Universal credit falls short of minimum living cost by £4,000 a year, experts warn

Benefits are expected to fall to their lowest ever levels in real terms by 2030, new analysis has revealed.

Out-of-work benefits were worth more than a fifth (20.1%) of a person’s weekly pay in 1971. But benefits are on a trajectory to be worth just 11.2% by 2030, according to research from the Institute for Public Policy Research (IPPR) think tank.

This assumes that benefits will be increased by inflation every year until the end of the decade, which is not a guarantee.

Those on the lowest incomes are not receiving enough money from the government to survive as it is, with the IPPR warning that universal credit claimants are more than £4,000 short each year.

Henry Parkes, principal research fellow at IPPR, said: “Benefits should provide enough to live on but they have never actually been calculated in relation to the costs people face day to day. This has only been made worse by policies like the benefits cap, the two-child limit and a sharp reduction in support with housing.

“It’s time to rethink the role of our social security system. At the moment, it’s not providing enough for families to survive, and that is bringing further costs to us as a society and economy.”

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The report paints a worrying picture of the state of the social security system which is “failing to protect people from poverty, and is disconnected from the realities of life on a low income”.

Universal credit claimants do not have enough money to live. The IPPR has found single claimants are left with a shortfall of £35 each week once they’ve bought the basics like food and toiletries. This rises to £84 after housing costs and potential deductions. 

These figures match those from the Trussell Trust and Joseph Rowntree Foundation, which have found that nine in 10 people on universal credit are going without the essentials because they can’t afford them.

And 5.7 million low-income households are skipping meals because they don’t have enough money for food.

The charities are campaigning for an ‘essentials guarantee’ to ensure that benefits claimants can afford the essentials they need to survive – at the very least. The Big Issue is backing this as part of its End Housing Insecurity Now campaign.

Lord John Bird, the founder of Big Issue Group, previously said: “In one of the wealthiest countries in the world, the fact that nine in 10 low-income households on universal credit are going without essentials is unacceptable.

“As a champion for social justice, the Big Issue Group, alongside other like-minded organisations, is calling on the government to address this urgent issue. No individual or family should be left to struggle during this crisis. We need to ensure that everyone has access to the basic necessities they need to get by, and we urge the government to take action now to support those who need it most.”

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Following its research, the IPPR is calling for a new independent statutory body for social security. This would publish annual reports holding the government to account and reviewing progress, monitoring the impact of policy changes and recommending interventions when there are sharp increases in living costs.

Melanie Wilkes, associate director for work and the welfare state at IPPR, said:  “Universal credit could offer a crucial lifeline to households who are struggling on low incomes. But it is completely out of sync with the costs families are facing, and, as a result, is failing to protect many from poverty.  

“We need politicians to move from debates about social security grounded in outdated stereotypes and misperceptions, towards a shared long-term ambition for the purpose and shape of our social security system.”  

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