It’s official: some DWP benefits are worth less than in the 1970s

The DWP logo and a 1970s disco
Steve Topple

The Department for Work and Pensions’ (DWP) benefit cuts have left some welfare payments worth less than they were in the 1970s. But more staggering is that, compared to average incomes, some are at 70-year lows.

The DWP: freezing all over

In April 2016, the government brought in the benefits freeze. This means the DWP will not increase the amount paid for some working age benefits until April 2020. It followed a cap on increases at 1% from April 2013. The benefits affected are:

  • Jobseeker’s Allowance (JSA).
  • Child Benefit.
  • Housing Benefit.
  • Tax credits.
  • Employment and Support Allowance (ESA) Work-Related Activity Group.
  • Universal Credit (not disability elements).

The government said the freeze would save it £3.9bn a year. But now, a think tank has crunched the numbers. And it’s revealed the staggering impact the freeze has had on the value of benefits.

Staggering analysis

As the Guardian reported, the Resolution Foundation says that the poorest families will be £210 a year worse off from April 2019. But the think tank went further than this. It found that in real terms, the four-year freeze means a 6.4% cut (adjusted for inflation).

The Resolution Foundation also found that in real terms:

  • Overall Child Benefit is worth less than in 1999.
  • JSA is now lower than in 1991.
  • Child Benefit for two or more children is worth less than in 1979:

Benefits adjusted for inflation

But even more staggering was its analysis of benefits as a share of average earning. These figures show that unemployment benefits and Child Benefit for two or more children are at 70-year lows by this measure:

Benefits as a share of average earnings

Overall, the Resolution Foundation found that it’s some of the poorest families which will lose the most money:

All households income loss

And the freeze is hitting poor couples with children especially hard:

Couples with children income loss

While lone parents are worse off across the board:

Lone parents income loss

Time for change

As the Resolution Foundation notes:

it should hardly be surprising that relative child poverty has risen for five years in a row

And overall, it shows that by 2019/20 the freeze will have wiped off nearly £5bn from household incomes:

Overall impact of benefit freeze

The DWP cutting £5bn from household incomes is a regressive policy. It means these families will have less money to put back into the economy. The Resolution Foundation says the government has the chance to limit the impact of the freeze at the budget on 29 October. Will it listen in the face of damning evidence? With the chaos over Universal Credit dominating the headlines, maybe we are on course for a U-turn. But don’t get your hopes up.

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Featured image via Deutsche Fotothek – Wikipedia and UK government – Wikimedia 

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Steve Topple