New normal worse than the old one?

New normal worse than the old one?

14th May 2021

Social security is the missing piece in our pandemic recovery

by David Scott, CAS Policy Officer (Social Justice team).

This article first appeared in the Herald on 12 May 2021.

How many big public events have seemed ‘weird’ during COVID restrictions? I mean sporting events, Hogmanay, the election campaign. And now we have another to add to the list: the Queen’s Speech.

Stripped of all its usual pageantry (well, most of it), the 2021 edition seemed smaller, even eerie. Black Rod had far fewer MPs to corral down the hall.

In terms of content, the speech should have been significant. The first to look beyond the pandemic, it promised to support national recovery and ‘levelling up’ everywhere. But I’ve got to admit, I was disappointed.

Because the standard pomp and ceremony wasn’t the only thing missing from the occasion. Absent too was any mention of our social security system - surely one of the key areas that must be substantially reformed if we are to truly build a better, fairer society.

Universal Credit (UC) has been a lifeline for millions throughout the pandemic, with many claiming it for the first time. Nearly 6 million people claimed UC in February this year—482,000 of these in Scotland—which is nearly twice as many as before the pandemic. That’s millions of people finding out for the first time what it’s like to rely on UC in a time of need. Can we learn anything from their experience?

Evidence from Citizens Advice Bureaux around Scotland suggests three clear lessons. The first is that the current rate of UC simply isn’t enough to live on. Earlier this year, we published analysis showing that UC’s standard allowance has fallen by 11.5% in real terms since its introduction in 2013. That’s less money in people’s pockets and less money to cover the rising bills they’ve faced as a result of more time spent at home during lockdown.

This real-terms cut was ameliorated during the pandemic by the UK Government’s introduction of an uplift of £20 a week for all UC claims. That £20 a week has made a real difference to people’s lives, yet the Government has refused to make it permanent beyond September. The Queen’s Speech was a chance for them to fix that and give people some financial security - to help everyone level up - and they missed it.

The second lesson is that we need to improve the UC application process. I mentioned above how many people are claiming UC for the first time. What we’ve seen time and again is how stressed people are by the application system.

As it currently stands, new claimants must wait five weeks for their first payment of UC. This might be manageable if you have a decent final month’s wage to rely on, but for those with no income or only a part-time salary—or for those who waited to see if they could find another job before eventually applying—that’s a huge gap to fill.

To alleviate this, the Government offers an Advance Payment, which is then recovered from your next 24 UC payments. Aside from leaving people with even less to live on for those two years, the idea of being saddled with debt for that time is terrifying if you’re already living on the bare minimum. A non-refundable grant is fairer, safer, and would ensure support reaches those who need it most.

The third and final lesson is taken from what many have seen as a UC success story: its ability to handle the large influx of claims at the start of the pandemic.

It’s true that UC did not collapse under the huge strain of the past year. But part of that success was a result of removing some of the most pernicious aspects of UC, particularly work conditionality and sanctions. It was only by re-deploying staff to claim-handling that UC was able to shoulder the wave of new applications—and plenty of people still came to us for help because of the huge telephone queues at DWP.

So the lesson here is clear: remove the threat of sanctions altogether. Sanctions don’t encourage work or training. All they do is punish the most vulnerable and trap people in unsuitable, low-paid, insecure jobs.

The UK Government has promised to create a better, ‘levelled up’ society out of the pandemic. A strong social security net pumps money into the economy and reduces strain on other public services. Yet as it stands today, UC is set to be cut by over £1,000 a year for every person in September—the exact same time that the furlough scheme is set to be withdrawn. This is a dangerous recipe. An influx of new claimants and one of the largest overnight cuts to social security in history will hold back our recovery.

Social security is foundational to a fairer society. Without better support, people on lower incomes face destitution, hunger, fuel poverty, rent arrears and eviction. This affects physical and mental health, in turn placing greater strain on GPs, hospitals and other local services.

For that reason, the Government must prioritise fundamental reform of UC. I have set out what we see as the three clear strings to that reform: the £20 uplift must be made permanent, along with a wider review of UC rates; the application process should support people, not put them in debt; and sanctions should be abolished, to give people secure incomes while searching for good, well-paying jobs.

The Queen’s Speech was the government’s opportunity to announce its intention to reform UC in big, bold, capital letters. Its failure to do so is disappointing. Hopefully it can bring forward changes soon, or we risk a new normal even worse than the old one.