How a transformed social security system can change lives

This year’s Poverty in Scotland report looked at where social security is working for low-income families, and where it is broken and needs fixing. This explainer summarises where reform, restoration and bolstering are needed to poverty proof our social security system. Last month’s UK Government budget leaves that reform and repair work undone.

This year’s Poverty in Scotland report also investigated the extent which UK social security is helping low-income families. It found that for families with children:

• Basic rates of benefits are failing families – when parents are not in work their children consistently fall below the poverty line.
• The 2 child limit has visible effects on the incomes of large families. Removing the 2 child limit could lift around 10,000 children in Scotland out of poverty, reducing the 2030/31 child poverty rate by 1 percentage point compared to the policy remaining in place.
• The temporary £20 uplift to Universal Credit (UC) had a significant positive impact on families’ incomes.
• Child benefits, such as the Scottish Government’s Scottish Child Payment (SCP) and the UK Government’s Child Benefit, are holding some families just above the poverty line.
• Work only gets families with children so far, and we know that access to work remains a challenge for many low-income parents due to inadequate childcare and family unfriendly employment.

We spoke with the End Poverty Scotland Group about the design of the current system. 

Reflecting on the 2 child limit Andrew, a parent in Dundee living on a low income, told us:

“What they have introduced is prejudice. And I would go so far to say discriminatory against young children. And it’s absolutely disgusting! Abhorrent that an innocent child is punished for being born. I mean, who made this up? You know, it’s so cruel.”

Focusing on policy decision directly impacting the incomes of families with children we recommend that the UK Government further act to ensure that Universal Credit is enough so that people can afford the essentials and, as they have in the past, use the social security system to significantly reduce child poverty. The Scottish Government should consider how best to use the SCP to contribute towards meeting the Child Poverty Reduction Targets.

Benefit adequacy – pushing people under

I don’t know anyone that’s on benefits that feels secure, but you should feel secure.

Alex, Fife

People in receipt of low-income benefits are feeling the pressure as costs have risen and the real term value of benefits has fallen. For some families, moving into work provides sufficient earnings to have kept their total household income stable over the last 10 years, but for others, they remain in poverty (after housing costs) even when in full-time employment. Overall, a work first approach to social security has failed with increasing numbers in work yet increasing in-work poverty.

It is clear that the basic rate of benefits is leaving people unable to make ends meet. JRF and The Trussell Trust have called on the UK Government to introduce the Essentials Guarantee whereby the basic rate of UC would be set every year based on an independent calculation of the cost of essentials. This would require a pivotal change in mindset from the UK Government about the social security system because it would link benefit rates to real-world costs – rather than the arbitrary, and inadequate, levels set today. We found that the introduction of the Essentials Guarantee could lift around 140,000 people in Scotland out of poverty, including around 30,000 children.

To improve the adequacy in both the value and experience of accessing social security for families in Scotland, both the Scottish and UK Governments must work together. We call on political figures to end their use of the benefits system as a political tool that further entrenches the rhetoric around social security, and in turn, shames and stigmatises people in receipt of benefits.

As Alex in Fife put it:

“I wish the benefit system was separate from politics. It’s so unfair that every time someone wants to stay in power, they want to be seen as coming down hard on people on benefits. [But then] everyone that is having to do it as a lifeline is screwed over.”

Groups most at risk

We also found that the social security system is leaving some families at a greater risk of poverty both through its design and reach. Higher rates of poverty can be exacerbated by the social security system in a number of ways:

• For families that are more reliant on social security, such as single parents and disabled people, its inadequacy leaves them in, or at risk of, poverty.
• Some families are disadvantaged by the social security system due to policy decisions that directly target them, such as large families, young adults and people with no recourse to public funds.
• Some families in poverty who should be able to get support through the social security system are not accessing it, such as minority ethnic families.

We urge both the UK and Scottish Governments to support families to access the benefits that they are entitled to. Take up rates remain low for too many benefits and some groups with high poverty rates remain underrepresented. This is both a cultural and system problem with many claimants feeling put off by the processes and attitudes of DWP staff.

As Alex told us:

“They make you feel guilty for getting what you are entitled to.”

Others experience the systemic failures of the system where policy choices such as No Recourse to Public Funds and the 2 child limit are forcing families to live on inadequate incomes.

Stronger social security helps us all

Social security has the potential to give families the resources they need to make ends meet, a lifeline out of poverty that allows them to flourish. But systems must be designed with this as the goal, rather than with cruel rules that allow people out of work to fall into destitution, or leave a third sibling with no income to support them to grow.

It is incumbent on the UK Government to repair our social security system. Last month’s budget has begun to reverse the austerity that public services face but risks leaving low-income families behind. Other policy announcements, like cuts to Local Housing Allowance and the threat of future cuts for people who are disabled or in ill-health, breed insecurity.

For the Scottish Government, improvements in their financial position open opportunities for strengthening the support for families in poverty in Scotland.