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18 November 2022

How benefits have plummeted in value

Those on unemployment benefit now receive just 10 per cent of what the average worker earns.

By Ben Walker

In the Autumn Statement Jeremy Hunt emphasised that the government had taken the “compassionate” decision to increase welfare benefits in line with inflation (10.1 per cent). Yet after years of real-terms cuts, this decision has done little to reverse the decline of social security.

As a share of average earnings, benefits have more than halved over the last 40 years. The decline took hold in the 1980s, during Margaret Thatcher’s premiership, when unemployment benefit for a single person as a share of earnings fell from 20 per cent to 15 per cent.

The decline was briefly slowed, to an extent, during the New Labour years owing to more generous welfare provision but resumed once David Cameron’s Conservative government froze benefits in real terms. Today, those on unemployment benefit receive just 10 per cent of what the average Briton makes, one of the lowest replacement rates in the developed world.  

[See also: The UK faces a catastrophic fall in living standards]

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