Complexities for claimants: The reality of the £20 weekly uplift to Universal Credit

Universal credit (UC) is the UK’s single, ‘digital by design’ working-age benefit, intended to simplify benefits and incentivise work and higher earnings for low-income individuals and couples both in and out of work. In March 2020, in response to the Covid-19 pandemic, the UK Government announced an increase of £20 per week in the UC adult standard allowance for both individuals and couples (and the basic allowance of Working Tax Credit). Intended as a temporary measure to mitigate the worst effects of job loss, sickness and reduced household income as a result of the lockdown and pandemic, the £20 uplift was due to end in March 2021. Following intense debate and lobbying in favour of retaining the £20 increase longer term, in the Spring Budget 2021, the Government extended the uplift by six months, until early October 2021, around the same time that the Government’s Coronavirus Job Retention Scheme (furlough) was due to end. Research conducted by academics and policy think tanks examining the distributional effects of the £20 uplift, and of its withdrawal, on different groups of claimants, provides strong support in favour of making the increase permanent (IFS, 2020; Bell et al., 2020; JRF 2021). Returning the allowance to pre-pandemic levels, they argue, would represent a benefit reduction of greater magnitude than that imposed during the previous decade of austerity and social security cuts. These studies model the financial impact of retaining or reversing the increase. Here we examine how the effects of the uplift were actually experienced in real time by the intended beneficiaries. Drawing on a three year, two wave, ESRC-funded qualitative, longitudinal research study entitled Couples balancing work, money and care under the shifting landscape of Universal Credit (ESRC ES/ R004811/1), this policy briefing presents new empirical findings for how the £20 uplift was experienced and responded to by UC claimants themselves. This focus on the experience of claimants highlights how the means-tested design of Universal Credit affects claimants in different ways according to their circumstances, and especially whether or not they have any earnings. The research charted the lived experience of UC claimants with and without dependent children during two waves of interviews, two years apart, between 2018 and 2020. 90 people were interviewed in wave one and 63 in wave two. All were currently claiming, or had previously claimed, UC (and/or other means-tested benefits or tax credits) as a couple. Some also had experience of claiming UC as a lone parent or single claimant. Interviews focussed on longer-term experiences of UC beyond the application process and initial wait for payment. Wave two interviews were conducted in September and October 2020 and explored what had happened in the intervening two years, including how well the participants and their families were managing in the context of the Covid-19 pandemic and the suite of emergency income support measures put in place by the Government. Of the 63 participants (in 39 households) interviewed at wave two, 56 (in 34 households) were still claiming UC and so entitled to the uplift. They were asked what they knew about the £20 weekly uplift, whether they thought they had received it, what difference the uplift had made, and how the money had been spent. While some participants had received the uplift in full, others reported that they were not aware that they had received an increase in the UC payment, or said that they had been paid much less than the publicised amount. Indeed, some said that their UC payment had actually decreased since the uplift was introduced In his statement to Parliament on 8th December 2020, Will Quince MP, Under Secretary of State for Work and Pensions, confirmed that all new and existing UC claimants were eligible for the extra £20 per week (Hansard, 2020: 9P), so how can this conundrum be explained? Drawing on our wider study, this policy research briefing explores claimants’ differential experiences of the £20 uplift with reference to the hidden complexity and inherent income insecurity that lie at the heart of UC. Conclusions and policy implications Increasing the standard allowance in UC by £20 per week for all new and existing claimants might have been expected to receive an unambiguously positive response from the people entitled to the increase and intended to benefit from it. However, our findings showed that, whether participants knew about the uplift, whether they felt it actually increased the amount of UC they were paid or their income overall, and whether they benefitted in the manner often envisaged – with an extra £86.67 per month going directly into their bank accounts – varied significantly depending on their circumstances. While those reliant on UC as their main or only source of income spoke about the critical difference having an extra £20 per week to spend had made, those in work were more likely to report that there had been no noticeable increase in their payment, or that they had been paid much less than the publicised amount. Both the diversity in reported experiences of the £20 uplift, and the variability in financial impacts, testify to the hidden complexity which lies at the heart of the UC payment. In UC, the sum of money to which claimants are entitled, in terms of the standard allowance and the various elements of UC, and the payment they actually receive each month, can often be two very different amounts. Moreover, what claimants receive in any one month is no guarantee of what they will get in the next. For UC claimants who are employed or self-employed (around 40 per cent of current live claims), net earnings reduce entitlement by 63 pence for each pound of net income above any work allowance to which they may be entitled. A similar proportion of all UC claimants (around 40 per cent) have deductions from their award for advance loans, benefit and tax credit overpayments and third party debts, which can also significantly reduce the amount of UC that is actually paid. We hesitate to call these effects ‘unintended’ or ‘design flaws’ because, in the main, they reflect how UC is intended to work. However, these findings do call into question some of the key assumptions underlying the benefit’s design – including the way in which monthly assessment and calculation of the single monthly payment are intended to increase the transparency of the relationship between benefit entitlement and the financial rewards from working. In this research, automatic adjustment of the UC payment in real time could serve to obscure, conceal or reduce the visibility and financial impact of the £20 uplift, particularly among working claimants. And while for some people the £20 uplift was a lifeline, it did not eliminate the financial hardship experienced by the poorest couples and families with children who relied on UC as their main or only source of income. Overall, people regretted the temporary nature of the uplift and strongly felt that it should continue long term because, without it, many believed that they would struggle financially even more: I did hear that [it was temporary] … I think once they give it, they’ve got to carry on … Because I just feel like people are just going to struggle again. Female partner in single-earner couple with children As others have noted, the uplift might also have benefitted from better targeting. Paying the same flat rate of increase to all types of claimant, regardless of their circumstances, means proportionately less financial support for families and those with additional needs. A sum of £20 is worth significantly more to a single claimant with no children or housing costs, compared with a family with children living in a privately rented house, and no uplift was applied to the child or disability elements of UC. Nor does the flat rate take into account the generally higher living expenses families with children face arising from the pandemic. Finally, only one UC payment is made to couples. Not only is this worth proportionately less than the same payment is to single people, but there is no guarantee that both partners will have access to or benefit from the £20 uplift. To be clear, none of these points is intended to suggest that an increase in the standard allowance was not welcome, or that claimants did not benefit. The case for retaining and extending the £20 per week uplift remains compelling. Given the severity of cuts to social security and historically low levels of benefits prior to the pandemic, any increase in rates is to be welcomed. Many more people would have struggled harder to cope without the uplift. The uplift is withdrawn from payments of UC from mid-October 2021 onwards. The implications of the removal of the uplift will become more apparent over the coming months. Nevertheless, it is important for those lobbying for change, and for policymakers, to be clear about the variable effects on income levels for individuals and families in different sets of circumstances. In the context of UC’s design, the £20 uplift may also provide some claimants with less financial support and income security than is generally assumed by politicians, analysts and commentators. Alongside a case for increasing the adequacy of benefit rates, what these findings add to existing research is a clearer understanding of how people with low and insecure incomes – both in and out of work – experience and perceive the function and value of social security payments. Increased responsiveness to changes in personal circumstances and to income and earnings in real time make UC a much more unpredictable and unreliable benefit than its predecessors. What mattered most to our research participants to their income security and living standards, and to their financial well-being, was not so much their UC entitlement, understanding the link with earnings or how the award had been calculated, but the amount and reliability of the payment. A payment that can, and often does, change each month at short notice also has implications for claimants’ legal rights and access to justice. Not knowing how much you are entitled to or will receive each month makes it hard to know whether the payment decision is correct. With potentially a quarter of the UK working-age population likely to be claiming UC when fully implemented, these are findings that politicians and policymakers would do well to heed