Social Security and Welfare Reform

Is there still a safety net and, if so, what is it?

  • Published: Apr 07, 2014
  • Authors: Hannah Aldridge, Peter Kenway
  • Category: Social Security and Welfare Reform

On the day when those claiming social security benefits see an annual increase in the money they get, we launch a series of blogs looking at what is happening to the 'safety net'. Given the safety net was recently the subject of a disagreement between the Archbishop and the Prime Minister, this first blog aims to answer 'What is it'?

Interviewed on his way to Rome to collect his red hat, Cardinal-to-be Nichols told the Daily Telegraph in February that the “basic safety net that was there to guarantee that people would not be left in hunger or in destitution has actually been torn apart”. In his response, Mr Cameron insisted that “the safety net remains in place.

The fact that these two public figures are openly debating the safety net shows it is a politically important idea. But the fact that they disagree on its shows that it is also an obscure concept. So what is the safety net?

To set the scene, we start with the cash. The state offers a basic cash transfer to those with no alternative means of support (assuming that they can prove they are actively seeking work or have an acceptable reason not to). From today, the amount provided by the state to those of working-age is:

  • £57.35 per week for a single adult aged under 25;
  • £72.40  for a single adult aged 25+;
  • £113.70 for couples.

Pensioners get much more than this. Nowadays, the additions for children, provided through child tax credits, are also larger than those for working-age adults. The cash values here are the same irrespective of which benefit the working-age claimant qualifies for, that is jobseeker’s allowance (for those actively seeking work and ready to start), income support (for lone parents with young children), of employment and support allowance (for those in the first stage “assessment group”).

It’s worth noting that this level, which the DWP has described as the amount intended to cover all normal day-to-day living expenses, is not based on an assessment of the cost of items required to meet an individual’s needs. Efforts to make such an assessment have been considered flawed and unnecessarily complicated (see more in this comprehensive and interesting parliamentary paper). Instead the cash value has just been uprated each year. For more than 30 years, uprating was in line with inflation. But in April 2013, the rule changed so that in the three following years the rise would be limited to 1%. In April 2014 single adults aged 25+ have therefore just seen an increase of 70 pence, couples over 18, £1.15.

Although the most obvious part of it, the cash transfer is only one element of the safety net. The other element is that some essential costs are covered. For example those entitled to a means-tested cash benefit are also entitled to free prescriptions and their children are entitled to free school meals.

They also get a discount on their council tax (via council tax support) and substantial support towards their housing costs (via housing benefit). These two benefits used to ensure that the cash benefit did not have to go towards rent or council tax. But changes introduced by this government, beginning in 2011 for housing benefit and 2013 for council tax, mean that this is now no longer so for many people. This is how Nichols can claim that the safety net has been torn apart even while Cameron can point to the continued existence of the cash transfer. Given that what we are talking about here is the bedrock of the entire system, this dispute is fundamental not merely semantic.

The next two blogs in this series explore the changes to each of these benefits in turn. The final blog in the series will consider the adequacy of the safety net for those who are long term sick or disabled and who rely on it for prolonged periods as well as facing a higher cost of living.

If the Cardinal’s graphic imagery is to be justified, there must now be many people having to “meet their day to day living expenses” from an amount of money worth less than the cash value of means-tested benefits – people, in other words, with incomes below the safety net. As far as we know, no such estimate has been published: certainly the government has not done so. At the start of next week, a report that we have written, published by Oxfam, will fill that gap.

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