Why checking benefit claimants’ bank accounts is a red herring

The government is right—we need to fix social security. But ‘cracking down’ on people with savings is just a distraction from the real issues 

November 07, 2023
Credit: Michael Foley / Alamy Stock Photo
Credit: Michael Foley / Alamy Stock Photo

One of the strangest policies trailed ahead of the Kings Speech, likely to be included in the Autumn Statement later this month, was the announcement that the government plans a big push to check the bank accounts of people claiming benefits to make sure they haven’t got savings over £16,000. 

The policy feels as if it’s been beamed in from an alternative reality. There is compelling and alarming evidence of the level of hunger and hardship facing people, both in work and out of work, who receive benefits. Nine out of ten of those on Universal Credit have to go without essentials because their incomes are so low. Over the summer, more than half ran out of food and couldn’t afford more. The idea that there are lots of people in this position who are sitting on savings of more than £16,000 is fanciful. For many, having any savings at all feels like a distant dream. The government’s own figures reinforce the tiny scale of this issue—they hope to save up to £20 million a year, out of a welfare budget of £260 billion (nearly half of which goes on the State Pension). 

The announcement was particularly odd because the problem the government is actually worried about is the high number of people not in the labour market, described (erroneously in most cases) as “inactive”—meaning they’re not working or available for work.  5.4 million people are currently on out of work benefits, with the rise driven particularly by an increase in the number of people assessed as being unable to work due to illness or disability. The reasons for this are well known. Demographic trends mean that we have an aging population and more people living with long-term health conditions. Increasing backlogs and delays getting treatment can lead to conditions worsening and people moving further away from being able to work. Many disabled people would like to work but too few jobs are accessible for people with health conditions or caring responsibilities. Issues like poor public transport and a lack of suitable and affordable childcare add to the barriers.

The government is right to ask if the social security system is doing all it could to help tackle this situation, and it’s right to conclude that it isn’t. But the problem isn’t that people have too many savings, it’s that low levels of benefits and difficulties accessing disability benefits in particular are making people increasingly ill and less able to get and sustain work. Recently, health leaders wrote to the Prime Minister warning that so many people were having to go without essentials it posed a grave risk to the nation’s health, adding to the pressure on the NHS.  Health workers are seeing people unable to afford food, forced to miss hospital appointments because they can’t afford the bus fare, reducing medication because they can’t afford the prescription and unable to run medical equipment because they can’t afford the electricity.

Employment support for disabled people is also very patchy and has been ineffective in closing the employment gap between disabled and non-disabled people. It has been especially weak on working with employers to redesign jobs to open up more opportunities to people with health conditions and carers. And too often, even when disabled people do manage to get work, low pay and insecurity mean it fails to protect them from hardship.

The truth is that this policy is little more than a distraction from the real issues affecting people on universal credit. The government should be using the time remaining before the election to bring forward genuine solutions to hunger and debt as well as homelessness driven by an unaffordable housing market. And it should be reforming its support for disabled people, which is currently inadequate, both for those who aren’t able to work and for those who would like to, but face barriers which aren’t being taken down.