The Department for Work and Pensions (DWP) has been urged to introduce an ‘Essentials Guarantee’ for Universal Credit claimants, designed to ensure social security payments always cover the cost of basic living essentials. This call was made in a new report titled Ending Business As Usual published by the thinktank Compass, which specifically appeals to Labour Party leader Andy Burnham to champion these reforms.
The report highlights that although the Government has acknowledged the worsening impact of economic hardship by enhancing the basic rate of Universal Credit (UC) in the 2025 Universal Credit Act, it has failed to communicate the importance of this increase effectively. Compass argues that this presents a missed opportunity to shape public understanding and support for welfare measures.
An Essentials Guarantee would legally establish a minimum UC payment level that aligns with the cost of essential items such as food, energy, toiletries, and cleaning products. Crucially, this minimum would not be undermined by deductions like debt repayments or the benefit cap, preventing payments from falling below this safety net.
READ MORE: Labour Proposes Three New Capital Gains Tax Bands to Reform CGT System
Compass explains that setting the rate would involve an evidence-based advisory process, incorporating input from people who have first-hand experience living on low incomes. The thinktank notes that just as the introduction of the National Minimum Wage and the Low Pay Commission transformed discussions about low pay, the Essentials Guarantee could similarly reshape the conversation around social security.
By implementing such a system, social security would be framed as a solid support mechanism for all individuals facing adverse household circumstances. Additionally, the report proposes an immediate, low-cost measure to establish a protective minimum floor within Universal Credit: limiting the total amount that can be deducted from the basic rate due to debts or the benefit cap to 15%. This step aims to reduce the most severe hardships experienced by claimants.
Overall, the Essentials Guarantee seeks to position welfare as an effective tool in addressing living standards challenges, ensuring that no one on Universal Credit falls below a level that covers their fundamental needs.