The combined impact of benefits reform and public sector cuts is putting huge strains on a welfare system already 'buckling' in the face of growing demand and underfunding, according to a think-tank report. The long-term result is that social crises are likely to build up – leading to unsustainable human, social and economic costs.

The report is the outcome of an 18-month project with people in some of the most deprived communities in Birmingham and Haringey (London), designed to explore their experiences of the government’s austerity measures and its ambitions for building a ‘Big Society’.

The authors say the social security system is being eroded at a time when it is most clearly needed. Social services have been reduced, but the demand for them is intensifying. Responsibility for welfare is moving away from the state to individuals, small groups and charities – leading to widening social inequalities. Over the next three to four years the report highlights the following key trends:

Key medium-term trends

• Incomes will fall for all those receiving benefits, while the cost of living continues to rise.
• Homelessness will grow as reductions in housing benefit affect more people.
• Personal debt will proliferate, alongside a mushrooming of payday loan companies.
• Access to advice and support services, including legal aid and debt advice, will be severely reduced.
• There will be more social polarisation and widening inequalities between poorer and more affluent areas, as changes to housing benefit push people out of higher-rent areas.
• Many groups, including elderly and disabled people, will suffer from social isolation and insufficient support as services are cut. This will lead to declining physical and mental health, and rising demand for NHS services.
• A growing burden of care will fall on women as access to childcare and social care is reduced.
• Many community and voluntary sector organisations will close down.

A final set of findings from the project will be published in June 2013.

Source: Joe Penny and Julia Slay, Everyday Insecurity: Life at the End of the Welfare State, New Economics Foundation
Links: Report | Summary | Guardian report