This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
This is the report summary, read the full report.
The Department for Work and Pensions is the UK’s biggest public service department, responsible for the delivery of welfare policy to around 9.3 million working-age people at any one time. One of its key priorities is to “provide financial support to people who are entitled to it,” which it does through a range of benefits intended for different purposes—such as benefits for jobseekers, benefits for families, and benefits to help with costs associated with illness or disability.
In this report, we consider benefit levels for working-age people and whether they are meeting the needs of claimants. This inquiry follows our July 2022 report, The Cost of Living, where we recommended that the Government “review the adequacy of benefit levels and publish its findings”. The Government did not accept this recommendation because “there is no objective way of deciding what benefits should be”. This report is our response to that challenge.
In this report, we set out a wide range of evidence which suggests that benefit levels are too low, and that claimants are often not able to afford daily living costs and extra costs associated with having a health condition or disability. Whilst we find the experience of claimants has been exacerbated by recent cost of living pressures, our inquiry has led us to look more probingly at what the purpose of the benefit system is, how benefit levels have historically been set, and how they could be set and uprated in the future.
We identify that a key challenge when evaluating the adequacy of benefit levels is that the Government has not set objectives for what benefit levels ought to achieve or prevent. While there is an objective that benefits should incentivise work, there is not an explicit objective as to how benefits will support claimants with daily living costs. In order to set objectives, we recommend that the Government first develop a framework of principles to inform discussion on benefit levels and help build cross-party consensus. With a firmer base to progress from, we suggest the Government outline a benchmark and objectives linked to living costs to measure the effectiveness of benefit levels, and to make changes alongside annual uprating.
This report also sets out an overview of the procedures used to uprate benefits on an annual basis, and it identifies where changes could be made to improve consistency, transparency and accountability in the system. We recommend the Government commit to an ‘uprating guarantee,’ to uprate benefits annually with a consistent measure, for example prices. We also recommend the Government uprate the Local Housing Allowance rate each year so that it retains its value at the 30th percentile of local rents.
Benefits are affected by a range of policies which go beyond how levels are set or uprated annually. In this report, we signpost previous work we have conducted, and we look forward to planned changes the Government has announced which relate to employment support and conditionality, which are likely to have a significant impact on claimants. We recommend DWP monitor and publish statistics on the number of Work Coaches and Disability Employment Advisers.