Fran Bennett is an Honorary Researcher at the University of Oxford Department of Social Policy and Intervention; and a Visiting Fellow at the University of Bath Institute for Policy Research (IPR). She is currently part of the ESRC-funded project, ‘Couples balancing work, money and care: exploring the shifting landscape under Universal Credit’.
Universal Credit has now been around in theory, and in reality, in the UK for over 10 years. So, this seems an appropriate time to reflect on its past, present and future.
Its past has been troubled, to say the least, and many words have already been written about it. The most recent contribution is a blow-by-blow account by David Freud, who first became involved in ‘welfare reform’ under Tony Blair’s New Labour administration and was then Minister for Welfare Reform in the Lords during the legislative debates introducing Universal Credit, initiated by the Conservative-led Coalition Government.
The title of his recent book, Clashing Agendas: Inside the welfare trap, evokes two key themes. Both in his book, and in a Daily Telegraph article that he wrote for its launch, David Freud is vitriolic about the damage to the progress and reputation of Universal Credit by the Treasury’s demands for benefit cuts.
Indeed, interdepartmental conflict is central to his account. But he is also convinced that claimant behaviour must change, and that the ‘welfare trap’ is crucial to this mission because it confined people to one claimant category. He lauds Universal Credit for being ‘nimble’ and open to experimentation; but this is to be done essentially to find an optimum benefit level that will not disincentivise job search.
The progress of policy change within the Universal Credit system increasingly depends on the courts. Legal cases have resulted in some of the most serious challenges to the core design of Universal Credit. These have largely involved the equality legislation or judicial review, rather than direct objections to features of Universal Credit’s design. The impact of the treatment of childcare costs on single parents has been judged discriminatory and irrational; and the effect of two payments of salary in one monthly assessment period on Universal Credit awards was found to be so perverse that the Government has had to amend the regulations. But in this case its response was minimalist; and in the case of single parents’ childcare costs, the Government appealed, meaning the final outcome is not yet known.
Whilst systematic monitoring and advocacy by organisations such as the Child Poverty Action Group and Citizens Advice of course continues, and Select Committees produce regular reports about Universal Credit, not much policy change has come about via these two routes recently. Indeed, two Committees were so concerned that the Government was rejecting the vast bulk of their recommendations that they held a special oral evidence session with the relevant minister. And the systematic programme of evaluation of Universal Credit by the Department for Work and Pensions seems to have petered out.
It is true that the devolved administrations, within their different but limited powers, are still trying their best to amend the system. Northern Ireland ministers have recently declared their intention to try to solve the problem of childcare costs having to be paid in advance with reimbursement in arrears, and amending the regulations on Universal Credit calculations to ignore any grant made to a claimant at the beginning of a job. But these grants are, as in the rest of the UK, discretionary; and this can only work by pretending in effect that such a payment has not been made.
On the other hand, Scotland’s intentions of introducing separate payments to partners in couples on Universal Credit by default appear to have stalled, at least for the moment, with the Scottish Government and the Department for Work and Pensions each saying that the other is at fault but proclaiming their willingness to work together.
In the meantime, ministers have had to correct previous statements that 60 per cent of Universal Credit awards to couples are paid to the ‘main carer’, in order to clarify instead that some 60 per cent of payments were made to women where the gender of the payee could be established. And there is apparently insufficiently robust data to demonstrate the impact of the ‘nudge’ to couples to nominate the ‘main carer’ as the payee, introduced by Amber Rudd when she was Secretary of State.
Other policy reforms have of course been made to Universal Credit – not least because of the COVID-19 pandemic which, according to the Department for Work and Pensions, has resulted in over 200 changes. Some of these are therefore only temporary in nature. A planned reduction in repayment rate and length of repayment period for some deductions from Universal Credit was brought forward from October to April 2021. But this was apparently possible only because technicians were going into the system in any case, in order to extend the ‘uplift’ of £20 per week payable to claimants until the end of September 2021. This seems to mean that prioritisation of reforms is subject to the demands of automation rather than claimant wellbeing.
On the other hand, changes to policy on sanctions seem to have resulted from reaction to their very high rates and punitive aspects. COVID-related easements of conditionality have in any case resulted in far fewer sanctions being imposed over recent months. But in addition, a new procedure has been introduced, which will outlast the pandemic, to make the decision-making process on sanctions more considered. An MP is introducing a Private Member’s Bill to try to ensure that someone refusing a zero hours contract is not sanctioned.
The Government has recently produced ‘refreshed’ business case figures for Universal Credit. These seem to show that projected savings have increased, making Universal Credit cheaper to administer than the ‘legacy’ system of benefits and tax credits it is replacing – a fact which ‘stakeholders should clock’, according to the relevant minister in his letter.
However, the improvement in these figures appears to be due in part to the changes in numbers and composition of claimants during the pandemic, together with the easements made to conditionality in this period, which cannot be applied to the equivalent ‘legacy’ benefits (as well as to a new method of comparing Universal Credit and legacy claimants). Thus, the savings are highest in 2020/21 and 2021/22 and decrease after that.
The Government has assumed that 10 per cent of households in the legacy system do not take up their full entitlement but apparently has not applied any equivalent take-up assumption to Universal Credit entitlement, despite suggesting elsewhere that conditionality might deter some from applying.
The managed migration pilot, deliberately moving legacy system claimants to Universal Credit, had to be halted due to the pandemic, with no definite date for restarting. But in order to avoid the arduous process for the Government of implementing managed migration, the Department for Work and Pensions is now suggesting that people should consider whether they would be better off on Universal Credit by using a benefit calculator. Such calculations are, however, currently muddied by the Government’s intention to terminate the £20 per week ‘uplift’ at the end of September. And various proposals by Select Committees to soften the blow of losses for those without transitional protection have been rejected.
What about the longer term? The Trades Union Congress and the Labour Party are both currently committed to stopping and scrapping Universal Credit, although it is not entirely clear what this would mean in practice. Other organisations are considering wider reforms – though one of these alternatives (the ‘Minimum Income Guarantee’) looks remarkably like Universal Credit, albeit paid at a more generous level and potentially with some underpinning non-means-tested cost-related benefits for children and disability.
The advocates for Universal Basic Income, which would involve an unconditional, non-means-tested individual benefit, have become more numerous and vocal during the course of the pandemic, although for some this would be paid at a level which suggests that it would be a Partial Basic Income, with other benefits necessary to top it up.
Others still, including some of the major think tanks, are suggesting that COVID has shown us the need for contributory benefits, perhaps related to earnings in a system more akin to continental European social insurance.
Finally, some – including the Child Poverty Action Group, the Fabian Society, and the Institute for Government with the Social Security Advisory Committee – are looking more widely at options for longer-term reform. In the meantime, however, David Freud confidently predicts that we will stick with Universal Credit for the next half century.
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.