On 23rd May 2024, the Government published its response to the Work and Pensions Committee's report on Benefits levels in the UK. Our CEO, May Fairweather, participated in the roundtable discussions that informed this report, and was quoted multiple times in the final report, so we were eager to see the Government's response.
The report made 19 recommendations and comments. For the purpose of this post, and reflecting the Government's response, some of the recommendations have been combined.
Recommendation 1: The Department should set out when it intends to conclude its review of research on the experience of carers.
The Government response was that they are going to do this, at some point soon, but with no actual timeframe. In the time period between the consultation period, the publication of the report, and the government's response, this issue has come under significant additional scrutiny.
Recommendation 2: The Government should commission further research to understand the impact of benefit levels on the health and wellbeing of claimants and its relationship with economic productivity.
In response, the Government referred to a "growing body of evidence that good work can actually improve mental and physical health", and stated there were no plans to commission research into the effect of benefits levels on health and wellbeing.
In conjunction with the response to recommendation 18, explored further below, this response makes it clear that the Government has little interest in funding external evaluation of the consequences of welfare benefits policy.
Recommendations 3, 4 and 5: The Government should outline a set of principles to guide the design and delivery of benefit policy, and to inform decisions on how benefit levels are set, including a clear benchmark for income-replacement benefits (such as Universal Credit) which relates to living costs as well as incentivising work. Benefit levels should be increased in accordance with this benchmark.
The Inquiry into the adequacy of benefits levels was launched specifically to understand how and whether social security levels in the UK met the needs of claimants. The Committee had previously presented a report to the Government outlining that a root cause of the cost of living crisis was the "fundamental inadequacy of social security support". The Government's response in 2022 was that there was no objective way to determine what benefits should be. As such, this Inquiry was launched to determine exactly that.
Despite the existence of multiple objectively-measurable definitions of income inadequacy, such as the relative and absolute low income thresholds used in the Government's own reports into poverty, or the Joseph Rowntree Foundation's definitions of destitution and extremely low income, the Government response continued to maintain that "There is no objective way of deciding what an adequate level of benefit should be", and as such they do not intend to establish a benchmark for benefits levels.
This is a disingenuous response; while determining an adequate level of benefit is certainly a contentious and complex issue, it is certainly not difficult to acknowledge that income-replacement benefits which fail to provide sufficient household income to prevent destitution are not adequate. The JRF determined that income after housing costs below £95 per week for a single adult, £145 for a couple without children, and £205 for a couple with two children, would cause households to fall into destitution. Universal Credit standard allowance (the element of the benefit intended to be used for living costs other than housing) pays £71.93 for a single adult under 25 and £90.80 if over 25, £122.90 for a couple under 25 or £142.52 if over 25, and £245.79 for a couple under 25 with two children. Only a couple over 25 with two children would receive enough income from Universal Credit to avoid destitution, at £275.41 per week.
While it is unusual for Universal Credit standard allowance to be a household's sole source of income, it is not impossible, particularly for single adults whose health problems or disabilities prevent them from working but do not meet the exacting standards to be eligible for disability benefits.
The implication that retaining low benefit levels is part of a policy of incentivising work is an interesting one. The Government response states that "work incentivisation is the core of the welfare system", a statement that could be debated, but what is more important is whether there is any evidence that the current system is an effective form of work incentivisation. Research in the fields of behavioural psychology and economics, to name just two areas relevant to incentivisation, suggests that financial incentives often operate to decrease motivation to perform a task, by undermining intrinsic motivation and damaging social norms of trust and prosocial behaviours.
Punishment is a particularly ineffective motivator, with even the DWP's own (methodologically dubious) research on the effect of sanctions on employment outcomes suggesting that punishing a claimant for failing to meet their claimant commitment to look for work reduces the likelihood they will find work. It does, however, make it more likely that they will stop claiming Universal Credit, despite not having managed to find work.
It is hard to see how keeping benefits levels below the destitution threshold is intended to encourage work. As noted by one of the participants at the roundtable consultations, looking for work is made more difficult when you are unable to eat sufficiently or heat your home. The Government points to the payment taper (the reduction of Universal Credit payments by 55p for every £1 earned) as proof that people are always financially better off in work than solely on benefits. The assumption that people would choose to remain in poverty when they could increase their income through work seems based on the idea that benefits claimants are both lazy and stupid.
In reality, our experience has been that people who are reluctant to look for or increase paid work fall into one of three categories: people who are afraid of the devastating financial, emotional, psychological and health consequences of losing their disability or care-related benefits (which do not taper in a work-incentivising manner), people who lack the confidence, self-efficacy or ability to conceptualise a different lifestyle, and people whose circumstances make regular work extremely difficult in ways that the DWP's processes do not allow for.
Recommendations 6, 7, 8 and 9: Evidence suggests that insufficient means-tested benefits frequently necessitate PIP recipients to use their extra costs benefits to cover day-to-day living costs. The DWP should be part of the Extra Costs Taskforce. Once operationalised, DWP should use findings from the Taskforce to set a benchmark for the health and disability related costs it intends PIP to cover. It should then set out how it intends to reach this benchmark alongside annual uprating. The Department should introduce further levels of support through PIP and the new Health Element of Universal Credit in time for the start of financial year 2025–26.
These recommendations hinge on the foundational premise, also underpinning recommendations 3 to 5, that means-tested benefits should be adequate to cover basic living costs, a premise that the Government has already rejected as being subsidiary to the need to incentivise work, and impossible to implement due to the "lack of objective measures of adequacy". It's therefore not surprising that the response to this section focuses more on the need to reduce the cost to the taxpayer of disability benefits such as PIP, and less on how to ensure that disability benefit recipients are able to afford their basic essentials and disability-related costs.
Recommendations 10 to 17: The Government should make an ‘Uprating Guarantee’ to uprate benefits annually, for example with inflation, or provide Parliament with the justification and analysis of the consequences of failure to do so. The capital limit, benefit cap, Local Housing Allowance, and earnings threshold in Carer’s Allowance should also be uprated annually.
Again, it is unsurprising that the responses to these recommendations were, in essence, that the Government is not required to uprate benefits, reduce caps or amend thresholds on a specified schedule or by a specified amount, and it does not choose to do so. The assurance that these matters will be kept under review carries little weight.
Recommendation 18: There is scope for DWP to commission independent research, either via an independent body, such as the Social Security Advisory Committee, or ad-hoc, to supplement its own review of the extent to which current benefit levels are meeting its objectives for what benefit levels should achieve in relation to living costs.
The response to this recommendation is succinctly and tellingly summarised by its own first sentence: "The Department currently has no plans to commission independent research into the extent to which current benefit levels are meeting its objectives for what benefit levels should achieve in relation to living costs."
Recommendation 19: To improve transparency, the Department should include in its quarterly statistics release, the number of Work Coaches and the average number of claimants they are responsible for, including the number of Disability Employment Advisers (DEAs), the number of Disability Employment Adviser Leads (DEALs), and the number of Work Coaches DEAs and DEALs are supporting in Jobcentres.
Once again, the response to this recommendation was that there are no plans to do any more than is already being done. The government's response to this report can, at the very least, be commended for its consistency of message.
Footnote: The report and the Government's response to it predated the UK General Election of July 4th, 2024. It remains to be seen what the new government will choose to do, if anything, with the recommendations made.