Is Birmingham really Britain’s ‘benefits capital’?

Various headlines last Thursday proclaimed Birmingham as Britain’s “benefits capital” – accompanied by a map (looks familiar?) – which made this Library researcher drop his hot cross bun in surprise. It’s inaccurate to say 10% of people in Birmingham Ladywood constituency are claiming “welfare”, but why?

Unemployment benefits

The figures in the press reports are for people claiming unemployment benefits only – more specifically, people claiming Jobseeker’s Allowance or people claiming Universal Credit who are required to seek work.

It’s not 10% of the population

Although Birmingham Ladywood does top the list for the highest number and ‘rate’ of people claiming unemployment benefits, it’s certainly not the case that 10% of the population are claiming them.

Rather, Birmingham Ladywood’s claimant rate of 10.3% (as calculated by us) is the number of claimants as a proportion of the economically active population aged 16-64. ‘Economically active’ means someone is either in work or is looking for and available for work.

The economically active population is considerably smaller than the total population. We’re excluding everyone who says they are not available for work – whether that is because they are in education, have caring responsibilities, because of sickness or disability, or other reasons.

If we look at the total population aged 16-64, then the rate drops to a more modest 6.3% (as calculated by ONS). Look at the total population of all ages and the rate will be smaller still. The Times got the distinction between total and economically active populations, but it was missed in most other coverage.

What’s welfare?

Is it correct to equate welfare and unemployment benefits? Welfare usually means a much wider range of state support than just unemployment benefits, but most reports (with the exception of the Mirror) did not make a distinction.

If we include other benefits that might fall under a generic welfare label – for example, sickness and disability benefits, Housing Benefit, Child Benefit, State Pension – then the number of people on ‘welfare’ dramatically increases. We’ve previously discussed on this blog what counts as welfare, here and here.

Over half of families in the UK received at least one benefit in 2015/16 (including Child Benefit and the State Pension), based on DWP’s Family Resources Survey.

But why would you calculate a rate based on the “economically active” population?

Actually, the headline unemployment rate is calculated as a percentage of the economically active population (aged 16+) so people are using this kind of rate all the time even if they don’t realise it.

If we exclude people not looking for work when calculating the unemployment rate, we get a better idea of what proportion of people want a job but can’t get one.

When the Library calculates claimant rates for constituencies in this way, we are reflecting how the headline unemployment rate is calculated. We’ve also been calculating constituency claimant rates on this basis for a long time (at least 30 years, before ONS started publishing constituency rates).

Of course, claimant rates for an area are likely to be some way lower than the unemployment rate for the area: many unemployed people do not claim benefits (as we discussed in this article last February).

Several reports incorrectly attributed the rates figures to ONS – as noted above, they are in fact calculated by the Library based on ONS data (see this methodology paper for details of our calculation). We publish constituency claimant rates every month in our briefing, People claiming unemployment benefits by constituency.



Picture credit: Birmingham City Centre_Aug13 by IanCreative Commons Attribution 2.0 Generic (CC by 2.0)