Permanent changes to UK’s failing social security system needed
by Holly Barrow
The Covid-19 pandemic has once more highlighted that the UK’s social security system is in dire need of reform. Chancellor Rishi Sunak himself seemingly identified its shortcomings, as he felt it necessary to boost universal credit and tax credit by £20 per week in April, recognising that the former amount was insufficient to support the public throughout this crisis.
And yet far preceding the Covid-19 crisis, the UK’s welfare state fell drastically short of supporting those who need it. In 2019, an inquiry by two independent MPs found that the failures of the universal credit system and cuts to local services have fuelled extreme poverty, leaving the welfare safety net malfunctioning. Four key failures of universal credit were criticised within the report: the initial five-week wait and its system of loans known as ‘advance payments’; the frequently inaccurate calculation of payments; sanctions or failed applications due to difficulties understanding or accessing the new digital system; and critical deductions from monthly payments to pay back historical or recent debts.
Despite these well-known issues, it has taken a global pandemic to push the government to make changes to the welfare system – and even then, these changes are modest to say the least. While the increase of an additional £20 per week on universal credit and tax credit has undoubtedly come as a welcome improvement, the government has made clear that this is only a temporary measure, which is set to be rescinded in April 2021. We must fight to make this permanent and to further improve the system.
At a time when unemployment is spiralling and extreme poverty is predicted to double by Christmas, a robust social safety net is vital. However, it is important to note that this is a necessity not only during the pandemic but also beyond. A recent project titled the Commission on Social Security has examined crucial ways in which the UK’s social security system can improve. It sets out to provide clear, solution-driven analysis which centres the perspectives of those who have lived experience of the system. Underpinning this project are the following key proposals for vastly improving the social safety net: a guaranteed decent income, child benefit as a main pillar, a new start on disability benefit, and benefit rates based on minimum income standards.
Similar proposals have been outlined by unions and by the TUC, which published a report in April emphasising that fixing the safety net ought to be a priority in the government’s economic response to the coronavirus. Despite the government recently announcing it will extend its furlough scheme until the end of March 2021, little has been done in the way of improving the social security system even though so many are now having to turn to it for survival. In the last two weeks of March 2020 alone, 950,000 applications for universal credit were made compared to the expected 100,000 applications under typical circumstances.
The TUC’s report makes clear that, as it currently stands, the welfare system is broken and failing millions across the country. Even with the £20 increase to universal credit, data shows that the unemployment benefit rate currently falls far below that in any other period of mass unemployment, such as during the recessions of the 1980s and early 1990s. Even after this boost, the basic rate of universal credit is worth around a sixth of average weekly pay (17 per cent) compared with in 1984, when the basic rate of benefits stood at a quarter of the average wage. The minor increase to universal credit and tax credit is simply not enough to counteract the repercussions of the current crisis and support those in need.
The system is also punitive, designed in a way that seems determined to trap rather than help people. Conditionality requirements can see those claiming universal credit being made to prove that they are spending 35 hours per week applying for jobs or attending CV writing workshops, while restrictions for those with limited savings and an excessive wait before receiving payment leaves many exposed to poverty. In fact, the number of those living in poverty in the UK is at a record high of 14.5 million, with the majority (56 per cent) of those living in a working household.
The advantages of a strong social safety net are many. An IPPR (Institute of Public Policy Research) report in 2019 emphasised that, contrary to widespread belief, a punitive welfare state does not provide greater incentive to work. In fact it simply strips people of the flexibility and financial security necessary to stabilise themselves in order to find and maintain work. What’s more, the report goes on to tackle the common misconception that investing in social security is a constraint on economic growth. There is increasing evidence to suggest that a robust social safety net is beneficial for economic growth, both in its own right and owing to its ability to reduce inequality.
In this time of great uncertainty, the government must show dedication to permanently fixing the gaping holes in our social safety net. Time-limited appeasements such as the £20 boost to universal credit do not go far enough and must not be used as a temporary buffer. Instead, we ought to see a safety net that is accessible to all which ensures every individual has the money needed to live – with those who have personal experience of using the system at the forefront of its operations.
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