Guide to the UK Welfare State
The UK welfare state is designed to help British families when they fall upon hard times. If you are struggling to cope with your financial situation, learn more about what benefits you may be entitled to and how you can make a claim.
This guide is here to provide information about how the UK’s welfare state works and practical advice about how to make a claim if you need to do so. On top of this, you will find information about why the welfare state was founded, how well the UK welfare system compares to welfare offered in other countries and what the main challenges are that the UK welfare system faces today.
Table of Contents
History of welfare reform
Chapter 1
The fascinating history of the welfare change
How the UK welfare system works
Chapter 2 Part I
Pros and cons of a welfare state
Chapter 2 Part II
Is the UK the best welfare country?
Benefits for working parents
Chapter 3
UK Maternity Pay
Chapter 4
Child BenefitGuardian’s AllowanceUniversal Credit for ParentsTax CreditsChild Tax CreditWorking Tax Credit
Chapter 5
Help with childcare costsThe ‘Care to Learn’ SchemeDiscretionary Learner SupportChildcare Grants
Benefits for unemployed
Chapter 6
Jobseeker’s AllowanceUniversal CreditIncome Support
Benefits for disabled
Chapter 7 Part I
Personal Independence Payment (PIP)Attendance AllowanceUniversal CreditExemption from Vehicle TaxVAT Relief
Chapter 7 Part II
Carer’s AllowanceDisability Living AllowanceIndustrial Injuries Disablement Benefit (IIDB)Constant Attendance AllowanceArmed Forces Compensation SchemeBlind Person’s AllowanceReduced Earnings Allowances
Benefits for heating expenses
Chapter 8
Cold Weather PaymentWinter Fuel PaymentThe Warm Home Discount SchemeEnergy Debt Grants
Chapter 8b
Social Tariff Broadband and Phone For Those on Benefits
Benefits from local councils
Chapter 9
Council Tax ReductionSocial Services from Local CouncilsDisabled Facilities GrantOther Support from Local AuthoritiesSupport and Financial Aid for EducationLearner SupportThe 16 to 19 Bursary Fund
Housing benefits
Chapter 10
Housing SupportExtra Payments for Housing Discretionary Housing Payment Extended Payment of Housing Benefit
Universal credit
Chapter 11
Universal CreditUniversal Credit Work Allowance
Chapter 11b
Problems with Universal Credit Claims
Benefit cap
Chapter 12
Benefit CapBenefit Cap Exemptions
Pension system
Chapter 13 Part I
UK State Pension SchemeThe New State PensionThe Basic State PensionAdditional State PensionPension Credit
Chapter 13 Part II
Workplace PensionsAuto-Enrolment SchemeOther Support for Pensioners
Social welfare
Chapter 14
Welfare AssistanceThe Effects of Welfare on SocietyWelfare and the EconomyEffects of Poverty
Chapter 15
The Reality of Life On BenefitsSocial Housing ProblemsBedroom TaxFood BanksEnergy Bills When Living On Benefits
Illegal immigrants
Chapter 16
Why do Asylum Seekers Choose the UK? Do Illegal Immigrants Get Welfare?Are Immigrants a Burden on the NHS?What Benefits do Asylum Seekers Get?
Bereavement support
Chapter 17
Bereavement Support Payment
How to Use this Guide to the Benefits System in the UK
The structure of this guide is as follows: Firstly, this guide begins with two general chapters: one about the history of welfare in the UK and the second gives a general explanation of how the UK welfare system works and explores how it compares to other countries. Chapter 3 – 12 explains the main benefits that are available to citizens of the UK. Look at this section for information about benefits for new mothers, people who have children, benefits for people who are unemployed or on a low income, benefits for disabled people, benefits to help with heating expenses, local council benefits and housing benefits. We then explain in chapters 13 – 17 how the pension system works and how recent and future welfare reforms affect people who need to make a claim. On top of this, we discuss the way that benefits claimants are viewed by society, what impact immigrants have on the system and support people can claim after suffering a loss.
Which lenders will approve loans on benefits?
As a loan company receiving loan applications from individuals on benefits as well as those in employment, we decided to research the lending practices of other short-term loan providers in relation to applicants on benefits. From the results in this table we can see that most financial institutions recognize benefits as a valid source of income when evaluating loan applications.
| Generally accept | Additional information | |
|---|---|---|
| Cashfloat | No | Unable to approve applicants solely on benefits, but will consider if benefits are in addition to income from a salary. |
| Drafty | Yes | Applicants must also have a minimum income of £1200 per month to apply. |
| Fast Loan UK | No | Must be in part or full time employment. |
| Lending Stream | Yes | Applicants must also have a minimum income of £1250 per month to apply. |
| LoanPig | Yes | Applications are handled on a case-by-case basis. |
| Mr Lender | Yes | Must also have a regular income of at least £800 (net) per month. |
| Payday UK | Yes | Must be able to show that you can afford repayments. |
| PaydayBadCredit | No | Accept bad credit, but cannot offer to the unemployed or those relying solely on benefits |
| Quidmarket | No | They can not provide loans for customers on benefits. |
| Sunny Loans | Yes | Applicants will need to have a solid credit report and a source of income. |
| WageDayAdvance | Yes | Consider all benefits as income. |
Although Cashfloat may provide loans for people on benefits under very specific criteria, we very strongly advise you to check if you’re receiving all the benefits you may be eligible for and only use payday lenders as a final resort once all other avenues have been exhausted.
Written by: Becky Hall
Last modified: October 15, 2023
