North Jesmond Labour Councillor Tanya Pretswell has described the Universal Credit rise announced in last week’s Autumn Statement as a “very grand-looking gesture” but said it failed to “assess what is needed”.

Chancellor Jeremy Hunt unveiled his plans last week to increase universal credit payments by 6.7% in line with September inflation levels. The payment boost will add £470 extra into the pockets of an estimated 5.5 million households.

But Cllr Pretswell has criticised the announcement.

“There has been no test to determine whether it is the right amount or whether it will help people with their day-to-day cost of living,” she said.

She added: “The Labour view is that it is all very well to look like the knight in shining armour but these are problems the Tories have caused.”

Cllr Pretswell said for someone severely in debt anticipating a rise in Universal Credit, the new payment allowance wouldn’t go far.  

“All you’re doing is using it to pay interest,” she told JesmondLocal.

Amanda Bailey, director of the North East Child Poverty Commission (NECPC), accused the government of a “bare minimum” response to supporting those on low incomes.

“It shouldn’t be a matter that’s up for debate each year,” she said.

But alongside higher universal credit rates, Bailey would like to see Hunt tackle the barriers that may prevent people entering work, an issue she believes should be at the top of the social security agenda. 

“Two-thirds of the children in the northeast who are living in poverty are from working families,” she said.

She added: “We should be focused entirely on looking at how we can remove those barriers in a supportive way rather than threatening people who already are on a very low income.”

“Whether it’s transport, childcare costs or needing more flexibility in the workplace, it’s about how we improve those,” Bailey told JesmondLocal.

She called for Hunt, and the wider Treasury, to “look at both sides of the coin” when addressing poverty levels.

In Newcastle, people are forced to bathe with kettle water while mothers struggle to afford baby formula according to Hannah Cooper, Research and Campaigns Manager at Citizens Advice Newcastle.

“We are seeing some really scary things to be completely honest,” she said.

Max Mosley, senior economist at the National Institute of Economic and Social Research (NIESR), a think tank, told JesmondLocal these effects are caused by a “deterioration in living standards.” 

The institute reported that the Consumer Prices Index (CPI), which tracks changes in the average prices of goods and services to measure inflation, was increasing at a faster rate than Universal Credit in their analysis of the Autumn Statement.

Mosley has criticised the government for basing the universal credit rate on “political desires”.

He said: “This is not good policymaking by the government.”

He added that Newcastle has historically faced the brunt of economic upheaval.

“Whenever I see economic shocks, we always know that places like Newcastle and the northeast more widely are the ones who are going to be impacted the most,” he said.

Mosley found that people in the north east have seen a “really big dip in their real income” – the level of income adjusted to inflation rates. It’s this kind of decline the NIESR believes welfare spending should work to mitigate.

“One way we can solve some of these issues is making sure that Universal Credit rises in line with the challenges we see”, Mosley told JesmondLocal.

A spokesperson from the Department of Work And Pensions (DWP) told JesmondLocal: “We are uprating Universal Credit by 6.7% and over eight million low-income households are receiving up to £900 in direct payments to help with the cost of living.

“To help people boost their finances through work, we are also investing £6 billion over six years to support thousands into suitable jobs, and our 47% increase to childcare payments and the National Living Wage rise means this work will pay.”

For further advice and support on the cost of living crisis you can contact Citizens Advice on 0808 278 7823