Social security and poverty

Since the pandemic, poverty rates have fallen for some groups receiving social security, though by varying amounts. For people in families receiving Universal Credit (or its equivalents), there are signs of a recent reduction in poverty rates, although further data is needed to confirm whether this represents a sustained trend. In contrast, poverty rates for people receiving disability benefits have remained largely unchanged between 2013/14 and 2023/24, both when disability benefit income is included and when it is excluded.

These recent falls follow a prolonged period of rising poverty among people in families receiving Universal Credit or its equivalents. This increase was driven in large part by cuts to working-age social security during the 2010s, including reductions in benefit levels and tighter eligibility rules, the effects of which continue to weaken the income safety net today.

Austerity-era policies severed the link between need and support. Measures such as the two-child limit — removed at the Autumn Budget — reduced support for larger families, while 8 of the 10 April upratings between 2013/14 and 2022/23 saw the headline rate of Universal Credit cut in real terms. As a result, the basic rate of support fell to its lowest real-terms level in around 40 years. Even now, the basic rate of Universal Credit remains far below what people need to afford essentials, including food and heating.

Source: Households Below Average Income, 2023/24, DWP 
Notes:

1. Universal Credit and equivalents covers families in receipt of Universal Credit and any of the working-age legacy benefits it is replacing, which are Jobseeker’s Allowance (income-related), Employment and Support Allowance (income-related), Income Support, Child Tax Credit, Working Tax Credit, and Housing Benefit.
2. Carer’s Allowance recipients are more likely to live with someone in receipt of disability benefits. If disability benefits are excluded as income, the poverty rate for this group increases to 42%.
3. Disability benefits include any form of Disability Living Allowance, War Disablement Pension/Armed Forces Compensation Scheme, Attendance Allowance, Industrial Injuries Disablement Benefit and any form of Personal Independence Payments. The income from these benefits has been included as income. But these are intended for some of the extra costs associated with being disabled rather than increasing living standards. If these benefits are excluded as income, the poverty rate for this group increases to 37%.

People receiving support from social security face much higher poverty rates than the wider population. Those receiving Universal Credit or its equivalents in the legacy benefit system are almost 3 times as likely to live in poverty as people not receiving any of these benefits (44% compared with 16%). We refer to Universal Credit and its equivalents, disability benefits, Carer’s Allowance and Pension Credit collectively as core benefits.

Around 1 in 5 people in families receiving Pension Credit (21%) are living in poverty, while over 4 in 10 people receiving Universal Credit are in poverty. For people receiving disability benefits — such as Personal Independence Payment, Disability Living Allowance or Attendance Allowance — the headline poverty rate is only slightly higher than for the wider population (18%). However, these benefits are intended to help cover the additional costs associated with disability.

When income from disability benefits is excluded, the poverty rate for people receiving them rises sharply to 37%. A similar pattern is seen for people receiving Carer’s Allowance: excluding this income increases the poverty rate from 27% to 42%. This demonstrates that disability and carers’ benefits help mitigate poverty, but are insufficient to fully offset the extra costs people face.

A similar pattern is evident for material deprivation, a self-reported measure of whether families can afford basic goods and services such as keeping up with bills or maintaining their home in a reasonable state of repair.

In 2023/24, 11% of people who were not living in poverty and not receiving Universal Credit or legacy benefits were materially deprived. This rose to 36% among people living in poverty but not receiving these benefits. However, households receiving Universal Credit experienced much higher levels of deprivation regardless of poverty status: 59% for those not in poverty and 75% for those living in poverty.

Planned cuts to social security are being driven by concerns about rising caseloads and spending on health-related benefits. Between 2019/20 and 2025/26, spending on disability, incapacity and carers’ benefits for children and working-age adults increased by 56% in real terms, from £45 billion to £71 billion. Even so, total spending on working-age social security is projected to flatline as a share of the economy over the course of the parliament.

Measured as a share of GDP, spending on working-age benefits is broadly where it was in the years preceding the global financial crisis. Claims of spiralling welfare spending are therefore detached from the reality shown in the data.

These narratives risk driving misguided policy responses, with political debate too often focused on blunt reforms within the benefits system itself rather than addressing the structural drivers of poverty — such as low pay, insecure work, high housing costs and ill health — that push people to rely on social security in the first place.