Fran Bennett is a Senior Research Fellow in the Department of Social Policy and Intervention at the University of Oxford, and a Visiting Fellow in the Institute for Policy Research (IPR) at the University of Bath.
Our recent report about our research exploring the experiences of couples claiming Universal Credit revealed how features of its design are in tension with norms shared by many families today and the way they live.
Our findings led us to conclude that policymakers need to devote more attention to how Universal Credit affects couples in particular. At the moment couples are still a minority among Universal Credit claimants, but the number of couples is rising all the time and (pre-COVID-19) had been estimated to reach almost three million when the system is fully rolled out.
So what should be done? First, we suggested a review of the relative amounts of Universal Credit for single people and couples. Couples on means-tested benefits have never been entitled to twice the standard amount for a single person. This downward adjustment is meant to reflect economies of scale, though some of our research participants said they were taken aback by the difference. But, as shown in a recent IPR blog, the uplift in the Universal Credit standard allowance to help claimants during the pandemic, equivalent to £20 per week, was the same for single people and couples – resulting in a widening of the existing differential. So we believe it is time for a review of the relative needs of different households and the extent to which Universal Credit allowances match these.
Secondly, many participants in our research thought that enabling both partners in a couple to have access to some income was safer and fairer. Yet the integration of different means-tested benefits and tax credits in Universal Credit, and the monthly payment into one bank account by default, can result in the disruption of previous arrangements whereby each partner often had some personal income from different sources. The Scottish Government is seriously considering options for both partners in couples to get some Universal Credit as a matter of course, rather than just a special exception as now. We would urge the Westminster Government to learn from this and act upon it.
This is not the same as achieving financial independence for individuals in couples, however, because the way Universal Credit works means that the resources, needs and actions of one partner affects what income the other partner can receive. So it is important to recognise that Universal Credit is not the only benefit in the UK’s social security system, and ensure that those benefits awarded on an individual basis are protected and increased.
This is particularly important for women, as it is harder for them to achieve financial independence via wages alone. And this has been made even more difficult under Universal Credit – which is ironic, given the Government’s policy emphasis on ‘making work pay’. The design of Universal Credit means that so-called ‘second earners’ in couples generally have worse incentives to get a job and to earn more compared to ‘first earners’. We will examine this issue in more detail in the second phase of our research. But our evidence from the first phase already suggests strongly to us that this is another area ripe for reform.
Despite these obstacles, we did interview some individuals in couples in which there were two earners. But we found that dual-earner couples can be particularly disadvantaged by some problems inherent in the structure of Universal Credit. As a recent Court of Appeal case demonstrated, the timing of wages received during a month’s assessment period can play havoc with the amount of Universal Credit paid, leading to volatility in income from one month to the next. This can of course affect any claimants with earnings. But the insecurity and loss of entitlement can be multiplied for couples with two earners. The resulting unpredictability of earnings and benefit combined can make budgeting from month to month almost impossible.
This is one area in which couples are particularly affected by a key feature of the system. In our view, the monthly reassessment of entitlement inherent in the design of Universal Credit, and the ways in which both earnings and changes of circumstances are taken into account, require a thorough rethink.
Some issues that we explored are common to both couples with children and lone parents. One of these is the treatment of childcare costs in Universal Credit. Participants in our research, like other parents using formal paid child care, had to pay childcare costs upfront, with reimbursement via Universal Credit paid in arrears. This made a big difference to the income they had to survive on during the month, and some had been tempted to – or felt they were forced to – give up their childcare provision, and sometimes their employment as well. Like others in the past, we believe that current assistance (such as the Flexible Support Fund that gives some support to those starting a job) is insufficient, and that this problem must be resolved at speed.
The worse incentives for ‘second earners’ and the disruption to income caused by the treatment of childcare costs are more likely to affect women than men. This is also the case for other features of Universal Credit. The issue here is not only – as with the single payment of Universal Credit into one account – about exacerbating the risks of financial coercion and other forms of domestic abuse, but also about creating potentially more unequal relationships between partners in couples. Power imbalances between women and men mean that this inequality is more likely to disadvantage women.
More general concerns relating to partnered women also emerge from our findings. In particular, our research revealed a disproportionate burden being taken on by women in couples in relation to managing both the household budget – often rendered harder by the integrated nature and monthly frequency of Universal Credit – and the Universal Credit online account itself. There was no let-up for many women, some of whom were also attempting to juggle a part-time job and child care. This leads us to argue that there should be a review of the administrative and compliance costs for claimants created by the design and demands of the Universal Credit system.
The Government clearly has a lot on its plate at the moment. But the issues we have set out here, emerging from the findings of our research into Universal Credit and couples, will not go away. Indeed, as a blog by the research report’s main author argued, they are being thrown into even sharper relief with the increase in the number of couples claiming Universal Credit in the UK as a result of the coronavirus pandemic. Policymakers must take these issues seriously and work out urgently how to resolve them.
All articles posted on this blog give the views of the author(s), and not the position of the IPR, nor of the University of Bath.
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