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A benefits increase is essential to ease the cost of living for low-income families

A benefits increase is essential to ease the cost of living for low-income families
4 min read

“There is quite simply nothing left to cut back on.”

This statement from a participant in the Covid Realities project study of low-income families sums up the growing body of evidence from civil society groups.

Increasingly struggling families are unable to afford the basics of food and fuel as prices soar. One consequence has been a recent surge in the use of food banks and, according to the Food Foundation, a sharp increase in the proportion of households with children experiencing food insecurity – from around 12 to 17 per cent in just three months.

The measures taken so far to help with the cost of living crisis have been poorly targeted and inadequate. The government are now under immense pressure to do more but reports that the answer may be a further cut in the universal credit taper rate and bringing forward the promised 1p cut in the basic rate of tax are not reassuring. While a cut in the taper rate may be helpful, it does nothing for the very worst off not in paid work (including many unable to work because of caring responsibilities, disability or chronic sickness).  And a cut in the basic tax rate is simply regressive, providing no help to those with incomes below the tax threshold and only limited help to others in receipt of means-tested benefits. 

To quote Lord Clarke, most of what the government has come up with is “a complete waste of time”.  

The harm that could result from waiting until next April, when the next uprating is due, cannot be countenanced

Such measures duck the key policy failure: universal credit and other social security benefits were uprated by 3.1 per cent in April when inflation was nearly three times as high at nine per cent. According to the Joseph Rowntree Foundation this represents the biggest fall in the real value of basic unemployment benefits for 50 years. They estimate that the below inflation uprating will pull 600,000 more people into poverty, a quarter of whom are children. Moreover, it will push those already in poverty further below the poverty line: the National Institute for Economic and Social Research warns that without a boost to universal credit around a quarter of a million more households could slip into extreme poverty. Such calculations do not even take account of the differential impact of inflation: both the Institute for Fiscal Studies and the Resolution Foundation calculate a real inflation rate of over 10 per cent for the bottom ten per cent of households.

The fall in value of benefits has to be understood in the context of a decade of cuts, freezes and punitive reforms, such as the benefit cap and two child limit, which have hurt children disproportionately, together with the loss of the £20 universal credit uplift. 

As former work and pensions secretary Stephen Crabb observed recently, “no one should think that we have a generous system…supporting families through a crisis like this…is exactly the purpose of social security’.  Indeed, a remarkable consensus has emerged among politicians, including many Conservative MPs and peers, think tanks and charities, that a further increase in benefit levels is essential to protect low-income families. The harm that could result from waiting until next April, when the next uprating is due, cannot be countenanced. 

So far the Treasury response has been to cite “technical difficulties” resulting from antiquated IT systems. But, as Sir Iain Duncan Smith has pointed out, this is not true of universal credit. And surely it should not take more than a few months to overcome any technical difficulties uprating other benefits. 

The Treasury’s “computer says no” response does not square with the Prime Minister’s repeated assurance that the government will use all its “ingenuity and compassion” to help people through the cost of living crisis.

Ideally, there should be additional support for children, as in Scotland, given children are at the greatest risk of poverty. At the very least, an immediate extension of free school dinners and breakfasts and additional funding to ensure that providers do not cut back on quantity or quality because of rising costs would help address growing food insecurity.    

The final word goes to another mother taking part in the study of low-income families, whose response to the Spring Statement was that it “offered nothing, no hope to those of us on the lowest incomes”. 

A commitment to a further increase in benefits and to improve school meals would at least offer a modicum of hope to her and other parents struggling to survive.

 

Baroness Lister is a Labour peer. 

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