Wednesday, August 31, 2016

The Future is gloomy for benefit claimants

The UK’s social security system is rapidly becoming unfit for purpose, as successive cuts leave children and working-age adults with an increasingly inadequate safety net for when families fall on hard times, according to a study.

Most low-income working households will be worse off by 2020, while years of social security squeezes mean the income of families on out-of-work benefits will have fallen by up to one-fifth, the analysis by the Fabian Society shows.

At the same time, the cash value of the basic personal tax allowances is on course to have increased by 80% in 2020 from what it was in 2010, meaning that by the end of the decade a typical high-income household will receive more financial support from the state than low-income families reliant on benefits.

The crisis in living standards for poorer families will get worse over the next few years as their incomes deteriorate, while child poverty and inequality will rise sharply, even with strong economic growth, the study says. Under current policy, social security spending as a percentage of national income is likely to half in the next few years, a prospect it says is unsustainable. It calculates that if there is “reasonable economic growth” in the next few years it will be possible to invest billions in working-age social security without raising taxes.

Andrew Harrop, the general secretary of the Fabian Society, said: “For six years of the Cameron government, ‘austerity’ dominated all discussion of benefit policies. But social security for non-pensioners will be worse in 2020 than it was in 2010 and will carry on getting worse in the decade that follows…”

Hundreds of thousands of private sector tenants would face a £100 a month shortfall between rent and housing benefits by the end of the decade.

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