An end to rations

When governments cut social security support, they ration decency. We need a way to restore that decency.

For many years, ministers used to maintain the fiction that benefits were enough for people to afford their basic living needs. Not anymore. The £20 a week uplift to universal credit at the start of the pandemic, which was welcomed and which cut child poverty, was a straightforward admission that rates were unjustifiably low. The new Household Support Fund explicitly states that its grants are “to support vulnerable households meet daily needs such as food, clothing, and utilities”. Again, a clear sign that low benefit rates are leaving people struggling to meet their most basic needs.

Action for Children’s analysis of our crisis fund, which provides emergency grants to parents and young adults using our services, found that 54 per cent of those supported last winter were claiming universal credit – a strong indicator that benefits are not protecting families from severe financial hardship.

Spending reviews and budgets of successive governments in the past decade have left the living standards of families with children dangerously exposed to the economic storm that is set to rain down over us for the next two years. A lot of this damage has been inflicted through real terms cuts to benefit levels by failing to uprate them in line with inflation. Increases to most working-age benefits were limited to 1 per cent between 2013 and 2016 and frozen entirely from 2016 to 2020. Analysis from the Joseph Rowntree Foundation shows that the value of the basic rate of unemployment benefit is at a 35-year low, having fallen in real terms in eight out of the 10 upratings between 2013 and 2022.

It is not just cuts. A number of structural obstacles have also been put in place – stemming from George Osborne’s reported “desire to ‘weaponise’ welfare policy” – to stop families getting the help they need, even if that means breaking the link between assessed need and support provided. The benefit cap, the two-child limit and the overall ‘welfare cap’ all make it harder – legislatively and politically – for future governments to provide families with a more effective social security safety net. Overturning these would require legislation or reform of the Office for Budget Responsibility’s charter.

All this has left family living standards open to the elements, with the route back to shelter stymied by arbitrary and politically driven hurdles that would require future governments to consume political capital to overcome.

A new independent body, a Living Standards Commission, modelled on the Low Pay Commission and public sector pay review bodies, is needed to make recommendations to the government on benefits uprating decisions to help cover living costs and protect living standards for those on low incomes.

Its expert members, including those with lived experience of poverty, would collect evidence through commissioned research, public and stakeholder consultations, oral evidence sessions and analysis of government data, to make annual recommendations to ministers on benefits uprating.

The Living Standards Commission would have a clear remit to help ensure that benefit uprating decisions include a clear focus on covering essential costs and protecting living standards. The body could be made to recommend minimum annual increases or be given a specific mandate by the government to bring benefit levels up to a certain level of basic adequacy over a period of time.

Such a mandate could, within its terms of reference, be subject to particular conditions, such as the health of the economy and the government’s fiscal position. This would give the commission the flexibility to adjust its target or timeframe if the external conditions change. This would be similar to the Low Pay Commission’s mandate to raise the national living wage to two-thirds of median income by 2024, which allows for an ‘emergency brake’ to be applied if deemed necessary. Ultimately, this new independent body can only advise. It would be for the government of the day to accept, reject or build on the recommendations made.

This structural innovation could also improve the policy debate on social security by bringing it out in the open. A public discussion on the adequacy of benefit levels, driven by an independent body, undoubtedly would improve public understanding and transparency around benefit adequacy. In doing so, it could give a reforming government cover to make the reforms needed to give financial security to more families.

A Living Standards Commission would give ministers the means, motive and opportunity to take out some of the politics from decisions on benefit levels – and to give families decency and respect.

Image credit: Catholic Church of England & Wales via Flickr