How the benefits safety net fails 1.75 million families

Inequality, Poverty in the UK

Hannah Aldridge, senior researcher for the New Policy Institute (NPI), explains how recent changes to the UK welfare system have hit the poorest families.

Research released today by the New Policy Institute for Oxfam has found that 1.75 million of the poorest families have had their incomes cut as a result of government benefit changes. This comes as those on benefits experience another below inflation increase in what they receive.

The current government has introduced a number of changes to the benefit system. In doing so, it has changed the shape of welfare support. Firstly, it has lowered the overall value of benefits by uprating them by less than inflation. This includes basic cash benefits which, according to the Department for Work and Pensions, are intended to cover all “normal day-to-day living

Secondly, multiple changes to housing benefit and the localisation of council tax support mean that some families have to spend some of their cash-benefit to pay for rent and council tax – costs they were previously deemed too poor to pay. These changes are:

• The under-occupation penalty (the bedroom tax),
• Lower LHA rates (housing benefit for private renters)
• The overall benefit cap
• Local changes to council tax benefit

Around 480,000 families are being hit by more than one of these, seeing both their housing benefit cut and an increase in the amount of council tax they have to pay. For instance, someone affected by both the under-occupancy penalty and cuts in £7.80 a day…to cover food, electricity and heating, water bills, and anything else.council tax benefit could be surviving on £54.40 a week, or £7.80 a day. This remaining amount has to cover food, electricity and heating, water bills, and anything else.

The impact of this has been compounded by the decision to uprate benefits by only 1% (below inflation) for three years, starting from April 2013. So not only do families have to draw on this benefit to cover additional costs (rent and council tax), but its value has fallen compared to the cost of all the other items it must cover as well.

The infographic below breaks down those 1.75 million families by the policies affecting them and the average cut in income. 
How the safety net fails 1.75 million families
The largest group are those families only affected by the change to council tax benefit. Since April 2013 these families have had to spend an average £3 per week of their benefit on council tax, a tax they were previously deemed too poor to pay. The smallest group are those affected by the overall benefit cap (28,000 families). These families still have a total benefit income of £500 per week, but much of it is spent on rent, after housing costs their income is considerably less.

Around half of families reliant on benefits contain a disabled adult; and around a quarter are lone parent families

These welfare changes affect some family types more than others. Around half of families reliant on benefits contain a disabled adult; and around a quarter are lone parent families. This is significant because employment is often touted as the desirable outcome of welfare reform, but for lone parents and those with disabilities, the barriers to work tend to be much higher.

As a result of these many benefits changes the safety net or “absolute minimum” provided by government has been weakened. The support available to families who’ve hit hard times is changing. Before it was based on the amount required to meet the basic needs of the members of the household. Now it also depends on the local authority they live in, the number of bedrooms in their house, or the local cost of housing. An inconsistent
safety net is a poor one.

Back in February the Prime Minster insisted that the “safety net remains in place” but this research suggests otherwise. We think an absolute minimum level of support needs to be reinstated. It should apply regardless of local authority or tenure; and it must be high enough to mean that those at it are not forced to walk the breadline. It’s time the government assert what it thinks this absolute minimum
actually is.

Read more

Download the research which shows how 1.75 million families have been affected by benefit cuts

Browse our UK poverty publications

View more blog posts about poverty in the UK

Photo credit: Wynand Van Poortvliet/flickr creative commons

Author: Hannah Aldridge
Archive blog. Originally posted on Oxfam Policy & Practice.