Benefits and the cost of living
Pressures on the cost of living and attitudes to benefit claiming
This chapter updates last year's research into public attitudes to the benefits system. In BSA 31 we focus on the views of Britain’s ‘squeezed middle’. How closely are their attitudes linked to how they feel about their own financial situation or their views about poverty in Britain?
There’s been a long-term decline in levels of support for benefit claiming – but many people still do not feel that benefits provide enough to live on.
44% of people think unemployment benefits aren’t enough to live on, and when told the actual amount of unemployment benefits, this rises to 56%.
More people support increases in spending than support cuts for nearly every type of benefit, except unemployment benefits.
People in working households feel more pressure around the cost of living than they used to, and think that poverty levels are rising.
In 2000, 36% of people in working households thought that poverty had risen over the last decade. In 2013, 64% did.
People in working households are more supportive of the benefits system when they themselves are struggling, but there are signs that this is changing – at least when it comes to attitudes to unemployment benefits.
In recent decades, British Social Attitudes has provided much-cited evidence of public attitudes hardening towards the benefits system. Over a period of economic growth from the mid-1990s, the British public has come to view benefit claimants as less deserving and the disincentive effects of the benefits system as greater. Partly as a result, people have become generally less supportive of spending on benefits (e.g. Taylor-Gooby and Martin, 2008; Clery et al., 2013). Last year’s British Social Attitudes report pointed to some signs that attitudes towards benefit claiming might be starting to soften (Pearce and Taylor, 2013). This seems likely to be what has been called a ‘thermostat’ effect (Stuart and Wlezien, 2005; Curtice, 2010): as a room gets warmer or colder we want to turn the heat down or up, even if our ideal temperature is unchanged. When it comes to the benefits system, this would mean that when people think that benefits are being cut – for example, as a result of the coalition government’s reductions in benefits spending – they may be more likely to want an increase in spending on benefits, even if their underlying view about the ideal level of spending is unchanged. As described above there is some evidence for this. Given that spending cuts on benefits are likely to continue – only six per cent of the proposed public spending cuts were implemented by the time of the 2012 British Social Attitudes survey cited in last year’s report (Adam et al., 2012:47) – we might expect this kind of thermostatic trend to carry on.
Yet there is another way in which attitudes can change to reflect the world around them: as levels of social need rise, support for the benefits system may change. We have seen considerable changes in social need in recent years, although this is less to do with rising unemployment than might be imagined. Unemployment among the working-age population rose during the economic downturn, from five per cent in late 2007 to a peak of nine per cent in late 2011, and still high at almost eight per cent in mid-2013. However, the unemployment peak is lower than in recent recessions, and inactivity has also declined, so the overall employment rate is only just below the pre-2007 level.
Rising social need instead reflects a number of other trends. Increasing numbers of people do not claim unemployment benefits – for example, the take-up of income-based Jobseeker’s Allowance among those who would be eligible fell from 71–84% to 51–60% over the decade from 1997/8, before rising slightly back to 60–67% in 2009–10 (DWP, 2012). Moreover, for those people who are reliant on the benefits and tax credits system, there have been various reductions in spending as a result of policy changes which total over £15 billion for 2013/14 (Downing and Kennedy, 2013:21), alongside a more than doubling in the sanctioning/
disallowance rate for JSA claimants since 2006 (Webster 2014: Figure 2). There is also a debate about whether some food bank networks are right to say that the single largest reason that rising numbers of people come to them is because of difficulties with the benefits system – a claim that has been heavily contested, with little robust evidence by which to adjudicate (Downing and Kennedy, 2013).
The change that has captured the public mood the most, though, is the ‘cost of living’ debate. This debate was partly prompted by rising costs in household essentials: the cost of energy bills rose by more than 60 per cent between the start of the economic crisis in 2008 and 2013, and food, water and transport costs all rose by more than 20 per cent (Adams et al., 2014). Yet rises in costs have not been matched by rising earnings: one reason why unemployment has not risen further is because the downturn was absorbed through lower earnings, following an earlier period in which median earnings stagnated. In combination, all of this means that the average (median) household is six per cent worse off in real terms in 2013/14 than its pre-crisis peak (Adams et al., 2014), and the average working-age household in 2011/12 was no better off than they were fully ten years earlier (Office for National Statistics, 2013). This is a sharp change from the year-on-year improvements in living standards to which we had become accustomed. As a result, a greater proportion of those living in poverty in 2011/12 were in working families rather than in workless ones, unlike in the previous fifteen years (MacInnes et al., 2013:27).
It is therefore perhaps unsurprising that the cost of living has therefore become central to political and media debate. The term ‘the squeezed middle’ was the Oxford Dictionary’s word of the year for 2011 after being popularised (although not coined) by the Labour leader Ed Miliband; and while the Prime Minister David Cameron and Liberal Democrat leader Nick Clegg have eschewed the term ‘the squeezed middle’, living standards are a key issue across the political spectrum. For example, the Labour Party is promising to freeze energy prices if elected, and the government is cutting energy bills by reducing environmental obligations on energy companies in 2013.
There has been little written on the perceptions towards the benefits system of those people struggling with the cost of living within working households (barring brief mentions in Hills, 2001; Bromley, 2003). There are certainly at least two schools of thought about how they might feel. One argument is that if people themselves are struggling then they may be more likely to support the benefits system. There is certainly evidence that self-interest is one influence on people’s attitudes towards benefits (Sundberg, 2014) resulting in economic downturns often being times of raised support for benefits (Clery, 2012). Rising awareness of the financial struggles of other people may also make us see claimants as more ‘deserving’ (van Oorschot, 2000). A second argument, however, is that the financial worries of people in working households will lead to a resentment towards benefit claimants, whose ‘unfair’, undeserving claims are contrasted with the daily struggles of ‘hard-working families’ (Hoggett et al., 2013). While all political parties have talked this way at times, it is most famously captured in George Osborne’s 2012 remark:
Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits?
This political stance has been covered in the dramatic rise in press coverage of the benefits system since the start of the recession. While this raised coverage cannot be described simply as being more negative towards benefit claiming than before, there is a definite longer-run trend for benefits to be increasingly described as ‘handouts’ (Baumberg et al., 2012). One possibility, then, is that the attitudes of the ‘squeezed middle’ may follow the winds of these political and media discourses like a ‘weathervane’ (Curtice, 2010), hardening attitudes further.
In this chapter, we first look at trends in attitudes in the population as a whole to see if cost of living pressures – or policy changes, or rising social need – have led to recent changes in attitudes (as well as putting these in the context of the sweeping longer-term shifts that previous researchers have shown). We then look for evidence as to whether, within the current economic and political context, Britain’s struggling working households are becoming more or less sympathetic to those claiming benefits.
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- See also http://inequalitiesblog.wordpress.com/2013/09/11/a-softening-of-attitudes/.
- ONS Labour Market Statistics, March 2014, Table A03 for people aged 15 to 59/64, seasonally adjusted (www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-301417, accessed 15/4/2014).
- www.newstatesman.com/blogs/politics/2012/10/george-osbornes-speech-conservative-conference-full-text, accessed 20/3/2014.
- See Baumberg et al. (in preparation) for a discussion of other scenario questions asked in previous BSA surveys, involving an unemployed single mother and a retired woman.
- Survey respondents respond to the first three statements using a five-point response scale including a mid-point “neither agree nor disagree”, while the fourth statement has a four-point scale.
- In a TUC poll, people said (i) that an unemployed couple with two children would have substantially less than they ‘need to live on … without luxuries’, but (ii) that they nevertheless would be worse off if one of them took 30hrs/wk of a minimum wage job. Again, this implies that people do not regard a minimum wage job as sufficient to live on (www.tuc.org.uk/social/tuc-21796-f0.cfm, accessed 17/4/2014; this data is analysed further in Baumberg et al. in Preparation).
- www.telegraph.co.uk/news/politics/david-cameron/9354163/David-Camerons-welfare-speech-in-full.html, accessed 2/4/2014.
- We have followed the approach of the Resolution Foundation in focusing on working-age people, given that real incomes among pensioners have continued to rise while incomes among working-age households have been static (Office for National Statistics, 2013). The Resolution Foundation’s definition of the ‘squeezed middle’ is of people in households below average (median) income, excluding both the poorest 10 per cent and ‘benefit-reliant’ households (those that receive more than 20 per cent of their income from means-tested benefits, excluding tax credits). The definition here differs primarily due to the restricted income measure available in British Social Attitudes, which is banded (making it hard to exclude the poorest 10 per cent in a consistent way) and does not take into account the different sizes of households (known as ‘equivalising’).
- Note that British Social Attitudes only includes information on raw household income, rather than equivalised income which takes account of household size. Therefore, those struggling on seemingly high incomes may have large households or other dependents outside of the household.
- In the second half of the chapter, I look twice at the differences between those who say they are struggling financially vs. those living comfortably – the first time just looking at 2013, and the second time looking at how these differences have changed 2000–2013. In both cases, the results are presented using regression adjusted percentages, having ‘controlled’ for respondents’ age, gender, and education. This note explains how this ‘controlling’ was conducted.
The underlying logic between these comparisons is simple – they look at the average effect of these controls on the outcome, and then look at the association of financial struggles with the outcome, net of the average effects of the controls. In practice, because the outcomes were all categorical variables, we use multinomial logit models with dummy variables for age (dummies for 25–34, 35–44, 45–54, 55–59 and 60–64 (men only) vs. aged 18–24 as the base category), gender (female vs. male as the base category), and education (degree, greater than A level but less than degree, less than A level qualifications vs. no qualifications as the base category).
Regression coefficients for categorical data are difficult to interpret, so to make these results easier to understand, we present the results in terms of the estimated percentage point differences across the sample (technically known as average marginal effects). It is these average marginal effects that are shown in the tables in the main part of the chapter, but the full regression tables for the models are available from the author’s website www.benbaumberg.com.
- British Social Attitudes also asks people how they define poverty. People were asked “Would you say someone in Britain was or was not in poverty …” in three situations. Few people (19 per cent) agree that poverty is where people “had enough to buy the things they really needed, but not enough to buy the things most people take for granted”. About half (47 per cent) agree that poverty is where people “had enough to eat and live, but not enough to buy other things they needed”. And nearly everyone agrees (87 per cent) that someone is in poverty “if they had not got enough to eat and live without getting into debt”. In Table 6.6, we control for whether people agree with each of these statements, and then look at whether people who perceive more vs. less poverty have different attitudes to the benefits system.
- For example, these patterns might reflect the fact that people who are struggling financially, or think that many other British people are, might have different expectations about living standards (Hills, 2001), or that they have other features of their lives (such as disabilities) that make them simultaneously more likely to struggle financially and more positive about the benefits system. It might even be the case that people’s beliefs about the benefits system – or their wider political beliefs – cause them to think differently about financial struggles, given evidence that people are much more receptive to information and ideas that fit with their pre-existing beliefs (Jerit and Barabas, 2012).
- Question on feelings about household income: 2010–2013
Which of these phrases on this card would you say comes closest to your feelings about your household’s income these days?
1. Living really comfortably on present income
2. Living comfortably on present income
3. Neither comfortable nor struggling on present income
4. Struggling on present income
5. Really struggling on present income
Question on feelings about household income: Pre 2010
Which of these phrases comes closest to your feelings about your household’s income these days?
1. Living comfortably on present income
2. Coping on present income
3. Finding it difficult on present income
4. Finding it very difficult on present income
- Comparable data on benefit claimants is only available from 1995, but we can look at longer-run trends if we look at the full population. The 2009 level of financial difficulties (21 per cent) is higher than any year since 1996 in the full population, but lower than any year between 1984 and 1995 (where it reached a high of 29 per cent in 1985). Likewise, perceptions of poverty hit a high in the pre-1995 period; in 1994 71 per cent believed there was quite a lot of poverty in Britain and 68 per cent believed that poverty had increased over the past ten years (up from 55 per cent and 51 per cent respectively in 1986).
- This question asked:
Over the last ten years, do you think that poverty in Britain has been increasing, decreasing or staying at about the same level?
- There has been a decline in the proportion believing that people are in poverty if “they had enough to eat and live, but not enough to buy other things they needed”.
Data shown here:
The change in people’s definitions of poverty is one possible explanation for why the rise in people’s contemporaneous perceptions of poverty (where definitions have changed) is less marked than the rise in people’s perception that poverty has increased in the past ten years (where people are making comparisons over time within whatever definition of poverty they prefer). See also Hills, 2001 for an in-depth discussion of these questions in the British Social Attitudes survey.
The findings here are similar to Ipsos MORI polling that asks people to describe how well they are “keeping up with their bills and credit commitments at the moment”. In 2006, 12 per cent of people said either they were “keeping up with all bills and commitments, but it is a constant struggle” or that they were “falling behind with some/many bills or credit commitments”, but by 2013 this has risen to 19 per cent (Money Advice Trust 2013 report and 2006 FSA baseline survey).
A similar question is also asked in the major survey that follows a representative sample of British people over time (the British Household Panel Survey until 2008, Understanding Society afterwards), which asks respondents how ‘you yourself are doing financially these days’. The British Household Panel Survey finds a slight rise in the people saying they are finding it (quite/very) difficult from six per cent in 2001–2007 to 7.5 per cent in 2008 (Measuring National Well-Being: Life in the UK, 2014: Table 6.4). However, Understanding Society then shows a decline (12 per cent to 11 per cent) in the new survey more recently, from 12.3 per cent in 2009/10 to 10.9 per cent in 2011/12. This seems likely to be because a certain number of people drop out of longitudinal surveys every year (particularly towards the start of the survey), making them a less robust way of looking at what the British population think than the British Social Attitudes series.
For the question on whether many dole claimants are fiddling, the change 2010–2013 is only just non-significant at conventional levels (p<0.07), and the combined trend 2000–2009 + 2010–2013 is significant (p<0.05).
While not covered in any detail in this chapter for reasons of space, other signs of softening looking at 2012 and 2013 British Social Attitudes data are that (i) there has been a rise in people thinking that it is the Government’s responsibility to ensure a decent standard of living for the unemployed (see the 2013 British Social Attitudes report); and (ii) there has been a rise in agreeing that “cutting welfare benefits would damage too many people’s lives” (a rise in agreement from 42% in 2011 to 47% in 2012 and effectively unchanged at 46% in 2013). More puzzlingly, though, there has been a decline in the proportion of people agreeing that ‘Large numbers of people who are eligible for benefits these days fail to claim them’ (from 77% in 2010 to 74% in 2012 and 69% in 2013).
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