Our welfare system is morally indefensible - but not like Keir Starmer thinks

11 March 2025, 14:57 | Updated: 11 March 2025, 15:37

The Prime Minister reportedly told his MPs yesterday that the UK welfare system is morally indefensible.

He is right. We have one of the least adequate unemployment support systems in Europe, with the standard rate of Universal Credit around £30 per week short of what’s needed to afford basic essentials. This means that at least 7 million families in today’s Britain—including millions of children—are going without sufficient food, basic toiletries, and clothing.

This threadbare safety net is bad for us all, not just those currently depending on it. It leaves millions of people knowing that they don’t have sufficient insurance against a life shock beyond their control, like a rise in the mortgage, a loss of work, or the loss of a loved one.

It’s also bad for the wider economy. Depressed spending from those on the lowest incomes reduces demand for other people’s good, services and jobs. And if someone doesn’t have financial insurance to fall back on, they are less likely to take risks and invest in themselves and others.

It is within this context that the government is reportedly planning at least £6 billion a year in cuts to benefits for people with a disability or long-term health condition. The government’s stated aims are to increase employment rates and reduce costs from welfare to the public purse, in the context of diminishing headroom against their fiscal rules.

The first of these risks failing on its own terms. The government’s Get Britain Working white paper contains a number of promising measures to help disabled people to prepare for and find work. However, alongside this, the benefit system needs to be reformed so that hardship is not a barrier to seeking work.

Instead, these cuts risk exacerbating the existing environment of fear and stress and pushing people already experiencing hardship and ill health even closer to the brink. More than 40% of people receiving universal credit and disability benefits skip meals. It’s nearly impossible to secure a good job when you are already hungry, cold, and unwell.

On the second, rebuilding fiscal headroom, the cuts to disability benefits are the wrong approach. Rebuilding the public finances is about balance and choices. It’s about balancing the right amount of economic risk on the government rather than pushing it onto families and firms. It is about deciding who in society should be asked to take on more of this risk.

Rather than repeating George Osborne’s trick of balancing the books off the backs of the poorest, government should be asking those who make an income from their wealth, to pay tax at a similar level to those in work.

________________

Alfie Stirling is the chief economist and associate director at The Joseph Rowntree Foundation.

LBC Opinion provides a platform for diverse opinions on current affairs and matters of public interest.

The views expressed are those of the authors and do not necessarily reflect the official LBC position.

To contact us email views@lbc.co.uk