Explaining the abolition of the wage stop in the UK

Abstract

Before the introduction of the household benefit cap in the UK in 2013 the previous mechanism there limited the income of social assistance recipients was the wage stop, operating for four decades between 1935 and 1975. Similar to the benefit cap, the wage stop reflected and reproduced concerns with incentivising unemployed people to labour. This raises questions about why the wage stop was abolished in the mid-1970s when worries about unemployment continued, particularly its intersections with out-of-work benefits. It is widely argued that the abolition of the wage stop was a consequence of lobbying by the Child Poverty Action Group. Drawing upon records held at the UK’s National Archives, this article argues that this is an over-simplified explanation that, first, ignores concerns with the wage stop that pre-dated the Child Poverty Action Group’s criticism of it, including concerns within the assistance boards with its administration. And, second, while by the mid-1970s there was (albeit ambiguous) concern with the impacts of the wage stop, there was a shift in approach that emphasised the supplementation of low wages with social security benefits, rather than forcing social assistance below the assessed needs of households, as being a preferable means of ensuring the incentive to take wage-labour.