Centre for Research in Social Policy

School of Social, Political and Geographical Sciences

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Public policy is becoming ever more skewed in trying to focus on “deserving” groups

The evidence is piling up: most people on low incomes will have been made much worse off in the course of this decade. Most depressingly, the Institute for Fiscal Studies predicts that the child poverty rate, which saw a sustained fall in the New Labour years, from 34% to 27% after housing costs, will have shot up to 37% by the end of this Parliament.  New projections we are publishing today show some dramatic examples of falling living standards – such as among out of work families, who got around two thirds of their minimum needs met by benefits at the start of the decade, but will have only about half by its end.

But amid this general gloom, not everyone loses equally, and a few actually make modest gains. Our projections identify a pattern in these differing fortunes that tell us a lot about where public support for low income families is heading.

Most obviously, the worst losers are those who were worst off in the first place: people depending on out of work benefits. The unprecedented decision to uprate benefits more slowly than inflation, and at present to freeze them entirely, is overlain with a myriad of specific punitive cuts, notably the benefits cap, the restriction of tax credit entitlements to two children, the bedroom tax and increasingly severe restrictions on the rent levels that will be supported by Housing Benefit. Put together, these are pushing more families towards destitution, making the escalation in food bank usage entirely unsurprising.

None of those measures that have helped improve family incomes in recent years – higher tax allowances, improved childcare support, a higher minimum wage – have done anything to help people without work. For low income working families, some of whom have benefited from these improvements, it’s a more mixed picture.

Most of these working families are also experiencing severe cuts, particularly in tax credits and in Universal Credit, which in most cases are much greater than the small offsetting gains. The exception to this is low-paid working families with at least one parent working full time and the other working either full or part time. They may get enough gain from the National Living Wage to make them slightly better off overall.

However, most families whose low incomes trigger means-tested help from the state do not have as much work in this – and that’s often why they need the help. Lone parents in particular cannot gain from changes that require two workers in the family to offset the losses in state support. Couples with part-time or sporadic work, including those who choose for one parent to allocate time to family caring, are also lose out.

Thus, behind the strategy of combining lower in-work support with higher minimum pay is the inference that families who want to thrive should increase their working hours. This tallies with the emerging system of “in-work conditionality” under Universal Credit, and the rule that self-employed people have to earn more than a minimum threshold to gain from it.

This is not how Universal Credit was originally designed, when it emphasised opportunities to gain from small amounts of work. It threatens to create a new narrative in which families are seen as “undeserving” of state help unless they are have two parents, who are working all available hours. Yet the purpose of in-work support in today’s uncertain economy should precisely be to guarantee a reasonable income to people on reduced earnings, often because of relatively few or irregular working hours. If these groups come to be seen as the new undeserving poor, the very purpose of support for working families will be undermined.

 

 

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