THE UK’s threadbare social security system is on track to reach its lowest level since records began, according to a new report by the Institute if Public Policy Research (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 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:

  • Publish an annual report to review progress and hold government to account on agreed commitments
  • Monitor any impacts of changes in rates on labour market participation and social security caseloads
  • 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 is 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.”

* Read: Towards real social security: embedding a long-term approach to universal credit here.

* Source: Institute for Public Policy Research