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A Better Recovery

Learning the lessons of the corona crisis to create a stronger, fairer economy
Report type
Research and reports
Issue date
Chapter 3: A real safety net

Even before coronavirus crisis hit the UK, it was clear that our safety net was broken. Its ragged holes have been newly exposed by the large numbers now falling through the net as their income disappears in the wake of the virus.

The UK’s safety net has been dramatically weakened after years of underinvestment, with thirty- four billion of cuts made to social security since 2010. Over a decade of austerity, including benefit caps and freezes, a punitive sanctions regime and the introduction of the five-week wait for universal credit, has pushed working families into debt and poverty. Last year, the UN Special Rapporteur on extreme poverty published a highly critical report on the UK, [1] setting out how years of austerity policies have ‘systematically and starkly eroded’ our social safety net, with ‘tragic social consequences’.

The impact of slashing social security is all too evident. The latest official poverty figures from 2018/19 show the number of people living in poverty at a record high of 14.5 million, including 4.2 million children. [2] Unsecured debt per household hit a new record high of £14,500 in 2019, and debt charities have reported being busier than ever. [3] This has caused a dramatic increase in food insecurity and left people turning to food banks to feed their families. Data from the Trussell Trust shows that over 1.5 million three-day emergency food supplies were given to people in crisis in 2018/19 - an increase of 73 per cent over five years. The top three reasons given for referral to a food bank were ‘income not covering essential costs’, ‘benefit delays’ and ‘benefit changes’. [4]

During the pandemic, as people lose their jobs or have fallen between the gaps in the job protection schemes, they have been advised to turn to the welfare safety net, leading to a surge in universal credit claims. Between the start of the lockdown on 16 March and 5 May the DWP received 2.5 million individual declarations to universal credit [5] . Although not all of these will be claims for unemployment, as universal credit also supports those in work who have experienced a fall in income, this is at least five times higher than new claims from the same period last year

This new group of claimants are now experiencing the inadequacy of benefit levels: if you become unemployed, the basic rate of universal credit is around a sixth of average weekly pay (17 per cent) [6] . The inability of our weakened welfare system to cushion the fall for these new claimants can be seen in the soaring demand on food banks during the last two weeks of March: overall food parcels increased by 81 per cent compared to the same period in 2019 and for children there was a 122 per cent rise. [7]

The Work and Pensions Committee has carried out a survey to find out about people’s experiences of the benefit system during the coronavirus outbreak and found 75 per cent of those claiming universal credit felt the benefit wouldn’t stretch to cover their bills. [8]

At £95.85 a week, statutory sick pay is worth less than a fifth of weekly earnings. The Health Secretary, Matt Hancock, admitted on Question Time that he could not live on this amount [9] – yet the government expects others, with far less savings than most government ministers, to do so. Two million people are not entitled even to this, because their earnings are too low to qualify.

The inadequacy of our safety net has become visible for all to see. While the government claim there has been an emergency boost of £7bn to welfare as the pandemic unravelled, this is only a fifth of the cuts made to social security since 2010.

We need to transform and revitalise our safety net. During the life cycle there will be times when many people need to rely on the social security system: social security is a social good, providing economic security for all. The cuts in funding for this essential safety net have reflected a political commitment to austerity, rather than economic necessity. What is needed, now more urgently than ever, is a political commitment to protecting the vulnerable as an essential part of rebuilding our economy. The costs of adequately funding the social security budget is small when compared to the costs of not acting to reduce poverty, which includes both the damage of weakened demand on the economy and the deep social costs of inequality. We want and need an economy where no one is left to fall between the cracks.

Making our social security system fit for purpose requires fundamental changes, including scrapping universal credit. The immediate priority, however, is for the government to come up with an urgent plan to provide financial support and security for those who need it most.

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