Is now the time for a minimum income for benefit recipients?

A minimum income for benefit recipients was one of the points debated at a Parliamentary event this week following a new report published by the think tank Brightblue Consulting .

Policy in Practice spoke at a panel discussion exploring the findings of the Building up: the future of social security report. The report proposes three major reforms to the welfare system:

1. A minimum income for benefit recipients with annual increases set independently by the Social Security Advisory Committee
2. A digital platform through which claimants can access unclaimed support and have their benefits processed through a single claim
3. A contributory benefit that offers an extra layer of payments to the unemployed, that individuals can opt out of

Deven Ghelani , Policy in Practice, joined a panel alongside The Labour Party peer Baroness Lister, report author Anvar Sarygulov and Shaun Bailey MP who sits on the Work and Pension Select Committee. The panel was chaired by Chris Smyth, Whitehall editor of TheTimes.

Clear support for ‘adequacy’, but how much and for whom is less certain

The discussion began with a focus on the adequacy of benefits. Policy in Practice's analysis has shown that DWP benefits are worth 7.5% less in real terms today than compared to 2009. The panel agreed that social security levels are inadequate and support should better reflect the needs of claimants, but the politics remain challenging.

"Think tanks on the right thought working-age benefits had been cut to the bone in 2015. We've had a further five years of cuts since then"

While a third party recommending a base level of benefits had merit, the panel couldn’t see how any government would accept the recommendation of the third party body on what was an inherently political issue.

It was also unclear whether a body setting a minimum income level for benefits recipients to prevent destitution, for example, would set a ‘floor’ for politicians to aim for rather than build upon so people were able to fully participate in society.

"The £20 uplift to Universal Credit and the furlough scheme are a tacit acceptance that benefit levels are too low"

Optimism that benefits take-up can be improved

The proposed digital platform is a novel recommendation that was welcomed by the panel.

Anvar Sarygulov focussed on the huge amount of unclaimed benefits, which we estimate to be around £19 billion. He gave the example of Healthy Start vouchers on which the government holds all of the data required to determine eligibility.

In the absence of a national digital system, local authorities have led the way by demonstrating how administrative data can be used for good to target take-up campaigns and maximise incomes.

The Low Income Family Tracker (LIFT) platform, created by Policy in Practice, has just delivered the first wave of a Pension Credit take-up campaign for the Greater London Authority which saw 5,700 letters to eligible Londoners. The campaign is expected to deliver an economic benefit of around £30 million in additional income to low-income pensioners in the capital.

This type of benefit take-up campaign can be easily replicated across the country and across a range of payments, including Free School Meals, Healthy Start vouchers and social tariffs from water and energy companies. Use our Pension Credit calculator to see how much income your local authority could unlock.

Baroness Lister, former head of the Child Poverty Action Group, spoke about how things had developed since she wrote her first pamphlet on benefit take-up decades ago. We have asked her for a copy, as it's an important piece of history. 

Different opinions about ‘paying in’ to receive additional benefits

Baroness Lister was critical of the proposal for a contributory benefit that offers an extra layer of payments to the unemployed. While not completely opposing contribution-based support, she said the government would do better to tackle policies contributing most to poverty instead, naming the two-child limit and benefit cap as particularly harmful. 

Deven Ghelani suggested that voters want a two-tier system, and it’s for the political process to take the lead on what standard of living social security payments should provide:

"People want a good level of support for themselves, and a lower level of support for everyone else"

Other issues were raised about the way the social security system works. These included concern about its growing complexity given the increase in discretionary funds, social tariffs and other elements that complicate eligibility.

The panel also discussed how the adequacy of support can be funded while also improving work incentives; the challenge of digital inclusion; and concern over a possibly excessive focus on Universal Credit when other elements such as the work capability assessment cause so much hardship.

"Applying for Personal Independence Payment applications is like climbing a mountain"

"The DWP loses 70% of cases, which sees the well-advised and informed winning appeals while others accept what are sometimes incorrect assessments"

The case for social security needs to be made and won with the public

A councillor in the audience felt work incentives hadn’t been tackled by Universal Credit. Residents still tell her they will be worse off if they move into work or increase their hours, despite this being one of the key benefits of Universal Credit.

Recipients keep 45p of every £1 earned below the income tax threshold and are left with 30p for every £1 earned after tax, National Insurance and UC is withdrawn. Yet the perceived complexity of the benefits system means it still isn’t clear to people when they will be better off in work.

Helping people to access support, making all of the various support schemes accessible in one place, and showing people the benefits of work as we do with our Better Off Calculator, can help with many of the issues raised by the panel.

For example, the Better Off Calculator demystifies the Universal Credit taper rate in an easy way by allowing users to ‘change your earnings’.

Bright Blue's proposals, including that of a minimum income for benefit recipients, put the spotlight on how our social security system is working. Whilst reforms are undoubtedly needed, as debated by the panel, they alone won't tackle the wider issues pushing up the cost of social security. Rising housing costs, poor public health and the consequential problem of economic inactivity are policy challenges that must also be addressed.