There have been a series of reforms to the UK’s social security system in recent years, while spending on welfare has fallen as a share of national income. Key changes include the introduction of the benefit cap; the ‘under-occupancy charge’ or ‘bedroom tax’; the high-income child benefit tax charge; a two-child limit for tax credits and the tax credit elements of universal credit; removal of the ‘family element’ in child tax credits and universal credit for new claimants; a four-year freeze to working-age benefits between 2016/17 and 2019/20; and a reduction in the universal credit work allowance.
Reports and analyses have attempted to quantify the financial impact of these changes on households, including identifying categories of claimants whose awards have either fallen or risen as a result of the changes. The observed or forecast financial impact of the changes on families varies widely, depending on the actual or hypothetical circumstances used in calculations. However, most analyses appear to have concluded that overall universal credit—the Government’s flagship welfare reform—is less generous than the benefits it is replacing. This reduction in generosity, they argue, has clear financial implications for some households. However, secondary effects may result from the reduction in household income experienced by some families, including in relation to health and wellbeing, and the educational attainment and life chances of children.
This briefing provides background information on the welfare benefits named in the motion to be debated on 1 November, before providing an overview of key benefit policy changes. It then summarises reports examining the financial impact of these policy changes on households, before summarising academic research on the noted effects of low income on both adults and children. A synopsis of contributions made during a recent House of Commons debate on universal credit is provided, before the briefing concludes with a selection of further reading on this complex and contested issue.