LABOUR'S cuts to benefits and welfare payments are costing the economy tens of billions in lost productivity every year, according to a new report commissioned by a leading charity.
Trussell (formerly the Trussell Trust) said that more than £38 billion was being lost annually due to high levels of “hunger and hardship” in the UK, which are preventing people from getting and keeping stable employment.
The charity, which runs food banks across the UK, commissioned the research from consultancy WPI Economics which found that Labour’s harsh stance on benefits is damaging the economy.
It said that in the year ending March 2023, 9.3 million people in the UK (3 million of whom were children) had faced hunger and hardship, meaning they were more than 25% below a poverty line set by the Social Metrics Commission.
This financial hardship was leading to a missed £38.2bn in output and £18.4bn in tax revenues each year, the report said.
The report further said that there were greater costs to the Treasury involved with having to support people in deep poverty through education, homelessness, social care, or health services which totalled around £13.7bn annually.
Trussell said that there should be an “urgent rethink” from the Labour Government on a host of policies, including its commitment to the two-child benefit cap and plans to cut disability and health benefits by around £5bn per year.
The trust said that abolishing the two-child cap, for example, would save the Treasury around £3bn per year on other costs by helping people to support themselves.
Helen Barnard, the director of policy, research, and impact at Trussell, said: “Slashing support for disabled people who most need our collective protection from hunger is cruel, irresponsible, and out of touch with what the public wants. It risks piling even more pressure on public services and damaging our economy.
Last week, a group of leading charities including Barnardo’s, Save the Children UK, and Citizens Advice warned Labour ministers that they will oversee the highest child poverty rates on record if they fail to scrap the two-child benefit cap.
However, Labour officials briefed the Guardian that it will remain in place, with one source saying: “If they still think we’re going to scrap the cap then they’re listening to the wrong people. We’re simply not going to find a way to do that.”
Jen Clark, Amnesty International UK’s economic social and cultural rights lead, said the UK has a “consciously cruel social security system that erodes dignity by design”.
She went on: “Amnesty have repeatedly spoken to people treated with a shocking lack of compassion, including a woman who was threatened with sanctions if she didn’t attend an appointment two days after her baby died.
“Poverty is a political choice, and by choosing to put the squeeze on those with the lowest incomes, consecutive Governments have forced huge numbers into destitution, run roughshod over our human rights and left our public services to pick up the tab."
A UK Government spokesperson said: “We have set out a sweeping package of reforms to health and disability benefits that genuinely supports people back into work and lifts people out of poverty, while putting the welfare system on a more sustainable footing so that the safety net is always there to protect those who need it most.
“Our £1bn employment support package will unlock work as part of our Plan for Change, alongside increasing the living wage, boosting benefits, and introducing a fair repayment rate to help more than a million low-income households on universal credit.”
