The 1942 Beveridge Report created the foundation of the welfare state which we have lived with for over 70 years. It proposed to abolish the ‘five giants of Want, Disease, Ignorance, Squalor and Idleness’, and argued that in a civilised society, everyone should be protected from destitution. But this government’s policies have seen a return of several of the giants, and new sanctions for Universal Credit claimants are driving growing numbers into absolute poverty.
What is Universal Credit?
Universal Credit (UC) was introduced to harmonise a confusing range of 6 previous benefits payable to unemployed people. One objective was to remove an unintended effect of the previous benefit system, where unemployed people could be worse off if they took up paid work, because they lost more in benefits than they gained in earnings. Universal Credit was intended ‘to make work pay’. So, when people take up part time work, or low paid jobs, the benefit does not immediately stop, and is ‘tapered’ as their income rises. Around 40% of claimants are in work which pays below the UC threshold.
Universal Credit is paid monthly, and the first payment is usually made five weeks after the claim. Loans are available to cover that period, but they are then repaid by deduction from Credit when payments begin.
Universal Credit has been formidably complex to introduce, and this has thrown up many anomalies, particularly since the level of payment is adjusted whenever earnings change, which may happen weekly for some workers. The system of reporting earnings is complex and not always reliable.
At present, there are nearly 6 million people on Universal Credit. This includes 390,000 in the East of England (6% of the population). Half of all claimants have children.
At a time of high inflation, Universal Credit is not generous. Since unemployment benefit was introduced in 1948 at a standard rate of 20% of average earnings, it has since fallen to 12.5%. The average household energy bill of £2,500 would, on its own, take more than a quarter of that income, well above the common definition of fuel poverty. A single claimant, entitled to just over £4,000 a year, could easily end up spending most of it on energy alone.
Sanctions
To encourage claimants into work, they are required to have regular meetings with Jobcentre ‘work coaches’ to actively seek jobs, and to undertake training if deemed appropriate. Those who fail to do these can be sanctioned, which means their payments can be reduced or stopped. They may also be sanctioned if they refuse to take up a job offer which their work coach thinks is suitable, or they leave a job without good reason. Sanctions can be for only a few days, but they can be for as long as six months.
However, in March 2020, when Covid hit, these requirements were relaxed, and the number of sanctions fell from around 2.5% of all claims to almost zero. This relaxation was gradually reversed from April 2021 as people returned to work.
Labour shortages
In early 2020, the UK labour market experienced two major shocks: the Covid pandemic, and the implementation of Brexit. When the economy began to recover, some people remained ill, some decided to retire early, or leave the country, and we ran out of people to fill the jobs available. There are now major shortages of labour and skills in many industries. Latest figures from the ONS show a record 1.2 million unfilled vacancies – 59% higher than in 2019.
The government hoped to tackle this with stronger measures to get unemployed people back into work, and help those in part time or low paid jobs to seek better ones.
‘Way to Work’?
In the past, people claiming Universal Credit could specify the kinds of work they were seeking, and were allowed three months to find it. After that point, they could be required to broaden their search. If they refused to do this, or failed to meet other conditions, they could be sanctioned.
This changed in January this year, when the government introduced the ‘Way to Work’ programme. Announcing the programme, the government said:
“As we move out of the pandemic, with restrictions lifted and life returning to normal, the Way to Work campaign will focus on getting job-ready people off Universal Credit and into work, rapidly filling vacancies which are at a record high.”
Under Way to Work, claimants were now allowed only one month to find work in their chosen field, before they would be required to broaden their search. This could mean accepting a job that was less attractive, a poorer match with their skills, or lower paid. Since Universal Credit payments only begin five weeks after the initial claim, this means that some can be required to broaden their search before receiving any money at all.
A surge in sanctions
The effect of this change has been dramatic, but not widely reported. In January 2022, the number of Universal Credit sanctions had returned to its pre-pandemic level of 2.5%, but it has now more than doubled, to over 6%. At a time of rapid inflation and high energy prices, this means that over 100,000 people are sanctioned, many of them deprived of their only income.
There are many alarming stories of hardship. Anna Stevenson, a senior benefits specialist at the charity Turn2Us, said that sanctions are a ‘disproportionate’ penalty for what can often be missing a single meeting.
“All of people’s living money is cut off; it leaves them in absolute desperation,” she said. “It is a really frightening, terrifying experience and it causes enormous poverty and suffering.”
She explained how sanctions can be counterproductive. “To get a job, you need to have data on your phone, and you need to be able to travel to interviews. You need to be able to wear appropriate clothing, and you need to show up not looking hungry. All of these requirements are undermined if you have absolutely no money to live on.”
Sanctions and homelessness
Charities have also reported a rise in homelessness as people are evicted when their income dries up. Matt Downie, at Crisis, said, “In most cases, sanctions only serve to push people closer to the brink of homelessness, or further trap those already experiencing it. The people we support constantly tell us about the issues they face accessing the internet or washing facilities to keep their clothes clean. If you’re being forced to move from one sofa to the next, it can be impossible to receive important mail. Sanctioning people’s incomes when they’re already struggling, and in the midst of a cost-of-living crisis, is not only cruel, but it’s counterproductive in our efforts to tackle homelessness.”
Beveridge’s five giants return
Earlier this year, the Institute of Public Policy Research urged the government to end ‘excessively punitive sanctions’ on universal credit claimants and take a more humane approach. Their Senior Economist, Henry Parkes, said,
“As the cost of living crisis deepens, the UK government absolutely shouldn’t be making people’s lives any harder by imposing inappropriate conditions and punitive sanctions. Otherwise, people risk being forced to endure impossible conditions to receive their benefits, setting them up for failure.”
So far, the evidence suggests that the government is not listening, and hunger and poverty continue to grow.
Beveridge’s ‘five giants’ are on the march again. Many of us had hoped our society had grown beyond that.
We are grateful to The Big Issue, who first highlighted this issue.
