Rapid action could lift 1
million from poverty overnight, make work pay for thousands, and
stop ‘punishing’ children and
families
Benefit claimants come
together to call for overhaul of social security system that is
failing in its own
terms
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 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. Caroline said “it can be exhausting” while Edison 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.”
