‘Fairness and Simplicity’: Who Benefits from Universal Credit?
An account of how it works from someone who has been on this ‘benefit’.
When Iain Duncan Smith, as the Work and Pensions Secretary, announced in 2010 that Universal Credit would replace six welfare benefits, he said that this would ‘restore fairness and simplicity’ to the system. Nearly eight years on, few would agree that Universal Credit has been either fair or simple.
One aspect of Universal Credit which has been anything but simple is its introduction since pilot schemes began in the North West during 2013. Then, it was expected that the new benefit would be fully implemented by 2017, a target which has since been put back five years. Given the problems many people have experienced claiming Universal Credit, it’s probably a relief to others that the rollout has been delayed. The benefit is being introduced in stages, going by postcode area. By the end of this year, in every area, new claimants or existing claimants of other benefits with a change in circumstances will have to apply for Universal Credit. Then, it’s planned that all remaining people receiving the benefits being replaced (Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Housing Benefit and Tax Credits) will be transferred over by 2022, unless there are any further setbacks. The number of people already claiming Universal Credit was 700,000 as of 14December 2017, a rise of 6 percent on the previous month.
One of the main stated goals of Universal Credit is to encourage its claimants to find jobs. In December 2015, the government boasted that ‘Universal Credit claimants are eight percentage points more likely to have been employed in the first nine months of their claim – 71% for Universal Credit versus 63% for Jobseeker’s Allowance’ . Amazingly, another of its aims is to heal the sick. When it was first announced, the then Work and Pensions Minister Chris Grayling said he hoped it would get at least half of the 2.5 million people claiming sickness benefits back into employment. But before Universal Credit can work its magic on someone, they first need to set up a claim.
The state prefers people to make their claim online, which immediately makes the process far from simple for those who lack computer skills or easy access to the internet. After entering your details on the government website, the system requires your ID to be verified by another organisation. This involves photographing your ID and yourself (face-on and in profile) and uploading the pictures to their website. This stage in the process may not be easy for any claimants without sufficient paperwork or a smartphone; the system isn’t designed to be accommodating to those most vulnerable and in need, such as homeless people. The initial online form also has sections to type in what kinds of jobs you are looking for and how you will do this, unless you have a medical condition which prevents you from working.
An appointment will be set for within a few days to attend the job centre. Then, staff make further checks of ID, and your ‘commitments’ of what you’ll do to find work are clarified. These may be ten hours a week trawling through websites, fifteen hours writing applications, two hours travelling to the job centre appointment and back, eight hours compiling a CV and so on, as long as they add up to 35 hours each week.
Waiting Days and Assessment Periods
Once your claim has been set up, the next hurdle to overcome is the delay before payments start to come through. Until February, when a new claim was made by most job seekers, no payment was given to cover the first week, a period called ‘waiting days’. However, you would still be expected to spend 35 hours looking for work during this time. No reason is given for this rule in official documents, and no reply was received to a request for an explanation. It would be easy to assume that this policy was there just to reduce costs to the state and deter people from making a claim.
When Universal Credit was designed, it was decided that the first payment would be received 42 days after making a claim, including the waiting days. In February this ‘Assessment Period’ was reduced to 35 days, still far too long to manage without being able to buy necessities. The 42 day limit was often not kept; during June 2017, for example, around one in five claimants waited even longer for their first full payment. In comparison, people claiming JSA or ESA during 2015 and 2016 had to wait a relatively easy two weeks before receiving any money.
From the beginning of the claim, it’s a requirement that claimants regularly update their online records (called the ‘journal’) with details of what has been done to look for work. The website also allows messages to be sent between the claimant and job centre, and checks that notifications about rules have been read. Weekly ‘Work Search Review’ appointments at the job centre are set, when the ‘Work Coach’ offers some guidance about ways to find employment. More importantly, they review what’s been written in the journal and decide whether sufficient effort has been made looking for work. Twice I was accused of not doing enough, just because the adviser hadn’t clicked on the box showing what had been written.
If it’s decided that not enough has been recorded, or if jobs haven’t been applied for, or if appointments have been missed, then payments can be stopped or reduced, known as a ‘sanction’. How much and how long sanctions last depend on what you’ve been judged to have failed to do and how often you’ve been sanctioned in the previous year. A sanction can last between seven days and three years, with a perplexing set of rules specifying which offence brings which punishment. For example: ‘Do all the activities you’ve agreed with your work coach. If you don’t, your payment will be reduced until the day before you do as you agreed. Once you’ve done this, your payment will be reduced for an additional 7, 14 or 28 days.’. During March 2017, 6.9 percent of claimants were having their payments reduced through being sanctioned, more than the 0.4 percent of people claiming JSA , suggesting that the new system is stricter.
The difficulties which come with Universal Credit described above are faced by claimants willing and able to look for employment. Different problems are faced by claimants with health conditions. After completing a medical questionnaire and sending in a Med 3 form (what used to be called a ‘sick note’) from the GP, they will have to undergo a ‘Work Capability Assessment’ at the job centre. This is a medical examination to judge if they are too unwell to manage a job, with the decision made by a benefits assessor overruling that of the GP who signed off the Med 3 form. Failing a Work Capability Assessment is what Chris Grayling meant when he said Universal Credit would help half of those claiming sickness benefits back into work.
When the Payment Arrives
Five or six weeks after making the claim, and if there have been no sanctions, then the first payment should arrive. A single claimant aged 25 or over receives £317.82 each month, with additional amounts paid to people with disabilities or children and to cover rent. The government says that Universal Credit provides ‘every financial incentive to stay in work, because work will pay’, a euphemism for the benefit payments being less than people need. The Minimum Income Standard website says that a single person requires £765.48 each month (excluding rent and council tax costs) for a ‘decent standard of living’, based on April 2017 prices (www.minimumincome.org.uk).The government says that Universal Credit’s approach ‘enables people to take much more control over their own lives’, although it’s not explained how you can have control of your life when you can’t afford basic necessities.
A difference between Universal Credit and the benefits being replaced is that it is supposed to be paid monthly to the claimant, rather than fortnightly. Ostensibly, this is intended to prepare claimants for budgeting over a month, as most employed people do. Another difference is that this monthly payment includes the component to cover rent. Under the old housing benefit system, money for rent was usually paid directly to the landlord, which didn’t prevent arrears building up due to delays or complications with a claim, but gave more assurance to the landlord that their rent was on its way. Not all of someone’s rent may be covered by the benefit anyway, for example when a single person is living in a property judged too large for them. The consequences of all this are that some claimants have been unable to afford rent or have spent the money intended for it on other things, leading to arrears building up. In Southwark, Universal Credit claimants renting social housing were each in arrears by an average of £1,178 in the first few months of claiming. The state has back-tracked on some of its policies about the rent component, and from April it will be easier to have this paid straight to the landlord.
Many new claimants aged between 18 and 21 don’t get the rent component of Universal Credit at all. Presumably, the reasoning behind this is to deter young people from trying to find state-subsidised housing, which ignores the needs of many young adults who, whether through overcrowding or fraught family relationships, can’t or shouldn’t live with their parents.
For claimants with a mortgage rather than a rented property, there is very little assistance towards housing costs. It’s possible to receive money to cover interest on a mortgage (rather than the mortgage itself), but this is at a flat rate of 2.61 percent rather than the actual rate, and a claim needs to be in place for nine months before this is paid. The rules are even harsher from April, when any payments for mortgage interest will be a loan rather than a benefit.
Once a claimant finds employment and declares it to the job centre, Universal Credit is still paid after they start work until the first wages are received, which at least balances out the unpaid ‘waiting days’ at the beginning of the claim. The job centre will know when wages have been received even if the claimant doesn’t advise them of this, as the computer systems for tax and national insurance contributions are linked to that of the job centre.
Universal Credit claims can continue if you’re employed and on a low income, as long as you are looking for more work. Just over two fifths of claimants are in employment, many will be on zero hours contracts or irregular shifts, or be self-employed. This means they are likely to be earning different amounts each week, or even nothing, and trying to maintain a Universal Credit claim to top up wages is far from straightforward, or lucrative. Self-employed claimants have fallen victim of the ‘Minimum Income Floor’ clause. This refers to an amount which the state assumes a self-employed person will earn each week, based on their particular trade. This amount is then deducted from the amount paid to the claimant, even if they haven’t earned that much, leaving many claimants short of enough money to survive. According to the state, ‘this will encourage you to grow your business and make sure it can support you’. From April, when a self-employed claimant earns more than the threshold to qualify for Universal Credit, any surplus is taken into account for six months, meaning they won’t receive benefits until this surplus is reduced through subsequent months earning less. This leads to a complicated situation where they re-apply for Universal Credit knowing they won’t receive any, but just so that the declining surplus is logged. According to the Resolution Foundation thinktank, roughly 2.5million households in employment but on a low income will be over £1,000 a year worse off by transferring to Universal Credit (Guardian, 20 November).
The bureaucrats who devised the rules behind Universal Credit don’t have to live with the consequences of their actions. The restrictions, confusions and delays in receiving Universal Credit are forcing its claimants into poverty. The long wait for the first payment has left thousands of people without the means to buy food and other basics, and with rising debts from unpaid bills. Private sector landlords may not want to wait to receive their rent, and so either may evict someone or refuse to house them in the first place. Among the issues discussed at the job centre appointments are how to apply for advance payments and where to get budgeting and debt advice, as the staff realise that people will get into difficulties, especially early on. Staff may be able to issue vouchers to receive supplies at a food bank, or refer claimants on to another agency to get a voucher. According to The Trussell Trust, which operates Britain’s largest network of food banks, demand for its parcels has risen by 30 percent since last April in areas where the rollout of Universal Credit is most advanced (Guardian, 7 November).
Predictably, Universal Credit has attracted a barrage of complaints and criticisms. The government opened up an online consultation, and of the 55 responses left on their website, only one was positive. Respondents described the benefit as ‘inhumane’, ‘an absolute shambles’ and ‘disgusting’, with many people writing about how scared and poor claiming Universal Credit has made them. Even Tory ex-Prime Minister John Major, writing in the Mail on Sunday joined the backlash, saying that the benefit ‘although theoretically impeccable, is operationally messy, socially unfair and unforgiving’ (7 October). Iain Duncan Smith promised us ‘fairness and simplicity’, remember.
Regardless of any guidance given by job centre staff, the way that Universal Credit ‘encourages’ people to find employment is by its brutality: the long wait for not enough money, the constant threat of a sanction, the confusing, obstructive rules. Wage labour is less harsh by comparison, so claimants are pushed towards it, or to the desperation of trying to maintain a claim longer-term. This reminds us that the state isn’t there to support people, it’s there to support a system which needs wage labour. The pressures, both financial and emotional, on claimants are like a punishment for falling outside the system’s expectations.