and coordinated action to shore up the economy.

That picture began to change on Wednesday. The sharp jump in benefit claims from people either losing their jobs or suffering pay cuts highlighted how the government's package of wage-subsidies may be too slow to stop a huge rise in unemployment. At the same time, ministers expressed frustration that banks are not giving struggling companies the government-backed loans they had been promised, risking a wave of insolvencies.

“We have never seen anything like this,” Mr Torsten Bell, director of the Resolution Foundation think tank, said, referring to the universal credit figures. “It is not remotely normal even in the grim circumstances of a recession.”

Chancellor of the Exchequer Rishi Sunak, who promised to do whatever it takes to protect businesses and jobs, has announced 65.5 billion pounds of aid for the economy since March 11 - about 3% of GDP. The rescue plan includes offering to pay 80% of employees' wages, supporting the self-employed, and 350 billion pounds in grants and loan guarantees.

Yet economists have noted that the time needed to start the program risks a surge in unemployment and business failures. Companies also complain that the Coronavirus Business Interruption Scheme is too complicated and onerous. Lenders such as Barclays Plc and Lloyds Banking Group Plc have come under fire in particular for quoting high interest rates and requiring directors to offer personal guarantees for loans.

On Wednesday, business secretary Alok Sharma urged banks to make money easily available to companies, and conceded that the government's scheme was not perfect.

“It will be completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty,” Mr Sharma said at a press conference in Downing Street. “Just as the taxpayer stepped in to help the banks in 2008, we will work with the banks to do everything they can to repay that favor.”

Mr Sunak is considering loosening the requirements for firms trying to access the government-backed loans, according to a report by Sky News, and could make an announcement in the coming days.

“Whitehall must not waver on getting cash to businesses fast,” Mr Adam Marshall, director general of the British Chambers of Commerce, said by phone on Wednesday. “The government needs to get a lot of the packages of measures from announcement to delivery.”

The economic heat adds to the difficulties facing Mr Johnson, who has isolated himself after being infected with the virus and is under growing pressure over the failure to ramp up its testing rate to the levels seen in other countries. Official figures on Wednesday showed the highest number of deaths so far recorded in a day, as the outbreak spreads.

Speaking in a video on Twitter on Wednesday evening, Mr Johnson said the country would turn the tide on the coronavirus in the coming “weeks and months.”

“We will begin to start to push those numbers down,” Mr Johnson said, referring to the death rate, after the toll rose by 563 in a single day to 2,352. “I'm absolutely confident we will beat it.”

Categories: Economy, Politics, International.

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