Pandemic sees proportion of people in households receiving benefits increase

A decades-long fall in the proportion of people in households receiving benefits was partially reversed during the coronavirus pandemic, driven by a sharp rise in young adults needing help, research shows.

The proportion of adults aged 16-24 receiving benefits rose by two-thirds from nine to 15% between February 2020-21, according to analysis of Government figures by the Resolution Foundation.

The share of 25 to 29-year-olds receiving welfare payments rose from 17 to 24%, while 27% of the 30-59 age group were claiming benefits in February 2021, up from 22%.

Immediately before the pandemic, 62% of the UK population lived in households that received at least one benefit, such as child benefit, state pension and tax credits and other working-age benefits.

This is down from 72% in 2005, the think tank’s report, Age-old or new-age, found.

This fall was driven by changes such as the removal of child benefit from higher earners, the increase in the state pension age and rising employment and earning meaning some families were no longer eligible, it said.

But the “staggering” surge of new claims during the pandemic has partly reversed this trend, with the Resolution Foundation estimating that 64% of people now live in a household receiving benefits income.

The number of families on working-age income-related benefits rose by 1.4 million in 12 months to 7.5 million in February 2021.

It also identified a “potentially worrying” rise in the number of older claimants claiming Universal Credit (UC), with 34,000 more people aged over 50 on the benefit since February.

The Resolution Foundation said that, while the number of families receiving benefits has fallen in recent months, it is expected that the number of families in receipt of benefits will remain higher than pre-crisis levels into next year.

With record numbers of people receiving UC payments, it says the Government’s decision to remove the temporary £20 a week uplift from September will have a “bigger impact on family living standards across the country than ever before”.

Karl Handscomb, senior economist at the Resolution Foundation, said: “After a decades-long decline in the share of families receiving benefits, the Covid-19 crisis has led to a surge in claims, with 1.4 million more families now claiming support.

“The pandemic benefit surge has been driven by young people – a group who have traditionally been the least likely to claim benefits – and reflects that fact that they have been by far the hardest hit by the Covid economic crisis.”

The research was funded by the Nuffield Foundation.

It comes as disabled people on legacy benefits hit out at being excluded from the £20 UC uplift.

The Disability Benefits Consortium’s (DBC) said some disabled people are falling behind on bills, skipping meals and facing considerable mental health challenges as they struggle financially.

More than 1,800 disabled people in receipt of legacy benefits completed the DBC’s survey, with more than three-quarters (78%) saying their financial situation had deteriorated since the start of the pandemic.

Respondents said they felt the Government’s actions were “discriminatory” (46%), “cruel” (21%), and unfair (21%), with one saying: “The Government are sending a clear message that the disabled do not matter”.

Ella Abraham, Z2K’s policy and campaigns manager and campaigns co-chairwoman of the DBC, said: “It’s been 18 months of discriminatory Government excuses which have continued to leave 2.5 million people without the vital income they need to support them throughout the pandemic and beyond.

“The Government must end this two-tier welfare state to ensure disabled people and those with health conditions aren’t pushed any further into poverty and destitution.”

In September, the High Court will hear whether the Government acted unlawfully by not giving people on legacy benefits the same weekly increase.

A Department for Work and Pensions spokesperson said: “The Government’s unprecedented measures, including the temporary uplift in Universal Credit and the furlough scheme, have supported the nation through the economic shock of the toughest stages of the pandemic.

“Universal Credit will continue to provide a vital safety net, and with record vacancies available, it’s right that we now focus on our Plan for Jobs, to support people in the long-term and help people of all ages back into the workplace.”

The spokesperson added: “It has always been the case that claimants on legacy benefits can make a claim for Universal Credit if they believe that they will be better off.”