Written evidence from Public Health Scotland [UCW0089]

Public Health Scotland (PHS) is Scotland’s lead national agency for improving and protecting the health and wellbeing of all of Scotland’s people.

Our vision is of a Scotland where everybody thrives. Our focus is on increasing healthy life expectancy and reducing premature mortality. To do this, we use data, intelligence and a place based approach to lead and deliver Scotland’s public health priorities.

Key Messages:

1.              To protect population health and reduce health inequalities in Scotland, we support the first of the options listed in the inquiry: scrapping the five week wait for Universal Credit (UC) for all claimants. To achieve this we would recommend: reducing the time between claiming UC and receiving the first payment (to two weeks if possible) and covering this period with a grant paid in advance to all claimants unless they choose not to receive this. Ensuring first payment is made two weeks after date of claim, removes the need for an advance to cover 5 weeks. This would be easier to manage and require less resource intensive, and prevent longer term hardship for claimants on reduced benefits due to deductions to repay advance. We recommend cancelling debts owed on advance payments by all existing UC claimants aligned to this change.

2.              We recommend removal of the 5 week wait, ensuring that UC provides a prompt, stable, predictable income response that is sufficient for claimants and their families to maintain a healthy standard of living and maintain their dignity by:

• paying benefits without deductions, increasing the value of UC benefits paid. Repayment of debt from UC at its current level is unreasonable and risks hardship. The additional increase in the value of UC announced in April 2020 are welcome, but would need to go further to achieve minimum income for healthy living;
• we welcome the pause in recovery of other public debts for April-June 2020 in response to COVID-19, but would recommend that any future decision about resuming debt recovery (including advance payments) takes into account the impact of the resulting reduction in income on the health of claimants and their families;
• increasing the frequency of UC payments (e.g. to every two weeks);
• lengthening the period over which assessments of income are made, to smooth out fluctuations and create more stability in income.

3.              We recommend that a Health Inequalities Impact Assessment is conducted on UC to understand the full impact, especially on marginalised groups.[1]

Why we are responding

4.              Income is one of the fundamental causes of health inequality. We know from the evidence that growing up in poverty can have a detrimental impact on children’s health, both immediately and in the longer-term.[2]  Adequate income in adulthood also increases happiness and reduces mental health problems such as stress and anxiety for adults.[3]  Financial difficulties for jobseekers can lead to worsening mental health, which in turn lowers their capacity to seek employment effectively.[4]  While UC works well for some, there is evidence that the five-week wait, together with other features of UC, are contributing to poor health outcomes and health inequalities in Scotland (and the rest of the UK).

5.              In 2018/19, 35% of all households (and 68% of lone parent households) in the UK had no savings with which to cover the five-week wait.[5]  The requirement therefore for a prompt payment of benefit when making a new claim is to be expected. In October 2018, around 60% of UC claimants took an advance payment.[6] Advance payments, a debt to be repaid from benefit allowance, immediately reduce future benefit payments until fully recovered, risking persistent poverty. Both debt and poverty have a detrimental impact on health.

6.               The rapid increase in UC claimants, as an indirect result of the COVID-19 epidemic, has exposed more of the population and their families to the unintended health risks associated with delays in receipt of payment of UC. This heavy volume of claims is creating a backlog in claims processing, over and above the expected 5 week wait.  The UK Government has however acknowledged the challenge of debts and low rates of UC, in its response to COVID-19, by suspending repayment of other debts (e.g. tax credit overpayments) and increasing the rate at which UC is paid.

To what extent have the mitigations the Government has introduced so far (e.g. advance payments) helped to reduce the negative impact of the five week wait for UC claimants?

7.              Both quantitative and qualitative research suggests that current mitigation efforts have not reduced the negative impact of the five week wait.  In 2018, after the wait was cut to 5 weeks and 100% advances introduced, 44% of adults in households in Scotland receiving UC (n=200) reported the household had some financial difficulties, were not managing well or were in deep financial trouble. This is little different from the 45% reported in 2016/17. Just 9% of households receiving UC reported their household was managing very well/quite well financially, compared to 57% in households not receiving UC.[7] [8] [9] This is likely to be due to difficulties in making ends meet, rather than difficulties with day-to-day budgeting skills.[10]

8.              Wickham et al (2020) found that psychological distress among people who were unemployed in those places where UC was being rolled out increased by 6.57 percentage points after the introduction of UC.[11]  This large-scale population study included a year’s worth of data from 2018, during which the five-week wait and 100% advance payments operated. 

9.              The 2017/18 DWP claimant satisfaction and experience survey (CSES) suggested that whilst UC is working well for a third of people, it is not working well for around a fifth.[12]  However, the exclusion of some groups from the CSES sample (homeless people, terminally ill people and those whom the Jobcentre has flagged as “potentially violent”) make it unclear how those groups fare under UC. 

10.              Advance payments are not an appropriate solution to the five week wait, because they are loans and likely to have an adverse impact on the health of households, by reducing future income and increasing anxiety through a new or additional debt. 

11.              We would recommend an equitable approach to advance payments which is both fair and more cost effective. Limiting non-repayable advances to some ‘vulnerable’ claimants requires identification. Vulnerability, is complex and often difficult to detect. Identification of vulnerability therefore requires wide ranging knowledge, skills and connection to other public services, which is resource intensive. In terms of equity, this is open to staff interpretation and discretion, risking inconsistency and vulnerable claimants being missed.[13][14]   A system-wide change in processes, training and ways of workings to ensure that vulnerable claimants are consistently identified and supported would be required across services. This requires significant investment and is likely to take a long time to achieve at a considerable opportunity cost. 

12.              If households choose to accept advance payments, they are reducing future income.  In 2017, two-thirds of households (68%) in Scotland claiming low-income benefits had no savings with which to cover the five-week wait.[15]  In effect, households claiming UC are forced to choose between hardship today (by refusing the loan) and hardship tomorrow (by taking one).  

13.              Debt has an adverse impact on mental health.  Fitch et al (2011), found “indebtedness may contribute to the development of mental health problems, and mediate accepted relationships between poverty, low income, and mental disorder.”[16]  This is acknowledged by DWP: “Problem debt….can place a heavy burden on families. This can create a debt spiral in which low-income families become trapped in problem debt, further reducing disposable income, increasing mental stress, and reducing the ability to meet repayments or seek help.”[17]

What problems do claimants still experience during the five week wait?

14.              A qualitative study, carried out by Cheetham et al. (2019) in April to December 2018 in the North East of England, found that the five week wait for UC resulted in debt, rent arrears, fuel and food poverty for claimants, with adverse consequences for their physical and mental health.[18] 

15.              Financial difficulties for jobseekers can lead to worsening mental health, which in turn lowers their capacity to seek employment effectively.[19] The prospect of moving into a job is reduced with no income to support this, during the 5 week wait.

16.              In 2018/19, 56% of children[20] and 59% of working-age adults[21] in households claiming UC were in relative poverty (<60% of median incomes, after housing costs). The five week wait creates an additional pressure on household incomes, especially families already experiencing poverty, exacerbated by:

• The low level at which UC is paid: Universal Credit is paid at too low a level for families to achieve a minimum income for healthy living. It is unreasonable to deduct loan payments from an income that does not meet healthy living requirements.  The increases in the value of UC introduced in April 2020, as part of the UK Government’s response to COVID-19, are welcome, and confirm the need to increase the value of UC.  Increasing the value of means-tested benefits in line with published Minimum Income Standard would have a large impact on reducing years of life lost and on reducing relative inequalities in years of life lost.[22] 
• Repayments excluding UC advances.  For the single month for which we have data (August 2019), £4.2m was being deducted from UC payments in Scotland for other public sector debts: tax credit overpayments; rent arrears; other DWP overpayments; and social fund loans.  As noted above, debt has a detrimental impact on mental health.  We recommend that any future decision about resuming debt recovery post COVID -19 takes into account the impact on the health of claimants and their families.   

• Frequency of payment and length of assessment periods. Tomlinson (2018) found that around 40% of UC claimants are paid more frequently than monthly, so are likely to experience greater changes to their income to begin with.[23] Low income households have more insecure and fluctuating incomes and prize financial stability more than higher income households.[24]  UC risks increasing financial insecurity because of its design, since: “changing benefits as soon as circumstances change, adds to financial insecurity, potentially creating stress alongside debts”.[25]  This can result in claimants moving in and out of UC, with an accumulation of five week waits.

17.              Unless they have negotiated easements, UC claimants (and their partners) are expected to meet the conditions in their claimant commitment during the five-week wait, i.e. prior to payment of UC. For almost half of UC claimants their claimant commitment includes job search. If they do not meet this commitment they risk a benefit sanction, reducing their income. No income during the five week wait may mean they have no financial resources to support job search. (NB. In February 2020, of the 257,527 claiming UC, 28% were not expected to look for work as health or caring responsibility prevented them from doing so and a further 9% were lone parents or lead carers caring for a child aged 2 or under.  Another 24% were working and claiming UC).

18.              We would recommend UC is adjusted to ensure claimants have a stable, predictable income that recognises long-term need by:

• Reducing the frequency of payment periods (e.g. to two weeks), or at least adopting the Scottish Choices approach, which entitles claimants to ask for this, rather than for it to be left to the discretion of DWP officials (as in England and Wales);
• Lengthening the period over which assessments of income are made, to ensure income provided meets long-term need.

What is the best way of offsetting the impact of the five week wait?

19.              We recommend scrapping the five week wait for all claimants.  To achieve this we would recommend: reducing the time between claiming UC and receiving the first payment (to two weeks if possible) and covering this period with a grant paid in advance to all claimants unless they choose not to receive this.  We also recommend cancelling debts owed on advance payments by all existing claimants.

Are different mitigating options needed for different groups of claimants?

20.              The rapid increase in additional claims for UC in March 2020 (+950,000 people), linked to the COVID-19 outbreak, highlights the need for an effective social security system that promptly responds to protect people and their families in difficult times.  UC now touches the lives of more than 3.8m.  This pandemic has highlighted the diversity of families facing a sudden and unexpected loss of income, who require timely help if they are to avoid hardship and harms to health: the five week wait offers delayed payment and impending debt.  We would encourage the UK Government to acknowledge the health implications of this challenge, and to scrap the five-week wait for all claimants, to reduce these risks to health.

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