Bright Blue, the independent think tank for liberal conservatism, has today published new analysis, entitled Beyond the safety net? It reveals the extent to which Universal Credit claimants have received informal financial support from family and/or friends during the course of the first year of the Covid-19 pandemic, compared to the rest of the population.
The original analysis compares the financial experiences of two groups during the first year of the pandemic: those who do not claim Universal Credit and those who are claiming Universal Credit or are applying for it in the month of the survey, at four points: May 2020, July 2020, November 2020, and March 2021. This is done using data from the Understanding Society Covid-19 Study.
The main findings from this analysis are:
- A quarter of Universal Credit claimants, representing over one million people in total, were receiving informal financial support from family and/or friends in the early stages of the pandemic. In July 2020, 25% of all Universal Credit claimants were receiving financial support from family and/or friends, representing around 1,378,000 claimants in total. By March 2021, this had fallen to 17%, which nonetheless represented around 1,015,000 claimants in total. In comparison, the percentage of the rest of the population reporting receiving support from family and/or friends remained consistently lower, between 4% and 5% during the first year of the pandemic.
- By the end of the first year of the pandemic, Universal Credit claimants were as likely as the rest of the population to give financial support to family and/or friends, despite having lower income. 13% of both Universal Credit claimants and the rest of the population reported giving financial support to family and/or friends by the end of the first year of the pandemic, accounting for around 780,000 claimants in March 2021.
- The most common source of informal financial support for Universal Credit claimants has been parents. A majority of 57% of Universal Credit respondents who received informal financial help mentioned them as a source in May 2020, and an even higher percentage of 72% in March 2021. This is followed by adult children, with about a third (33%) of those receiving informal financial support mentioning them as a source in May 2020 and 13% in March 2021.
- At the start of the pandemic, parents were more likely to be recipients of informal financial support from Universal Credit claimants than adult children. 40% of Universal Credit claimants giving informal support reported doing so for parents in May 2020 and only 21% reported doing so for adult children. By March 2021, this reversed, with 36% of Universal Credit claimants reporting adult children as recipients and 32% reporting their parents.
- Universal Credit claimants have been more likely than the rest of the population to both provide informal financial support to, and receive informal financial support from, family and/or friends. From May 2020 to March 2021, between 4% and 6% of Universal Credit claimants reported both receiving from and giving to family and/or friends, accounting for around 240,000 claimants in March 2021. This compares to between 1% and 2% of the rest of the population during the same period.
Ryan Shorthouse, Chief Executive at Bright Blue, commented:
“The Conservative Government cannot really represent left-behind places and people if it now makes the biggest single cut to working-aged benefits ever seen. There is no evidence to suggest that the uplift in Universal Credit is damaging work incentives. Indeed, over 40% of Universal Credit claimants are now in work.
“Money matters. Here is a policy introduced by the Conservative Government that gives money directly in people’s pockets. Cutting it would be profoundly ill-judged, self-defeating – and worst – push more people into poverty.”
Anvar Sarygulov, Senior Research Fellow at Bright Blue and analysis author, commented:
“A large number of Universal Credit claimants have received financial support from those close to them during the first year of the pandemic, despite the strengthening of the safety net that happened from March 2020.
The full removal of the uplift, which will be a significant loss to many claimants, is likely to push even more of them to rely on other sources of financial support, creating significant uncertainty for them.”
