People who receive unemployment benefits alone only receive a little more than would push them into destitution, a report has warned.
The welfare system is ‘almost unrecognizable’ from the one created after World War II following William Beveridge’s seminal report, the Resolution Foundation has said.
The think tank said that although working-age social security spending has more than doubled since the creation of the modern welfare state, income support has consistently fallen relative to average incomes.
People receive very low levels of basic income support, with a “porous safety net” that favors low-income families over single adults by helping to cover additional costs such as housing and children.
The authors say that “too much” of the income support work is done by these additional benefits.
They say: “This strategy in itself has been undermined by recent cuts to the way support is provided to people with children and tenants.
“But it is also unsustainable to allow benefits for groups that are not eligible for top-ups to fall to near destitution levels.
“If tackling Britain’s legacy of high inequality and poverty is remotely part of the new economic strategy for the 2020s, then policymakers will need to reconsider that approach.”
The government has said the current system provides a safety net with “vital employment support”, while the most vulnerable can get extra help.
The report – Social Insecurity – is a joint project with the Center for Economic Performance at the London School of Economics, funded by the Nuffield Foundation.
He said unemployment benefits in 2022-23 will be at their lowest level, in real terms, in three decades.
This is only slightly above an estimated poverty level of £70 a week, and sits at around 14% of average earnings – half the level it was in the 1970s.
The report says the UK’s record in terms of living standards for the poorest in society has been “terrible” since 2003-04.
He said a direct consequence of the low basic level of benefits is that employees without additional needs have little protection if they lose their job.
This was highlighted by the coronavirus pandemic, with the creation of the furlough scheme revealing the ‘limits’ of the system, and the rise in Universal Credit by £20 ‘partly a recognition that benefit levels had dropped too much’ , says the report.
Karl Handscomb, Senior Economist at the Resolution Foundation, said: “Our social security system has seen huge changes over the past 75 years, leaving us with a benefit system that makes little effort to provide levels of basic income support, but does more to support households with specific costs like housing and children.
“With even these advantages of reduced costs over the past decade, we enter the 2020s with a porous safety net.
“The result is that the poorest members of society are further left behind, while many are left with little insurance if their jobs are threatened by economic change.”
Alex Beer, program manager at the Nuffield Foundation, added: “As this research shows, over time the protection afforded to people who lose their jobs has fallen to a level that barely allows them to avoid destitution. and which harms not only the people concerned but also the ability of our society to respond to economic changes.
A government spokesperson said: “Our social protection system provides a safety net while providing vital employment support to help claimants find work and become financially independent.
“We know work is the best way out of poverty, so our Jobs Plan is helping people across the country build their skills and take the next step in their careers.
“Working families on Universal Credit are seeing an average of £1,000 more a year in their pockets and we are raising the living wage again in April by 6.6% to £9.50 an hour – £1,000 per year for a full-time worker.
“For the most vulnerable, including those unable to work, further support is available through schemes such as the Warm Home Discount and our £500million Household Support Fund.”
Shadow Work and Pensions Secretary Jonathan Ashworth said: ‘This is even more damning evidence of the cost of the life crisis facing working people thanks to 12 years of Tory incompetence.
“With rising heating bills and crippling tax increases, families are likely to be hit hard, with many at risk of falling further into poverty and destitution.
“Ministers should follow Labour’s plan and cut VAT on energy bills and extend the Warm Home rebate to provide real help for families.
“And the next Labor government will tackle poverty and fundamentally reform social care and support families, with respect, security and prosperity at the heart of our approach.”