Benefits system ‘must be more ambitious’ as the labour market struggles to recover from Covid-19

The Department for Work and Pensions (DWP) reacted dynamically to process an unprecedented number of new claims last year as lockdown began. Alongside other changes designed to speed up the process, a £20 per week boost to Universal Credit was announced, to help claimants through the pandemic and lockdown restrictions. However, major concerns remain about specific aspects of the application process and the adequacy of payment levels. 

The report found that many benefit claimants were struggling with a considerable gap between their basic cost of living and the amount of benefit they received. Findings showed that almost 60% of new benefit claimants and 43% of existing claimants (i.e. who had been claiming since before the pandemic) had experienced a drop in their income which they were not able to manage by simply reducing their spending. 

Almost two-thirds of all claimants reported some level of financial strain, saying they would not be able to replace or repair major electrical goods if they broke, and could not save £10 a month. Around half of claimants were experiencing some form of severe financial strain - one in six new claimants and one in five existing claimants had skipped a meal in the previous two weeks because they could not afford food. 

People were using a range of strategies to ‘get by’ including borrowing from banks (using a credit card, an overdraft or a bank loan) or from friends/family, as well as receiving ‘gifts’ from friends/family. Food bank use and the use of emergency help from local authorities or third sector organisations were also evident. 

Additionally, almost half (46%) of new claimants had experienced some sort of difficulty applying for benefits. These included: telephone accessibility; calculating their household income and expenses; providing information related to housing or childcare costs; providing supporting documentation to prove eligibility; and submitting a joint claim as a couple.

Many claimants were particularly confused by the amount of benefit they were eligible for. Universal Credit claimants were the least likely to understand their payments, with 18% saying that they did not understand how the amount they received was arrived at.

Claimants reported that although many DWP staff were kind and helpful when they spoke to them, they often felt that they did not always have the expertise and experience to fully answer their queries, perhaps reflecting the rapid redeployment of staff to frontline roles to cope with the large influx of new applications. It was common for claimants to need to seek extra advice and support outside the DWP. Social media groups, family and friends, employers, and wider social networks, were all drawn upon to navigate the application process.

The report comes from the Welfare at a (Social) Distance project; a major national research project investigating the benefits system during Covid-19 and its aftermath. The project is led by the Sustainable Housing & Urban Studies Unit (SHUSU) at the University of Salford, working in collaboration with the University of Kent, the University of Leeds, the LSE and Deakin University, Australia. It represents the largest project in the UK focusing on the benefits system during Covid-19 and is providing rapid data to the DWP and other key organisations to support the response to Covid-19. 

Dr Kate Summers, Fellow at the London School of Economics, who led the report said: “We should think more ambitiously about what ‘success’ means within our social security benefits system. Yes, the benefits system held up through the first wave of the pandemic, but fundamental issues remain in terms of the adequacy of payment levels, and people’s ability to access and understand the system.

“Many people who were new to the benefits system last year hoped and planned for their claims to be short term. As the pandemic has continued, the system is unlikely to provide adequate support in the medium and longer term, as people’s capacity to cope financially is eroded.

“Some of the most severe forms of deprivation are most common among people who were making a claim before the pandemic started. These claimants, including those on legacy benefits, must not be forgotten in upcoming policy decisions.”

Professor Lisa Scullion, Co-Director of SHUSU at the University of Salford, who leads the project, said: “The last year has challenged the UK social security system like no other. The DWP moved swiftly to process an unprecedented number of new benefit applications and cope with soaring demand.

“But now, ongoing weak labour market conditions mean that what might have initially been thought of as short-term financial situations to tide people over during the crisis may remain for the medium or long term. Many new claimants are depleting what limited resources they have in order to get by. Over time, we have an impending cliff edge facing people when their resources are totally exhausted, and they are still faced with fixed costs (e.g. mortgage or rent payments) that they cannot reduce.

“The DWP must also recognise the challenges faced in the ‘return to normal’. For example, for new claimants, the benefits system during Covid-19 is the only one that they have ever experienced. Any post-pandemic changes in relation to benefit levels or work-related requirements need to be introduced carefully – and communicated fully in advance of their implementation – to avoid considerable levels of confusion”.

The Welfare at a (Social) Distance project is funded by the Economic and Social Research Council as part of UK Research and Innovation’s rapid response to Covid-19. Over the course of the project, researchers will be publishing regular reports, blogs, and briefings about different aspects of the benefits system.

For more information on the project, to sign up for updates, or to share your ideas or personal experiences please visit https://www.distantwelfare.co.uk/