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Anvar Sarygulov: Widening chasms

By Anvar Sarygulov, Centre Write, Welfare

It is no secret that the economic fallout from the COVID-19 pandemic is worsening existing inequalities. The pandemic has had an asymmetric impact on jobs, putting the greatest strain on areas where sectors such as hospitality and tourism are significant, and which are more likely to employ low-income workers.

By examining differences in Universal Credit (UC) uptake across England, we can observe the severity of the pandemic’s economic impact on each local authority in England. We can explore the consequences of the pandemic on geographic inequality, specifically the Government’s ‘levelling up’ agenda which is trying to better support so-called ‘left-behind’ areas in coastal towns and industrial communities.

This analysis is unique in two ways. First, it is analysis which uses the latest available data on UC claimants, which is from October 2020. Second, this analysis goes beyond examining only increases in unemployment by English local authorities, by looking at overall increases in UC claimants, meaning we will capture both those who have become unemployed but also those still in work who have lost hours or income and now need to claim UC. It is important to consider the latter group, as while 56% of the increase in UC claimants between March and October 2020 is composed of unemployed claimants, 44% of this increase is composed of employed UC claimants.

We first focus on the Index of Multiple Deprivation (IMD) calculated in 2019, which aggregates deprivation factors related to income, employment, education, health, crime, barriers to housing and living environment. IMD ranks all local authorities, with a higher rank representing a higher degree of deprivation relative to other areas.[i] Hence, rank 1 represents the most deprived local authority and rank 317 the least deprived. We then compare it against the increases in the working-age population (those aged between 16 and 64) who are claiming UC between February and October 2020.[ii] [iii] As mentioned above, this increase in UC claimants not only includes individuals who have become unemployed during the pandemic, but also those in work who have started claiming UC due to a fall in their income.

The relationship between a local authority’s IMD ranking and increase in UC claimants during the first eight months of the pandemic is shown in Chart 1 below.

Chart 1 above illustrates the clear asymmetric nature of the pandemic’s impact, with local authorities that already faced higher deprivation also being more likely to see larger increases in proportion of people claiming UC. In fact, the 10% most deprived local authorities have seen on average an 8.5%-point increase in working age population claiming UC, as opposed to an average 4.8%-point increase for the 10% least deprived local authorities. Hence, the difference in increased uptake of UC is to some extent widening existing geographic inequalities. The pandemic is undermining the current Government’s attempt to ‘level up’ so-called ‘left-behind’ areas of the UK.

London local authorities, highlighted in orange, stand out as particularly unique. Generally, London local authorities have a much higher increase than non-London English local authorities in the number of UC claimants during the first eight months of the pandemic. This is unsurprising, considering many Londoners work in industries that have been affected the most by the pandemic.  On average, London boroughs have seen an 8.3%-point increase in the working age population claiming UC as opposed to 6.3%-point increase in all other English local authorities.

But note among London local authorities the consistency with the trend among all other English local authorities: namely, more deprived London local authorities are more likely to have had a significant increase in UC claimants than the least deprived. In fact, for London local authorities, the disparities are even starker: the 10% most deprived London local authorities have seen an average 12.2%-point increase in UC claimants since February, in contrast to an average 4.6%-point increase in the 10% least London deprived local authorities.

We can also rank the English local authorities with the highest and lowest increases in UC during the first eight months of the pandemic. Table 1 below shows the 20 local authorities in England with the highest and lowest increases in UC during the pandemic, alongside their IMD ranking.

Table 1. 20 English local authorities with the highest (left) and lowest (right) increase in proportion of working age population claiming UC between February and October 2020

Source: Department for Work & Pensions, Stat-Xplore: People on UC (2020); Office for National Statistics, Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland (2020); Ministry of Housing, Communities & Local Government, English indices of deprivation 2019 (2019)

As shown in red in Table 1, London local authorities dominate the top 20 local authorities with the biggest increase in UC claimants in the first eight months of the pandemic. Specifically, 12 of the 20 local authorities with the highest increases in UC claimants were in London.

The London borough of Haringey has seen the biggest increase in UC claimants since February, of 12.4%-points, meaning that in October, 19.7% of its working age population were claiming UC.

Table 1 also shows that, other than the unique borough of the City of London, the local authorities that have experienced the lowest increase in UC claimants are outside London and have very low deprivation. Alongside the City of London, Rushcliffe, an affluent district in Nottinghamshire, has seen the smallest increase – of 3.8%-points. This means only 6.2% and 6.7% of the working age population in the City of London and Rushcliffe respectively are currently claiming UC.

Many of the places that have seen the greatest increases in UC claimants outside of London are English local authorities which have already struggled significantly economically and socially. Some of the local authorities with the highest increases, such as Blackpool (the most deprived local authority in England, according to the IMD), Hull and Middlesbrough, are coastal towns and post-industrial communities, prime targets for the ‘levelling up’ agenda of the current Government.

As unemployment continues to rise, and job hours and opportunities reduced, it will be essential for government to help people find new jobs or more hours quickly so they do not suffer the scarring impacts of long-term unemployment or underemployment, providing appropriate education and training support for those who would benefit from it.

But some local authorities will be better able to bounce back and increase employment opportunities. This is because there is a strong correlation between those with higher educational attainment and a shorter period of time spent in unemployment.[iv]

We now focus on the Index of Education, Skills and Training Deprivation, calculated in 2019, which ranks local authorities on a combination of rates of school attainment, school absences, entry to higher education, number of adults with low qualifications and English language proficiency.[v]  A higher rank represents a higher degree of deprivation relative to other local authorities, meaning rank 1 represents the most educationally deprived local authority and rank 317 the least deprived. We then compare it against the increases in the working-age population (those aged between 16 and 64) who are claiming UC between February and October 2020.

Doing this analysis will indicate whether the geographical inequalities caused by the pandemic are likely to be sustained for a longer time. In other words, if local authorities have high rates of UC claimants but high education levels, they may be able to bounce quicker in terms of employment outcomes, whereas local authorities with high rates of UC claimants but low education levels, may struggle and be left-behind even more for a longer period of time.

The relationship between a local authority’s Index of Education, Skills and Training Deprivation ranking and increase in UC claimants during the first eight months of the pandemic is shown in Chart 2 below.

Chart 2 illustrates a clear relationship between local authorities experiencing higher rates of UC claimants and having lower levels of education, according to the Index of Education, Skills and Training Deprivation. The gap is notable, with the 10% most educationally deprived local authorities seeing an average 7.7%-point increase in working age population claiming UC, as opposed to a 5.3%-point increase in the 10% least educationally deprived.  This indicates that those English local authorities experiencing higher rates of UC claimants are also those less likely to be able to bounce back quickly with increased employment outcomes. This implies the pandemic could be undermining government attempts to ‘level-up’ so-called left-behind areas of the country over the long-term.

As Chart 2 shows, London is unique again, in that its local authorities have high increases in UC claimants but relatively high education levels. This means it is better placed to revitalise levels of employment outcomes quickly, since its population has relatively higher levels of education and skills. In the long-term, then, despite the generally higher increases in UC claimants in London now, it could be that more deprived areas of England outside London – especially in industrial and coastal communities – experience more long-term reduced employment opportunities.

But note among London local authorities the consistency with the trend among all other English local authorities: namely, more educationally deprived local London authorities are more likely to have had a significant increase in UC claimants than the educationally least deprived, with the 10% most educationally deprived areas in London seeing an average 10.5%-point increase in UC claimants as opposed to an average 4.6%-point increase for the 10% least educationally deprived.

Table 2 lists the top 20 most educationally deprived local authorities in England alongside the increase in UC claimants for the first eight months of the pandemic.

Table 2. 20 English local authorities with the lowest rank of Education, Skills and Training deprivation and the increase in proportion of working age population claiming UC between February and October 2020

Source: Department for Work & Pensions, Stat-Xplore: People on UC (2020); Office for National Statistics, Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland (2020); Ministry of Housing, Communities & Local Government, English indices of deprivation 2019 (2019)*Local authorities in London are marked in red

Table 2 shows that the most educationally deprived local authorities in England are in so-called left-behind areas, industrial and coastal communities such as Boston, Hull, Stoke-on-Trent, Blackpool, and Bolsover. In fact, eight of these 20 English local authorities are in at least one constituency which belonged to the so-called Red Wall seats that the Tories won in the 2017 or the 2019 General Election, making them a key part of the Conservative Party’s future electoral success.

These so-called left-behind areas already required significant support and investment before the pandemic. The pandemic risks causing them to fall further behind, especially in regards to employment opportunities. The pandemic really has made ‘levelling up’ a lot harder. The Government should ensure that these areas get sufficient resources when the pandemic ends, and the economic recovery begins, to avoid this.

Anvar Sarygulov is a Senior Research Fellow at Bright Blue.

Endnotes

[i] Ministry of Housing, Communities & Local Government, “English indices of deprivation 2019”, https://www.gov.uk/government/statistics/english-indices-of-deprivation-2019 (2019).

[ii] Office for National Statistics, “Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland”, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesscotlandandnorthernireland (2020).

[iii] Department for Work and Pensions, “People on Universal Credit”, Stat-Xplore, https://stat-xplore.dwp.gov.uk/webapi/jsf/login.xhtml (2020).

[iv] W.C. Riddell and X. Song, “The Impact of Education on Unemployment Incidence and Re-employment Success: Evidence from the U.S. Labour Market”, Institute for the Study of Labour, http://ftp.iza.org/dp5572.pdf (2011).

[v] Ministry of Housing, Communities & Local Government, “English indices of deprivation 2019”, https://www.gov.uk/government/statistics/english-indices-of-deprivation-2019 (2019).

January 17, 2021

Miatta Fahnbulleh: A radical overhaul of the welfare system is needed for the fallout from COVID

By Centre Write, Coronavirus, Welfare

The economic fallout from the pandemic is nothing short of grim: a projected 14% contraction in the economy this year; the deepest recession for 300 years and unemployment twice as high as before the crisis. 

Behind these headline numbers are millions of people who face a catastrophic hit to their livelihoods. We have yet to understand the full impact of this on ordinary people’s lives. The early warning signs are alarming: 2.9 million new applicants for Universal Credit between 1st March and 19th May of this year, an estimated three million people going without meals since the lockdown and an 81% increase in food bank usage in March compared to 2019. All of this points to the inescapable reality that many families across the country are facing real hardship.

This hardship is exposing the gaping holes in our social safety net. We entered this recession with one of the weakest social security safety nets – both among advanced economies and in our own post-war history. Total out-of-work payments received by UK employees are on average 34% of their previous in-work income – the third lowest among 35 OECD advanced economies. At the outset of the crisis, the main adult unemployment payment was worth less than 15% of average earnings, lower than at any time since the creation of the welfare state. While the £20 per week boost to Universal Credit and working tax credits since then was a small step in the right direction, it only reversed one fifth of the overall cuts to welfare seen since 2010. And at £94 a week, many people who never imagined they would ever be on welfare are struggling to cope with an income that is simply too inadequate to live on. However we look at it, our social security system has been denuded to a worrying degree.

For too long, we have swept the inadequacies of our social security system underneath the carpet — the pandemic has laid it bare for all to see. We will have to respond – if not now, then when the swelling numbers relying on this system begin to make their voices heard. In responding, we must rekindle the spirit behind Beveridge’s welfare state: the ambition to deliver a minimum standard of living ’below which no one should be allowed to fall’. This was a key plank of the social contract that dominated for much of the post-war period. A contract that has slowly been broken.

At the heart of our response should be a new minimum income guarantee. In the heat of the current crisis, when the priority is to get much needed income support to families quickly, this should take the form of a temporary, upfront, non-conditional payment of £221 per week to anyone that needs it. This would provide much needed relief to an estimated 5.6 million people who are at risk of losing their jobs or hours and falling through the cracks of the Government’s job retention and income support schemes – as well as for the millions more who may yet be left stranded as these schemes start to become unwound from August. The case for doing this to ease the hardship of those at the sharp end of this crisis is clear, but it also has the benefit of boosting spending and demand in the economy, which in turn has the power to create the jobs needed for recovery.

As we recover from this crisis, we should then enshrine this principle of a minimum income guarantee into a social security system that badly needs reform. Through a combination of universal payments – that benefits all those who pay into the system – and means tested support for those that need it most, we must create an income floor that ensures that everyone can afford the basics for a decent standard of life.

We must move beyond the welfare state of old that was there to catch us when we fell on hard times to a wellbeing state that aims to provide everyone with the building blocks they need to live decent, fulfilling, healthy lives. Alongside a minimum income guarantee should be access to well-funded education, childcare, health and social care and quality housing to everyone that needs it. This should form the basis of a new social settlement coming out of the pandemic to replace the one that has frayed.  If we get this right, we have the chance to build back better from this crisis.

Miatta Fahnbulleh is the Chief Executive of the New Economics Foundation. This article first appeared in our Centre Write magazine Family friendly?. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: J J Ellison]

January 5, 2021

Peter Aldous MP: The Conservatives are taking rising need for food banks seriously – these new measures must be just the start

By Centre Write, Welfare

It has been a difficult year for families across the country. Despite the best efforts of the government, the pandemic has thrown many families newly into sudden financial hardship and tipped many of those already suffering into despair.

Nowhere has the hardship of this difficult year been clearer than in the levels of need for emergency food parcels – as new data from the Trussell Trust shows, more than 1.2 million emergency food parcels were given to people struggling to afford essentials by food banks in their network between April and September 2020. This represents the busiest ever half-year period for food banks in the Trussell Trust network, and may be just the tip of the iceberg, as many people will have been helped by other community groups during the crisis.

It is now impossible to dismiss needing a food bank as a relatively marginal experience, as may have happened in the past. The campaign led by Marcus Rashford has energised the whole debate and brought the issues of food banks and poverty into the political centre stage. As a Conservative MP, I welcome this desperately needed national conversation.

But words will only get us so far when people are suffering serious financial hardship every day. It was thus very welcome this last weekend to see the Government take clear action. In announcing a Covid Winter Grant Scheme, which provides a major and much needed £170 million funding boost for councils in England to provide local welfare, the government has taken a clear step towards the Prime Minister’s commitment to ensuring ‘no child goes hungry this Christmas’. What’s more this is just the start – the Department for Work and Pensions have said this is part of a long-term plan to tackle poor health, hunger and education in the UK.

But while this new package will undoubtedly help, we cannot rest on our laurels when financial hardship remains so high. I know first hand from my own constituency of Waveney that further action is needed. This local support must be complemented by a UK-wide social security system that is strong enough to ensure those most at risk of suffering during this crisis have enough money for essentials. This needs to include extending the £20 uplift to Universal Credit beyond next spring and extending to legacy benefits.

It also means taking action on the high levels of government debt being repaid by those on the lowest incomes. It cannot be right that almost three quarters of people arriving at food banks on Universal Credit are repaying advance payments. We need to see a long-term plan to tackle the five week wait and create a fairer approach for repaying debts – but in the meantime we need to see a temporary suspension to these benefit debt deductions which are pushing too many into hardship.

Behind these policies lies a moral mission. Which is that we as One Nation Conservatives will not accept a country with an ever rising need for food banks.

We can all do our bit to support this moral mission. An easy step I would urge others to take is to show their support for the Trussell Trust’s campaign for a Hunger Free Future – which is saying loud and clearly that no one should need to turn to a food bank, through volunteering, much needed donations or campaigning for change.

We must use this moment to protect those suffering most in the current crisis, and ensure that over the long-term we create a society in which no one is forced to turn to a food bank. Last weekend’s announcements are a major step forward – we must work together to build on this.

Peter Aldous is the Member of Parliament for Waveney. Views expressed in this article are those of the author, not necessarily those of Bright Blue. 

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November 12, 2020

Joseph Silke: Separate support?

By BB Research, Centre Write, Joseph Silke, Welfare

In the final days of the 2014 Scottish Independence referendum campaign, the three main unionist parties promised that new powers would be devolved from Westminster Holyrood in the event of a ‘No’ vote. ‘The Vow’ committed to making the Scottish Parliament ‘the most powerful devolved assembly in the world’. Following the rejection of separation at the ballot box, Prime Minister David Cameron established the Smith Commission to determine how to fulfil the promise of the transfer of powers. The Scotland Act 2016 delivered on the recommendations, including the transfer of a range of powers over social security. 

The legislation mandates the transfer of control over 11 benefits, with the Scottish Parliament able to make changes to their value, eligibility and scope. Collectively, this amounts to around £3.5 billion of yearly social security payments to be paid to roughly 1.4 million Scots. The transfer of their delivery from the British Department for Work and Pensions (DWP) to Social Security Scotland (SSS) is ongoing, and should be fully completed by 2024. 

Today, Bright Blue Scotland releases the first major report that looks into Scottish public attitudes towards social security since the post-referendum settlement: Separate support? Attitudes to social security in Scotland, addressing a major research gap. 

Drawing on public polling of the Scottish public conducted by Opinium, the report explores the broad attitudes of Scots on the purpose and effectiveness of the social security system, their views on specific reforms that have been or will be introduced by the Scottish Government and their support for a range of potential future reforms. The report also breaks down these views by social, economic and political divides.

It is important to note that the research was conducted prior to the outbreak of coronavirus; before the unprecedented expansion of the state to support the livelihoods of individuals during the pandemic. This research, therefore, acts as an indication of the baseline of public opinion pre-COVID-19. While it is impossible to know at this stage what the long term consequences of coronavirus will be for the relationship between the state and individuals, it is clear that the economic disruption means that more people are now reliant on the state for social security than at any point in living memory. 

Purpose and effectiveness of social security

The research has found that a clear majority of Scots (70%) believe there is quite a lot of real poverty in Scotland, with 62% believing that poverty has gotten worse over the past decade and almost half (47%) believing that the problem will continue to get worse over the next decade. It is unsurprising, therefore, that 64% of Scots believe further cuts to social security would be damaging and more Scots are likely to want spending to be increased rather than decreased, although there is division over how such increases should be funded. 

Devolution of social security

Devolution of social security is generally popular, with 60% of Scots overall and even 43% of ‘No’ voters wanting the Scottish Parliament to decide most or all of Scotland’s social security policy, although this is supported by only 29% of Conservative voters. Awareness among the Scottish public of the benefits that are being devolved is low, however, with a majority of Scots unable to correctly identify what has been devolved. 

There is notable support for social security principles commonly associated with centre-right: that social security should promote personal responsibility (72%); that social security should only be a safety net (59%); that social security should be conditional on strict requirements (58%); and that those who have paid income tax and NI for a greater number of years should receive greater help (64%). 

A majority of Scots also supported the principles introduced by the Scottish Government, including that social security is a public service (65%), that it is a human right (57%), and that it should be actively promoted to those who are eligible (61%).

Universal Credit

Most Scots support the presence of conditionality (71%) and sanctioning (52%) for unemployed Universal Credit claimants and some support for conditionality and sanctioning for other claimant groups, such as parents of young children (38%), the self-employed (40%), and part-time, low-income working people (37%). Labour and SNP voters tended to be divided on conditionality and sanctioning measures for different claimant groups, while Conservative voters tended to support them. 

Most Scots support the flexibility of Scottish Choices for Universal Credit in terms of frequency of payments (62%) and the ability to have their housing element paid directly to their landlord (74%). A majority (62%) would also like the claimants to have the ability to split their payment across different members of the household, which has been promised by the Scottish Government, but yet to be delivered.

Devolved benefits

There is significant support for devolved benefits for those on low income, including for fuel (79%), funeral (71%) and council tax costs (73%). There is plurality support for the expansion of grants offered to low-income parents of young children through the Best Start scheme and most Scots support introducing the Scottish Child Payment. 

Scots also support the Scottish Government’s reforms to reduce face-to-face assessments for disability benefits with 47% of Scots believing the current application process is too demanding. However, Scots are agnostic about who carries out the assessment service, with more Scots (45%) believing that it does not matter whether a public or a private company is involved.

Improving social security

Bright Blue Scotland has found majority support for the following further, alternative reforms:

  • Bright Blue Scotland’s idea of an additional income supplement for those on low incomes based on previous National Insurance contributions (59%)
  • Bright Blue Scotland’s idea of an establishment of an independent compensation scheme for benefit claimants that have been failed by the DWP, such as on timeliness of benefit payment (57%)
  • A compulsory employment support scheme for people with disabilities who are able to work (55%)
  • Government-funded incentives to employers for offering work to long-term unemployed (63%)
  • Attracting the highest level of support, allowing carers to keep more of their Carers Allowance depending on their earnings (65%)

Finally, many Scots (45%) are open to the idea of introducing a universal basic income (UBI). The idea, which has been touted on radical fringes for generations, has been discussed more widely in the context of coronavirus. Amongst the funding options proposed for UBI, however, there was a marked lack of consensus, with higher income taxes on those who earn more than £50,000 (21%) and a new tax on wealth (20%) being the most popular choices. 

The report demonstrates that the social security principles and reforms of the Scottish Government, prior to the COVID-19 crisis, were broadly in line with Scottish public attitudes. However, there is also public support for constructing the social security system based on a range of principles, including those associated with the centre-right, and for alternative reforms to the Scottish social security system. With elections for the Scottish Parliament coming up next year, this research provides a critical insight into the attitudes of the Scottish people, made all the more timely by the increased prominence of social security issues due to the coronavirus pandemic.

Joseph Silke is Research and Communications Assistant at Bright Blue. 

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April 13, 2020

Anvar Sarygulov: The Government must address the five-week wait for Universal Credit

By Anvar Sarygulov, Centre Write, Coronavirus, Welfare

For all the comparisons of our predicament with war, there is no military to draft people into, no war effort to support through production, no infrastructure that suddenly needs building. Instead, most of us are to play our part by staying home. Hence, entire sectors of our service-driven economy have shut down, with millions facing unemployment and no opportunity to find an alternative job. They are now finding themselves turning to our safety net and claiming Universal Credit.

It is hugely welcome that the Government has acted and strengthened welfare provision by increasing the standard allowance of Universal Credit by a £1,000 for the next 12 months, by removing the minimum income floor for self-employed, and by increasing the housing element of Universal Credit. This will be of significant help to both existing claimants, and those who will soon be claiming it. But there is one more thing that the Government should address: the five-week wait.

Research, including our own, has shown that most claimants struggle with having to wait five weeks for their first payment. Many on low incomes have no savings and have to turn to their friends and family to get through this period, while others rely on assistance through foodbanks or even on short-term loans.

To help with this period, the Government has begun to offer advance payments, which need to be repaid, to those who request them. With these, a payment up to the size of their first award is made at the start of the five-week wait.  A majority of claimants take this up, but it is not universal, with some claimants not even aware of this option, while others are potentially concerned about having to repay their advance.

To repay, claimants are faced with deductions from their payments for many months afterwards. Considering the size of Universal Credit awards, such deductions cause significant financial issues for households in the long run, as their cash flow is reduced for many months. While the 2020 Budget has reduced the maximum possible deduction to 25% of the award and lengthened the period of payment to 24 months, this will only come to force in October 2021 and is not enough in the given circumstances.

The Government is seeking to help the cash flow of businesses, but it also urgently needs to do so for individuals newly out of work. It needs to encourage uptake of advance payments, and in the same way the Government has given businesses and individuals holidays on business rates mortgages, the Government should suspend all deductions for the repayments of advance payments from Universal Credit awards. This should be in place for the foreseeable future, and at the very least until current advice on social distancing ends.

Suspending deductions should apply to both new and existing claimants, to ensure that all claimants who now have to claim Universal Credit can take full advantage of the advance without being concerned about their finances in the months that follow, while also helping 1.3 million Universal Credit claimants who are currently dealing with deductions, primarily due to requesting an advance in the past.

While the increases in generosity of payment will be of substantial and significant help, it is also vital that claiming and managing on Universal Credit is made less painful while the crisis unfolds. Encouraging the uptake of advance payments and suspending repayments for them will allow the Government to support the cash flow of those who are out of work and these changes can be enacted at pace.

Anvar is Senior Researcher at Bright Blue. [Image: J J Ellison]

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April 3, 2020

Anvar Sarygulov: Labour should fix, not scrap, Universal Credit

By Anvar Sarygulov, Centre Write, Welfare

The release of Labour’s election manifesto confirms their desire to take a sledgehammer to Universal Credit. But Labour’s crusade against Universal Credit would be a significant step backwards in how our welfare system is designed. They would be far better off focusing on reform, rather than replacement.

It is difficult to understate the structural improvement that Universal Credit presents over the hodgepodge of benefits that preceded it. For example, in the legacy system, many families have to engage with three different government bodies to receive various benefits. This places a much greater burden on claimants, particularly if their circumstances change. In contrast, when Bright Blue interviewed Universal Credit claimants, there was a clear preference for a single payment from a single agency.

The incompatible and inconsistent eligibility rules across the variety of benefits in the legacy system meant that some claimants could be losing more than 90% of their new income when they worked more hours, disincentivising people from improving their situation. Universal Credit’s implementation ensures that any additional hours almost always leads to a consistent improvement, as benefit payments are withdrawn at a rate of 63p for every £1 increase in income, though local Council Tax support can complicate this. Incentives to work could be increased even further by lowering this rate, or by increasing the number and value of different work allowances to more claimants, which allow claimants to earn a certain amount without any withdrawal of benefits.

The above is not to say that the design of the Universal Credit is perfect. There are plenty of kinks to iron out, a number of which Labour has correctly identified. Forcing new claimants to wait five weeks for the first payment has been a disastrous decision, leading people into food bank usage, rent arrears and debt to cope with the wait. To the credit of the Conservatives, the introduction of ‘advances’ has alleviated some of the pressure by allowing claimants to receive money early, but the process of repaying them adds significant pressure on the already meagre finances of those households. Labour’s proposal to simply offer an interim payment will help to fully address this issue.

Labour is also correct in identifying the need for the ability to pay the housing element directly to the landlord and for the need for fortnightly payments of Universal Credit. Our interviews have shown that these are significant sources of concern for claimants and makes it more difficult for some to effectively budget. However, it is vital to emphasise the need for claimants to have the ability to make a choice on the frequency of payments; for many, the monthly payments are not an issue.

Notably, there’s nothing to stop Labour delivering their £8.4 billion welfare spending package through Universal Credit. Increasing the Local Housing Allowance, the Employment and Support Allowance or the rate of support for severely disabled people can all be easily achieved within the current system. Meanwhile, Labour’s desire to introduce greater ‘dignity’ and ‘respect’ into the system could be achieved simply by changing procedures.

Rather than wreck a system that fundamentally improves on its predecessor, it would be far better for Labour to build on it and modify it in pursuit of their vision of the welfare state. This will not only preserve the existing benefits of Universal Credit for those who claim it, but also ensure that they do not have to endure yet another overhaul of the welfare system.

Anvar Sarygulov is a Researcher at Bright Blue

December 6, 2019

Peter Aldous: The Conservative Party can proudly say we have turned the page on poverty

By Centre Write, Politics, Welfare

We created a National Living Wage, helping millions of people across the country; we launched Universal Credit to simplify an outdated system of welfare; and unemployment is at a record low. We extended free childcare for working parents, and raised the income tax threshold so people keep more of the money they earn.

But in amongst these victories, as a government, and as a nation, we know there is more to be done. 

Universal Credit, for example, can be a force for good. It is a policy which shows government at its best: pragmatic, forward-thinking and unafraid of a challenge, no matter how big.  

But in order to make sure Universal Credit fulfils its potential, we must pay attention to the issues that could make a real difference to people needing its help. Time and time again from discussions with my own constituents in Waveney, I have seen first-hand how the built-in five week delay for a first Universal Credit payment is adversely impacting people’s lives. 

It’s an issue I feel strongly about. That’s why I’ve added my voice in Parliament over the past year to back calls to end the wait altogether. 

It’s clear that some of the most vulnerable people in our society are struggling with the wait and face real challenges in getting by day-to-day. This isn’t right. 

This week, a new report by the Trussell Trust revealed in unprecedented detail the scale and profile of food bank use – and showed how the impact of the five week wait for Universal Credit and the waning value of benefits are acting as key drivers of people turning to charity for that most basic of needs, food. 

The research found that over a quarter of households referred to food banks reported ‘a long wait for Universal Credit’ in the past 12 months. At least 15% of households were still waiting for it at the time of the survey. 

And the research found that increasing the value of working age benefits by as little as £1 a week reduces the numbers going to food banks.

While the report brings into sharp focus the struggles of people on extremely low incomes, it also highlights how food banks and other community organisations provide vitally important support to get people the help they need to get back on their feet. Communities are working together to help people who without that support, would have nowhere else to turn. 

We’ve shown we’re listening – the Government has introduced numerous changes to improve the roll-out of Universal Credit. We are right to adopt a ‘test and learn’ approach, but we must ensure that as lessons arise, we act on them: when the evidence is this clear, we must continue to adapt so that Universal Credit genuinely transforms people’s lives. 

This is why I’m supporting the call by the Trussell Trust and many others to end the five week wait as a first priority, while also restoring benefits to cover the true, and rising, cost of living.

As Conservatives, with our record on employment and commitment to social justice, we can make a real difference to the lives of people up and down the country.

Peter Aldous was the Member of Parliament for Waveney. Views expressed in this article are not necessarily those of Bright Blue.

November 6, 2019

Anvar Sarygulov: Time for action: improving transitioning to Universal Credit

By Anvar Sarygulov, Centre Write, Welfare

By the end of 2023, more than 6.5 million people are forecast to be claiming Universal Credit (UC), yet in May 2019 only 1.8 million were. Over the next couple of years, millions of people on legacy benefits will be transferred to the new system, making it vital that the new PM ensures the transition is as painless as possible. 

The process of ‘natural migration’ is transferring people from legacy benefits to UC without any government action. ‘Natural migration’ occurs when a change in circumstances forces a claimant of legacy benefits to make a claim for UC. While some such changes in circumstances significantly affect what a person can claim, such as having a first child, other changes which force natural migration are less drastic. These include moving to a different local authority or becoming a carer. 

In contrast, ‘managed migration’ will occur when the Department for Work and Pensions (DWP) starts moving claimants to UC without them having any change in circumstances, a process which the DWP is currently trialling in North Yorkshire with 10,000 claimants.

Unsurprisingly, the rate of natural migration has increased after UC was fully rolled out across the country in December 2018. The latest DWP figures show that between December 2018 and May 2019, the number of UC claims with a housing element has increased by 299,000. In the same period, the amount of active housing benefit claims has fallen by 255,000. Indeed, the vast majority of legacy benefit claimants will move to UC due to natural migration by 2026, though the Government expects to finish managed migration by December 2023 for all claimants.

People who are naturally migrating are forced to wait five weeks before receiving their first UC award. Bright Blue research has identified this as the most problematic design element of UC. A majority of claimants do not have access to any significant savings, which means that many have to rely on family and friends for financial support, while others fall into commercial debt or face rent and bill arrears.   

The Government has already made some efforts to smooth out the natural migration process. For those who claim Housing Benefit and are moving to UC, the Housing Benefit is paid for an additional two weeks whilst they are moved to the new system. All claimants also have an option to request an advance payment while waiting for their first UC award. However, this advance payment has to be repaid from future UC payments and this reduction can negatively impact low-income households who already have significant difficulties budgeting month-to-month.

The Government is also introducing a two-week run on Jobseeker’s Allowance and Income Support for those first transitioning onto UC, but this will only come into effect from July 2020, by  which time thousands of claimants on these benefits will migrate without such support. Bringing forward the introduction of this measure is important to assist those who are naturally migrating. 

The new Government should also follow the recommendation that we have set out in our report on UC, Helping Hand?, and provide a one-off upfront payment worth at least 25% of their initial UC award as soon as a claimant first comes onto UC. In combination with the above measures, managing the five-week wait period should be much easier for those migrating from legacy benefits and for new claimants.

Another major issue is the lack of transitional protection for claimants who are naturally migrating. Applicants who will be moved to UC by DWP and stand to lose out financially will receive an extra award to ensure that they are not worse off as a result of the transition. The IFS estimates that around 40% of individuals transitioning to UC will lose at least £100 per annum and 17% will lose more than £1,000. The latter category includes 24% of all lone parents and 14% of all individuals in work on legacy benefits. For low-income households, such a sudden loss of income is likely to be a major shock and cause financial hardship while the household adjusts. 

While it would be impossible to provide transitional protection to all those naturally migrating to UC, as many changes in circumstances can entail significant shifts in their entitlements, the Government should at least consider providing such protection where the change has not had a significant impact on a person’s benefit award. Furthermore, the Government should also offer such transitional protections to those who are choosing to move to UC of their own accord. This would remove the incentive for many claimants to wait until they are migrated by the Government and ensure that transitional protection is available to all who need it. 

UC has been beset by numerous problems since its very beginning, and it is vital to take them as valuable lessons. With millions of people moving to UC in the next few years, now is the best time for the new PM to take rapid action on UC to ensure that these people do not encounter the problems that have already been identified and do not have to suffer as they transition to the new system.

Anvar Sarygulov is a Researcher at Bright Blue. Image licensed under the Open Government Licence v1.0.

August 30, 2019
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