“I’m getting like £1,300 to £1,400 a month. And there’s people out there working and they’re not even earning that.”
Michael, a welfare recipient interviewed by Dispatches.
“There's a lot of people out there that need jobs. But unfortunately, … benefits look easier to claim than to go to work.”
Kevin Trott, JLS Ovens, who is recruiting for a trainee sheet metal worker.
Britain is not a nation of skivers and scroungers. Just before the first lockdown, the proportion of 16-to-64 year olds either in-work or looking for it was at an all-time high. This ten-year downward trend in economic inactivity (2010-20) was achieved by reforming benefits and increasing the work incentive but cutting tax. This is now moving in the opposite direction, with tax rises concentrated on the low-paid.
The people I spoke to in the film - claimants and employers - pointed out that sickness benefit is competitive with low-paid work. This is because of the way the benefits pile up. A study by the Centre for Social Justice shows how the various claims can all stack up: combine sickness benefit with disability benefit (or 'PIP') and it adds up to more than the minimum wage.
The Universal Credit (UC) standard (£393 a month for a single person over 25) can be added to UC’s sickness benefit, LCWRA (‘limited capability for work and work-related activity’). On top of that comes housing, which varies regionally but averages £7,285 according to the DWP database. Most LCWRA claimants also take PIP (‘personal independence payment’), where the average award is £6,900 according to the OBR.
Compare that with £20,600 that you’d get, after tax, for 52 weeks of 40 hours on the minimum wage. And that’s before you add the ‘child’ element, which can take the package up to £35,000 depending on the child's own disability ranking. This is, needless to say, before any work: either declared (which is allowed) or undeclared (cash-in-hand).
In the documentary I meet Amy, a single mother, who she’d need £35k to replicate what she gets in benefits: like many, she's on the old Employment and Support Allowance (ESA). We consulted Policy in Practice, the UK leader in benefits modelling, who said this figure is perfectly plausible. Its gave an example, below.
NB, this describes someone like ‘Amy’ - not the interviewee herself. So £2,330 a month without work, which grows (but not by very much) if she did work.
In the film, Amy tells us that she believes she'd lose everything if she started work. Not so: she'd be liable for reassessment, but there no automatic qualification. I should stress here that Amy is clearly disabled (she needs a stick to walk) and, having been homeless as a child, is now giving her son the kind of stability she lacked. When I spoke to Jacob Rees Mogg on his TV show, he argued that Amy has played by the rules all of her life and cannot be blamed for the situation that she is now in. Removing this stability (that is, cutting her benefits) is unlikely to lead to the kind of social progress that welfare reform should be aimed at producing: my own view is was that any reform should grandfather old rights.
There are a mind-boggling number of benefit options, which gives a taste of the maze of complexity into which 3.2 million Brits have been plunged. Most benefits interact, but in different ways: below shows the main area of overlap.
More work is needed on such models, to understand the system as it is seen by those affected - and to ask whether the system, as it stands, is sucking people into worklessness by a matrix of perverse incentives. For a great many people, welfare has robbed work of its economic function. If middle-class people were offered the same money (or almost) without having to work, how many would persist with their not-always-interesting jobs?
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