The economics of Universal Credit


  1. The National Association of Welfare Rights Advisers (NAWRA) was established in 1975 as the Welfare Rights Officers’ Group, and then the National Welfare Rights Officers’ Group before becoming NAWRA in 1992. It represents advisers from local authorities, the voluntary sector, trade unions, solicitors, and other organisations that provide legal advice on social security and tax credits. NAWRA currently has more than 200 member organisations.


  1. We strive to challenge, influence and improve welfare rights policy and legislation, as well as identifying and sharing good practice amongst our members.


  1. NAWRA holds four conferences throughout the year across the UK, attended by members from all sectors of the industry. An integral part of these events are workshops that help to develop and lead good practice.


  1. Our members have much experience in providing both front line legal advice on benefits and in providing training and information as well as policy support and development. As such NAWRA is able to bring much knowledge and insight to this consultation exercise.


  1. NAWRA is happy to be contacted to provide clarification on anything contained within this document. NAWRA is happy for details and contents of this response to be made public.


Executive summary


  1. This response is informed by a survey of NAWRA members carried out over just two weeks (due to the short deadline) in January/February 2020 that received 63 responses. It is also informed by the discussion forum on the rightsnet website[1] - used by welfare rights advisers across the UK to get casework support, share the experiences of their claimants, and to network with other advisers – which is an ideal source of contemporaneous evidence. Examples of points raised which have come up in the rightsnet discussion forum are referenced in the footnotes.


How well has universal credit met its original objectives?


  1. Iain Duncan-Smith said in 2010[2]

Universal Credit will mean that people will be consistently and transparently better off for each hour they work and every pound they earn. It will cut through the complexity of the existing benefit system to make it easier for people to get the help they need, when they need it. By utilising tried and proven information technology, we will streamline the system to reduce administration costs and minimise opportunities for error or fraud.



  1. Better off in work?

There are design features in universal credit which means that this is not always the case –


  1. NAWRA members have reported examples of people having to leave work because of the UC system –


  1. Simplicity?

While the basic structure of universal credit has some simplifying features – one benefit, one organisation to contact – the rules within it are, at times, horrendously complicated and it can be difficult to get the help you need, for example –


  1. NAWRA members report that, while the digital approach can work well for people who are computer literate and have ready access to the internet, there is a lack of support for those who are more vulnerable and, even when adjustments are requested, they do not happen.


  1. Minimise opportunities for fraud?

As is well documented there has been widespread occurrence of fraudsters starting up claims and using the advance payment option without a person’s knowledge – in October 2019 the Permanent Secretary confirmed there were approximately 85,000 cases.[12] It was the digital system that allowed this to happen as fraudsters were able to make the claim and request the advance online without seeing anyone. NAWRA wrote to the Secretary of State in June 2019[13] raising its concerns and recommending that the ability to request an advance online was removed until the claimant had visited the jobcentre. It took the government over three months to act on that recommendation and it finally updated its guidance on 18 September 2019.[14]


Were the original objectives the right ones? How should they change?


  1. The three objectives discussed above all good objectives but, as we have evidenced, they have not been met for many people. Without addressing the issues we have set out they will not be achieved.


  1. While NAWRA agrees that people should be supported into work if that is what is right for them, the objective should be to listen to the claimant’s needs and respond accordingly. UC should be about social security – ensuring people have enough to live on - support rather than sanction. The case study below highlights some of the issues –


Claimants are often given inappropriate Claimant Commitments which pay no attention to limitations upon their ability to seek work or try work-related activities. I recently dealt with a profoundly deaf claimant whose deafness (and other serious family-related issues) was not referred to at all in the CC. The claimant states that she was told to seek work or be sanctioned, took inappropriate work as a panic measure, and owing to this suffered a breakdown. Owing to the ages of her children, and her disability, she should not have been told to seek work at all. This claimant stated that she did in fact wish to work, but only when she was well enough to do so and in a working situation that did not require telephone work or a noisy environment. Had her wishes been properly recorded and appropriate support and encouragement (as opposed to threats of sanctions) been provided, she may have been back to work and better off by now, but she remains at home, too unwell to work.


  1. There should be an objective to properly support disabled people both in and out of work. The design of UC has meant that disabled people have lost out hugely compared to the legacy system The Disability Benefits Consortium has produced a report[15] setting out ten recommendations to help remove the income losses and work disincentives for disabled people that exist in UC in its current design. NAWRA fully supports all the measures put forward which would move towards mitigating some of the biggest injustices in UC and also provide some simplification. DWP’s own research suggests that currently the benefits system incentivises individuals to avoid engaging with the DWP for work-related support due to the high risks involved.[16] 


What have been the positive and negative economic effects of universal credit?


  1. NAWRA believes that there have been wide-ranging negative economic effects of universal credit. By reducing incomes (through cuts as set out in points at 17 below) and increasing pressures (conditionality and sanctions) the health and wellbeing of claimants and their families has been adversely affected. This has led to increased demands in other areas such as health services, housing, social care and education.


  1. While the growth of foodbanks demonstrates an increased community spirit, it reflects the negative economic effect that claimants do not have enough to buy the essentials, let alone any luxuries, and that will impact on local businesses.


What effect has fiscal retrenchment had on the ability of universal credit to successfully deliver its objectives?


  1. Fiscal retrenchment has negatively impacted on the ability of UC to meet its objectives because –


Which claimants have benefited most from the universal credit reforms and which have lost out?


  1.          Claimants who have benefited from UC reforms are –


  1.          Claimants who have lost out include those who are


  1. A discussion thread on rightsnet sets out many of the less obvious ways in which claimants have lost out.[18]


How has the world of work changed since the introduction of universal credit? Does universal credit’s design adequately reflect the reality of low-paid work?


  1. There is more uncertainty in work – more temporary contracts, more zero hours contracts. For claimants who are able to deal with UC (see 18 above) then UC responds well as, being one benefit, there is no need to stop and start claims, and the award can go up and down in response to changing wages.


  1. However, UC does not reflect the reality of low-paid work, most of which is not paid monthly so does not fit well with the monthly assessment period.


  1. Additionally, claimant commitments often expect claimants to spend 35 hours looking for work and ‘to cold call employers’ or ‘hand in CVs’. Large organisations do not recruit people in this way and expecting claimants to do that is putting undue pressure on them, and reducing their confidence as it will inevitably lead to rejection. The support to find work does not appear to be realistic. For people who are a long way from the labour market, more genuine support and handholding is required. For many there may not be the jobs available to match their experience due to the changing job market eg less industrial work, more work requiring digital skills. The caseloads of work coaches is very high and, however well-meaning, they often do not have time to provide the necessary support. This is likely to get worse as the service is scaled up.


  1. UC fails to take into account the reality of self-employed work which may have uneven cashflow, and where claimants may work very hard and yet not take home the equivalent of the minimum wage. Also the requirement to report incomings/outgoings monthly, which does not tie in with reporting to HMRC is an added administrative burden. Imposition of the MIF is forcing people out of work when their chances of getting other work may not be high. There needs to be recognition that low paid self employment can be worthwhile to do, and support given to enable people to build on their self-employment rather than sending them into hardship.


If universal credit does not adequately reflect the lived experiences of low-paid work, how should it be reformed?


  1.          A number of reforms are needed including –




  1. While UC may work well for the majority of claimants at present, NAWRA believes that it is not working well for a very significant minority, and that the proportion of claimants that it does not work for will only increase when managed migration starts, and the numbers of vulnerable claimants increases.


  1. The UC system in its current state is complex and inflexible, and causes unnecessary hardship and suffering. Good work is done within it, but often by imaginative workarounds in spite of it rather than because of UC approaches. NAWRA believes that a substantial overhaul is needed before the most vulnerable claimants are migrated.


28 February 2020




[2] pg 1



[4] pg 6

[5] see for example

[6] see for example



[9] see for example



[11] see







[17] see for example





[20] and