Spending on social security must rise by £45 billion to tackle poverty – Fabian Society report
A revolution in social security is needed after the general election including a 1-year emergency plan and a 10-year blueprint for reform, according to a new Fabian Society report published after 9 months of consultation.
A revolution in social security is needed after the general election including a 1-year emergency plan and a 10-year blueprint for reform, according to a new Fabian Society report published after 9 months of consultation.
15 million people in the UK are expected to be living in poverty in 2020 including 2 million pensioners and over 4 million children. In response Where next? reforming social security over the next 10 years calls on the next government to introduce an urgent ‘rescue’ package immediately after the general election followed by a sustained increase in spending.
- In the first year of a new government, ministers should spend up to £6.5 billion on a one-off increase of £5 per week on key benefits for working-age adults and children
- Over four years the report calls for an increase in spending of £45 billion over existing plans which would provide the resources to transform social security, providing the money to raise spending on working-age adults and children by up to 40 per cent
The report calls for a large share of the extra spending to be funded by freezing the thresholds for income tax and national insurance. In the first year, this would generate £4.5 billion in revenue which would pay for most of the costs of a one-off rise in benefits. Over 4 years a freeze would generate £20 billion in higher revenues. The remaining £25 billion (of the £45 billion package) would come from returning social security spending as a share of GDP to 2015/16 levels.
The report also calls for a new fiscal rule requiring the government to report ‘spending’ on tax allowances and social security in a single new account to bring transparency to the financial support provided to different households through tax and benefit policies combined.
Andrew Harrop, Fabian Society general secretary and report author said:
“The UK is scarred by poverty and our social security system is in crisis, with 15 million people expected to live in poverty next year. At the 2017 election none of the political parties presented credible plans for reducing poverty so this time it must be different.
The next government must promise both a 10-year strategy for long term social security reform and a one-year rescue plan to solve the worst failings of the system now. The parties’ election manifestos should promise a £5 per week increase in key benefits for children and working-age adults.
Politicians should also set out their ambitions for longer term change with present credible plans to end poverty for children and working households over 5 to 10 years.
Billions of pounds could be pumped into social security by freezing the value of tax-free allowances. No one would see their take-home pay fall but over time cash would gradually be shifted from poorly targeted tax give-aways to payments for those in greatest need.”
Kate Bell, TUC Head of Economic and Social Affairs, said:
“Universal credit has been a disaster. Trade unions believe it should be scrapped. We need a system that does not leave people waiting weeks for support, and that keeps families out of poverty. This report sets out some helpful ideas for how to do things better.”
More about the proposals:
The Fabian Society report also proposes a package of measures to deal with the worse failings of the benefit system immediately and calls on ministers to introduce the ‘triple lock’ for all age groups. It urges future ministers to implement a long-term plan to create a far more generous social security system which is less dependent on a single means-tested household benefit. It argues that a future government must sign-up to ambitious living standards goals and then redesign benefits to achieve them:
- Within 5 years the aim should be to end poverty for all households working a reasonable number of hours given their circumstances.
- Within 10 years the aim should be to lift all children out of poverty and see that every household working a reasonable number of hours can secure a decent living standard, as judged by the views of the British public.
Where Next? calls for a social security system for children and working age adults that is closer to the pension system and based on a mix between means-tested, universal and contribution-based benefits. It sets out detailed plans for turning universal credit into a new household benefit by raising payment values, ending existing toxic policies and fixing design flaws.
The report follows 9 months of debate and consultation, including a series of 8 events with social security recipients. The recommendations are designed around a ‘people’s charter’ designed by benefit recipients which calls for a system based on security, respect, simplicity, consistency and support. The research was supported by Age UK, the Children’s Society, Crisis, JRF and the TUC who were among the organisations who contributed ideas to the project.
NOTES AND TABLES
- Contact: Rabyah Khan, media and communications manager at the Fabian Society
0207 227 4906 | 07888861096 | rabyah.khan@fabians.org.uk - Where Next? is available here.
- Andrew Harrop, Fabian Society general secretary, is available for interview.
- This report represents not the collective views of the organisations involved but only the views of the individual authors.
Costings for a £5 weekly increase in social security for key groups
| Beneficiaries | Cost | |
| First adult – UC and predecessors | 6.6 m | £1.7 bn |
| Second adult – UC and predecessors | 1.9 m |
£500 m
|
| Each child – child benefit | 12.7 m |
£3.3 bn
|
| Babies aged under 1 – child benefit | 650,000 | £170 m |
|
Households with a disabled adult – DWP means-tested benefits |
2.1 m | £540 m |
| Disabled children – DLA | 500,000 | £130 m |
Illustration of how UK social security spending could increase over 4 years
| 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | |
| Percentage of GDP | |||||
| Existing plans | 10.4% | 10.2% | 10.2% | 10.2% | 10.3% |
| Reverse cuts since 15/16 over 4 years | 0.0% | 0.2% | 0.5% | 0.7% | 1.0% |
| Extra revenue from freezing tax allowances | 0.0% | 0.2% | 0.4% | 0.6% | 0.8% |
| Total | 10.4% | 10.7% | 11.1% | 11.6% | 12.1% |
| Extra spending over existing plans (nominal amounts) | |||||
| Reverse cuts since 15/16 over 5 years | £6 bn | £12 bn | £18 bn | £25 bn | |
| Extra revenue from freezing tax allowances | £5 bn | £10 bn | £15 bn | £20 bn | |
| Total | £10 bn | £21 bn | £33 bn | £45 bn | |
Proposed ‘year one’ package
- ‘Rescue’ policies:
- improve council tax support
- increase payments for large families
- re-link housing support to the cost of modest local rents
- provide more help to families during school holidays
- end the five-week wait for universal credit
- reform health assessments
- end sanctions in most circumstances
- raise payments for couples where one partner is over pension age
- reform local welfare schemes with national rules and funding
- Increase key benefits by £5 per week for (mostly paid for by freezing thresholds for tax-free allowances for 1 year):
- Adults receiving UC and predecessors – £2.3 bn
- Children receiving child benefit – £3.3bn
- Babies (an extra £5) – £170m
- Disabled children (an extra £5) – £130m
- Disabled adults (an extra £5) – £540m
- Introduce a single policy for annually uprating benefits for all age groups (ie the ‘triple lock’ or a variant of it).