Social security isn’t just for the unemployed – 4.3 million working families get benefits too

15th May 2013

How many working families receive benefits? Tom MacInnes explains the findings from new research.

New research by the New Policy Institute shows how many working families are in receipt of benefits. Here, Tom MacInnes discusses the main findings.

Deafened by the interminable call for reforms to ‘make work pay’, it’s easy to forget that plenty of families receiving state benefits are already working. Our report for JRF tries to counter this by providing an estimate of the total number of working families who get such benefits. What sounds like a trivial task is actually quite complicated. There is no official estimate, and adding up government statistics on the numbers receiving each benefit in isolation won’t do because that would double count all those who receive more than one.

Although the definition of ‘working’ varies between the different data sources used for the report, the common sense idea – that at least one of the adults in the family is doing paid work – is a good enough approximation. The term ‘family’ includes single adults and couples as well as parents with children. But a child who has left school, even if they are still living at home, doesn’t count as part of the parental family but is, instead, another ‘family’ in their own right.

Our main focus is on three benefits: housing benefit (HB), council tax benefit (CTB) and working and child tax credits (WTC and CTC). Supporting estimates are also provided for several others, namely disability living allowance (DLA), income support (IS), jobseeker’s allowance (JSA) and employment and support allowance (ESA) along with its predecessor incapacity benefit (IB). 

In 2012, some 4,300,000 working families were receiving one or more of these benefits (see Figure 1, below). That year, we estimate that

  • 3,230,000 working families were receiving tax credits. This number was down by about 1,400,000 (almost one-third) compared with 2008. Most of this fall occurred in 2011 and 2012, due mainly to the abolition of the family-only element of child tax credits.
  • 930,000 working families were receiving housing benefit. Up 490,000 since 2008, the number of working families getting housing benefit more than doubled over four years.
  • 790,000 working families were receiving council tax benefit, up 430,000 since 2008. Here too, the number of working families receiving this benefit more than doubled over this period.
  • Taking account of the overlaps, it is estimated that in addition to the 3,230,000 receiving tax credits, a further 420,000 working families were receiving housing benefit and/or council tax benefit but not tax credits.
  • On top of this, another 380,000 working families who got neither HB, CTB nor tax credits received DLA. A further 270,000 working families who didn’t get HB, CTB, tax credits or DLA did receive ESA (or IB), JSA or IS.

Figure 1: 4.3 million working families receiving state benefits in 2012

In comparison with working families who do not get these benefits, working families who do are far more likely to have dependent children (73% compared with 25%), more likely to have a head of household in their 30s or 40s (62% compared with 46%) and – although still a slight majority – are less likely to be home owners (53% compared with 75%).

What’s crucial here is the extent of state benefits for families with children, provided at the moment by tax credits. This explains both the first and second of the contrasts above. In fact, 40% of all working families with children were receiving benefits in 2012. Alongside the extent of owner occupation, this shows quite how far the targets of ‘welfare reform’ actually differ from the hackneyed and often extreme stereotypes so beloved by at least some of our politicians.