Benefits & welfare reform

Date 31 August 2017
Date updated 18 May 2018
Overview

The social security system has a major impact on poverty because benefits are a key income component for poorer families, both in-work and out-of-work. Benefit payments made up 46% of disposable income on average for a UK family in the bottom fifth of the income distribution in 2015/2016. As such, low income families are greatly affected by changes/reductions to social security benefits. 

This set of indicators highlights the reduced generosity of the welfare system and the removal of some protections for those at the bottom of the income distribution. 

The Coalition and Conservative Governments have implemented a major programme of cuts and changes since 2010. Some of these were made directly to the current benefit system, for example through the 'bedroom tax' (or 'underoccupation penalty'); others are coming into effect as claimants move to Universal Credit, which is slowly being rolled out to replace six means-tested benefits. In addition, benefits have been frozen until 2020, but inflation means that benefit incomes will be reduced in real terms.

The proportion of the working age population claiming out-of-work benefits in London has dropped to 8%, compared to 12% in 2010. The percentage of unemployed people who claim benefits has fallen during this time though, suggesting that there is a widening gap between benefit receipt and benefit need. The benefit cap, introduced in 2013 and reduced further in 2016, affected 15,300 households in 2017 – particularly affecting families with children. The number of benefit sanctions across London has reduced significantly from its peak in 2012, down to 40,000. This may rise again if the Universal Credit sanction rate does not go down as it is rolled out further though, because the sanction rate for Universal Credit in 2016 was 6% - higher than the Job Seeker's Allowance sanction rate has ever been.

Benefits & welfare reform: Indicators

Out-of-work benefits over time

This graph shows the proportion of the working-age adults claiming an out-of-work benefit in London and the rest of England. This is based on their ‘client group’, and the main reason why they are claiming a benefit. This includes jobseekers, Employment Support Allowance and incapacity benefits claimants, lone parents and others on income-related benefits (for example carer’s allowance) and is shown by the lines on the graph. The bars show the proportion of the working-age population that are claiming one of the four main out-of-work benefits for London only. Universal Credit (UC) will replace all of the benefits shown when it is fully rolled out, a process expected to be complete by 2022. It has been included in the graph for 2015 and 2016 only, as before then the numbers of people who had been transferred onto UC were extremely small. …

Map of out-of-work benefits by ward

The map shows the proportion of the working-age population claiming an out-of-work benefit* across London in November 2016. The boroughs of North East and East of London contain the highest concentration of wards with more than 10% of people claiming out-of-work benefits. Most boroughs have a mixture of areas with larger or smaller proportions of people claiming an out-of-work benefit. Hackney, Islington and Barking & Dagenham only have a few areas where less than 10% of the working-age population are claiming an out-of-work benefit. Some boroughs such as Barnet, Harrow, Hounslow, Kingston, Richmond, Merton and Sutton contain no areas where more than 10% of the working-age population are claiming an out-of-work benefit. These are all Outer London boroughs. 

The 32 London boroughs, excluding the City of London due to lack…

Housing benefit by tenure & work status

This graph shows the number of working-age housing benefits claimants by whether they are in the social or private rented sectors and by whether they are in work or not. Housing benefit is a means-tested benefit which helps those living in rented homes (both in the social and private sector) meet their housing costs. Those claiming an out-of-work benefit are automatically entitled but it can also be claimed by those in work on a low income and by pensioners.*

In 2017 there were 590,000 working-age families claiming housing benefits. The number of families claiming housing benefits has been falling since 2013, when it peaked at 680,000. The social rented sector accounted for 380,000 (or 65%) of claimants and the private sector for 210,000 (or 35%).

The area in which there has been a significant change is the number of housing benefit claima…

Council Tax Support

This graph shows the impact of the replacement of Council Tax Benefit (CTB) with Council Tax Support (CTS). From April 2013, local authorities across England were required to devise their own systems of CTS for working-age adults, and funding for it was reduced. It replaced the national system of CTB which provided support to low-income families to help with their Council Tax bill. Councils had to keep the previous system in place for pensioners.

The most common change that local authorities have made from the former CTB system has been to introduce a ’minimum payment’ which requires everyone to pay at least some Council Tax regardless of income. This graph shows how much more CTS claimants pay on average relative to the system of national support before April 2013.

Seven boroughs – Camden, Hammersmith & Fulham, Kensington & Chelse…

Families affected by the overall benefit cap

This graph shows the number of households affected by the benefit cap,  grouped by the weekly cut in their support. The cap was introduced in 2013, based on an annual equivalent of £26,000 a year, with a lower level for single adults without children (£18,200). In 2016, it was reduced further (to £23,000 or £15,410), and by a greater amount outside of Greater London.

In London, in 2017, the number of families affected was 15,300 compared with 8,900 in February 2016, an increase of 6,400.

In 2017, the largest single groups of those affected were families losing up to £25 per week and those losing between £25 and £50 a week, both at around 3,900.

Compared with 2016, the number in each category of cut has increased with the lowering of the value of the cap. In February 2016, there were 890 families losing more than £150 a week, rising to 1,4…

Benefit sanctions over time

The number of JSA sanctions by age, the total number of ESA sanctions from 2009 onwards and Universal Credit sanctions from 2015 onwards. Benefit sanctions are imposed when a claimant fails to comply with the conditions of a benefit without a reason that the DWP finds acceptable. Thus they only apply to the parts of benefits with conditions attached, such as JSA, or the Work-Related Activity Group of Employment and Support Allowance (people in the work-related activity group are not expected to actively seek and apply for work, but they are expected to carry out some activities).

Under UC, they do not apply to the housing element of the benefit. They vary in length and severity depending on the benefit and why the claimant is being sanctioned. For JSA, 100% of benefit is lost for between four weeks up to a maximum of three years. Under ES…

Proportion of working-age population receiving out-of-work benefits

This graph shows the proportion of working-age people in each London borough receiving an out-of-work benefit. These include: JSA, ESA and incapacity benefits, lone parent and other income related benefits.

The three boroughs where the highest proportion of working-age people were claiming an out-of-work benefit were Barking & Dagenham, Hackney and Islington. 10% of working-age people in these boroughs were claiming an out-of-work benefit (or 1 in 10).

At the other end of the scale, only 4% of working age people were claiming an out-of-work benefit in Sutton and Richmond (or 1 in 25).

These figures are only relating to out-of-work benefits, so do not include other benefits such as Child Benefit or Disability Living Allowance. This figures do not include Universal Credit which is being rolled out unevenly across London. This means …

Loss from council Tax Support by borough

This graph shows the impact of the replacement of Council Tax Benefit (CTB) with Council Tax Support (CTS) in London local authorities. From April 2013, local authorities across England were required to devise their own systems of CTS for working-age adults, and funding for it was reduced. It replaced the national system of CTB which provided support to low-income families to help with their Council Tax bill. Councils had to keep the previous system in place for pensioners.

The most common change that local authorities have made from the former CTB system has been to introduce a ’minimum payment’ which requires everyone to pay at least some Council Tax regardless of income. This graph shows how much more CTS claimants pay on average relative to the system of national support before April 2013.

Seven boroughs – Camden, Hammersmith & Ful…