Written evidence from South London and Maudsley NHS Trust UCR0188)
Self-employment and Universal Credit
Clearly, evidence suggests that Universal Credit does very little to assist those in self-employment and inhibits innovation and entrepreneurship. The premise of the minimum income floor ensures that a business can be treated as a going concern. There is total disregard for the fact that a new venture can take a considerable amount of time to setup and generate returns. The statistics show that around 50% of new businesses fail within the first 2 years. The minimum income floor which assumes that a gainful self-employment constitutes 35 hours a week at national minimum wage is therefore unachievable for many people in this position for an extended length of time. In order to maximise the rate of successful self-employed ventures, it is essential that during the initial 12 months JCP staff provide adequate support both internally and externally as this will ensure the successful running of these ventures in the future. The very fact that JCP are discouraging claimants from undertaking these ventures is abhorrent especially in the modern era of entrepreneurism and that other areas of sustainable employment have been closed off to some people, particularly around disabled people who are subjected to employer perceptions leaving little other options. The current provision of New Enterprise Allowance is only available for people that have not been engaged on the work programme and this needs to be made more accessible.
Free School meals and other entitlements
It has long been accepted that a measure of low income under tax credits is a gross income of £16,190 as this has entitled claimants to free prescriptions and free school meals. This seems to be an arbitrary figure which has become enshrined. Universal Credit can be paid both as an in work and out of work benefit and so distinctions need to be drawn and suitable income levels defined. The Governments proposal to
means-test free school meals under Universal Credit at a level of £7,400 will take 1 million people out of this whilst ensuring that that the most impoverished families face further hardship. A fair methodology of assessing this would be to use the living wage currently amounting to around £16,000. This provides a fair resource in respect of assessing eligibility for this and similar services such as free prescriptions.
Work Incentives
The introduction of Universal Credit was implemented on the premise that ‘work should always pay’. Unfortunately, there is a massive discrepancy between the original form of Universal Credit and its present form. The original form offered a wide variety of work allowances where a certain amount of earned income was disregarded before affecting entitlement. The vast majority of these have been abolished leaving new claimants significantly worse off. There has been no consideration of how the private rental market has continued to rise at an astronomical rate whilst the Local Housing Allowance has remained static, coupled with the other reforms around housing costs. In the case of families without children who would not qualify for a work allowance, they would be financially worse off by at least £519.96 over the course of year (£10 per week) comparing the models of Housing Benefit and Universal Credit. Hence, this would cause greater financial hardship, poverty and inequality and even create additional barriers around entering employment.
Furthermore, we believe that the work allowances should be reflective on individual groups as is the case under Working Tax Credit especially for those disabled workers who incur additional expense in undertaking employment, hence the disabled element of Working Tax Credit. Whilst the revised taper rate of 63% has provided some small relief to claimants on a low income, this does not go far enough and the government needs to provide more in work support ensuring that work really does pay. The absence of the work allowances makes this difficult for some people. The very fact the work allowances clearly discriminate against those people who have housing costs and those that do not is a strange concept as housing costs do not provide any additional income to claimants, and this system only serves to punish hardworking people who are looking to progress and improve their lives.
Furthermore, under legacy benefits, those that had been in receipt of benefit for a prolonged period of time, 26 weeks, were entitled to not only to a four week run on of housing benefit, coupled with a tax free return to work credit and in work credit payment for the first 52 weeks of employment. This scheme was scrapped on the basis that a similar scheme was to be introduced under Universal Credit and has not manifested itself, again something which should be addressed.
Additionally, whilst the government acknowledges the fact that some people are unable to work reflected through the limited capability for work related activity component, there are some people who whilst are technically ‘fit for work’ as per the Work Capability Assessment, but still have a disadvantage when entering the workplace as a result are limited to the hours that they can do, meaning that their disposable incomes are significantly less than able bodies people. In fact that those with a health condition have increased living costs and are more likely to incur debt and this is particularly the case with mental health conditions. Once again, the government appear to be making a distinction between disabled people than cannot work and disabled people that may be able to work, but have withdrawn the financial assistance available. Specifically referring to the abolition of disability premiums and the working tax credit disability element of which there is nothing comparable under universal credit will leave many disabled people unable to cope financially in work. The creation of permitted work under both ESA and Income Support on the basis of Incapacity previously has enabled many people to move into work on a phased basis and therefore not finding themselves finally worse off. The removal of permitted work under Universal Credit does nothing to encourage disabled people back to work and mandating them back to employment still potentially with claimant conditionality which will only serve to exacerbate the situation.
Furthermore, the DWP have stated that once the managed migration takes place from legacy benefits to Universal Credit, nobody will be worse off financially due to a transitional amount which will be added to their claim. There has been no mention of those in receipt of Working Tax Credit with the disability element on the basis that they claim DLA or PIP and presumably the change in regulations means that they will have to undergo a Work Capability Assessment as this route does not exist under Universal Credit. This is an essential form of income for some people and not only should provision exist under Universal Credit for this, but guarantees should made regarding the protected payments. This change would leave a disabled person in the region of £100 a week worse off along with potentially other societal costs.
In addition, Universal Credit operates differently from legacy benefits in respect of the claimant conditionality which could still mandate people to attend work focused interviews even when they are in work, generally working less than 35 hours a week contrary to legacy benefits which cuts off support at 16 hours a week. Ultimately, due to claimants often being unable to represent themselves adequately, this may result in disabled people being forced to engage in the workplace, causing a further decline in their health condition. Clearly, conditionality and sanctions is an area which needs further assessment.
Universal Support
The success of Universal Credit is very much dependant on local partnership having been developed especially between local JCPs, local authorities and local organisations such as employment advisors and healthcare providers. These strong linkages have enabled a holistic package of support to customers covering all of their circumstances from budgeting and housing through to intensive employment support. It is questionable whether this has been successful as evidence suggests that take up for services such as Personal Budgeting Support have been low and more work is needed in local areas to increase this. The full roll out of Universal Credit will place further financial difficulties on claimants and it is essential that these issues are resolved quickly as to ensure an effective ‘claimant journey’.
We believe that there are local variations in the quality of Universal support and this is down to geographic disparity with some areas with local support in rural areas being unreachable or inaccessible for many. Many people would have to travel long distances to attend local support at a high cost when incomes are already squeezed by Universal Credit. More support should be made available to claimants looking to access this support as well as a greater emphasis on using JCP as a hub for engagement.
As aforementioned, we believe that the full Universal Credit roll out will present additional challenges particularly around resource capabilities, such as the sheer number of people who will need financial capability training ensuring that successful claims can be made and sustained on Universal Credit. Moreover, there should be better transfer of data protection protocols between such organisations as this would maximise positive outcomes with the effective use of external agencies.
Furthermore, there should also be greater working relationships between JCPs in an area once again ensuring that suitable support is provided. Mental health specifically is a topical issue which prevents many customers from engaging in the workplace and the disparity in local support only adds to the challenges the customers face in both managing their health condition, their claimant commitment and their finances. These barriers to inaccessibility need to be addressed as matter of priority mitigating the effects of financial illiteracy, unemployment, homelessness and deteriorated health conditions reducing the societal impact.
In addition, the introduction of the Support Purchasing Scheme where claimants have the onus to inform their work coaches of the support that they need with work coaches providing this support. This support ensures that the support received is individualised and appropriate for each individual and has the potential for longer sustained positive outcomes, rather than a one size fits all approach traditionally which has consisted of a DWP partnership manager representing the needs of the area.
In the London Borough of Southwark the uptake of purchasing requests has been non-existent due to the fact it is payment by results so organisations cannot sign up due to risk to business, or the fact it is a very long process to be a support service (3 stages), or the work coaches are not able to offer, encourage, identify or be confident in where and what kind of additional support might be needed.
This a key area of employment support which has seemingly been ignored by the Government especially in supporting disabled people back into the workplace and this is needed in addition to the provisions of Universal Credit ensuring that disabled people are still getting the same opportunities as able bodied people.
Career Management Service South London and Maudsley NHS Trust (SLaM)
January 2018