At a recent meeting on women and poverty, I was asked to speak about universal credit (UC). It forced me to think about the ways in which UC is hugely problematic for women, particularly mothers. Eventually I concluded it was a case of discrimination by design. Here’s how it goes.
At the Social Policy Association conference this year, Professor Ruth Lister reminded us we should always be on our guard when a policy receives cross-party support in parliament and just about everyone else ‘agrees with the principle’ of something. We have been here before – remember the Child Support Agency? Greeted, like UC, with cross-party consensus. At CPAG we said it was fundamentally flawed and explained in detail what those flaws were – but the government went ahead without piloting the scheme. And everything we said would go wrong with the scheme did, in fact, go wrong. Exactly the same applies to UC.
Back in 2011, when the Bill introducing UC was published, we explained in detail how the policy was fundamentally flawed, and proposed amendments to fix it. Very little change was made. And since then it has actually got worse, with the 2015 Budget freezing the value of payments for a further four years and cutting work allowances (the amount people can earn before UC is tapered away). Those Budget cuts blew great holes in UC’s ability to support paid work and make people better-off in work. As UC rolls out, it is now rolling out cuts.
The chief achievement of UC is the integration of out-of-work and in-work benefits so the transition to paid work is easier. This aspect is worth having, but not at any cost. One thing we do support is the slow introduction. Why land an untried scheme on the public without testing and improving it? And there have been some improvements recently – the payment of housing costs for 18-21 year olds has been reinstated and work allowances will be uprated. But apart from that, everything we said would go wrong, has gone wrong – the five-week wait for a first payment, the monthly assessment of people’s entitlements (it doesn’t work), monthly payment that drives a coach and horses through the budgeting methods of low, often weekly-paid women, payment to one person in the household ‘the main earner’, childcare costs reporting (see point 5 below), payment of housing costs (not paid or part-missing) online claiming, online ID verification, the list goes on…. Suffice it to say, all these problems were known and pointed out from the start.
At CPAG, we have just published a report based on the latest 400 cases to come to us from advisers as part of our ‘Early Warning System’ and the top 8 issues are: errors, delays, housing costs (not paid or partially paid), establishing and making claims (including online), migrants having trouble claiming despite successful earlier claims, mistakes in awards of disability-related elements, poor communication and processing of evidence and difficulty in challenging decisions. To put it mildly, it’s not working very well. But, without the necessary re-investment of resources, the much vaunted ‘test and learn’ approach is turning into ‘test and tinker’, but never properly fixing, UC.
Women are disadvantaged in UC in a number of ways – here are 10 for starters:
1. The male wage-earner model - far from looking like a ‘modern’ benefit, UC actually resembles a return to the 1950s family wage model. The claim that one payment into a household (rather than two payments split between two adults) is like real life – in a country where nearly 75% of mothers are in paid work – is a complete nonsense. When challenged in the early days, Ministers were clear they were perfectly relaxed about this model and in fact their vision for UC was to get one earner in a household into paid work. They saw this as the key achievement of UC.
But this is not how normal family finances work. In normal families, there is money coming in from different sources, two wages, different benefits, wage subsidy, child benefit. Nor is this how couples get out of poverty – it takes two paid workers to achieve this – at least one and a half paid workers. The child poverty data is very clear on this – child poverty rates 2016/17 show: when no-one in a couple is working the child poverty rate is - 76%; if one or more is part-time - 63%; if one works full-time and the other does not - 34%; if self-employed - 33%; however, if one works full-time and the other part-time, it falls to - 13% and if both are full-time - 5%.
Domestic violence is given as one circumstance where benefits can be split between two adults in a household. But a woman being subjected to domestic violence would risk making herself more vulnerable if she drew attention to the violence by requesting split payments. And even in couples where there is no domestic abuse, women may be denied financial independence, putting them in a vulnerable position should the relationship break down. We should look to the decision in Scotland to offer split payments between members of a couple by default.
2. There is no work allowance for second earners, mainly women, and, post Budget cuts, a lower one for lone parents (90% of whom are women). I remember the IFS once reporting that the main improvement in family incomes in the past 40 years has come from second earners joining the labour market. UC is a benefit that creates little or no incentive for second earners to enter or progress in paid work – this is clearly dysfunctional in this day and age.
One case that came to us provides a good example of the impact of the lower work allowances. A lone parent with childcare costs on UC working 16 hours a week asked for a ‘better-off’ calculation to find out what would happen if she worked full-time – the calculation actually showed if she worked full time she would have been £300 a month worse off.
3. The insistence of UC on dividing a couple with children into a ‘main earner’ and a ‘main carer’ (or second earner) in the first place is problematic. Why can’t both men and women with children restrict their working hours and share the responsibility of caring for children? Two three-quarter time earners is surely better for everybody!
4. Lone parents under the age of 25 receive a lower rate of benefit, unlike in the previous benefits system. How exactly are their responsibilities and costs any different to those of older mothers? And this group is doubly disadvantaged by a lower minimum wage rate for under-25s.
5. The treatment of childcare and housing costs – the two greatest expenses families face. Help with childcare costs is generally paid at the end of the assessment period in which the care is received, yet mothers make up-front payments to providers and wait weeks for UC to reimburse them , causing arrears and making it impossible to pay bills. And childcare costs do not always arise neatly, each month.
Housing support has been cut so it no longer covers actual rents, but makes only a contribution towards it – pushing families into arrears and risking homelessness, or forcing them to use money intended for other purposes like children or health needs on paying the rent.
6. The benefit cap – 94% of capped households have children, 72% are lone parents (77% with children under 5 and 33% a child under 2). The vast majority of these will be women. These claimants are sitting ducks because they have young children so face barriers to work, and can’t find affordable housing. Those with babies and toddlers are not required to look for work in the benefits system, yet they are still hit by the cap. And the monthly assessment of UC entitlement is causing some workers to be benefit capped because of the day in the month they are being paid. It means some people are treated as though they are paid twice in the same month and not at all in the next –if their earnings appear to be nil or very low in one month (because they were paid early as their payday fell on a weekend or bank holiday) they may be capped the following month when they appear not to be earning.
7. The two-child policy (which limits child allowances in UC to two children) and the rape clause. Immoral and impracticable, the policy fails on every count. It’s proving impossible to introduce in universal credit, as it is administratively difficult and can’t be done using existing IT. Let’s hope they drop it on that count alone. It’s immoral, because it counts some children as being worth less than others, - it interferes in those most personal and precious decisions about life, fertility and family size, it forces couples to think twice about whether to stay together or get together, causes women to have abortions they don’t want, and that’s without even mentioning the rape clause.
8. Jobcentre staff can waive work-related requirements for lone parents but the flexibility is contained in guidance and not regulations, so allowances are not always being made as required for lack of childcare, school hours, and other reasonable work restrictions. And the rate of sanctioning of lone parents is, as a result, very high.
9. Lack of understanding of ‘legacy benefit’ entitlements, like jobseekers’ allowance (JSA) and employment support allowance (ESA), means women are being put off claiming their individual entitlement to contributory benefits (and the period of entitlement has been cut to one year only for ESA). ESA, confusingly, must be claimed via the UC helpline where, from our experience, people are often told by DWP staff that it has been abolished (which it hasn’t). Protecting some independent income for women outside the UC ‘basket’ is important to preserve financial independence, particularly – though not only – for women in financially controlling or abusive relationships or those whose partners are not able to manage money in a way that ensures the household’s needs are fully met.
10. The sheer size of the losses for families with children (around £1000 per year) and for lone parents (c. £2,340 a year), due to cuts to UC, is astounding. There will be one million more children in poverty as a result – compared with what UC originally promised. It was meant to reduce child poverty, but now this promise lies in tatters.
Back in 2002, David Willets, at the Conservative Party Conference, declared that the ‘war on lone parents is over’. We at One Parent Families (where I worked at the time) asked him to make sure the weapons were put beyond use! We may not have the loud, anti-lone parent rhetoric today that was such a feature of the 1980s and 1990s but now policies are doing the job for them without explanation or rationale as to why lone parents should be singled out for such financial misery. This is discrimination by design! I could go on.
The impact of all of this on women is ‘up close and personal’ – your decisions about children, your partner, working, getting childcare, just managing your life, are made more difficult and stressful, with attendant risks to your mental health. Once in paid work, how is it possible to manage a benefit that is really designed to be more like an out of work benefit, that interferes with you, tells you through ‘in-work conditionality’ to work more hours and get more pay and requires information from you on a monthly basis? Especially if you have childcare costs or are self-employed. In other words women.
Some of this is about design and some about the nature of means-testing. But if tax credits were an exercise in means-testing ‘light’ – UC is an exercise in ‘means-testing heavy!
Putting all your financial eggs in one basket (thankfully, with the one exception of child benefit) means household budgets are vulnerable to the ability of the state to get them that money. And so far, it is not doing that very well. The results of this reliance are everywhere to see – delays, mistakes, the five-week wait, harsh UC sanctions – are all driving families to food banks and destitution.
Food banks are becoming a semi-permanent feature of the welfare state, partly funded by food barons, they are the regrettable recreation of parish relief, albeit very well-intentioned and necessary.
If we’d thought the answer to the problems of the social security system was to create a massive means-test and reintroduce the poor law, we would have said so.
However, the boy economists like a straight line on a graph and think this answers everything. It does not. The day to day assumptions and shape of the UC scheme matter too - how women are treated at different stages of life, how it takes account of children, caring roles, entry into and out of couple relationships, entry into and out of paid work, the demands on mothers as workers and carers, independent entitlement to maternity, parental leave, carers benefits, benefits when you are unemployed, sick or disabled, administration, payment and so on are all equally important. Of course, fairness and who gets more or less is important, but the moral of the UC story is – you need to think harder boys!
But if we’re stuck with UC, what are the solutions? There are ways to make UC work better – benefit splitting automatically or on demand, a second earner work allowance, reinvesting in work allowances for lone parents, changing to weekly assessment and fortnightly payment, allowing averaging of costs, increasing rates for lone parents under 25, ensuring entitlement to and take-up of ‘legacy benefits’, ending the freezes, abolishing the benefit cap and the two-child policy, ending fixed-length sanctions and the regime that imposes them too easily – affecting lone parents worse than anyone.
We could also consider not rolling it out to families with children as it is currently not fit for purpose and should not be imposed on half the children in this country – 7 million women and families in total.
And, one thing they absolutely must not do is to roll up child benefit into UC. If anything, UC makes the case for reinvestment in child benefit all the more powerful. It is paid to the main carer, it does not change when you enter paid work, it creates a platform you can build other income on without a steep withdrawal rate, it helps to prevent poverty, it arrives on time and is simple to claim.
In CPAG’s experience in the last three years working in food banks in Tower Hamlets, destitute mothers arrive with one source of income – child benefit. They have it because it works. It is by way of a basic income for children. It is important to women and it is the type of scheme worth investing in. Currently, it is not nearly enough and will have lost 23% of its value by 2020. It needs to be raised by £5 per child immediately to make up this loss.
Discrimination by design cannot go on; serious reform of UC is needed, right now.