The elephant in the room: time to pay attention to the inadequacy of the UK Benefits System

Failure to ensure that benefits cover essential costs is an injustice to those who need support the most and stores up future economic challenges, says Policy and Research Officer Joel Davies

‘Fixing the foundations’ has become one of the key buzz-phrases of the new UK Government, shorthand for its stated aims of reforming public spending and increasing prosperity. On the benefits system, it has made much of the need to join up health and employment support to get sick people into work. If this initiative, dubbed ‘Get Britain Working’, can contribute to the creation of more high-quality employment and a fairer jobs market then it will be a positive step.

But the Government has thus far been largely silent on the principle of increasing benefits in line with the costs of living and ensuring that claimants have enough for essentials. It is the need to fix this crumbling foundation that matters most urgently to the hundreds of thousands who rely on benefits in Wales.

Social Security leaves people in poverty

Social security benefits provide an essential lifeline for people who are on low incomes, lose their job, or are unable to work because of illness or caring responsibilities. This support is a cornerstone of a fair society and should ensure that people are not pushed into hardship due to circumstances outside of their control.

But the reality of the social security system is that it simply does not pay enough to ensure those in need have all the essentials, leaving them without a stable foundation on which to build their lives. The basic rate of Universal Credit is just £91 per week—below what the Joseph Rowntree Foundation considers to be the destitution threshold of £95 per week. For the 360,000 people claiming Universal Credit in Wales, this causes demonstrable harms: the latest polling undertaken on our behalf by YouGov in September showed that almost half of Welsh adults receiving Universal Credit have recently skipped or cut down on the size of meals. Almost six in ten had needed to borrow money to cope with increased financial pressure, and half were in arrears on a household bill.

The implications are economic as well as moral. Inadequate social security support means that people face unjust impediments to making their contribution to the economy, while becoming far more likely to require more costly intervention from public services down the line. The cost to the NHS of health inequalities is just one example of this—increased need for hospital services by people in areas of high deprivation adds an estimated £322 million per year to the Welsh health budget. It is poor economic strategy not to act to prevent significant portions of the population from living in poverty.  

Migration to Universal Credit

It’s clear that a commitment to adequacy in the benefits system must be forthcoming, and quickly, from UK Government if it is to fulfil its goals and involve everyone in its plans for growth.

Adding to the urgency for many, however, is the prospect of the final stages of the move to Universal Credit from ‘legacy’ benefits. We are years on from the original date of completion for the migration, and it is understandable that UK Government is keen to push for its revised completion date of 2026, as announced in the Budget.

But the bulk of claimants left to be moved to Universal Credit are some of the most vulnerable. DWP data appears to show there were at least 65,000 legacy Employment and Support Allowance claimants remaining in Wales in May 2024. These are people with a long-term health condition or disability who have a limited capability for work, and who often also have complex additional needs.

We already know that 21% of claimants do not take up Universal Credit after receiving a notice that their legacy entitlement is ending. For those with the most complex needs and who will require support to apply for the new system, the risks are plain to see. With an accelerated timescale, there is likely to be immense pressure on frontline organisations which exist to provide support. From government, there will need to be much scrutiny and safeguards put in place to ensure the migration process is not causing harm and unnecessary hardship.

Both the Welsh and UK governments should not allow their attention to be anything less than unwavering on these issues surrounding benefits. That means more support to those already on Universal Credit, in line with the costs of living, and a renewed focus on making sure those yet to be moved to it are an urgent priority, and treated with compassion and care throughout the migration process.

Big picture and growth, yes. But the prevention of hardship and destitution must come first.

More information on working-age benefits in Wales, including legacy benefits and the move to Universal Credit, is available for subscribers in December’s State of Wales briefing, ‘Working-age social security benefits’

Joel Davies is Policy and Research Officer at the Bevan Foundation