A STATE of the nation report on the UK’s social security system concludes with a package of reforms to cut poverty, incentivise work and deliver quick wins to create a modern welfare system.

The new report from the Institute for Public Policy Research (IPPR) and Changing Realities highlights a series of previously unreported flaws with the current system, including:

  • Many are at risk of being pushed into poverty – a single adult out of work and under 25 on Universal Credit faces an 18 per cent real terms cut to their income for day-to-day living costs, due to the sudden end of the emergency cost of living payments
  • Some households are put off work due to having a combined tax-benefit withdrawal rate of 69 per cent because of the way Universal Credit taper rates and work allowances work alongside national insurance and income tax
  • Even when Local Housing Allowance is unfrozen, research estimates over 800,000 households on Universal Credit who rent privately will continue to face a shortfall between their rent and housing support

These issues, among others, are holding people back from escaping poverty and getting on in work.

Changing Realities participants set out clearly how the current problems with Universal Credit are holding them back. One said “it can be exhausting” while another said it was “draining and scary”.

The report sets out a package of reforms to pull the UK’s social security system into the 21st century, with a series of quick win policies, including:

  • Increase the core entitlement for all households on Universal Credit by £50 a month, with an equivalent for those on legacy benefits. This alone would lift 350,000 people out of poverty.
  • Remove the two-child limit and benefit cap, to tackle child poverty and restore the link between entitlement and need.
  • Introduce a second-earner work allowance and reduce the taper rate to 54 per cent (towards a goal of 50 per cent over the next parliament), to support parents, tackle the gender pay gap and improve work incentives so that work always pays.
  • Tackle the five-week wait by introducing two weeks of backdating for new claims, to reduce claimant debt in the system, with additional reforms to how debt is collected.

Together, the first three measures would lift an estimated 1 million people from poverty, according to IPPR’s analysis, at a cost of around £12 billion, while boosting economic activity and with it, bringing extra growth to the UK economy.

Henry Parkes, IPPR principal economist, and an author of the report, said: “Universal Credit was supposed to make work pay. However, the shambles of administration that has been overseen by nine DWP ministers in 14 years has led to a threadbare system that neither prevents poverty nor supports people into meaningful work.

“This package of reforms, all potentially quick wins for any government, would create a social security system fit for the 21st century.”

Professor Ruth Patrick of the University of York, co-author of the report, said: “Our social security system is failing against its own objectives. Rather than protecting people from poverty, and supporting people to enter and progress in work, it punishes those it is supposed to support, and – by its very design – entrenches poverty and insecurity.

“The government must act fast to address this, and our costed proposals, developed in partnership with people with lived experiences of social security, would be a very good place to start.”

Caroline, a Changing Realities participant, said: “Sanctions, the five-week wait, an ‘any job will do’ approach and a sense of being ‘on my own’ with work coaches merely doing a job and not providing personalised support. How can we make people’s lives better if children, disabled people, and families feel they are being punished?

“We need to listen to people, give them a hand up and the ability to see a way out. The ideas set out in this report could be the change we need to make that happen.”

* Read: Snakes and Ladders: Tackling precarity in social security and employment support here.

* More about Changing Realities here.

* Source: Institute for Public Policy Research