Jane Millar is Professor of Social Policy in the Institute for Policy Research (IPR) at the University of Bath.
Another day, another damning report on the workings of Universal Credit. Over the summer it was the House of Lords Economic Affairs Committee, now comes the House of Commons Work and Pensions Committee which focuses on ‘the wait for the first payment’. However, as the Committee recognises, that five-week wait is impossible to address separately from the monthly assessment regime that is fundamental to the Universal Credit design. People must wait at least five weeks at the start because it takes one elapsed month to assess their incomes and circumstances, and then one week to make the payment arrangements.
In our ongoing in-depth research with couples receiving Universal Credit, we have seen close-up many of the issues raised, highlighting the way that the five-week wait may be just the start of ongoing issues and problems. These included many of the factors identified in the Select Committee report: financial hardship; rent arrears and debts created at the start of the claim; the heavy burden of automatic deductions for debts and overpayments; and the lack of timely information to help people make and manage their claim.
We also saw some specific challenges for couples who must make a joint claim, relating to monthly assessment and other aspects of the design. These included providing all the information needed for the joint claim in a timely way; deciding who should be the ‘lead carer’ for couples with children; the requirement for each partner to accept a claimant commitment; and the need to designate one bank account for payments.
For two-earner couples there were often problems because wages did not always fall neatly into the fixed monthly assessment period. Sometimes this meant three or four sets of wages were included in the assessment, resulting in a reduced or stopped payment, or even loss of entitlement altogether.
Payment amounts that fluctuated unpredictably from month to month also caused problems with budgeting. Getting the Universal Credit payment lined up with essential outgoings like rent, food and utility bills could be tricky, and it often fell to the women to try and keep on top of this. And sanctions, overpayments and debts incurred by one partner (in the current or any previous benefit claim) could affect the other partner.
Another evidence gap related to the preferences for payment frequency, and in particular why people might opt to go back to monthly payments, after having used the twice monthly option. A monthly payment is the current default in England and Wales, with twice monthly the default in Northern Ireland, and a choice in Scotland (but only after the first payment has been made). In our sample, there were mixed views and experiences of payment frequency. Those with other sources of income – including earnings and other benefits – and people who paid their rent and bills monthly, generally coped well with a monthly payment. Those whose main or only source of income was Universal Credit tended to struggle more. The Select Committee recommendation of making the twice-monthly option easier to access would provide more flexibility for people to choose the frequency that best fits their needs, and to change this if necessary. However, if budgeting monthly is difficult because of income inadequacy then simply splitting an inadequate payment in two is unlikely to help.
Among their other recommendations, the Select Committee propose a ‘starter’ payment of three weeks of the standard allowance, reducing the burden of deductions, and retention of the £20 per week increase to the standard allowance that was introduced as part of the COVID-19 emergency measures. The Economic Affairs Committee made similar proposals. Our research provides support for all of these. Some sort of starter payment would provide a much-needed stop gap as people wait for the system to get regular monthly payments established. The gap between entitlement and what people actually receive each month can be substantial and deductions place a heavy burden on family budgets.
The low level of financial support provided by Universal Credit was a real issue for many of the people we interviewed, so keeping the increase is important. But, we would argue, more is needed in relation to couples and especially couples with children, as outlined in a previous blog by Fran Bennett. This includes a review of the relative amounts of Universal Credit for single people and couples. The increase of £20 per week to the standard allowance is the same for single people and couples, so relatively speaking couples and families have gained less, which does not reflect their circumstances and needs.
Couples – with and without children – are going to be a significant proportion of Universal Credit claimants as the roll-out continues, and the numbers are already increasing rapidly in the upsurge in claims over the past few months. Understanding their circumstances and needs, and making the reforms now, is important to ensure that Universal Credit is as ready as the system can be to provide income adequacy and security for all claimants.
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.
Learn more about ‘Couples balancing work, money and care: exploring the shifting landscape under Universal Credit’.