Reconditioning the benefits system for a stronger COVID-19 recovery

It is undeniable that the benefits system has been a lifeline to many during the COVID-19 pandemic, enabling millions of individuals and families to continue living with some semblance of normality. The demand for Universal Credit in particular has been exceptionally high, with 6 million people in receipt of this benefit in January 2021 – double the number prior to the pandemic.

A smoother system

For a system with pre-existing issues, the rapid increase in Universal Credit applications could have been hugely problematic. But efforts made by the Department for Work and Pensions (DWP) during the pandemic appear to have protected, if not enhanced, the system. Moving to a ‘don’t call us, we’ll call you’ tactic seems to have improved the experience of Universal Credit applicants.

Similarly, the temporary removal of conditionality (in order to speed up the application process and because of the impact of the pandemic on the labour market) not only helped manage the influx of prospective claimants but also improved the experience of recipients. For people claiming Universal Credit, the removal of conditionality reduced the potential stress of looking for work during such an uncertain time for employment across so many sectors.

But are people claiming?

Despite these measures by DWP, new analysis conducted by the University of Salford (and funded by the Health Foundation) found that half a million (430,000–560,000) people were eligible for Universal Credit at the start of the pandemic but did not claim it. According to estimates from the study:

• Nearly a quarter of a million (220,000) people thought they were eligible for the payment but didn’t want to claim it.
  • Around 60% of this group hadn’t applied because of the perceived hassle of applying, including working out if they were eligible, navigating the claims process itself or the threat of sanctions.
  • Almost 30% of these people say they did not claim because of the stigma surrounding benefits.
• An even greater number (estimated at 280,000–390,000) wrongly thought they were ineligible for Universal Credit.
• An outright majority (59%) of those eligible for Universal Credit but who didn’t want to claim it said that conditionality would put them off applying for Universal Credit in the future.

The health consequences of financial strain

With Health Foundation analysis predicting that 800,000 people in the UK will be unemployed and living with poor mental health by the winter, it’s vital that the benefits system is available to those who need it. A financial safety net can have a considerable impact on people’s health – both in reducing mental health concerns such as stress and anxiety, but also in improving physical health by ensuring people can engage in social activities and afford necessities to live such as food and heating.

Misunderstanding eligibility and the stigma associated with claiming benefits have limited people’s willingness to apply – exacerbating financial strains during the current crisis. Research shows that to make ends meet, people are taking on more debt, borrowing from family or friends, or over-relying on personal savings, which is not necessarily sustainable or sufficient to support outgoings. Many of those involved in this research reported severe financial strain, which means falling behind on bills or not being able to afford fresh fruit and vegetables daily.

People’s short-term efforts to stabilise their financial security ultimately risk undermining their health during what has ended up being a prolonged period of pandemic restrictions. In using savings or relying on a partner’s income, people have become exposed to serious financial hardship, which we know causes stress, anxiety and poorer mental health outcomes. In turn, this has considerable implications for people’s physical health, creating adverse knock-on effects for employment prospects and future health. It is clear that an accessible, stigma-free benefits system can not only provide financial stability when used as a preventative measure, but can also have a hugely positive impact on health.

What deters people from applying for Universal Credit?

People are ostensibly put off from getting the support they need because of a lack of understanding of their eligibility or because they have a negative perception of the benefits system, often due to the stigma associated with claiming. Concern also stems from the negative reputation attached to the Universal Credit system itself and to the conditionality criteria. While conditionality has an important role to play, failing to find the appropriate balance between responsibilities and support can do more harm than good – as can a strict sanctioning regime. Negative perceptions of Universal Credit appear to have deterred thousands of eligible people, who had previously worked and suddenly needed a safety net, from claiming financial support.

How can access be improved?

With some time before the Job Retention Scheme ends and unemployment reaches an expected peak by the end of the year, the government has an opportunity to do more to address the issues that prevent people claiming Universal Credit despite being eligible.

Easing of conditionality requirements should be continued, to ensure people receive the support they need without inappropriate expectations to find work while restrictions apply. Keeping good practice by maintaining the ‘don’t call us, we’ll call you’ approach during the claims process will be key to reducing the mental health toll of applying. Better provision of benefits-related information to those likely to be at risk of redundancy as the furlough scheme ends can also help people prepare for what’s ahead.

There is a lot to learn from the pandemic. Rapid changes to Universal Credit processes at the start of the first UK lockdown helped the benefits system function better. As we move away from lockdown and into recovery, the government needs to build on the positive changes we have witnessed and continue to protect health through our welfare system.

Hardeep Aiden (@HardeepAiden) is a research manager in the research team at the Health Foundation.

Heather Wilson (@heathers_health) is a policy and programme officer in the healthy lives team at the Health Foundation.