White Paper on Universal Credit - Work and Pensions Committee Contents


Written evidence submitted by Women's Budget Group

SUMMARY

Knowing about the gender implications of policy changes is important not only for ensuring that gender inequalities are reduced, but also so that policies can be designed to meet their own goals most effectively. This submission from the Women's Budget Group raises a number of concerns about possible gender implications of ways in which UC may be designed.

There are a number of unresolved issues that are of crucial importance in determining whether the introduction of Universal Credit will increase or decrease gender inequalities in income, in work incentives and in the access of individuals to household income. These issues may also undermine the effectiveness of UC in meeting its aims of reducing the complexity of benefits/tax credits and ensuring more consistent work incentives.

The Women's Budget Group recommends that legislation should not be put before parliament until those crucial issues are resolved. Otherwise it would require members of parliament to vote on legislation without being able to take into account their gender implications, in contravention of the spirit, and possibly the letter, of Parliament's duty to take account of the impact of proposed measures on gender equality.

These issues include:

  1. Whether it is conducive to good resource use in families for Universal Credit (UC) to be paid in a single undifferentiated monthly payment to one member of a family.
  2. ¾  In particular, whether payments for children's needs and childcare costs should be paid to the same person as the rest of UC.
  3. ¾  On what basis payments for childcare will be made.
  4. ¾  The longer-term future of Child Benefit as a separate benefit once UC is introduced.
  5. ¾  A similar question concerning the future of Carer's Allowance.
  6. ¾  The form in which conditionality will operate for multi-person households and in particular how children's welfare will be protected.
  7. ¾  What can be done to mitigate the decrease in work incentives to enter employment for "second earners" in some families in the UC system.
  8. ¾  How attachment to the labour market can be maintained though periods in which employment costs are particularly high, such as around the birth of a child.
  9. ¾  How to cope with regional variations in the costs of taking employment, without creating the counterproductive effect of families moving into areas with lower employment opportunities and, in particular, women's employment being disrupted by such moves.
  10. ¾  Finding terminology to describe family roles that does not help solidify an unequal division of family responsibilities and labour.

SUBMISSION

1.    The UK Women's Budget Group (WBG) is an independent, voluntary organization which brings together individuals from academia, non-governmental organizations and trade unions. We have been scrutinizing the gender implications of the budgets and spending plans of UK governments since the early 1990s.

2.    The WBG welcomes the Committee's decision to ask for submissions on the proposals in the White Paper on Universal Credit. This submission raises a number of concerns about possible gender implications of ways in which UC may be designed to meet the laudable aims of reducing the complexity of benefits/tax credits and ensuring more consistent work incentives. Knowing about the gender implications of policy changes is important not only for ensuring that gender inequalities are reduced, but also so that policies can be designed to meet their own gaols most effectively.

3.    The WBG recommends that legislation should not be put before parliament until those crucial issues are resolved. Otherwise it would require members of parliament to vote on legislation without being able to take into account their gender implications, in contravention of the spirit, and possibly the letter, of Parliament's duty to take account of the impact of proposed measures on gender equality.

4.    The working assumption that under Universal Credit only one partner would receive the Universal Credit payment for a joint claim needs more justification. The idea that families will manage better, resources be shared more fairly and used more to the benefit of children, when a single undifferentiated monthly payment is made to one member of the family (in practice, unless the government actively discourages this, more likely to be the man in heterosexual couples) is challenged by much recent research into what goes on financially within households. Women are usually the managers of household money in low-income families, often by performing a complex juggling act in which the timing of a variety of different payments plays an important role. Attention should be paid to what is already known about intra-household financial management in deciding the form in which UC is paid and the frequency of payments.

5.    In particular, there is good reason why child benefit and payments to children and for childcare in the tax credit system go to the mother or "main carer"[150]. Without evidence to the contrary, it would seem best to continue that system and avoid a significant redistribution of resources from women to men. Evidence from research done prior to the introduction of tax credits[151] - as well as the current research with low- to moderate-income couple families from a recent research project investigating "Within Household Inequalities and Public Policy" (WHIPP) as part of the Gender Equality Network funded by the Economic and Social Research Council (www.genet.ac.uk)[152] show the continued salience of gender roles in intra-household finances. This should be used to think carefully about how the different components of UC should be labelled and to whom they should be paid.

6.    The form of payment towards childcare costs under UC has not been established. This is not a minor detail but for many parents, particularly lone parents and second earners, may determine whether taking employment is really worthwhile. This is not simply a question of marginal deduction rates but also the availability, affordability and convenience of good quality childcare. It does not seem a good idea to move to legislation without the way in which childcare support will be delivered being clarified.

7.    Child Benefit is no longer a universal benefit. The White Paper states that it will not be part of Universal Credit. But what will happen to its value, and will further means testing be introduced in future? It is crucial that Child Benefit, which does not cause work disincentives, is retained as a separate universal benefit at a sufficiently high level to make a meaningful contribution to meeting children's needs, and provide their "main carer" with control of at least some income. Given that the Secretary of State had previously suggested that Child Benefit might be integrated with UC in order to overcome the anomalies created by the withdrawal from higher rate taxpayers, it would be helpful to have confirmation that this is not envisaged in the longer term.

8.    The future of the Carer's Allowance is also important as a form of independent income for those with significant caring responsibilities, most of whom are women. Whether this benefit is retained as a separate, individual non-means-tested benefit will crucially affect the gender impact of the introduction of UC. Until this matter is resolved, any gender impact assessment will be sufficiently incomplete that it cannot fully inform members of parliament in deciding how to vote on the introduction of UC.

9.    The form in which conditionality will operate is a crucial matter. Caring responsibilities are often uneven or unpredictable. School holidays, for example, may make taking some forms of employment difficult for mothers who could work during school term-times. Care needs of elderly and disabled people are particularly unpredictable and the conditionality regime (which it appears will apply to those who are not judged to have "substantial" caring responsibilities) would have to be flexible enough to deal with this, since few carers will abandon those for whom they care even in the face of severe financial penalties. Another issue that needs clarifying is how the failure of one partner to meet conditionality requirements might impact on the other's access to an income - and in particular, how children will be supported if either or both of their parents do not conform to conditionality rules. Again before legislation is proposed these issues need to be sorted out if parliament is to have the ability to make an informed decision on the introduction of UC.

10.  In families with caring responsibilities, "second earners" are known to be more sensitive to work (dis)incentives because it costs them more in both money and time to enter employment. In practice it is usually the woman who is seen as a couple's "second" earner. For couples already above their earnings disregard, the change to UC could increase the marginal deduction rates of potential/actual second earners under the tax and NI threshold from the current 39 (soon to be 41)% to 65% under UC. If there is no extra earnings disregard for second earners, this can only encourage a more uneven division of gender roles and may counteract the government's intention that short jobs become economically viable for those with caring responsibilities.

11.  This is not just an issue of restricting choices made at a point in time. A decline in "second earning" in poorer families would lead to a long-term increase in child poverty and greater financial insecurity. "First earners" may lose their jobs and many families split up. Keeping an attachment of mothers to the labour market is crucial in protecting the well-being of children in poorer families. Children tend to live with their mothers and so the poverty rates of children follow those of their mothers. It is particularly important to enable women to keep that attachment through stages in which the financial and organisational costs of taking or staying in employment are particular high, such as around the birth of a child. There may be a case for increasing earnings disregards at times when the cost of employment are particular high and re-considering earnings disregards for individuals.

12.  There is considerable evidence that the high cost of childcare, housing and/or commuting makes paid work relatively much less worthwhile in some areas of the UK, notably central London. We urge the Committee to examine this problem - and consider ways of lessening its impact on the propensity to find and take employment, including that it does not result in families moving into lower cost areas where jobs are in practice scarcer. Moving families is disruptive, particularly for women who often have to manage the process, including settling children into new schools, giving up their own jobs in the process, and potentially losing the support of families and neighbours that enabled them to take employment in the first place.

13.  Finally, we would ask that care be taken in the language used to describe family members in any legislation. The terminology used by government should not help solidify an unequal division of family responsibilities and labour. We have been disturbed for some time by the use of the term "main carer" in the tax credit system. While, as noted above, we think it is important that payments for children and childcare go to those who actually take responsibility for their care, we would not want an implied assumption that it should inevitably be the case that there is a main carer. Many parents are trying to share care responsibilities equally. The language used, while it should be flexible to recognise actual practice, should be careful not to impede change or restrict the possibilities of more equal sharing of roles and responsibilities within families.

December 2010



150   Lundberg, S J, Pollak, R A and Wales, T J (1997), "Do husbands and wives pool their resources? Evidence from the United Kingdom child benefit", The Journal of Human Resources 32(3): 463-480. Back

151   Goode, J, Callender, C and Lister, R (1998), Purse or Wallet?, London: Policy Studies Institute. Back

152   See, eg, Sung, S and Bennett, F (2007), "Dealing with money in low- to moderate-income couples: insights from interviews", Social Policy Review 19, Bristol: The Policy Press. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2011
Prepared 7 March 2011