Second Report - Benefit levels in the UK

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. (Paragraph 55) Setting benefit levels: Purpose, principles and policy objectives Read more 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. (Paragraph 55) Setting benefit levels: Purpose, principles and policy objectives Show less

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DWP is clear that benefit levels and the design of benefit policy are intended to incentivise work. This is welcome. The Department does not however directly acknowledge the other purpose of benefits: to provide financial support for living costs to … Read more DWP is clear that benefit levels and the design of benefit policy are intended to incentivise work. This is welcome. The Department does not however directly acknowledge the other purpose of benefits: to provide financial support for living costs to jobseekers, people with low earnings, and to those who are unable to or not expected to work. We find this surprising given that the cost associated with benefits is significant—to claimants, to the taxpayer and across Government spending. Setting out clear, measurable objectives and a benchmark for benefit levels linked to living costs would enable DWP to measure progress and improve accountability in the system. DWP should outline a clear benchmark for income-replacement benefits (such as Universal Credit) which relates to living costs as well as incentivising work. When deciding what benefit levels ought to achieve and/or prevent in relation to living costs, the Department could, for example, consider the methodology used in the Joseph Rowntree Foundation and Trussell Trust’s ‘Essentials Guarantee’. The Government should then present a statement of objectives for these benefits within the first session of the next Parliament. Show less

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Having established a benchmark, the Department should review the extent to which current benefit levels are meeting this benchmark. If DWP finds that it is not meeting these objectives, it should set out how it intends to reach them alongside … Read more Having established a benchmark, the Department should review the extent to which current benefit levels are meeting this benchmark. If DWP finds that it is not meeting these objectives, it should set out how it intends to reach them alongside annual uprating, for example, by ratcheting-up benefit levels where fiscal headroom allows. Show less

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We understand that to increase legacy benefits, changes must be made to DWP IT systems several months in advance—with work needing to be completed by the end of November, for increases to be enacted the following April. Parliament however is … Read more We understand that to increase legacy benefits, changes must be made to DWP IT systems several months in advance—with work needing to be completed by the end of November, for increases to be enacted the following April. Parliament however is not presented with the secondary legislation to approve these changes until months after the decision is announced, by which time it would not be possible for the Government to change its course should it be persuaded. We are concerned that the process does not provide genuine opportunity for Members to scrutinise the Government’s plans. The Government should devise and bring forward further opportunities for Parliament to scrutinise its decisions on benefit uprating. For example, ahead of debate on the benefit Uprating Order, the Government should provide this Committee with a statement of how its decision on benefit uprating has taken into account its newly stated set of principles and objectives. Show less

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If the Government decides to deviate from the ‘Uprating Guarantee’, it should clearly set out its reasoning to Parliament. The Government should also undertake work to understand what impact the decision to not follow consistent practice would have on its … Read more If the Government decides to deviate from the ‘Uprating Guarantee’, it should clearly set out its reasoning to Parliament. The Government should also undertake work to understand what impact the decision to not follow consistent practice would have on its benchmark of objectives for benefit levels. Show less

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Policies which reduce the level of support claimants can receive, such as the capital limit rule in means-tested benefits, the benefit cap, and the earnings threshold in Carer’s Allowance, risk reducing benefit levels if they are not regularly uprated in … Read more Policies which reduce the level of support claimants can receive, such as the capital limit rule in means-tested benefits, the benefit cap, and the earnings threshold in Carer’s Allowance, risk reducing benefit levels if they are not regularly uprated in line with other prices. To ensure that policies designed to allocate and limit benefit entitlement operate as originally intended, the Government should commit to uprating the capital limit rule in means-tested benefits, the benefit cap and the earnings threshold in Carer’s Allowance on an annual basis. Show less

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We recognise the Department cannot shorten the reference period for benefit uprating due to the DWP IT systems used to uprate legacy benefits. In the longer term, and following the completion of migration to Universal Credit, the Government should aim … Read more We recognise the Department cannot shorten the reference period for benefit uprating due to the DWP IT systems used to uprate legacy benefits. In the longer term, and following the completion of migration to Universal Credit, the Government should aim to reduce the length of time between the measure of inflation used for uprating, and the uprating implementation date. The Government should retain this new, shorter uprating reference period each year to maintain consistency within the system. Show less

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It is welcome that the Government is extending the Household Support Fund (HSF) for a further six months until September 2024. Alongside other benefits, the HSF has provided a vital layer of additional support to households during the cost of living crisis. The Household Support Fund should be made a …

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The Government of the day has a political mandate to make decisions about benefit adequacy, but its decision-making might be assisted by independent advice. 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 …

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