Social security is inadequate – what will government do about it?

The past few years have messed with our perception of time. 2015 is a mere eight years ago, although it feels much further away.

At the time, Welfare Reform was a hot topic. Local politicians were broadly in agreement that the UK’s social security overhaul would increase pressure on more-deprived individuals and families here in Northern Ireland.

That year also saw the Fresh Start Agreement, one of many false dawns for NI politics in general and Stormont in particular. However, not everything that emerged from Fresh Start didn’t work out. As part of the deal, a £585m financial package was put together to implement local welfare mitigations, providing extra money to some of the most vulnerable people in society.

Those mitigations came with a countdown. Payments would end in March 2020. Enter the Cliff Edge Coalition NI, a collaboration between organisations from across Northern Ireland calling for improvements to the welfare system – and for mitigations to continue beyond that March 2020 cliff edge.

That campaign was pretty successful. Some mitigations were extended indefinitely while others will run until at least 2025. Accordingly, the Coalition took a step back – until last week, when it relaunched its mission.

Why? Well, does 2023 feel better than the late 2010s? Is the economy better? Are people at the poorer end of society in a better situation right now? In particular, is social security in the UK more suitable now than it was eight years ago?

For more reasons than can be discussed in one article, the answer is an emphatic no.

Relaunch

As part of its relaunch, the Coalition published a briefing paper which outlined its updated mission.

“Today, it is essential that we continue to work to highlight the negative impacts of a range of new welfare challenges which have emerged since the original mitigations were introduced, particularly in the context of the ongoing cost-of-living crisis. New welfare changes, combined with the cost-of-living crisis have created the perfect storm to increase poverty, deprivation and homelessness. Urgent measures are needed to strengthen the current benefit system to ensure the situation does not worsen further.

“Our social security system has never been more important. It should be a lifeline to individuals. But the truth is that it isn’t doing enough to ensure that they have sufficient money for basics like food, heating, and clothing. For some individuals, rules in the system, like the five-week wait and the two-child limit, are pushing them into debt and destitution.

“The Joseph Rowntree Foundation (JRF), in its 2022 Report on Poverty in NI explained that as NI entered the pandemic, nearly one-in-five people in NI lived in poverty, including over 100,000 children; with 1 in 14 households in NI in food insecurity. Further, Trussell Trust end of year statistics for 2020/2021 show that the referrals to their food banks in NI have almost doubled in 2 years from 37,259 in 2018/2019, to 78,827 in 20/21.

“The Trussell Trust report that one of the main drivers for referrals to their food banks is problems with the benefits system (delays, inadequacy and reductions).

“The existing welfare mitigations for the benefit cap and the bedroom tax are proof we can have a better social security systemin NI.”

Specific Asks

Last October, an independent advisory panel commissioned by the Department for Communities published a report looking at the mitigations, and the general state of benefits in NI.

The Coalition said it supports all the recommendations from the Welfare Mitigations Review, which involves expanding the current social security system and increasing mitigations.

As well as this, the Coalition is also re-asserting some previous policy demands which weren’t fully implemented first time round.

The three main asks are:

1. Resolving the five-week wait in Universal Credit

Universal Credit (UC - the new UK welfare system, rolled out over the past decade) mandates that new claimants will not receive any benefits payments for at least five weeks after they make their first claim. The Coalition cites studies saying this five-week delay is a factor in increasing poverty, and a “driver” accelerating demand for loan sharks.

A contingency fund set up to, in theory, give discretionary grants to people who find themselves in extreme hardship while waiting for payments is struggling with difficulties in accessing payments and low public awareness. The Coalition wants to see this grant increased in value, used more widely, and to see public promotion of its availability – while also calling for longer-term reform of the five-week delay itself.

2. Mitigating the two-child limit

The two-child limit within UC means families only receive welfare payments for their first two children, with no support for larger families (aside from a few exceptions). This represents an effective £62.21 per week, per child shortfall for larger families – which are more common in NI than in the UK as a whole. The Coalition supports the removal of the two-child limit and, if that does not happen, wants to see supplementary payments that counteract it.

3. Providing support to private renters affected by the Local Housing Allowance

Rents have gone up by 8.4% in the past year, but Local Housing Allowance (LHA) rates have been frozen since April 2021. This means “many private renters face a significant shortfall between their rent and the amount of LHA they receive, as well as a lack of affordable properties available.”

Tenants in the social sector have received some protections on costs. Nothing comparable exists in the private sector. In September 2022, the social housing waiting list was almost 45,000 households. This means a large number of people have no option but to rent privately.

“The Welfare Mitigations Independent Review Panel Report recommended establishment of a Financial Inclusion Service to provide advice and money management to low-income families who have been impacted by the local housing allowance.  This will provide access to a grant to assist in meeting shortfalls between housing costs paid through benefit and contractual rent. The Welfare Mitigations Review estimated this to cost around £3 million per annum. The Coalition endorse these recommendations.”

Realism

Household finances are stretched to breaking point. Compared to the current situation, the late 2010s seem like glory days.

In that context, the reaffirmation of the Cliff Edge Coalition makes perfect sense. Its return should be a welcome one.

Its asks are relevant to two places, Stormont and Westminster, both of which are embroiled in various crises.

A robust Assembly and Executive that are able to update, improve and renew welfare mitigations would be welcome. At the same time, London sets the tone for Universal Credit and if it made certain changes to the core principles of UC (and increased the value of payments) the need for local mitigations would reduce and perhaps vanish entirely.

That seems unlikely, and the Coalition has previously seen success in Belfast (rather than in London), which is why it wants to see Stormont back up and running – and why its central focus is on NI, with some policy requests that would need an Executive, and some that would not.

The big problem is the state of public finances. Northern Ireland’s departments are making huge cuts. Without a significant intervention from Westminster, will these asks be affordable? Maybe, maybe not.

However, realism cuts both ways. People really are struggling. The cost-of-living crisis continues. The current UK government seems to be opting for austerity again. This is a political choice. It didn’t work last time but now the stakes are much higher. Is it realistic, or pragmatic, to allow poverty to grow and grow? What is the cost of that? What are the consequences?

As former Prime Minister Gordon Brown wrote last week: “As charities take over from the welfare state as our national safety net and the food bank, not the social security system, is fast becoming the last line of defence against destitution, it is difficult not to fear for the future.”

Northern Ireland’s public finances are what they are, but all spending is a choice. Households are struggling, financially. There is a serious risk of a spike in deprivation. Whatever support is available should be directed to those who need it most.