Britain’s social safety net is one of the weakest in the rich world and its poorest households are worse off than counterparts in Slovenia, according to analysis that shows jobless benefits have covered the cost of essentials in just two of the past 14 years.
The report by the National Institute of Economic and Social Research comes as Prime Minister Sir Keir Starmer seeks to convince Labour MPs to back welfare reforms that will cut financial support for the sick and disabled in order to bolster the public finances.
Spending on health-related benefits has risen sharply since the pandemic and ministers are preparing to cut about £5bn from the projected £41bn cost of personal independence payments, the main disability benefit, by 2029-30.
The package of reforms could also include reductions to separate incapacity benefits — which are paid to people who are too sick to work — in order to fund an uplift to the basic rate of jobless support, which amounts to £393.45 a month for a single claimant aged 25 or over.
The think-tank’s analysis, to be published on Thursday, shows that Britain ranks third from bottom in the OECD for the generosity of support for the unemployed, where benefits replace less than 40 per cent of average wages. Only the US and Australia are less generous.
The UK also slipped from 14th to 21st place in the group of advanced economies for the amount spent on welfare as a percentage of GDP between 2010 and 2019,
The drop — which came as the then Conservative government put in place new caps and conditions and freezes to a range of benefits, while also freezing housing benefit — was the biggest of any country and left overall welfare spending just below the OECD average.
Niesr said there had been only two years since 2010 — during the pandemic, when the government boosted the basic rate of benefits by £20 a week — where the value of welfare payments had been enough to cover the cost of essentials.
Meanwhile slow wage growth, reflecting the UK’s poor productivity performance, had left the poorest British households worse off than their counterparts in Malta and Slovenia, even as other parts of the country prospered, the think-tank said.
“We are neither delivering prosperity through high wages nor security through welfare,” said Max Mosley, senior economist at NIESR and the report’s main author, pointing to the corrosive effect on living standards of weak productivity growth and benefits cuts.
Speaking at Prime Minister’s Questions on Wednesday, Starmer said the current benefits system was “indefensible, economically and morally”.
Ministers have repeatedly said the aim of the reforms is to give people stuck in a benefits “trap” the incentives and the support they need to re-enter work.
But charities and campaign groups representing disabled people say reforms that prioritise short-term savings for the Treasury, rather than investments in better health and employment support, will hit vulnerable people without boosting the workforce or cutting the benefits bill in the long term.
Both campaigners and ministers acknowledge one reason health-related benefits spending has risen so much is because it is so difficult to survive on the basic rate of jobless benefit.
