Gordon Brown has implored Jeremy Hunt to take action based on shocking recent studies on the inadequacy of the UK’s welfare system. The research revealed that the most impoverished households have to allocate an average of 63p for every pound in order to cover essential expenses such as food and energy.
The ex-leader of the government stated that the document served as a warning to the finance minister, exposing the numbers behind poverty. It also compels the UK to confront the reality that it is currently experiencing a critical situation.
The research shows that a family receiving benefits and having two children now needs to allocate almost half of their income towards food and energy, which is a significant increase from 46p in 2012. This is a result of the decline in the actual value of benefits. In comparison, the average UK family spends approximately 20p for every pound earned, according to the report.
Brown suggested that the chancellor should utilize his budget on March 6th to enact a comprehensive overhaul of the benefits system, in an effort to prevent the continued impoverishment of the most underprivileged children in Britain.
At the World Economic Forum in Davos, Hunt suggested that he intends to offer significant tax breaks during his upcoming budget, just before the general election. This forum, held yearly at a luxurious ski resort in Switzerland, is a popular gathering for wealthy individuals and government officials.
According to a briefing paper written by Professor Donald Hirsch, titled “The UK’s Insufficient and Unjust Social Safety Net,” it is determined that the benefit system in Britain no longer offers a sufficient amount of support for individuals to maintain a healthy lifestyle and meet their daily needs.
According to his statement, it is important to find a balance between essential expenses such as clothing, toiletries, and transportation. This can result in low spending on food and energy for the most economically disadvantaged households, which can have significant negative impacts on their health. The Financial Fairness Trust study determined that even if these households were to reduce their spending on basic items, they would still be unable to afford other necessary items.
For individuals receiving benefits, the disparity is especially noticeable. In 2012, their weekly income was largely consumed by minimum expenses for food and energy, totaling 73%. However, in 2023, these costs increased by 22%, resulting in a greater gap between their benefits and necessary expenses. As a result, they are unable to adequately afford proper meals and also struggle to cover costs for clothing, toiletries, and transportation.
Hirsch stated that current working-age benefits in the UK are preventing claimants from obtaining essential resources for daily functioning and maintaining good health.
He stated that the benefits system in the UK has always had flaws. The rates of benefits are not based on actual need, there are significant hurdles and delays in the administration process, and there are individuals who do not receive the income protection that the system aims to provide.
However, nowadays, these characteristics are so widespread that their advantages are consistently and significantly inadequate in safeguarding individuals from difficult circumstances.
In an interview with the Guardian, Brown expressed that the UK must confront the reality of its current poverty crisis. He highlighted Donald Hirsch’s significant and pioneering research, which outlines the mathematics behind poverty and explains why numerous families receiving benefits struggle to cover their expenses.
This serves as a clear message to the chancellor, backed by evidence, urging him to take action in the March budget and completely overhaul the benefits system.
A recent study has uncovered the shortcomings of the benefits system, highlighting a concerning rise in the number of households struggling with extreme poverty. In the past year, over 1 million children in the UK have faced destitution, unable to access proper nutrition, clothing, hygiene, or warmth due to financial constraints.
The value of working-age benefits has decreased by 13% since 2009, with the biggest decline occurring when the government froze benefit levels from 2016 to 2019. However, this decrease has been worsened by gaps intentionally built into the safety net, resulting in most claimants receiving even less money than they are entitled to.
The policies that fall under this category are the bedroom tax, two-child limit, benefit cap, and deductions for loan repayments given to universal credit recipients who have to wait five weeks for their initial benefit payment.
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According to Hirsch, the gaps in the safety net are so large that receiving the full entitlement is now uncommon, rather than the norm.
He urged for a revamp of the existing system to guarantee a “just and dependable” safety net, by creating a government taskforce modeled after the 2005 Turner commission. This commission established the rule that pensions would increase in accordance with earnings.
Hirsch used accepted minimum income guidelines to determine the expenses for food, considering the amount required to afford a basic and healthy diet. His estimations do not account for alcohol or dining out.
In an article for the Mail on Sunday, Hunt reiterated his support for tax reductions in the upcoming budget, drawing comparisons to ex-chancellor Nigel Lawson known for his tax-cutting policies.
According to Hunt, the current Conservative government has positioned the UK for a significant technological boom similar to how Nigel Lawson positioned the City of London for the finance boom in the 1980s.
Hunt stated at the Davos conference on Thursday that he believes countries with lower taxes, such as those in North America and Asia, tend to have faster-growing economies. He believes that low-tax economies are more vibrant, competitive, and able to generate more revenue for public services, such as the NHS.
“We aspire to move in that direction, but it is premature to determine our course of action.”
A representative from the Department for Work and Pensions stated that the most effective way to assist those facing difficulties is by providing financial relief. This is why we have reduced taxes and decreased inflation by over 50%, while also offering assistance to those in greatest need.
“We are committed to providing financial assistance to families, with an average of £3,700 per household for cost of living support. This includes a 6.7% increase in benefits in April.”
Source: theguardian.com
