Any further questions?

From The safety net in action? Universal Credit’s role in the crisis and the recovery

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We often have more questions submitted for our event Q&A sessions than we’re able to answer. Where this is the case, we’ll endeavour to respond to a selection of the most interesting or most representative questions that went unanswered. The questions below were submitted to our panel for the event The safety net in action? Universal Credit’s role in the crisis and the recovery. Mike Brewer and Karl Handscomb, authors of the report This time is different: Universal Credit’s first recession, respond to these questions from our audience.

Why are advances repayable during this period as it does put claimants into ‘debt’? Better options would be to make it non-repayable or to do away with the five week waiting period.

DWP has taken the line that it is not possible to make major changes to this area in the short-run. But this is a difficult policy area, and we will be doing more work later this year on the choice of assessment period used in Universal Credit. One of the ideas tried in tax credits was to make provisional awards which were then reconciled at the end of the year, but this led to the problem of overpayments. We have recommended that DWP suspend the repayments of advances for 6 months to encourage higher take-up.

 

What about those affected by the benefit cap who were on UC and working 16+ hours, but whose hours have dropped because of the pandemic and so are newly capped? Some of these workers will be protected by the ‘grace period’, but some won’t have had a consistent work history over the past year.

We agree that this is a concern, and we recommended that the benefit cap either be temporarily suspended, or increased by the size of the uplift in Universal Credit.

 

Rates of payment for UC have typically been described as the minimum a person needs to live. Does the recent substantial increase evidence that these have historically been an under-calculation and demonstrate a need to maintain, and uprate, the current payments going forward? If not, why?

There is substantial work looking at minimum income standards, and the basic unemployment benefit falls short of this, even with the recent increase. In normal times however people are typically unemployed for a short period of time – and with unemployment at record low and vacancies at record highs pre-crisis low replacement rates were arguably less of a societal concern. This is why we think the uprating should go further so as to give the same proportional increase to families that single adults received, and should be in place at least for the rest of this crisis. However, given 26 per cent of new UC claimants in our survey had no savings (another 21 per cent had less than £1,000), there seems to be a real need for the benefits system to provide more than the bare minimum when families lose employment income – even if for a short period of time.

With younger workers already looking hardest hit by the impacts of the pandemic, is it time to look at equalising benefits for under-25s living independently?

We looked at this in a recent report. We concluded that overall, young people today have a more limited safety net than in the past, and one that is set to shrink further in the years to come. We recommended that policy makers should explore: (1) Rethinking some of the lower awards that young people face in the benefits system, for example by removing the penalty that young single parents face in the switch to UC. (2) Ensuring that young people have the financial resilience to cope with the increased risks and insecurities they face, for example by revisiting asset-based welfare schemes akin to the Child Trust Fund. (3) Taking steps to reduce the number of minimum wage rates or narrow the gap between youth rates and the 25 and over rate, something that both main parties have committed to, to different extents. These changes should be made with a close eye on the evidence of any adverse employment effects for young people. (4)  Ensuring that young people get the support they need and that benefit and childcare take-up are maximised, via good advice and guidance systems sitting around the benefit system.   Through steps such as these, policy makers can ensure that the financial safety net available to young adults today balances priorities like fairness in relation to other groups in society, and overall cost, against the need to ensure that all young adults have the tools to transition to an independent and healthy future.