openDemocracyUK: Opinion

Social security needs a massive boost to help people through this crisis

A million more thrown into the benefit system. 14 million in the UK already poverty before coronavirus struck. It’s time to fix the safety net.

Frances O'Grady
10 April 2020
PXfuel/CC0

For as long as this crisis lasts, a top priority for us all must be to keep working people in their jobs.

Trade unions were amongst those pressing government to deliver the Job Retention Scheme, and for additional protections for self-employed workers and working parents, to do just that. In workplaces across the country, union reps are also working to ensure that employers take advantage of it rather than making layoffs. There's a need for us all to keep fighting to ensure stronger protection for even more workers.

But we can’t avoid the reality that, around the world, tens of millions of workers are losing their jobs to this crisis. In the UK, we’ve already seen a massive increase in the number of people turning to the social security system to keep their families going.

According to the latest figures from the Department of Work and Pensions, there have been 1.2 million applications for Universal Credit in last three weeks, nearly ten times what they would expect in normal circumstances.

The message is clear: social security – our shared safety net – will be vital in supporting families through this crisis.

The problem is that after a decade of cuts the safety net isn’t strong enough.

In 1993, the last time the unemployment rate went over 10 per cent, the basic rate of unemployment benefit was worth around a fifth of average wages. In 1984, when unemployment was over 11 per cent, the benefit was worth a quarter of the average wage. And in 1979, it was worth 30 per cent of the average wage.

Today, even after the recent increase of £20 a week, the basic rate of universal credit is worth just a sixth of average weekly pay.

If we don’t act now to fix social security, many more families will be plunged into poverty.

That’s why the TUC – like OpenDemocracy, NEF and many others – is calling for an emergency boost to universal credit.

Restoring ‘replacement rates’ to the level seen before the long dismantling of the safety net began in the 1980s, would mean increasing the payment of universal credit to £165 a week – around 30 per cent of average wages. But we think the government should be more ambitious. To protect against sharp income drops, we recommend raising the basic level of universal credit to at least 80% of the real living wage for the duration of the outbreak. That increase should be reflected in legacy benefits – like jobseekers’ allowance and employment support allowance – too.

What’s more, we need to make sure that support reaches as many people as possible as quickly as possible and protects children from poverty. So we’re also calling on ministers to:

End the five-week wait period for Universal Credit by replacing emergency Universal Credit loans with emergency grants so claimants don’t build up debts waiting for payments.

Speed up the application process for Universal Credit by not requiring claimants to have a telephone interview.

Raise child benefit payments.

Ensure no-one loses out by removing the benefit cap.

These changes can and must be made immediately. But we also need to have a longer-term conversation about repairing our social safety net.

There were already 14 million people living in poverty in Britain before the coronavirus struck, including four million children. And since 2010, government has deliberately redirected spending away from social security for working families, to the tune of about £34 billion.

Last year, the UN’s special rapporteur on extreme poverty said that “ideological” cuts to public services and social security have driven the "systematic immiseration" of a significant part of the UK population.

So, beyond the emergency boost to see us through the coronavirus crisis, we need to upgrade our social security system to meet the economic challenges ahead.

In the medium term, we’re calling on the government to adopt an earnings-related system for unemployment benefit. This is the norm in most European countries, where unemployment benefits are related (at least in the initial period of unemployment) to previous wages to cushion income shocks. This ranges from 60 per cent of previous wages in Germany to 90 per cent in Denmark. There’s no reason the same can’t be delivered here.

This crisis has reinforced that change is necessary – and possible. In recent weeks, a Conservative government performed an ideological somersault on wage subsidies. Ministers listened to unions and civil society as well as business, and acted swiftly to protect working people’s jobs.

Now they need to go further. For those who lose work or hours – and for their families – it’s vital that the safety net is strengthened fast.

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