Personal Finance

The Guardian view on the welfare safety net: failing to catch people | Editorial

When rough sleeping in England has risen by over a quarter, and schoolchildren are turning up with empty lunchboxes, ministers ought to be in emergency mode. Destitution, a word with Victorian associations, is increasingly common in Britain. Yet, aside from a patchwork of temporary support, the government’s solutions have been grimly predictable. Thousands of people on universal credit will soon be shifted to an “intensive work search” regime. The Department for Work and Pensions has announced a job centre league table that will pay £250 bonuses for getting people into work. The environment minister, Thérèse Coffey, suggested those struggling with food bills could simply work more hours.

Instead of supporting vulnerable people, successive ministers have been more interested in pushing benefit claimants into work by making the alternative as unattractive as possible. The current system neither incentivises full-time work nor protects people from falling below the minimum needed to survive. A zealous focus on work and stringent job-search requirements have forced many into low-paid, part-time “mini jobs”. Meanwhile, universal credit forces claimants to take on debt during the delay before their first payment. It has all but designed in deprivation.

Quite simply, benefits for the working poor and those out of work are too low. The government will raise universal credit in April, but this is still far from adequate. A better solution, recently proposed by the Joseph Rowntree Foundation, would be setting payments according to the actual cost of living. It is remarkable this has never happened. The idea of a “national minimum” was central to the Beveridge report, but ministers chose not to follow the payment levels he proposed. Ever since, benefit levels have been set at largely arbitrary rates.

Instead of basing them on a calculation of need, numbers have been determined by the shifting balance of political power. The Conservatives’ 2012 Welfare Reform Act and successive benefit freezes reduced the generosity of the system by around £34bn. Social security now provides the same level of support as it did in the early 1980s. Benchmarking payments to the cost of living would both set a minimum below which nobody could fall and insulate benefits from political caprice. The minimum wage is already calculated independently; there is no reason the same could not apply with universal credit.

Ministers may say such a move cannot be afforded. Yet the pension triple lock ensures state pensions retain their value in real terms. Today, the majority of people in deep poverty are either working-age adults or children; just one in 10 are pensioners. One reason for this is spiralling housing costs, a fact that any overhaul of social security would also need to confront. Another is political: older groups are more likely to vote and few politicians seem interested in taking up the cause of those who rely on the fraying social safety net.

They should be. The pandemic and cost of living crisis have caused the image of benefits “scroungers” to recede, and people are now more likely to back higher payments. Instead of treating welfare as a drain on state finances, politicians should see it as an investment in people’s capabilities. The safety net is supposed to catch people as they fall. That more and more are falling so far should be a wake-up call.