Social Security and Welfare Reform

Working-age ‘welfare’: who gets it, why, and what it costs

  • Published 13th Oct 2010
  • Authors: Peter Kenway, , Steve Fothergill, , Goretti Horgan,
  • Category: Social Security and Welfare Reform

The June 2010 Budget projected spending on social security benefits and tax credits of £193 billion in 2010/11 – 28 per cent of total public expenditure. Given the state of public finances, spending on this scale has to expect intense scrutiny. To help inform the debate, this paper provides some basic facts about the five main benefits that make up, or add to, the income of workless, working-age adults. The five are: Jobseeker’s Allowance (JSA); Income Support (IS); the Employment and Support Allowance (ESA); Incapacity Benefit (IB); and Disability Living Allowance

Key points:

  • Of the approximately five million out-of-work, working-age adults currently receiving an income replacement benefit, about 50 per cent do so because of disability or ill-health (ESA or IB/IS), 30 per cent because of unemployment (JSA) and 20 per cent by virtue of being either a lone parent or a carer (IS).
  • 1.8 million working-age adults (who overlap with this group) also receive a benefit because of their care and/or mobility needs (DLA).
  • Working-age benefit claimants are disproportionately concentrated in the UK’s weakest local economies.
  • After allowing for inflation, JSA and IS of £65.45 a week are worth what they were in 1997. £65.45 isequivalent to just 41 per cent of the Minimum Income Standard for a single working-age adult.
  • The projected spending on income-replacement benefits (£20.2 billion) and DLA (£6.6 billion) in 2010/11, though large, accounts for only one seventh of the total bill for social security and tax credits in that year.
  • Major reforms have been made to working-age benefits since October 2008, for lone parents and especially for those who are disabled or ill. There is no doubt that these reforms have tightened the conditions for eligibility: what is unclear is by how much.
  • The extension of ESA to existing claimants of incapacity benefits from autumn 2010 onwards strongly risks causing distress while doing little to increase employment.
  • There are particular concerns that the health needs of mental health service users are not being taken fully into account under the new eligibility conditions.

About this report
This report was funded by the Joseph Rowntree Foundation and written by Peter Kenway, Steve Fothergill, and Goretti Horgan. The facts presented and views expressed in this report are those of the authors and not necessarily those of the Foundation.