1.Universal Credit (UC) merges six separate benefits into one single payment, paid monthly in arrears. For people who do not have income from work, this means that their UC can be their entire income for the month: covering rent, bills and childcare, as well as basic living costs. UC works well for many claimants, but not for everyone. Our previous reports have highlighted several reasons why some claimants may struggle to manage on UC:
a)There is a minimum five week wait for payment at the start of every UC claim. This is a consequence of the Department for Work and Pensions’ (DWP/the Department) decisions to pay UC monthly, and to pay it in arrears. The Department offers claimants a repayable Advance payment (a loan) to tide them over during the wait, equivalent to four weeks’ worth of UC. An Advance must be repaid over the following 12 months (rising to 16 months from October 2021). The Department also has plans to extend “run ons” of some of the benefits UC replaces. For some claimants the wait for all, or some, of their payment will be longer than five weeks. The Department’s latest figures show that in March 2019, just 84% of new claims were paid in full and on time.
b)Most of the benefits that UC replaces have been frozen in cash terms at 2015/16 rates. In the three years before 2015/16, they were uprated by only 1% each year. Our report on the Welfare safety net, published in August 2019, concluded that these reforms are “pushing some people not only into poverty, but into hunger and destitution”.
c)Claimants may find that their payment is substantially lower under UC than it was under the system that UC replaces (the “legacy system”). This is because claimants who move to Universal Credit via the “natural” migration process will not receive transitional protection that would ensure they do not lose out in cash terms from the introduction of UC. “Natural” migration is when a legacy benefit claimant moves to UC because they have had a change in circumstances. They might, for example, have separated from their partner or formed a new couple, or have had a child. We have concerns about some of the circumstances in which “natural” migration is triggered: for example, if a claimant’s partner dies, or if someone is fleeing domestic abuse.
d)Claimants need to communicate with their Work Coach—Jobcentre Plus frontline staff—via their UC online journal. Claimants who have poor digital skills, have difficulty accessing computers or smartphones, or other problems using the journal independently may struggle to use it for this purpose. Even those who can access and use a smartphone may not be able to afford the cost of data needed to update their journal regularly. This can mean they miss important messages from their Work Coach, or fail to fulfil parts of their UC Claimant commitment (for example, entering details of their work search activities or telling their Work Coach that they cannot attend an appointment). This can lead to claimants receiving a sanction, which means their benefit payments are reduced or stopped for a period of time.
e)Sanctions can be applied at a higher rate, and for longer, under UC than under the legacy system. In the most severe cases, claimants can lose 100% of their Universal Credit personal allowance for up to three years.
f)The amount that the Department is allowed to deduct from claimants’ awards to repay debts is higher under UC than under the system it replaces. Debts can be to repay Advance payments, or to third parties such as landlords or utility companies. Tax credit claimants who transfer to UC carry any pre-existing debts with them.
g)Under the legacy system, some of the benefits that UC replaces would not have been paid to the claimant. Housing benefit, for example, is often paid direct to landlords. UC claimants are expected to manage their entire budget themselves, paying for rent, food, bills and other living expenses (including expenses for children) from their monthly payment. Some claimants find it difficult to cover all costs. This can be because they have difficulty budgeting effectively, or because—given the freezes and UC policy decisions, such as changes to deductions policy and the two-child limit—their UC payment is not enough to cover all of their and their household’s basic living costs.
2.The Department’s own data show that financial difficulties are not uncommon amongst UC claimants. For example, in its Full service claimant survey (“the survey”) the Department found that 44% of claimants were experiencing financial difficulties at the outset of their claim. These ranged from “keeping up [with bills and commitments] but it is a constant struggle” (14%), to experiencing “real financial problems” (18%). Older claimants and those reporting a long-term health condition were more likely to report that they were in financial difficulty at the start of a claim. By five months into their claim (Wave 2 of the survey), half of claimants who were still on UC had taken on debts in addition to their UC payments. This was more common among those who had fallen behind with bills and credit commitments (63% of whom said they had borrowed money), but 41% of those keeping up had taken on debts in order to do so. Friends and family were, at the point the survey was carried out, the most common source of additional funds: one in three claimants (33%) said they had borrowed from friends or family. Around 7% had obtained extra money from high risk sources, such as payday or doorstep lenders—in spite of the Government’s own efforts to reduce reliance on high-cost credit.
3.The survey was carried out before the Department introduced new rules on Advance Payments of Universal Credit. The latest data suggest that take up of these payments, which can be up to 100% of a claimant’s monthly UC entitlement, stands at around 60% of claimants (compared to just over one in ten of those who took on debts in the survey above). The Department has not published further data on the proportion of claimants who now take on additional funds from other sources.
4.Our inquiry arose from the experience of one of our members, who had visited a project in his constituency called Tomorrow’s Women Wirral. Staff at the project explained that some women had turned to survival sex because of the way Universal Credit worked and because of threats over debt collection. In the light of these alarming findings, the same Member asked the then Secretary of State on 15 October 2018, on the floor of the House of Commons, about the possibility of a link between the roll-out of Universal Credit and women being driven to survival sex in his constituency. The former Secretary of State for Work and Pensions, Rt Hon Esther McVey MP, responded that the Department needs to:
Work with those ladies and see what help we can give them—from Work Coaches right through to various charities and organisations. In the meantime, perhaps […] the Work Coaches could tell these ladies that there are currently a record 830,000 job vacancies, and that perhaps there are other jobs on offer.
The inadequacy of the then Secretary of State’s response led us to launch this inquiry.
5.We were also concerned by the Department’s response to media reports that charities and support organisations across the UK were seeing increasing numbers of people—overwhelmingly women—getting involved in “survival sex” as a direct result of welfare policy changes. The media reports tended to refer to “survival sex”, although we heard some criticism of this term from witnesses (see Box 1: What is “survival sex”?). The policy changes identified in the reports included the roll-out of UC. The five week wait for a first payment was causing particular difficulties. For example, on 19 November 2018, the BBC reported that it had spoken to five charities in England who said they had seen an increase in women on UC turning to “survival sex” to meet immediate survival needs, such as paying for shelter or food. One of the charities—Tomorrow’s Women, based on the Wirral in North West England—told the BBC that women taking on sex work, especially while waiting for their first UC payment, was:
A very familiar story […] The delay [in payments] is massive, how are you supposed to cope? So people think it’s a quick fix: “I’ll go out, do a bit of sex work, it’s a quick fix”. But then they get trapped.
6.The Department responded to the initial news reports about UC and survival sex by saying that “no one has to face hardship” on UC. It stressed that “100% Advances are available from day one of a claim”. These responses suggested to us that the Department had not yet grasped either the scale or complexity of the problem, or the role its own policies could play in exacerbating or alleviating it.
Box 1: What is “survival sex”?
The call for evidence for our inquiry referred to “survival sex”. We drew on a definition from research carried out in 2015 by Changing Lives, a charity that supports women who are, have been, or are at risk of engaging in sex work. The research was peer-led, meaning that current sex workers were trained to interview and gather data from their peers. It sought to understand the experiences and motivations of sex workers in cities that do not have traditional “red light districts”.
Changing Lives’ research found several broad categories of sex work, although it emphasised that these are fluid: “categorisations which were given for the purpose of this study are likely to change with the circumstances of individuals”. For example:
Some witnesses had concerns about these definitions. The English Collective of Prostitutes, a grassroots organisation, told us that many of their members objected to a distinction between “survival sex” and sex work more widely. They “considered that what they were doing was sex work to ensure their survival and the survival of their families and other loved ones”, irrespective of whether there was an immediate need for money or other resources.
Other witnesses sought to place “survival sex” in the wider context in which it takes place—particularly as it relates to poverty and a lack of resources to meet immediate survival needs. Dr Raven Bowen, Chief Executive of National Ugly Mugs, a support organisation, told us that “survival sex” is linked to “desperation [and] deprivation”. Dr Bowen said that these factors can compel people “to take the next date because of chemical dependency, poverty, rent issues, school fees, whatever that is”. We also heard that deprivation can also push people to engage in more risky forms of sex work (such as working alone), or to feel that they have little control over their work. This can mean that “survival sex” workers are particularly vulnerable to exploitation or violence from customers.
7.In the light of the Department’s inadequate response to the experiences of our constituents—many of whom face destitution when they move onto Universal Credit—and to the reports from charities working directly with people engaged in survival sex, we called for evidence to help us to understand better what was happening across the country. We received nineteen pieces of written evidence, largely from specialist, frontline organisations. We also heard directly from women involved in sex work: both via written evidence submissions, and during a private evidence session held in Parliament in May 2019. We are extremely grateful to the women who took part in that session, to the others who took time to give evidence to our inquiry, and to the support organisations that facilitated their involvement. We recognise that for several of the women we heard from, giving evidence involved sharing extremely difficult and distressing experiences. We are grateful for their courage and openness in coming forward and helping us, Parliament, and the Department, to better understand this issue.
2 “Run-ons” are non-repayable payments of some of the benefits that UC replaces. They are automatically paid to people who were in receipt of those benefits who move to UC. They are intended to help ease the transition to UC. Former Housing benefit recipients have been able to receive a two-week run-on of that benefit since April 2018. Run-ons of Employment and Support Allowance, Jobseeker’s Allowance and Income Support will be paid to claimants moving to UC from 2020.
3 DWP, , updated October 2019
4 Work and Pensions Committee, , Twenty Eighth Report of Session 2017–19, HC 1593, July 2019, p.3.
5 Work and Pensions Committee, , Twenty Seventh Report of Session 2017–19, HC 1884, July 2019, p.4.
6 See, for example, Beyond the Streets (), Changing Lives (), National Ugly Mugs ()
7 The “Claimant commitment” sets out what individual claimants are expected to do to in order to receive benefits.
8 Work and Pensions Committee, , Nineteenth Report of Session 2017–19, HC 955, November 2018, p. 9
9 Work and Pensions Committee, , Eighteenth Report of Session 2017–19, HC 1667, October 2018
10 Work and Pensions Committee, , Twenty Eighth Report of Session 2017–19, HC 1539, July 2019, pp.26–43
11 DWP, , Research Report 958, June 2018, pp.67–68
12 DWP, , p. 69.
13 DWP, , p.69
14 National Audit Office, , HC 1123, Session 2017–2019, June 2018, p.32
16 HC Deb, vol. 647, col. 398, 15th October 2018
17 BBC News, , 19 November 2018
18 BBC News, , 19 November 2018
Published: 25 October 2019