Gordon Brown has urged Jeremy Hunt to act on startling new research into Britain’s threadbare benefits system that showed that the poorest families must spend an average of 63p in each pound to meet basic food and energy needs.
The former prime minister said the paper was a “wake-up call” to the chancellor that “reveals the arithmetic of poverty”, and forces the UK to “face up to the fact that it is in the throes of a crisis”.
The study highlights how a couple on benefits with two children must spend nearly 50% more of their income on food and energy than they did in 2012, when the figure was 46p.
This is due to the precipitous fall in real-terms value of benefits. The equivalent spend by the average UK family is roughly 20p in each pound earned, the report says.
Brown said the chancellor should use his budget on 6 March to “implement a root-and-branch reform of the benefits system” in order to stymie further impoverishment of Britain’s poorest children.
On Thursday Hunt gave his heaviest hint yet that he plans a big tax giveaway at his next budget in the run-up to this year’s general election. He was speaking at the World Economic Forum in Davos, an annual meeting at a Swiss ski resort frequented by billionaires and politicians.
The unpublished briefing paper by Prof Donald Hirsch, titled the UK’s Inadequate and Unfair Safety Net, concludes that Britain’s benefit system no longer provides the basic amount needed “to function day to day and have healthy lives”.
He added that the need to balance competing basic costs – such as clothes, toiletries and transport – meant spending on food and energy by the poorest households was likely to be inadequate, leading to serious health consequences for families. Even if they cut back on basic items, other essentials would be unaffordable, the Financial Fairness Trust study concluded.
The gap is even more stark for single adults on benefits. In 2012, minimum basic food and energy costs ate up 73% of their weekly income, whereas in 2023 those costs amounted to 22% more than their benefits provided, leaving them unable to afford to eat properly, let alone meet clothing, toiletries and transport costs.
Hirsch wrote: “The level of working-age benefits in the UK today is denying claimants access to the most fundamental material resources needed to function day to day and have healthy lives.”
He added: “The UK benefits system has always had its shortcomings, with benefit rates that are not related to evidence of need, serious obstacles and delays in administration and some people falling through the net of income protection that it seeks to provide.
“But today, all these features have become so pervasive that benefits are falling woefully and systematically short of protecting citizens against hard times.”
Speaking to the Guardian, Brown said: “Britain needs to face up to the fact that it is in the throes of a poverty crisis. Donald Hirsch’s important and path-breaking research reveals the arithmetic of poverty, showing just why so many families on benefits can no longer make ends meet.
“It is an evidence-based wake-up call to the chancellor to use his March budget to implement a root-and-branch reform of the benefits system.”
The research into the inadequacy of the benefits system comes amid an alarming growth in households facing deep levels of poverty. More than 1 million children experienced destitution in the UK last year, meaning their families could not afford to adequately feed, clothe or clean them, or keep them warm.
Working-age benefits have fallen to 13% below their 2009 peak, their real-terms value falling most dramatically when the government froze benefit levels between 2016 and 2019. But this has been exacerbated by holes designed into the safety net that mean most claimants now receive even less money than their entitlement.
These include the bedroom tax, the two-child limit and the benefit cap, and deductions used to pay back loan advances made to universal credit claimants waiting five weeks for a first benefit payment.
“These holes in the safety net are so gaping that receiving a full entitlement has become the exception rather than the rule,” writes Hirsch.
He called for an overhaul of the current system to ensure it provided a “fair and reliable” safety net, by setting up a government taskforce along the lines of the 2005 Turner commission, which established the principle that pensions would rise at least in line with earnings.
Hirsch calculated the costs of food by adapting publicly agreed minimum income standards that agree how much is needed to afford a modest, nutritionally adequate diet. His calculations do not include alcohol or eating out.
Writing in the Mail on Sunday, Hunt again signalled that he was keen on tax cuts in the next budget, comparing himself to the former tax-cutting chancellor Nigel Lawson.
Hunt said: “Just as Nigel Lawson positioned the City of London for the finance boom in the 1980s, this period of Conservative government has seen the UK positioned for the massive technological boom we’re set to see in the coming years.”
Speaking at Davos on Thursday, he said: “In terms of the direction of travel, we look around the world and we note that the economies growing faster than us in North America and Asia tend to have lower taxes, and I believe fundamentally that low-tax economies are more dynamic, more competitive and generate more money for public services like the NHS.
“That’s the direction of travel we would like to go in, but it is too early to say what we are going to do.”
A Department for Work and Pensions spokesperson said: “The best thing we can do to help those who are struggling is put money back in people’s pockets. That’s why we’ve cut taxes and brought inflation down by more than half while providing support to those who need it most.
“We continue to help families with cost of living support worth on average £3,700 per household, including raising benefits by 6.7% in April.”
New research by Age UK released on Monday has found that almost everyone aged over 50 is worried about the cost of living. While a quarter said the cost of living was affecting them severely or very severely, this rose to nearly half (46%) of people from black, Asian and minority ethnic populations and more than a third of those aged 50-59, those from more disadvantaged backgrounds, people with long-term conditions and unpaid carers.
Nearly one in five over-50s, equivalent to 4.8 million people, said they were worried they would not be able to eat enough this winter. Around one in five people over 50 are already skipping meals, while three in four over-50s have been turning down their heating or reducing how long they keep it on for. As a result, 9% said their health had suffered.
Caroline Abrahams, charity director at Age UK, said: “Whether it’s pensioners struggling to pay their bills on their fixed low incomes, or people in their 50s in poorly paid jobs, or out of the labour market altogether due to ill health, caring responsibilities or unemployment, anxiety about making ends meet and getting through this winter is incredibly widespread.”
Additional reporting by Anna Bawden
