White Paper on Universal Credit

Written Evidence Submitted by Oxfam


1. Our response consists of two main elements: specific concerns around the proposals outlined in the White Paper, particularly around gender; and identifying areas in which detail or explanation of rationale is lacking, and we believe the Committee should request further information from the government.

Additional information

2. Oxfam have already put on record many of our comments and concerns around Universal Credit in our response to the Department for Work and Pensions consultation paper (attached, and also available at http://www.oxfam.org.uk/resources/policy/right_heard/response-to-21st-century-welfare.html). In our evidence, we also refer to a gender analysis of the same paper, which was commissioned by Oxfam, and written by Janet Veitch, with assistance from Fran Bennett (attached, and also available at: http://www.oxfam.org.uk/resources/policy/gender/gender-perspective-welfare-reform.html).

3. We have also set out our broader principles on welfare reform in a briefing paper from June 2010 (attached, and also available at: http://www.oxfam.org.uk/resources/policy/right_heard/struggling-with-the-system-welfare-reform.html). In addition, we published a report in April 2009 on the experiences of people in Clydebank, West Dunbartonshire affected by the transition from Incapacity Benefit to Employment and Support Allowance, which holds important lessons for ongoing welfare reform, and which has informed our thinking and understanding in this area (attached, and also available at http://www.oxfam.org.uk/resources/ukpoverty/downloads/To%20banker%20from%20bankies.pdf).

Impact upon women

4. We have particular concerns around the ways in which the proposed reforms will impact upon gender equality, and on the livelihoods of women living in poverty.

5. Calculating and making payments at the household level is problematic. Household assessment and payment assumes that money coming into the household is shared equally between men and women in couples. Research on intra-household allocation of resources suggests that this is not a safe assumption. We would like to see the government explain why it has chosen a single household payment, rather than, for example, splitting payments intended for adults equally between both halves of a couple.

6. In addition, research shows that money going into the family via the ‘purse’ (i.e. women) rather than the ‘wallet’ is more likely to be spent on children’s needs. We welcome the commitment in the White Paper (Annex 3, paragraph 10) to explore continuation of payment to the main carer of support for children, as occurs currently under Tax Credits. It is crucial that money intended for children continues to be paid to their main carer (usually women), as otherwise this risks damaging children’s welfare, as well as negatively impacting upon women within couple households.

7. In terms of assessment at a couple level, it is important that the government explains how the household unit is to be designated, and why. Family units can be chaotic, with people moving in and out of the household regularly, and it is crucial that the government takes account of ‘new’ rather than merely traditional family forms.

8. We were pleased to see that Child Benefit is not to be included in the Universal Credit, and therefore means-tested. Child Benefit is particularly important for women, as a source of independent income for individuals which is unaffected by a partner’s income. For that reason, we urge the government to refrain from further means-testing of Child Benefit, and to retract existing plans to means test. It and other universal benefits not only help to provide independent income for women in different family types, but also help to promote solidarity in social protection.

9 . In order to protect the principle of universal Child B enefit , it must not be included in the overall benefit cap calculation. Child Benefit is intended to be ring- fenced as a universal benefit for child ren, and so should no t be considered for purposes of capping income at the h ouse h old level. We urge the government to give assurances that it will not introduce means-testing of Child Benefit through the back door through such a mechanism .

10. It is crucial that barriers to women’s employment are considered, beyond the limited (though crucial) ‘better off in work’ aspect upon which Universal Credit focuses. In particular, childcare must be taken into account – in terms of quality, affordability and accessibility. Investment in such childcare should be prioritised. Where government supports childcare financially, it must be with the aim that work incentives for those whose employment is contingent on childcare support are at least as favourable as for other people claiming Universal Credit. Regrettably, this is not the case in any of the proposed mechanisms for paying for childcare. The likely effect will be to make work pay less particularly for lone parents and for second earners in households with children – in both cases, probably women. We would like to see the government explain the rationale for making work less affordable for such groups. More broadly, this should be considered in the context of the gender pay gap, and the fact that women are more likely to be in low-paid employment.

11. Finally, it is crucial that proposed changes to conditionality do not impact disproportionately upon women. More stringent conditions are likely to hit carers harder, especially parents bringing up children alone (mainly women). We would like the government to explain what will be done to minimise the impact of sanctions on children living in families affected by sanctions. Even if sanctions on lone parents will be capped, when they already live below the poverty line this is nonetheless unacceptable. What has the government done to assess the impact of sanctions, e.g. use of loan sharks, petty crime, or homelessness?

12. We would urge the government to incorporate into its ‘reasonable job offer’ test that parents with childcare needs not be required to work for a lower incentive than the standard taper under Universal Credit, once childcare costs have been taken into account. Quality and accessibility of childcare must also be taken into account before any sanctions are applied.

Areas in which explanation is required from government

13. Absent from the White Paper is any explanation of the government’s long term plan for the welfare system. We would encourage the Committee to request such a plan from government. This should address in particular what levels of benefits, tapers and conditionality will be set at in the future. This is of crucial importance as benefits and work incentives are both being set at lower levels than are consistent with a decent income in the case of benefits, and the incentives to work for the highest rate tax payers in the case of work incentives. We are told that this is due to a lack of resources in the current fiscal climate. The government should therefore explain how it sees the trajectory for these in the longer term.

14. The government must also explain what it has planned in terms of short term, transitional safeguards. This applies to those who will have weaker work incentives under the new system. It also applies more broadly to people on low incomes who will find their existing budget-management tools removed, and who will be especially vulnerable to system failure now that there is only going to be one payment. This is particularly pertinent to women, who tend both to be household budget managers in low income households, and to act as ‘shock absorbers’ at times of crisis, going without in order to protect other members of the household. In particular, the government must explain what support along the lines of the current Social Fund is going to look like, and how it intends to meet the need for additional support or education for people to up their skills in budget management and financial planning.

15. Given the risks to people living in poverty of its failure, it is imperative that an independent evaluation is carried out of the planned IT system for handling Universal Credit. The government should explain whether this has occurred.

16. We would also like reassurances from the government of how, in light of plans to deal with a far higher proportion of administration online under Universal Credit than under the current system, it plans to address issues of digital inclusion. At present, partners with whom Oxfam work have asked for more face to face contact not less. This particularly includes vulnerable groups such as women escaping violence, and some BME groups. The latter are among the groups who will need assistance in filling in forms, and who could be excluded by an automated system.

17. The government must provide an explanation of how it plans to match its undertaking not to further reduce the value of benefits with action. Promises in place do not match with the reality of movement from RPI to CPI uprating, and stealth cuts through changes to Housing Benefit.

18. In its proposals for the extension of conditionality, the government proposes to use the threat of extreme sanctions, up to and including the threat of destitution, to coerce people into work. It is unacceptable for the government to remove – or to threaten to remove – the basic right to social protection from anyone. Additionally, research shows that, while sanctions unequivocally cause severe hardship, and contribute towards increased crime rates, their impact on employment is at best mixed, and can lead to worse outcomes in the longer term (see A review of benefit sanctions, JRF, December 2010, available at http://www.jrf.org.uk/publications/review-of-benefit-sanctions). Support and encouragement should be the government’s focus, rather than punishment.

19. These proposed sanctions are, to a large extent, at the discretion of personal advisers. The government should outline how it plans to ensure that the rights of claimants within the system are upheld – for example through a contract of welfare rights for individuals – especially in the context of the greater responsibilities they are to be asked to fulfil. At present, many people are not aware of their rights or on how to complain. This needs to be flagged up to ensure there is equal responsibility on both sides of the relationship between society and benefit claimants if conditionality is to be expanded.

20. The government must provide an explanation of the logic behind proposed earnings disregards. Proposals (in Annex 3) are to remove earnings disregards entirely from single, childless adults, while childless couples are to have theirs increased substantially. Yet no rationale is given for this step, which will have an enormous financial impact upon millions of people.

21. Under the proposals for Universal Credit, the state undertakes to subsidise low-paid work in order to make such work a viable financial option for more people. In addition, the government proposes, through the Work Programme, to pay the costs of getting people on benefits ‘work ready’. This amounts to a substantial increase in corporate welfare. The government should explain how it intends to ensure that employers – especially large, profitable employers – are to fulfil their side of this new social contract.

22. For further information, please contact Moussa Haddad, Policy Officer for sustainable livelihoods, on mhaddad@oxfam.org.uk or 01865 472446, or Helen Longworth, Policy and Communications Manager for the UK Poverty Programme, on hlongworth@oxfam.org.uk or 01865 472378.

December 2010