Listen and learn

“[The] social security system is an amazing achievement of humanity. The proof that people do care for each other. But in the UK, that system is not working as it should.”
Xander D, Universal Credit Review Big Question,
November 2025

April 2026 will mark a true milestone for the UK benefits system: the end of the thirteen-year rollout of Universal Credit (UC) that has brought together all means-tested working-age  benefits. At that point, an estimated 8.5 million working-age adults and 6.5 million children will live in households in receipt of UC, equivalent to a quarter of all people below pension age (26 per cent), and two-in-five children (42 per cent) in the UK today. Small surprise, then, that by 2029-30, the Government is forecast to spend £86 billion per year on UC (2025-26 prices), 60 per cent of DWP’s total non-pensioner social security budget by that point in time. The steady-state scale of, and spend on, Universal Credit make it ever-more critical to ‘get UC right’.

The Government made a welcome promise in its 2024 manifesto to review UC and is now actively considering the benefit’s operation. This exercise has its limitations: it is not considering the level at which the various elements of UC are paid, for example, or the operation of the conditionality regime. But as UC’s rollout concludes, and the Labour Government seeks to place its stamp on part of the social security system so strongly identified with its Conservative progenitors, there is clear merit in taking a fresh look at the benefit to ask: what  system changes could improve the lives of UC claimants whatever the level of financial support the benefit provides?

This report brings a range of evidence to bear on this important question. It draws on three key sources: the voices, views and expertise of low-income families in receipt of UC  articipating in the Changing Realities project; the insights of ten welfare rights advisers that participated in a Resolution Foundation policy roundtable in September 2025 and interviews with other specialists; and analysis of the large existing literature on UC, as well as relevant survey and administrative data and Freedom of Information requests. Taken together, this evidence  informs our recommended programme of UC reform that is grounded in claimants’ experiences; realistic about the system and its core policy objectives as is; and fully costed

A key design feature of the UC system is that the claimant’s income is assessed monthly using real-time information (RTI), and a single monthly award is then made in arrears. There were a number of reasons why UC was built this way. Most important was the desire to put a stop to overpayments that had proven to be a serious problem in the tax credit system both for the state and claimants. But there were less-well evidenced reasons for this decision too: UC’s architects wanted the new benefit to “mimic work and receipt of a salary” (despite the fact that a third of low-paid workers are not paid monthly), and believed a single monthly payment would promote budgeting skills (heedless of the multiple studies that show that low-income families are often very smart budgeters indeed).

One upshot of UC’s rigid monthly assessment period and payment in arrears is that new claimants must wait five weeks between making a claim and receiving their first UC payment, a gap which will cause hardship for claimants that do not have a final monthly pay cheque or savings to tide them over. In response, the Government offers claimants the option of a UC advance, in effect an interest-free loan paid back through automatic deductions from future UC payments over a maximum of 24 months. But although many do take out an advance (in 2024-25, 56 per cent of new UC recipients did just this), others are deterred by lack of knowledge, or by a reluctance to take on debt especially as managing on a reduced UC standard allowance is a daunting prospect.

But there are a number of relatively small changes that could help. First, it should be incumbent on work coaches to make sure new claimants know about, and fully understand the implications of not taking out, a UC advance. Second, the Department for Work and Pensions (DWP) could take a less stringent approach to backdating, allowing those that delayed
applying for UC to backdate their claim by up to a month. Third, DWP could look to the system in Northern Ireland where discretionary grants are available for claimants in crisis without savings. Taken together, this set of ‘fixes’ could materially ease the impact of the five-week wait, at an annual estimated cost of around £500 million.

But UC’s rigid monthly assessment brings with it problems other than the five-week wait. UC’s design aimed to mirror an idealised version of employment with monthly pay cheques, but this means that the system works poorly for those who are paid at different frequencies, such as weekly, or four-weekly. The unfairness of this arrangement is brought home by considering
the experience of three hypothetical single parents, all of whom earn £1,200 over a three-month period. The first, who has a steady monthly salary, receives just over £5,000 from UC over this time. The second, who is paid on a four-weekly cycle, receives £104 less in UC. And the third, a single parent on a zero-hours contract with irregular earnings, is eligible for £131 less  UC over the three months than the parent with a steady monthly wage.

These problems arising from the monthly assessment period cannot be fixed by small tweaks. A flag on the UC journal (the claimants’ primary interface with the system) that alerts people to the likelihood of a lower-than-usual payment in the following month would go some way to helping families prepare for a drop in their award. But properly fixing this issue, at  least for those with a weekly-based pay schedule, would require a structural adaptation of the system so that claimants can elect to have their income assessed either four-weekly or monthly, depending on whichever reflects the realities of their lives.

Implementing a similar change to allow claimants with volatile earnings to be assessed on a rolling basis over a three-month period would plausibly be a less problematic reform for DWP: we assume that it is easier in a system that works in months to aggregate up, as opposed to assess weekly. And there is one group of claimants to whom we do think this facility should be extended, and that is self-employed people who by the very nature of their way of working have very little control over when their invoices are paid.

UC has been mostly successful in reducing the instances of very weak financial incentives to work, but there are still sharp edges in the system that can lead to barriers to people working  more, particularly for two groups: the self-employed, and parents with childcare costs.

The UC system takes a tough, yet largely justified, approach to self-employed claimants in other ways, not least by assuming that 12 months after their claim begins they earn the  equivalent of the National Living Wage for their required work hours regardless of their actual earnings. This ‘minimum income floor’ (MIF) can truncate self-employment for some and  undermine the financial stability of others. However, the time needed for a business to become viable varies significantly across sectors, and 12 months may not be sufficient for some solo practitioners to get off the ground. Given this, work coaches should be given discretionary power to extend the start-up period if a claimant is genuinely close to achieving profitability.

UC provides significant support to parents on a low-income with childcare costs, with a subsidy of up to 85 per cent. But this support is not as helpful as it might be because UC requires parents to pay childcare costs upfront, and then to claim the subsidy back. But an outlay on this scale can be prohibitive for low-wage parents, preventing many from entering, or taking on more, work. The Flexible Support Fund (FSF) can already be used to cover the first month of childcare costs when entering work (but not increasing hours), but awareness is low; the  FSF is administered outside the UC system; and only a small slice of the fund is spent on childcare each year. Bringing this element of the FSF into the UC system could boost awareness and  harness this resource to better effect.

But if DWP were mindful to introduce more fundamental reforms to prevent UC claimants paying childcare costs upfront, it could look to another part of the childcare architecture for inspiration: Tax-Free Childcare (TFC). Under this system, a 20 per cent public subsidy is paid into a parent’s account as soon as the parent has deposited their funds, and the account  can only be used to pay childcare costs to a registered provider. If DWP could use the TFC system for UC claimants, then the government could pay the childcare element of UC into the equivalent of a TFC account as soon as UC claimants had deposited their required contribution, meaning parents would no longer have to cover the full bill upfront.

One of UC’s key policy objectives was to simplify the benefits system, and in some respects, it has delivered on this aim. Bringing together six previous benefits, each with their own rules, application processes and payment systems, has simplified the claims process considerably, and the shift to using RTI data for earnings has reduced the reporting burden for  claimants. But as Changing Realities participants attest, managing a UC claim can be anything but simple. Claimants are often unable to understand the system, which leaves them with  a strong sense that the system is not on their side. Compounding this, while the UC claimant commitment clearly sets out what DWP expect from the claimant to maintain their  entitlement to UC, there is no reciprocal set of commitments made by DWP regarding, for example, response times to claimant queries.

Clear communication is the foundation of a trusted service and there are a number of ‘fixes’ that could easily improve information flows. Claimants would benefit from a clear breakdown of their award, for example, and an ‘urgent action’ tab on the journal would ensure that important information about appointments or requests for evidence was not missed. But if the  Government wanted to indicate that it is truly ‘on-side’ and to deliver on the highly desirable public policy objective of boosting benefit take up, it should extend its role from benefit administrator to provide a full benefit check for UC claimants.

Clearer explanations of decisions would also help claimants know if they have cause for complaint. If a UC claimant wishes to challenge a decision, they must ask DWP for a Mandatory Reconsideration (MR) and only after that can they appeal to a benefits tribunal. Evidence from frontline workers suggests that many claimants are often unable to exercise this right  because they are simply not aware that a decision has been made or are confused about the multiple ways they can ask for a review (via the journal, by phone, by email or by a special  form). But again, there is a simple fix: just as an ‘advance button’ has been added to the UC interface in recent years, so too could an ‘MR button’ or an ‘MR page’ in the journal be added.

And there is one further administrative change that could be of immense benefit to claimants, and that is a commitment that DWP respond to enquiries within a certain timeframe. Without this, claimants can be left in limbo both financially and emotionally, and this can be a very long limbo indeed for some: one-in-seven (14 per cent) UC MRs took an average of two to three months to clear in the first six months of 2025 (the latest data available), and one-in-six (17 per cent) took over three months. Of course, speedy decisions are not necessarily  accurate decisions, but the Government should set reasonable time limits for different types of requests.

Administrative competence and clarity are important for a trusted system, but so too is one that respects the people it seeks to support. Time and again, UC claimants report being  treated with suspicion, unkindness and a lack of dignity. For example, given the personal nature of conversations that happen as part of a UC claim, it is surprising that only 30 per cent  of Job Centre Plus (JCP) offices have a private room for conversations. One cost-free way to ensure privacy would be to move more work coach interviews online (there could be certain requirements attached to this: that claimants must have their cameras on, for example, and do the interview in a quiet place). But if DWP is wary of this approach (and it certainly seems to be with disability and incapacity benefit assessments), then it must commit to provide a confidential space in all JCP offices.

There is another simple change that could be made at minimal cost that would also help DWP staff know when extra privacy and sensitivity may be warranted, and that is to create a flag function on a claimant’s journal if they have a particular vulnerability (for example, if they are a care leaver, a domestic violence survivor or have a serious mental health condition). But DWP may need to go far further than these tweaks. So many people have deep-seated issues with UC, either because of personal experience or because of the discourse surrounding the benefit, more radical reform may be required if dignity is to truly be centralised in the UC system.

DWP would do well to look to Scotland to learn how to effect wholesale culture change of this type. From its establishment in 2018, Social Security Scotland set out to operate with ‘dignity, fairness and respect’. It worked with claimants and their representatives to co-produce a Charter setting out what people could expect from the new social security system; set up a monitoring framework for this Charter; and recruited and trained new staff in ‘Intelligent Kindness’. And this has paid off: evidence suggests that those claiming Scottish Adult Disability Payment (ADP), for example, report a better claimant experience compared to their peers in England and Wales claiming Personal Independence Payment (PIP).

Hard-headed politicians might argue that UC reform should not be on the cards when public spending is so tight. But there is an array of system changes which claimants attest would make lives better that can be achieved within tight fiscal constraints. We estimate that implementing all the recommendations in this report would cost the Government a ballpark £400 million in one-off costs, which would need to be found from DWP’s DEL budget of around £12 billion a year. And the estimated ongoing cost to the benefit bill of these changes is much less than the billions normally involved in the welfare system: the increase in annual benefit spending of our total package would be in the range of £700 million to £900 million a year, or up to 1 per cent  of the £93 billion forecast spend on UC in 2029-30.

Perhaps the most striking finding from this project is that many of the issues flagged by Changing Realities participants, welfare rights advisers and other experts are not new. DWP has  held countless stakeholder forums with frontline benefit experts and claimants, starting even before UC’s introduction in 2013, where it has been repeatedly told about problems like the  five week wait, the lack of clear channels for requesting an MR, and the disrespect that claimants encounter. All of which suggests a change in the way DWP makes policy is overdue. Rather than the ‘test and learn’ approach that the Government adopted when UC was first introduced, it should instead ‘listen and learn’ and truly take heed of the everyday experiences  of those UC purports to help.

April 2026 will mark the end of a thirteen-year overhaul of the working-age social security system, with UC (finally) fully replacing the six legacy benefits from that point on. But although this milestone represents the end of UC’s implementation phase, it cannot mean the end of its development as a benefit. And that is why we give the last word in this report to Lisa from Changing Realities:

“We share our experiences to help improve the lives of others. So, let’s hope we can continue this conversation with you”.
Lisa Holden, DWP roundtable,
January 2026