Almost half a million new Universal Credit claims shows the UK is in midst of an unemployment crisis

The 477,000 increase in new Universal Credit (UC) claims over the past nine days shows that the country is already in the midst of an unemployment crisis that is building much faster than during the financial crisis, the Resolution Foundation said today (Wednesday) in response to the disclosure of new figures by the Department for Work and Pensions.

The Foundation notes that this rate of new UC claims represents an increase of over 500 per cent compared to the same period last year.

This increase dwarfs the increases to Jobseeker’s Allowance at the height of the financial crisis, in which weekly increases in new starts peaked at 78 per cent. Indeed, the number of new claims to UC in the past nine days is greater than the successful claims made to JSA in any entire month during the financial crisis.

The Foundation adds that while the scale and duration of unemployment increases remains very uncertain, the sheer speed of this rise in claims to UC reflect the uniquely rapid impact of the current economic crisis. This should remind policy makers not to assume a repeat of the smaller-than-expected increase in unemployment we saw during the financial crisis.

Finally, the Foundation says that these figures show why the government is should urgently press ahead with further support measures for firms and their families. This should include support for both self-employed workers, employees who have had their hours reduced, and those who have already lost their jobs.

Karl Handscomb, Senior Economist at the Resolution Foundation, said:

“The unprecedented surge in new Universal Credit claims shows that the UK is already in the midst of an unemployment crisis.

“The increase in claims is putting huge pressure on our social security system, and is driven by a huge hit to family incomes.

“The Government was right to increase the generosity of the benefits system last week. It now needs to ensure the resources are there so that claims are processed quickly, and people receive support as soon as possible.”