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Out-of-work support set to fall
to 11.2 per cent of weekly median pay by end of
decade
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Call for new cross-party mission
for social security, with independent body and annual report to
hold government to
account
The UK’s threadbare social security
system is on track to reach its lowest level since records began,
according to a new report by
IPPR.
In 1971, out-of-work benefits were
worth 20.1 per cent of a man's weekly median
pay. However, after half a century of almost consistent decline,
it’s on a trajectory to be worth just 11.2 per
cent by 2030, even after assumptions that benefits are
uplifted by inflation every year.
The effects of such dwindling social
security levels are well documented. The paper from IPPR points
to rising poverty levels, poorer educational outcomes for
children, and further additional costs to the state through
issues such as worsening physical and mental
health.
Evidence also shows how low benefits
make it harder for people to find work, get more hours or better
work, and ultimately get off benefits. The cognitive impact of
poverty, alongside the costs of finding and starting work,
including childcare costs, make entering employment much
harder.
The report argues that a fundamental
issue with Universal Credit is that payment levels are not
grounded in living costs. Recent efforts to benchmark benefits
against what is needed to get by reveal a large gap in
support.
New analysis from IPPR shows
the average gap between
benefit payments and the actual cost of covering the basics is
*£35 a week for a single
person, rising to *£84
for someone with added typical housing shortfall and potential
deductions.
IPPR is calling for politicians to
come together and establish a shared goal for the future role and
purpose of social security. This should involve setting a
cross-party
mission and creating
a new independent
statutory body for social security,
along the lines of the Low Pay
Commission, the Climate Change Committee and public sector pay
review bodies.
The aim would be to break away from
short-term debates over specific levels and unlock a long-term
focus on the role of universal credit in tackling poverty. The
new committee would have the power to:
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Publish an annual report to
review progress and
hold government to account on agreed
commitments
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Monitor any impacts of
changes in rates on
labour market participation and social security
caseloads
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Advise on potential
responsive interventions in the event of sharp increases in living costs
Henry Parkes, principal
research fellow at IPPR,
said:
“Benefits should provide enough to
live on but they have never actually been calculated in relation
to the costs people face day to day. This has only been made
worse by policies like the benefits cap, the two-child limit and
a sharp reduction in support with
housing.
“It's time to rethink the role of
our social security system. At the moment, it’s not providing
enough for families to survive, and that is bringing further
costs to us as a society and
economy.”
Melanie Wilkes, associate
director for work and the welfare state at IPPR,
said:
“Universal Credit could offer a
crucial lifeline to households who are struggling on low incomes.
But it is completely out of sync with the costs families are
facing, and, as a result, is failing to protect many from
poverty.
“We need politicians to move from
debates about social security grounded in outdated stereotypes
and misperceptions, towards a shared long-term ambition for the
purpose and shape of our social security
system.”
Faith Angwet, a Universal
Credit claimant involved with the Changing Realities project,
said:
“Universal Credit rates are
getting more and more insufficient as the cost of living has hit
low income households like mine with less income, to feed their
household and children with.
“The importance of having an
independent commission to set benefit rates could not be any more
vital to be put into action no later than this present
moment."
NOTES TO
EDITORS
- This analysis applies forecasts of earnings growth and
benefit levels (assuming benefits will be uprated by inflation as
is convention) to estimate the ratio (or replacement rate) up to
2030 for a single adult over the age of 25.
-
The £35 gap referred to above is
calculated by looking at the difference between UC out- of-work
rates for a single person over 25, and the weekly cost of
essentials (excluding housing costs) as estimated by the Joseph
Rowntree Foundation. The £84 gap refers to this basic shortfall
plus the average shortfall between actual housing costs and
local housing allowances (£35/week) and the average UC
deduction (£14/week) according to the latest available
data.
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This paper has been developed with
people with direct experience of the current system: the three
core proposals outlined in the report were explored with and
supported by people in receipt of social security benefits
through a workshop with the Changing Realities project. It
provides a blueprint for a longer term, purpose driven approach
to social security.
