A cabinet split broke into the open on Wednesday over Rishi Sunak’s plan to end the “temporary” £20 a week uplift in universal credit, which has helped nearly 6m people through the Covid-19 pandemic.
Thérèse Coffey, work and pensions secretary, criticised the chancellor’s plan to offer an upfront payment of at least £500 rather than allowing the uplift to continue beyond April.
Mr Sunak is worried that the £1,000 annual benefits boost, which costs the exchequer about £6bn a year, could become permanent and has warned Tory MPs that tough choices on public spending lie ahead.
But Ms Coffey caused irritation in the Treasury when she made her reservations over Mr Sunak’s plan clear, telling MPs: “Previous experience is that a steady sum of money would probably be more beneficial to claimants and customers.”
She added: “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.”
Her comments to parliament’s work and pensions committee on Wednesday morning illuminated one of the many tough choices facing Mr Sunak in his March 3 Budget, as he seeks to phase out Covid-19 support measures across the board.
The chancellor is also under pressure from business groups and unions to extend the job furlough scheme beyond the end of April; the CBI has asked for it to be extended until June.
The CBI also wants to extend repayment periods for existing VAT deferrals until June and to extend the business rates holiday for at least another three months.
Mr Sunak is expected to extend many support schemes because the economy is unlikely to fully reopen before the end of April. A tapering of some schemes could help to remove “cliff-edges”.
But Mr Sunak is quickly discovering that turning off Treasury support is harder than starting it, whether for businesses or families on universal credit.
Labour seized on the chance to exploit the apparent difference of opinion between senior government ministers. Jonathan Reynolds, shadow work and pensions secretary, said: “A one-off payment rather than the extension of the uplift will mean that anyone who needs support after April — when unemployment is set to peak — will fall through the gaps.
“We urge Thérèse Coffey to stand up to Rishi Sunak, give certainty to families and secure our economy by cancelling the cut to universal credit,” he said.