MANDY CHEETHAM (TEESSIDE UNIVERSITY) AND SUZANNE MOFFAT (NEWCASTLE UNIVERSITY) – WRITTEN EVIDENCE (EUC0028)

The economics of Universal Credit

1. Our evidence submission is based on interviews with 33 Universal Credit claimants (aged 21-63 years) and focus groups with 37 staff supporting them undertaken in Gateshead and Newcastle in North East England from April to October 2018. This peer reviewed research has been published in the British Medical Journal Open (Cheetham et al 2018) (https://bmjopen.bmj.com/content/bmjopen/9/7/e029611.full.pdf) and cited in  the United Nations (UN) Special Rapporteur report following his visit to the North East of England in November 2018 (Alston 2019) https://undocs.org/A/HRC/41/39/Add.1
2. Our response to the questions posed by the Economic Affairs Committee is therefore based on analysis of 33 interviews from female and male claimants with complex lives who sought or required assistance with their Universal Credit claim and includes people with long-term health conditions and/or disabilities, mental health problems, learning disabilities, cognitive impairment/dementia, sensory impairment, primarily not in paid employment, on low incomes, with little or no savings. In addition, the research includes the perspectives of 37 staff from local government and the voluntary and community sectors that are supporting people with Universal Credit claims.
3. The Gateshead-Newcastle study upon which we base our written submission is relatively small scale in terms of the numbers of participants. However, these research findings reflect a growing evidence base across the UK drawn from other research (Dwyer et al 2018, Loopstra et al 2019), media accounts (Butler 2020), voluntary and community sector analysis (e.g. Citizens Advice 2018), and experiences of health care staff (Arie 2018; Walton 2018) that present a coherent picture about the negative consequences of Universal Credit for many claimants and their dependents. We therefore conclude that the research findings are valid, reliable and transferable to similar populations in other localities across the UK and are not particular to the North East of England.

How well has Universal Credit (UC) met its original objectives?

4. Our findings suggest that the original objectives of Universal Credit to simplify the benefits system, make work pay and reduce system fraud and error are not being met.
5. Participants’ experiences of claiming and managing on Universal Credit reported in our study show that it negatively impacts on material wellbeing, physical and mental health, social and family lives. Claimants with long term health conditions and disabilities described the digital claims process as complicated, disorientating, impersonal, hostile and demeaning. Managing claims online was particularly difficult for claimants with vulnerabilities who needed assistance. Several participants indicated that the previous (legacy) system was easier for them to access and manage.
6. The threat of punitive sanctions for failing to meet the enhanced conditionality requirements under Universal Credit added to claimant’s vulnerabilities and distress. Our evidence suggests Universal Credit is undermining vulnerable claimants’ mental health, decreasing the likelihood of finding and keeping a job and increasing the risk of poverty, hardship, destitution and suicidality. The experiences of staff supporting Universal Credit claimants who participated in the study concurs with those of the claimants themselves, adding to the reliability of the findings. 

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

7. The original aim of Universal Credit to simplify the benefits system was welcomed, but the design features and underpinning assumptions of Universal Credit, and the way it has been implemented, have resulted in profound hardship for vulnerable claimants with complex lives. Few participants said they had benefitted from tailored work coach support or were offered Alternative Payment Arrangements such as fortnightly payments or housing payments directly to landlords.
8. Digital by default access to Universal Credit has caused problems, combined with lack of job centre support to claim and manage on Universal Credit, the 5 week delay in payment (which, in our study, was between 7 and 12 weeks), inconsistent advice from the Department for Work and Pensions, and the time taken to resolve issues have exacerbated difficulties facing Universal Credit claimants. Access to high quality, timely, trusted advice and tailored, non-judgmental face-to-face support is needed.
9. The assumption that everyone in work is paid monthly was not reflected by study participants, many of whom were paid weekly or fortnightly. The Universal Credit system of monthly payments caused considerable problems for people trying to budget on low incomes. Fortnightly payments were the preferred option.
10. Advanced payments, where offered, were poorly explained and understood. Repayment levels were sometimes such that claimants received payments well below the minimum income for healthy living, and indeed were trying to get by on impossibly low incomes.

What have been the positive and negative economic effects of Universal Credit?

11. The requirement to initiate and manage a Universal Credit claim online was difficult for many participants, echoing Department for Work and Pensions (2018) research which found only 54% of claimants were able to register a claim unassisted. Poor digital literacy, lack of computer / internet access, email address and difficulties verifying identity online, added to the stress of completing an online application.
12. There were numerous examples of system errors which could result in serious payment delays, resulting in increased risk of food and fuel insecurity, rent arrears, homelessness, survival sex, and shoplifting. Many participants were forced to skip meals, or use foodbanks, including those with long term health conditions who discussed the difficulties of following nutritional, dietary or other advice from health professionals. The negative impact on family relationships and social networks was reported. Some participants lacked resources for every-day activities that maintained contact with family and friendship networks, increasing the risk of social isolation. It is not yet possible to quantify the impact of Universal Credit on physical and mental health.  However, our study indicated that claiming Universal Credit had negative effects on claimants’ mental health with increased anxiety, stress, depression and hopelessness reported. The consequences of claiming and managing on Universal Credit were so severe for some individuals that six research participants had considered suicide.
13. It should be noted that some local government staff supporting people with Universal Credit claims had received suicide awareness training. This finding resonates with the recent National Audit Office’s enquiries into the evidence held by the Department of Work and Pensions on benefit claimants who ended their lives by suicide. Our study findings of increased risks of self-harm and poor mental and physical health, the impact on primary and secondary care and unplanned hospital admissions are echoed by Mahase (2019).

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

14. The long standing and significant cuts to government expenditure have disproportionately impacted on the north of England affecting public services, reducing resources for the voluntary and community sector. Organisational and personal pressures and increasing workload as a result of an “unworkable and cruel” Universal Credit system were said to be creating additional costs. In the UK ‘digital assistance’ for claiming Universal Credit has been outsourced to public libraries and civil society organisations which are themselves subjected to public sector funding cuts. 
15. Punitive deductions pushed vulnerable claimants into debt and destitution, risk of alcohol and substance use relapse, increasing reliance on foodbanks, family and friends. The threat of sanctions for not meeting mandatory job searching requirements heightened fears of eviction and homelessness, and combined to seriously destabilise claimants’ mental health and emotional wellbeing. Universal Credit increased financial and housing insecurity and served to push vulnerable claimants further from the labour market, undermining the intended aim of encouraging people into work.
16. Ground down and demoralised by what they saw as the “nightmare” of the Universal Credit roll out, and “fearful for clients” ahead of the further roll out, staff from local government and the voluntary and community sectors described loss of hope for the future, increased stress, and burnout as a result of supporting Universal Credit claimants.
17. We were unable to include staff from health care or education services, and we strongly recommend that the impact of Universal Credit on all public sector service staff should be measured, in terms of the economic and human costs of implementing this system.

Which claimants have benefited most from the Universal Credit reforms and which have lost out?

18. Rather than providing a safety net for vulnerable claimants and those with long term health conditions and disabilities, Universal Credit is undermining basic rights to a decent standard of living, housing and health at a time of stringent cuts to public services. This is important given the uneven impact of welfare ‘reform’ in the UK with estimated financial losses higher in ex-industrial areas such as North East England (Beatty et al 2017). The cumulative impact of Universal Credit is hitting hard alongside other welfare reforms, including real terms reduction in benefit income due to welfare ‘reform’/retrenchment, alongside rising living costs and wage stagnation.
19. The findings show that expert criticism (Sainsbury 2014, Royston 2017, Patrick 2017, NAO 2018, OBR 2018) levelled at Universal Credit in advance of its implementation and predictions about the impact of Universal Credit on disadvantaged citizens, including disabled people, lone parents, and those with mental health conditions have been proved correct. It would appear that the dread anticipated by future claimants is well founded, exacerbating digital exclusion, (in)equality and increasing costs and dissatisfaction.

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?

20. Our findings suggest that Universal Credit’s design does not adequately reflect the reality of low-paid work in North East England. There are limited opportunities for people to increase their income or hours, with insecure, low paid, zero hours contracts common. Difficulties facing lone parents juggling childcare and work have been reported, particularly for parents whose children have health conditions or disabilities, exacerbated by the requirement to pay childcare costs up front.

If Universal Credit does not adequately reflect the lived experiences of low-paid workers, how should it be reformed?

• Remove the five week wait for first Universal Credit payments
• Alternative payment arrangements, including the option of fortnightly payments, split payments and direct payments to landlords should be routinely offered and available permanently for those who struggle to manage on monthly Universal Credit income.
• The Scottish Government (Social Security Scotland 2019) have implemented a Social Security charter promising dignity, fairness and respect, and we recommend that this is adopted in England, Wales and Northern Ireland.
• Consistent application of Universal Credit guidelines by job centre work coaches, for example whether meaningful volunteering counts towards work search activities.
• Full childcare costs paid in advance for working parents.
• Improve understanding of the amount, reasons for and timeframe for repayments or deductions, particularly historical overpayments of child or disability benefits or child tax credits.
• Further independent academic research on the impact of UC among disadvantaged groups, including single parents, and those in work with low and fluctuating incomes and self-employed claimants.
• Update the Equality Impact Assessment of Universal Credit, last undertaken in 2011

References

Alston P (2019) Report of the Special Rapporteur on extreme poverty and human rights visit to the United Kingdom of Great Britain and Northern Ireland https://undocs.org/A/HRC/41/39/Add.1

Arie S.  UK. Doctors’ concerns over Universal Credit are mounting. British Medical Journal 2018:k5131.doi:10.1136/bmj.k5131

Beatty C. and Fothergill S. (2017) Hitting the poorest places hardest: the local and regional impact of welfare reform: Centre for regional Economic and Social Research: Sheffield Hallam University

Butler P. (2020) https://www.theguardian.com/society/2020/feb/07/dwp-benefit-related-suicide-numbers-not-true-figure-says-watchdog-nao

Cheetham M, Moffatt S, Addison M, Wiseman A. (2018) Impact of Universal Credit in North East England: a qualitative study of claimants and support staff BMJ Open:9: https://bmjopen.bmj.com/content/bmjopen/9/7/e029611.full.pdf

Citizens Advice (2018) Managing Money on Universal Credit

Department for Work and Pensions (2018) Universal Credit full service survey research report 958

Dwyer P. (2018) Welfare Conditionality, welfare support sanctions and behaviour change final findings overview http://www.welfareconditionality.ac.uk/publications/

National Audit Office Information held by the Department for Work & Pensions on deaths by suicide of benefit claimants https://www.nao.org.uk/report/information-held-by-the-department-for-work-pensions-on-deaths-by-suicide-of-benefit-claimants/

Loopstra R, Goodwin S, Goldberg B, Lambie-Mumford, May J, Williams A (2019) A survey of food banks operating independently of the Trussell Trust food bank network https://uploads.strikinglycdn.com/files/c9576e7d-5d2c-4006-aaa0-6eced154427f/Report_IndependentFoodBankStudy_Dec2019-pdf.pdf

Mahase, E . (2019) “Hostile and demeaning” universal credit system worsens physical and mental health, study finds in BMJ 2019;366:l4552 doi: https://doi.org/10.1136/bmj.l4552 (Published 04 July 2019).

National Audit Office (2018) Rolling out Universal Credit Report by the Comptroller and Auditor General London www.nao.org.uk

Office for Budgetary Responsibility (2018) Welfare Trends Report Crown copyright www.gov.uk/government/publications

Patrick R. (2017) For whose benefit? The everyday realities of welfare reform Bristol, Policy Press

Royston S. (2017) Broken Benefits; what gone wrong with welfare reform Bristol Policy Press

Sainsbury R. (2014) Universal Credit: the story so far…Journal of Poverty and Social Justice, 22(1) pp11-13.

Social Security Scotland (2019) Our Charter https://www.gov.scot/publications/charter/

Walton E.  (2018) A truth universally acknowledged: moving to Universal Credit leads to large debt and poor mental health. Br J Gen Pract 2018;68:577.doi:10.3399/bjgp18X699977

26 February 2020