Friday, September 17, 2021

Number of young people on benefits increased by two-thirds during the Covid-19 pandemic

Report reveals how younger people have been disproportionately affected by the Covid-19 crisis.

According to recent research from the Resolution Foundation think tank, the number of young people in recipt income-related benefits grew from 9% to 15% during the Covid crisis, the largest increase of any age group.

The Nuffield Foundation-funded report ‘Age-old or new-age’ looks at the dramatic fluctuations in the number of individuals receiving benefits throughout the crisis and how this varied by age group.

According to the research, the benefit system experienced a startling increase in UC claims at the outset of the crisis, with 1.3 million more families getting UC in the first three months of the crisis.

Since then, an additional 600,000 families have been added to the benefit, while the number of persons getting legacy benefits (such as tax credits) has decreased.

As a result, the overall number of families getting a working-age income-related benefit increased by 1.4 million to 7.5 million in February 2021, reversing a long-term drop in benefit receipt. The number of people claiming UC grew, while the number of people on legacy benefits (such as Jobseeker’s Allowance) fell.

A JobCentre Plus Office.
Photo credit: jovike via photopin cc

In 2005, 72% of individuals lived in families that received at least one benefit; on the eve of the crisis, that percentage had dropped to 62%. This decline was sparked by the elimination of Child Benefit for higher incomes, the raising of the State Pension Age, and growing employment and wages, which resulted in some families losing eligibility for welfare assistance.

The Resolution Foundation believes that this has been partially reversed as a result of the spike in new claims during the crisis, with 64% of persons now receiving benefit income in their family.

Concentrating on which groups have benefited most from the pandemic benefits boom, the research finds that young individuals (16-24 years old) — the age group least likely to get benefits – have experienced the most dramatic increases in assistance, increasing from 9% to 15% claiming an income-related benefit.

The number of 25-29 year olds claiming benefits has also grown significantly – from 17% to 24% – whereas the proportion of 30-59 year olds claiming benefits has increased more slowly, from 22% to 27%.

According to the Foundation, the surge in benefit claims among young adults reflects the fact that they have been disproportionately affected by the Covid-19 crisis.

While the number of families getting benefits has decreased in recent months – by at least 130,000 between February and May of this year – the OBR anticipates that the number of families receiving benefits will stay higher this year and next year, compared to pre-crisis levels.

Additionally, there has been an alarming increase in the number of elderly individuals claiming UC, with 34,000 additional people aged 50 receiving the benefit since February.

The Foundation cautions that, as a result of the increased number of claimants, the forthcoming £20 weekly UC cut will have a greater impact on family living standards throughout the UK than originally anticipated.

Job application form.

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.

“One legacy of the pandemic is likely to be more families receiving benefits, and particularly more families receiving Universal Credit.

“That will mean that future decisions on UC, such as whether to keep the welcome £20 a week uplift, will have a bigger impact on family living standards than ever before.”

Alex Beer, Welfare Programme Head at the Nuffield Foundation said: “This research highlights the relevance of the benefits system to people of all ages, as well as the vital role it has played in supporting people and families through the economic crisis caused by the pandemic.

“However, it also shows that the level of support varies significantly across different age groups, and those differences should be taken into account by government when considering any changes to benefit rates.”

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