Professor Jane Millar:

I thank the Chair and members for this opportunity to talk to the committee. I thought I would start with a little bit of a timeline. A version of universal credit was first proposed in 2009. The UK Green and White Papers were published in 2010, immediately following the election of that year. The legislation was passed in 2012 and implementation started in 2013. The plan was to fully implement the scheme by 2017 but that was hugely overoptimistic. It took until 2018 to end new claims to the legacy benefits and there are still around 1.5 million households to be moved over to universal credit. The timetable for completion is now the end of 2025. The first lesson is clear - such a major reform needed longer and more careful planning and more realistic timescales.

There is a lot that could be said about universal credit but I am going to focus specifically on the committee's interest in consolidating the different means tests. As the Chair just mentioned, universal credit brings together four benefits and two tax credits into one system. It also includes the means-tested contribution towards childcare. Much is being made of the simplicity of replacing six schemes with one scheme but actually few, if any, households would ever have been eligible for all six at the same time. It is not necessarily simpler from that point of view. It is very important to remember that these benefits and tax credits had different purposes. Some were the main or sole source of income, others were intended to meet specific costs and others were intended to top up low earnings. Designing one system that can meet all these aims accurately and in a timely way has proved to be very challenging in the universal credit system.

First, the aim of means testing is to identify people in need and with limited resources and to make a payment to meet that need. This requires decisions about how to measure income and resources, over what time period to make that measurement and over what time period to make payments. Universal credit is based on a monthly assessment period and paid monthly in arrears. This means that the first payment is not made until after the first monthly assessment period. This is a very long wait for people with no other income who would, in the past, have received income support or social assistance after about two weeks. Not surprisingly, this waiting period has proved particularly tough for many people, creating a lot of hardship and debt.

Second, universal credit is reassessed every month. The aim of this is to make the system responsive to changes in income and circumstances so that people can easily move into work or increase their earnings. This, in theory, creates a financial incentive to work or to work more. However, what it means in practice is that payments can fluctuate, sometimes by very large amounts from month to month, making it very hard for people to know what their income is going to be and to plan accordingly. It also means that people are subject to an ongoing means test and, therefore, to regular scrutiny and reporting. This can be experienced as very intrusive and undermine rather than promote independence. Security of income, as well as adequacy, is an important principle to inform benefit design. The balance between security and responsiveness seems to tilt too far to the latter in universal credit.

Third, any means-tested system runs into the problem of how to deal with overpayments and underpayments and how and when to adjust so that people pay back money if they have received too much according to their circumstances or have paid extra and have not received enough. The super-responsive means test in universal credit was intended to eliminate this problem, as universal credit would always track income and circumstances. However, this is almost impossible to achieve in a means-tested system. It relies on no errors in assessment, on accurate information and on timely reporting, which are very difficult to achieve in practice. Overpayments are running at about 12.5% in universal credit. Universal credit is very unforgiving when overpayments happen, including those due to official error, with the usual rule being full repayment and with no disregards to provide a cushion for claimants as there were in the tax credit system.

Fourth, one benefit means just one payment. This may not be helpful to those in receipt. One payment makes life more difficult if anything goes wrong. All eggs are in one basket, as it has sometimes been described. One payment can be more difficult to budget and stretch than several payments received at different intervals. One payment goes to one bank account and so may raise issues of equity between women and men within families. Universal credit can be split between partners if requested but not everyone has been able or willing to make such a request.

Finally, take-up is a long-established measure of the success of a means-tested benefit. Is the benefit reaching the eligible population and are they receiving the correct amount? One of the aims of universal credit was to increase take-up, the argument being that take-up would be higher with just one benefit to claim. There are, however, no published measures of take-up for universal credit and the complexity of the design makes it very difficult to identify the eligible population. Independent estimates suggest that about £7.5 billion to £8 billion of universal credit is unclaimed. Having no data on take-up is a serious weakness for the evaluation of how universal credit is working.

To sum up, means testing is a complex way to determine benefit eligibility compared with universal or insurance benefits. The fact that universal credit consolidates so much of the existing means-tested system, includes people in and out of work and seeks to fine-tune the amount they receive to their circumstances over very tight time periods is, arguably, the source of many of the problems. It has all meant a very lengthy implementation period and the complexity of the system has increased over time. In my view, any consolidation of means testing would be wise to be much less ambitious about what to include. A review of means testing that focuses on specific social assistance benefits, with careful design and testing, could perhaps avoid many of these problems. I thank the committee.

Ms Fran Bennett:

I thank the committee for the invitation to give evidence. I have been involved, often with Jane Millar and-or other colleagues, in analysis of universal credit since 2010. Based on that, I think it is crucial to consider not only implementation and administration issues but also structural and policy concerns. That is what I will focus on but first, I wanted to raise several more general issues.

First, social security systems should, and usually do, involve a mix of universal, insurance and means-tested benefits. The policy attention paid to universal credit over recent years, which takes the UK firmly down the means-testing route, has resulted in the neglect of non-means-tested benefits. It would be better, in my view, to retain a balance between these different kinds of benefits and be more aware of how they interact or not. In my view, universal and insurance benefits should be retained and as far as possible improved.

Second, universal credit integrates means-tested benefits, providing an income for individuals or households both in and out of employment, as well as those helping with costs, for example, for housing and childcare. This also involves integrating different benefits paid by different administrative bodies. Both the multipurpose nature of universal credit and, conversely, the concentration of power over benefit awards in one official body create significant structural and policy problems. A more limited or focused approach would help avoid many such problems. Third, discussions of amalgamating means-tested benefits should, but sometimes do not, include the fact that needs, as well as income and capital, must be assessed.

I will talk a bit about simplification and the fact that the simplification resulting from integration can cause problems for claimants. Universal credit is, of course, a misnomer. This is not a universal benefit but a means-tested benefit and the word "universal" here means comprehensive.

It is not a credit; rather, as Professor Millar said, it is paid in arrears.

Simplification for claimants and administrators is a key advantage claimed for integrating means-tested benefits and is also meant to save on administration. However, in that amalgamation, and especially in automating the calculation of the integrated benefit, the algorithmic formula employed has a rigidity that limits policy flexibility. Professor Millar and I have written about this.

Universal credit is assessed on a monthly basis, using a cash flow-based accounting approach to income and a whole-month approach to changes of circumstances. These cause numerous problems for claimants, but it appears that cannot be altered, that is, without driving a coach and horses through the core features of universal cried. Thus, all income received in the month before an assessment day, no matter which period it relates to, counts when calculating that month’s universal credit. For employees, this is done via real time information, RTI, which is an automated system employers use to report earnings. RTI was apparently the clinching argument for the treasury to support universal credit because it meant significant administrative savings.

However, weekly- or fortnightly-paid workers may have differing numbers of paydays in any month’s universal credit's assessment, or an employee may get a bonus for several months’ work in one go. Outside the RTI system, someone getting a contributory benefit may be paid fortnightly, not monthly, for example. All this income, with any work allowance and withdrawal rate through a taper, reduces that month’s universal credit, causing income volatility and financial insecurity, making budgeting trickier. Only about a week’s notice is given of that month’s universal credit payment.

The Government has recognised that monthly-paid employees may sometimes be paid twice in one month, for example, due to a bank holiday coming up, and these people can ask for their universal credit not to be affected like that. However, otherwise, the Government has refused any change, arguing that the formula must have clear, bright lines for automation to be able to work. Self-employed people, which we may say a bit more about later, must report their relevant income for universal credit monthly, which may be challenging for them.

The whole-month approach to changes of circumstances, about which there is little or less debate, means that regardless of when a change happens, it is assumed to apply for the whole month. This can be advantageous, for example, if a baby is born later in the month but before the assessment day, you get more money than you would if it was pro rata. However, if a young adult moves out of your household just before the assessment day, no money will be allowed for them that month. This formula rigidity can undermine financial security, and it must feel very arbitrary to people.However, the Government says it is impossible to change the universal credit calculation to apply such changes pro rata instead.

Therefore, the simplification necessary to integrate different kinds of benefits and make administrative savings results in rough justice and precarity of income for claimants.

I wish to say a bit about gender issues. Means-tested benefits in the UK used to be claimed by one partner in a couple, including additions for dependants. I believe that is what happens in Ireland as well. Joint claims were introduced into means-tested benefits and tax credits over time for couples, and they now apply to universal credits as well. The policy goal was activation, in other words, to be able to apply conditionality to the other partner involved. However, with joint claims, payment for couples used to vary. Working tax credit, for example, was paid to the main earner and child tax credit was paid to the main carer, as identified by the couple. This could mean that each partner got some means-tested benefit themselves, or, more accurately, they could nominate the bank account for payment for that benefit. That could be crucial in cases of financial coercion and in general could help make relationships more equal.

However, these different means-tested benefits have now been amalgamated in universal credit, which is due monthly in one lump sum. The couple is given the choice of bank account, though couples with children are now nudged to nominate the main carer for payment. However, other than by discretion, in cases of financial coercion or money mismanagement, for example, the payment cannot be split between partners.

Child benefit has remained separate and is usually paid to mothers. Means-tested council tax support, if any, is also calculated and paid separately. If either partner has an individual non-means-tested benefit, that is paid to them too - one reason why we should retain these and not merge them with means-tested benefits. A couple’s universal credit may go into one partner’s individual account or it may instead be paid into a joint account, but research shows that both partners do not necessarily have equal access to joint accounts.

Scotland is committed to exploring ways to make separate universal credit payments to each partner, ideally by default. The Government, however, argues that universal credit is an all-in-one benefit and is adjusted for other income and so on as a whole; therefore, universal credit cannot be broken down into its component parts, meaning it is impossible to, for example, pay the child element of universal credit to the main carer. It is hard to see how to decide who should get what in a couple, particularly if one partner has some other income already, such as earnings. To date, Scotland has been unable to implement its plan.

In addition, universal credit's structure gives priority to having one earner in a couple deliberately, meaning insufficient incentives to have a so-called second earner. Arrangements for recouping childcare costs can also have disincentive effects. Although costs can now be paid upfront in limited circumstances, they are usually paid in arrears. Those problems are likely to mean fewer women in particular having an independent income through their own earnings.

Professor Millar also mentioned that measuring success is difficult with universal credit. The National Audit Office suggested it would be challenging to measure universal credit's success in increasing numbers in employment. In addition, while improving take-up and thereby reducing poverty was one justification for universal credit, a method for estimating take-up universal credit has not been developed yet. In fact, annual estimates of take-up of legacy benefits for working-age means-tested benefits are also now not published - only for pensioners. Therefore, it appears that several rationales for introducing universal credit cannot be tested either.

Professor Ruth Patrick:

I thank the committee for the invitation to attend this hearing. In my opening statement, I wish to share some key reflections about the roll-out of universal credit, looking particularly at research evidence, which includes a participatory research project funded by Joseph Rowntree Foundation that explored experiences of the roll-out of universal credit within Northern Ireland, and, second, an ongoing major programme called Changing Realities, which is a UK-wide project documenting life on a low-income and co-producing recommendations for change.

The first theme I will pick up is how we approach major reform such as benefit simplification. As we heard, universal credit represented a major reform of the UK’s social security system. From the beginning, ministers and Department for Work and Pensions officials proclaimed what they described as a test-and-learn approach to the benefit’s implementation. This included its initial roll-out into four pathfinder areas from April 2013 before wider implementation. A test-and-learn approach was a high-risk one, and one which I have argued elsewhere very much neglected the opportunities to instead listen, learn and draw directly, for example, on the expertise that comes with experience of social security regimes. This was a mistake by the UK Government, which could have been avoided were it instead to recognise and act on the fact that those with experiences of claiming social security and navigating life on a low income have a specific and specialist form of expertise. Many of the problems that have emerged with universal credit, which the previous witnesses have commented on, such as the default to monthly payment and the five-week wait, could have been avoided had policymakers involved claimants themselves in the development of the benefit.

Beyond this, there are very big and important opportunities in drawing on this expertise in the roll-out of new policies and in raising awareness about them. For example, a group in Northern Ireland called UC:Us has created the first claimant-led guide to universal credit, which provides key information to claimants in an engaging, user-friendly and accessible format.

This second theme I wish to pick up is the importance of adequacy. To emphasise, it is not possible to divorce questions of benefit adequacy from wider questions about the design and delivery of social security benefits. With universal credit, the payment levels are simply too low to enable households to meet essential living costs, as has been effectively demonstrated by campaigning activities by organisations such as Joseph Rowntree Foundation and the Trussell Trust. The inadequacy of social security delivered through universal credit inevitably and significantly negatively impacts on claimants’ experiences of it and its scope to meet underpinning objectives.

Third - this again follows what we have heard - is the theme of working with, rather than against, the grain of individual lives. A key ambition of universal credit was for it to promote working behaviours among claimants, and aspects of its design were supposed to reflect this.

This included a default monthly payment, and the payment of housing element directly to tenants rather than to their landlords. The idea of that was it mimicked working behaviours but these payment features went against the grain of people’s individual lives and undermined established budgetary practices. Notably, many on a low income are in fact paid weekly or fortnightly by their employment and the monthly payment period meant people had to stretch their budgeting over a much longer period, which was often incredibly challenging. Another example, which we might discuss further in this session, was the decision to offer payment to one person in the household, with important gendered implications and risks for those facing domestic violence. This is another place where a listen-and-learn approach could have prevented these implementation policies.

Fourth, with regard to risks and benefits implications, universal credit was motivated by a drive to simplify benefits, rolling up housing costs and means-tested support for children and adults into one payment, while a separate system of disability support remained. While simplification is a laudable objective - perhaps - for many people, receiving different payments at different time points such as, for example, income support, child benefit, housing benefit or child tax credits, helped with their budgeting work and ensured that they had small cash injections at different points across the month. There is also a potential tension between seeking benefit simplification and making sure that a social security system responds to and meets diverse needs. Doing the latter, arguably, demands an element of complexity to assess and properly meet diverse needs and household circumstances.

Fifth, universal credit was proudly digital by default, with the application process all completed online. This has created and continues to create problems for those without digital literacy. It also creates barriers to entitlement, which may reduce take up. I will share a direct experience from Roxy, who is part of Changing Realities, who highlights some of the problems in a diary entry from 9 May this year. She states:

For the last 6 days I have been unable to log into my Universal Credit account as they aren't sending me the text with the security code, I've phoned Universal Credit, their answer to this is for me to attend the job centre, I work full time I said I can’t, so they’ve said well if you refuse a appointment we don’t have to pay you.... so I can’t log in for their fault, there answer to them not sending the texts is to make me miss work not get paid to do what?

Members can see how she is in a cycle that is partly created by the digital system.

Sixth, and some others have mentioned this as well, there have been real problems around the assessment periods, with a claimant’s income in the previous month determining his or her pay in the following month. Edison, in her diary entry from 3 May, articulates the problem well, by stating “I had a two wage month in an assessment period this month making my universal credit practically nothing - I wish more than anything they would sort this assessment fiasco out.”

Regarding conditionality, we do not have the time to discuss this at length but it is important to flag that universal credit brought with it additional conditionality, for example, rolling out in-work conditionality for the first time. Conditionality governs encounters between Jobcentre Plus DWP staff and claimants, and the UK has created and sustained a culture of distrust. It has also been one-sided, for example, through universal credit claimants being required to sign a "claimant commitment" where they can pledge to do certain things in return for that benefit. They do not, however, receive a reciprocal offer from the state about what they are entitled to expect from the DWP. Aurora, part of Changing Realities, set out her experience in a diary entry in March 2024:

I am a lone parent who relies on Universal Credit. My mental health has been greatly impacted by conditionality. I live in fear of sanctions and my anxiety is triggered. When I was unemployed I was prescribed antidepressants. I have now been employed for almost 2 years and yet conditionality still has an influence because of the type of work I was able to find. (Enabling me flexibility due to childcare constraints) I work a zero hours contract. There have been some issues with this due to how UC works for people in my situation. When I have found myself at an appointment the work coach tells me I must find another job or more hours. The coaches are so unhelpful and this pressure perpetuates mental health issues.

Members will be pleased to know I only have two more but in respect of learning from difference, it is still not widely known that universal credit has been rolled out differently within the UK, with the most notable differences being observed in Scotland and Northern Ireland. Northern Ireland’s roll-out did not begin until 2017, that is, it began later, and it included key differences, such as a default to fortnightly payments, the option to pay rent directly to landlords available to all and scope for split payments, although the numbers of those taking up this option are still very low. Discretionary payments were also available to offset the five-week wait in Northern Ireland and conditionality applies slightly differently within Northern Ireland. More needs to be done to learn from these differences, and how far or whether they have improved experiences of the benefit. I am pleased this is part of a major research programme I lead that has just begun, which is called Social Security in a Devolved UK and is funded by the Nuffield Foundation.

Finally, reflecting on some lessons from the pandemic and ending on a positive note, during the pandemic the UK government moved quickly to allocate additional support to households at particular risk of increased poverty and this included a temporary uplift to universal credit of £20 per week. It seemed as though, and I am not an expert in this, that the computer systems and online infrastructure enabled this to be actioned rapidly. The system also withstood the large increase in claims over this same period. I will end on that note.

Marc Ó Cathasaigh (Waterford, Green Party)
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I thank Professor Patrick. Finally, I invite Dr. Brewer to make his opening statement.

Dr. Mike Brewer:

I am the interim chief executive of the Resolution Foundation, a think-tank devoted to securing improvements in living standards for low-to-middle income households. Before working here, I had roles as an academic and at a research institute. In all of these roles, I studied the impact and operation of the tax and benefits system.

I will say three quick things. First, I confess that in the 2000s, I was a supporter of the idea of combining the UK’s different benefit programmes into one. This was because we could see the downside that having so many programmes was having on claimants, in terms of the complexity, compliance costs and poor take-up rates. That does not mean I am a devoted cheerleader of universal credit now. Second, I will outline two things that might come up in our discussion. The first is that universal credit is, of course, not the only way in which one could design a single integrated system that combines in-work benefits and out-of-work benefits. The design of universal credit has changed a lot since it was first proposed by the UK Government in 2010. Also, the world has changed since universal credit was introduced. Indeed, UC was designed in the 2000s when the context in the UK was that the key labour market issues were unemployment and workless households but unemployment is now very low and more people are in insecure or volatile work. The reason that people are not working is not unemployment any more, but ill-health and caring responsibilities. The UK has changed in the past 15 years. The nature of work and the nature of not being in work has changed. What might be found from some of the evidences, is that perhaps universal credit has not quite adapted to that. I will leave it there so we can have time for members' questions.

Marc Ó Cathasaigh (Waterford, Green Party)
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I now invite members to discuss. I remind members participating remotely to use the raised hand feature and to cancel it when they have spoken. I advise the same to the witnesses. It is unusual for the committee to have so many people participating remotely, so if there is a question put and the witnesses feel that it is a question they wish to weigh in on, they might indicate using the raised hand function to make it a little easier on the Chair. First, I will go to Deputy Ó Cuív.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I listened with great interest to what the witnesses have had to say. We must start making choices. Regarding what Dr. Brewer has said, a theoretical simple system might look very attractive but my first question is, if it was decided to go to universal credit or some system of universal payment, how long would it take to get there? Second, when the system was introduced, from what I understand there was still a means-testing element. Did the anomalies and unfairness of the existing means-tested payment carry forward? I do not know how means testing worked in the UK, I will come to that in a minute taking where we are, but did it just transfer it into a more complex system? For my third question, it appears there is a constant means test going on and that is very stressful for people who lack certainty. As for many people I deal with, I have constituents who are not into bureaucracy. They can read and write and all the rest but they are not into reading all the technicalities of a very complex system.

Is digital terrorism, as I call it, involved in this? By "digital terrorism", I mean that a person must do it digitally or forget about it. Many people can get into Facebook and such forums but they do not want to do business digitally. There is a difference. The simplest digital thing that most people can do is tap a payment on their phones, or get money out of an ATM. However, that does not mean they are going to go on a computer and do much more complex operations such as making tax returns, integrating with the social welfare system, or inputting and uploading stuff. This to me this is a form of digital terrorism against the most vulnerable people, whom we should be going out of our way to help. My next question is this: did it try to take humans out of the system? Did it remove human interaction and the ability to interact personally with the system?

At the moment the situation on disregards is that with some payments, the first €60 or whatever is disregarded. Most of those disregards have not been changed for ten to 14 years, or in some cases even longer. Traditionally there was a very high penalty on any income. Take for example a couple where one party has a small income and the other one is on jobseeker's allowance, which is means tested, as opposed to jobseeker's benefit which is not means tested and is available for up to nine months when a person has social contributions. After that the person is on jobseeker's allowance. Many people live with a partner and are means tested on that. The first €60 of the partner's income is disregarded if he or she works three days a week, after which 60% of the balance is taken. That is quite a stiff cliff. It is not quite a sheer cliff but it is stiff. That has been the case for a long time. We could do the simple thing, which is calculable and the effect is known, for example by raising that €60 disregard to €100 and reducing the 60% to 50% or maybe 40%. I am just giving figures as an example. This would improve what is there because there would be no unintended consequences. We have a lot of anomalies between self-employed income here. For farmers it is 70% of the income and for other self-employed income it is 100% of the income and so on, whereas if it is income from employment there are disregards. That is why I asked the first question about whether all the crinkles of the old means testing were carried into the new system or the means testing was reformed. It seems that one way or the other, the means test is going to be part of this. Would we be better focusing our attention on reforming our system with an eye to creating something nearer to a universal income approach, before taking a big jump and spending five or six years devising a new system that in my view would probably come with a lot of crinkles? I would be interested in the witnesses' views, if anyone wants to be brave enough to give an opinion on that.

Marc Ó Cathasaigh (Waterford, Green Party)
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There are a good number of questions there for the witnesses. I see Professor Millar has indicated first.

Professor Jane Millar:

I am happy to start. The Deputy has asked a great set of questions that really highlight the difficulties and issues. I will pick up the first few questions and leave my colleagues with the others. For me, universal credit was never a good idea. I was never convinced by the principle of simplification because different benefits, as I said, have different purposes and are there for different people at different times. I always thought there would be challenges, particularly in trying to integrate people in and out of work. I always thought that was likely to cause problems.

I outlined at the beginning how long it took. In regard to the balance of time, not enough time was spent at the beginning on design and thinking about it. Professor Patrick made some points about test and learn that are important. Not enough time was spent designing the system and that affected the implementation. Many of the delays were around IT and also capacity within the Department to be able to deliver such a major change. That is a problem and it would take a long time.

In regard to whether the existing problems carried forward, they largely did. Universal credit jammed together the existing system. Rather than saying we should take a clean piece of paper and think about what a means test would look like and the sorts of things that need to be considered, such as the time periods, the disregards, the takers and so on, largely what happened was the existing system was jammed together to make universal credit. More time on that is important. It means a constant means test. There is a lot of evidence that people find that stressful, intrusive and difficult and do not necessarily want to engage with it. I will leave my colleagues to come in on the other points.

Ms Fran Bennett:

It is really important for us to emphasise that for those people doing a certain number of minimum hours of work, the means test used to be very different from the means test for those people out of work. This was because, although tax credits were a means-tested benefit paid by Revenue and customs, they were actually a means-tested benefit. They worked as though they were like the tax system. Therefore, they were based on an annual income test, in theory. That caused some problems because it meant that people could get overpaid quite easily and therefore had to pay that back, in theory. However, in practice, claimants could actually tell the Government that their circumstances were changing during the year. What that did, crucially, was give some stability for people with income from earnings, because they were basically getting a predictable amount of income. Also, it had quite a large disregard, which was subsequently reduced but it was still quite a large disregard, for the additional income that could be earned during the year before that counted for the means test, as has just been described so well by the committee member. That was there for a very different way of treating those people who either were working 16 hours or more, depending on circumstances, but there was quite a divide between those people and the people out of work who had a much more frequent means test and were paid fortnightly. That is one thing. Disregards worked differently for people who were in work on tax credits.

Another issue is that it sounds to me as though the disregard in the way it works in Ireland is a partial individualisation of the means test. In fact, Professor Millar has written about the Australian system which has a similar partial individualisation. That would mean that incentives for second earners were also improved, although as our colleague said, at the moment only €60 a week is allowed. However, in the universal credit system there is one work allowance per couple because the Government's priority was to have one earner in a couple in work. This is because, as Dr. Brewer said, the problem was worklessness, which was seen as the major issue. Therefore, at the moment the work allowance is one per couple, which means that for second earners the incentives are not so great as they are for first earners.

Briefly, on digitalisation, subsequent to what Professor Patrick was saying, the Government talked about digital by design rather than digital by default. Therefore it introduced, for example, funding for Citizens Advice to give some help with the first month of claim of universal credit.

That is probably online and possibly by phone, but it is not usually face to face. There is some help for face to face, though. In theory, someone can go into a job centre and get help if he or she cannot fill in an online claim form, so we must acknowledge that there is some help available, particularly for those who are being moved compulsorily from other benefits onto universal credit, but the primary point that people have been making, namely, that it is digital by design, is right.

Professor Ruth Patrick:

I will speak on a few of those points. One of the first questions was on how long it would take to get there and whether the crinkles remained. Professor Millar spoke about those. The other point to keep in mind is that the UK had the two systems operating alongside each other for quite some time, which created a great deal of additional complexity. We in the UK are ten or 11 years into some people having some universal credit in terms of pathfinder areas. People and policymakers have to navigate two systems. We saw that during the pandemic when changes were made to universal credit but not to what were described as legacy claimants. That is an important added complexity. Some good work that was done by a colleague of ours, Dr. David Young, made a contrast between simplicity for the claimant and administrative simplicity and pointed out that they were not necessarily the same thing. We have heard about real-time earnings assessments and monthly earnings assessments. While those may be simpler to administer, we have also heard about how they may be more complex for claimants and may be drivers of uncertainty.

The point about the constant means testing that people are subject to and whether it enhances insecurity is a critical one. Sometimes, it is obvious why people’s universal credit payments are going up or down. They may have had two payments in one month, for example. Sometimes, though, it is less obvious. There are also matters that we have not touched on in this session yet; for example, debt deductions and – I am sorry about adding to the complexity of this discussion – the recovery of overpayments, which Professor Millar mentioned. When people are moved onto universal credit, an historical tax credit overpayment is often discovered, leading to major debt deductions. This causes significant problems in the system. Feeling like a universal credit payment is a place of insecurity is a common finding in the research I do, with it causing additional stress and anxiety for claimants.

As to what “digital” means and how people experience it, Ms Bennett was right to add that there have been efforts to support people. That is where I am critical of the test and learn approach. Such help should have been in place from the beginning. We should have anticipated that people would struggle with a digital-by-design system. It is important to emphasise that it is not only the application that is digital, but also the management of the claim. How does someone find out what he or she is getting that month, what he or she is expected to do, when his or her appointments are and how to deal with conditionality? That is all happening online. Through the Changing Realities project, we often hear that people have lost their Internet connections, partly because of their poverty, and are consequently unable to access online systems and find out what is happening. This causes big problems.

The related question of whether it takes humans out of the system links to what Dr. Brewer said about benefits being rolled out and the world then changing. One of the changes has been cuts to job centre budgets. There have been closures of job centres. There are deserts where there are no job centres anymore. We spoke with colleagues the other day about how going into a job centre was a very different experience now. The environment has changed, but not just because of universal credit. It has happened because of parallel changes being made in our social security system.

Dr. Mike Brewer:

I will reflect on the problems we were trying to solve with the universal credit. Members can then decide how applicable those are to the situation in Ireland.

In terms of incentives, there were two issues we were trying to solve. The first was the fact that, when people moved from being out of work to being in work, they had to stop claiming under the out-of-work programmes, be those jobseeker’s allowance or social assistance, and start claiming under a different programme. Ireland’s nearest equivalent would be the working family payment programme. Governments were worried that this approach was imposing too much of a burden on claimants and made it difficult for them to see how much better off they would be in work. There was a gap between being out of work and in work.

The second issue we were trying to solve was that some people who were in work would be getting support from more than one programme at the same time and those programmes interacted with one another. Someone in work might receive a payment from the working tax credit programme and, if he or she was eligible for rent support, that rent support would depend on his or her earnings and how much he or she was getting from the working tax credit programme. If the person’s earnings changed, his or her working tax credit payment changed and both of those changes would then go into the formula for deciding his or her rent support, which would eventually change as well. This was a nightmare. It would take months to work through it all. These programmes were administered by different bits of government.

The second problem could only really be solved by ripping up the system and starting again. We had two programmes being run by different bits of government that interacted with each other. We could not solve that just by changing withdrawal rates or allowances. We had to start from scratch again.

It could well be that some of the problems that the member was talking about at the beginning could indeed be solved or tweaked. Some of the incentive problems can be solved just by tweaking the parameters in Ireland’s existing programmes. That was not really what we set out to do with universal credit. As Professor Millar said, universal credit is still highly means tested. People still face high deduction rates when they move into work and they are still subject to high marginal rates when they are in work, so we have not really solved the issue of people facing weak financial incentives. Instead, we have tried to solve the operational or logistical difficulties that arise when there are multiple programmes that interact with one another.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Something I notice about social welfare theory is that there seems to be paranoia about how, if there is not an instant change in the system, someone might get a payment despite an increase in income. The working family payment works on a different principle. It takes someone’s income from last year. He or she can go off to work, earn whatever he or she wants and still get the payment for the following year. If someone improves his or her situation, he or she gets a bonus. What is the harm in that? It does not cost the State a significant amount of the greater budget. That extra bit of generosity does not cost much. Is there paranoia in the system about someone possibly getting a few euro – pounds, in the witnesses’ case – more than his or her income warrants in that immediate instant? Do we just keep adding to the bureaucracy to check that does not happen? In our case, a self-employed person gets the payment for a year unless he or she gets a job. If the person is a self-employed farmer, he or she gets farm assist, which is jobseeker’s allowance for a farmer, for the year. No matter what he or she earns, it will be the following year before it is adjusted. That adjusted payment stays for a year and so on. If claimants earn more income, is the system being driven by its own desire to get its share right away rather than being slightly delayed?

Mention was made of how people who could not read or write or work digitally could go to the jobs office.

However, what happens if the nearest jobs office is 60 km or 70 km away? That presents distance discrimination. Has that been an issue for people trying to access this in person? It seems to be a glib answer to be told to go down to the local community welfare office but to find that it is a huge distance away. It seems it could be four, five, six or seven years before a system like that would be introduced. My instinct would be that we would be better employed in making the system we have a lot better in the meantime, maybe with a long-term view of changing the system radically. However, that would not in itself solve a great many problems, whereas improving day-to-day life for people now within our current framework would make it a lot fairer. That would be a better approach. That is the fundamental question we face when it comes to this big bang approach as opposed to incrementally changing what we have.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Apologies, I have one final question.

Éamon Ó Cuív (Galway West, Fianna Fail)
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In most social welfare systems, there seems to be a presumption that there are a great many lazy people out there who are perfectly capable of working but are shirking work, and they will give them a kick if they do not work and give them an incentive if they do. We effectively have full employment here. My experience from employing people in the past, before I became a politician, was that there were people who were suitable for commercial work. There were broad categories of people. Some could be put on an employment scheme and could make a contribution. That was good for their well-being. There were some, although very small number of people, who were effectively not ill, but unemployable. We just have to face up to that. This 4% or less; I reckon it is about 1% who fall into the unemployable category for one reason or other. This idea that we can drive them all into employment by activating them and training them is just not real life, as I know people on the ground.

Ms Fran Bennett:

I will come back on what Dr. Brewer said about the incentives issues. He was completely right about that. There were other objectives with the universal credit system. The minister in charge was on a mission to change people's lives for the better and to transform their lives. I am using his words, because he thought that welfare dependency was a huge problem and that people were not used to behaving in the ways they needed to behave in order to get into employment. Although some of the economic issues Dr. Brewer describes absolutely correctly were there, there were also motives about changing attitudes and behaviour which speak to the kind of thing that the committee member has just talked about. We cannot ignore those. The motivations with which a reform is undertaken are quite likely to shape the resulting outcome. There were also objectives about improving take up and therefore reducing poverty, about strengthening traditional families and so on. There were lots of other motives. An example is the issue of helping what were sometimes called chaotic families to budget monthly because that would help them to get into work. As Professor Patrick quite rightly said, the underlying approach to universal credit did not go with the grain of how people in poverty think and manage and organise their lives but actually wanted to change that. It had to do that through quite controlling mechanisms. That is how I see it.

I will say a little bit about the mostly rural distance problem the member talked about which is an absolutely real issue in the UK as well. When the UN special rapporteur for extreme poverty and human rights did a report on digitalisation, which was a global report, and might be useful to look at, he highlighted rural transport to offices as one of the key issues we should look at.

This is not what we are talking about at the moment, but France has for several years been considering some kind of amalgamation of means-tested benefits, originally called the revenu universel d'activité, RUA. It is now more likely to be called solidarité à la source. Spain is currently also looking at the possibility of amalgamating means-tested benefits. It may well be worthwhile for the committee to have a look at the ongoing debates within those two countries.

Professor Jane Millar:

I agree with the point Ms Bennett started with about the behaviour and cultural aims for universal credit. It is important to bear those in mind because they shape what universal credit looks like and the discourse around it on how it was responded to and received.

I will respond to the first point made by the committee member about means testing really. It is fundamentally about what you are trying to do with the means test. Are you really trying to respond to every little change that people have? One of the things we learned over the past few years is how much change there is in people's income circumstances. I do not think we were fully aware of that before. Over short time periods things can change quite rapidly. Do we really want a system that tries to respond to those all the time? Do we want to take account of short-term fluctuations and not really the longer-term underlying situation?

We talked about tax credits being an annual award period. It was an annual period but before that we had the family income supplement for people in work and family credit which was for six months. There can be different fixed periods. This would be a good reform for universal credit to be honest. I always argued that if it was awarded for a fixed period and if people's incomes went up during that period, then great. As the member said, that gives them an opportunity to have a bit more security, to settle down a little bit and to take advantage of that increase. If their income goes down, then you should top it up. If people are starting to fall into difficult circumstances, there should be a way to top up and not to try to respond constantly to what can often be not necessarily large fluctuations, although they are often large in terms of the amount of income people have, and not to try to respond all the time to every change that comes along.

Professor Ruth Patrick:

I am probably just reinforcing what has already been said. In regard to the first question, about the constant means testing, in its way that relates to the last point about the activation but also about the behavioural cultural discourse that was rolled out at the same time. When we look to recent history, and longer history in the UK, there is actually this kind of presentation of social security or welfare being described as part of the problem rather than part of the solution. Often there is this idea that we want to get away from welfare dependency, that we want to move people into paid work and the idea that these are different things entirely. We often have UK politicians talking about people in work and people on welfare as two distinct groups when, of course, and as with universal credit, they are very often one and the same thing. Those actually relate in terms of the design and implementation of universal credit and that constant means test. There was a kind of presentation of disaster, to use their language, trying to wean people off welfare to make sure they were not getting things they do not need or were not entitled to. To echo what Professor Millar and Ms Bennett said, this discourse reached its zenith at about the same time as universal credit was being rolled out.

One of the things we have not touched on, which perhaps is not directly relevant to what this committee is looking at, is related to the stigma of social security receipt and the extent to which, or whether, the stigma of social security receipt may impede take up and how it impacts on people's experiences of the benefit. I was too early in my academic career to be either strongly pro- or anti-universal credit when it was being rolled out but what was really interesting about it was the possibility that it might reduce the stigma of claiming social welfare receipt precisely because it was a benefit that people received both in and out of work. I was hopeful that would be something that would happen with universal credit but what has happened instead is that some of the stigma has been extended to people in low-paid work because it has been married with conditionality as well. It is right to pay attention to the surrounding discourses and the extent to which we increasingly see social security represented as a problem rather than part of a possible solution.

Marc Ó Cathasaigh (Waterford, Green Party)
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I thank our witnesses for being here. It is very thought provoking to see this experiment play out in our neighbouring jurisdiction because we have been looking at means testing here. I am not sure how well our witnesses know the Irish social protection system but it is very hybridised between universal payments, social assistance payments and social insurance payments. We have these small pots of means testing in different areas which are not all within the Department of Social Protection but are spread out across the governmental system. They are essentially bolt-ons to solve particular problems at particular times. A lot of them are historical, legacy bolt-ons. One of the infuriating things about it is that the Irish social protection system is actually quite good, despite the very hybrid and patch-and-mend approach over the years. Our market income inequality is quite high as measured on the GNI coefficient but when we apply social transfers, we actually do substantially better. We have a highly distributive model of social protection within the Irish context but of course, we are looking at this in terms of whether we can provide efficiencies in the context of bureaucracy and all of these different pots of means testing or whether we can just get better outcomes for people. One of the difficulties, as Dr. Brewer said, is that to try to stop an entire social protection system so that we can do a complete overhaul is not really practical. We cannot bring the car to the garage but have to try to fix it while driving on the motorway which is why we have this feature of bolt-ons across our system. It is also why we are examining this idea of means testing.

Professor Millar talked about the why. Why is that we would do means testing? We could proceed from the point of view that we do not want to inadvertently pay a poor person slightly more money and make them slightly less poor, which is certainly not the approach or philosophical underpinning that I would bring to the argument. What we are trying to do with means testing is to limit opportunity costs and to make sure that our spending as a State reaches those who need it most. Means testing is a way of targeting that spend.

My questions are general. It was interesting to hear the discussion about the philosophical underpinnings of universal credit in the UK context. To my ears, it sounds very conservative with both a big and a small C, in that there is a particular approach to or philosophy about people who are either in poverty or out of work. I might be applying a prejudice there and am very open to correction on that. Maybe that is not the case at all. Some of the things we would like to see resulting from changes to our social protection system are increased progressivity, a decrease in the number of people in consistent poverty, in particular, and labour force activation or at least that the social protection system and its construction is no impediment to people entering work and that there are no cliff edges whereby people are disincentivised from participating in work.

My questions relate to a very general analysis of how the universal credit system has worked out in the UK. Has it been progressive? Has it been effective in terms of tackling poverty? I refer here to consistent and persistent poverty. Has it been effective in terms of labour force activation in a positive way, such that it is enabling people to participate in work rather than precluding them because of the nature of the social protection system?

Ms Fran Bennett:

I was going to say that Dr. Brewer ought to answer but I will do so. On the question of whether universal credit has been progressive, I think I am right in saying - Dr. Brewer has written about this - that universal credit is actually more generous than the previous system but while there are many gainers, there are also many losers. The projected cost of universal credit was based on improved take-up but we do not know whether that increased take-up has actually occurred. Therefore, it is quite hard to determine whether that longer term aim of reducing poverty by increasing take-up is going to be borne out. The simplification via universal credit may be discounted for some people by the increase in conditionality and the extension of conditionality which happened at the same time. That deals with the issues of progressivity and poverty. However, we must say that transitional protection is available for those people who are moved by the Government to universal credit, if they would get a lower award under universal credit than they do on their existing legacy benefit or tax credit. We need to acknowledge that is the case but that is then eroded either by changes in the circumstances of the claimant or by inflation eroding the value of transitional protection. It does not last forever but is, as its name suggests, transitional at the point of change if people are moved compulsorily.

On labour force activation, others would know more than I do but as I said in my statement, the national audit office says that it is actually rather difficult to distinguish whether it is universal credit that has caused a change in employment. There were some experiments at the beginning of universal credit which were about people claiming universal credit and getting different levels of conditionality, and whether that affected earnings, but those were done on a specific group of people at a specific stage of universal credit so it may not apply to everyone. I would add that the old tax credit system had hours of work thresholds that claimants had to reach because governments did not want to permanently subsidise precarious and very part-time work. Universal credit is obviously available from the first hour of work and I would argue that the Government has replaced the thresholds of entitlement to tax credits by in-work conditionality in order to achieve the same aim of not subsidising precarious work permanently for people.

Paddy Burke (Fine Gael)
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I welcome our witnesses and thank them for their contributions.

My question may not have anything to do with means tests. Carer’s allowance is being paid to people availing of an old age pension who may be caring for a family member, a neighbour or someone else but they will only get half of the carer’s allowance because they are getting the State pension. As they are carrying out the same service as any other carer, it is very unfair that the fact they are getting a social welfare payment in the State pension means they only get half of the carer’s allowance. This should be looked at and included in the proposals.

Professor Ruth Patrick:

On the question of benefit take-up, while it is not my area of expertise, I want to flag that Scotland, with its devolved powers, has had a very strong emphasis on maximising take-up. I would advise the committee members to look at what Social Security Scotland has been doing. It has the child disability payment and the adult disability payment, which replace the personal independence payments available elsewhere in the UK, but it also has a new payment for children, the Scottish child payment, which has an incredibly high rate of take-up of up to 97%. It would be good to look at that area.

With regard to support for activation, I draw very much on qualitative research and speaking directly to people within my own research. There is very strong evidence that conditionality does not work or help. The constant threat and the pressure are ineffective and, as I said in my opening statement, this governs encounters in a very negative way. Rather than looking at a work coach or job centre adviser as somebody to whom people would go for help, they are seen very much in a punitive role as the person who potentially has the power to take away your money. That impedes the scope to see it as a supportive encounter.

In terms of what is welcome, and I am thinking in particular of women, it is interesting to look back within the UK context to things like the new deal for lone parents. Such measures were effective and we saw if not a massive increase – I must be cautious in my use of language – then at least an increase in employment for lone parents. Given the type of work I do, I would encourage that discussion with people as to what they need and what the barriers are. What is very important is to recognise those structural barriers, particularly for women, to enter and progress in work, and then look at how we dismantle them. This links in with the previous conversation we had about the activation approach that instead says let us look at all of these problems with the people themselves rather than saying people are not doing the right things. As Ms Bennett said earlier, there is the suggestion that people do not know how to budget and they need their credit to be paid monthly so they can budget. In fact, we know that people on low incomes are the best budgeters of anyone out there because they are very well versed and trained in managing very small amounts of money and making that work.

We definitely need support with childcare costs but also with training. One of the sad things about the universal credit system is the expectation that people treat looking for work as a full-time job, which removes the opportunity to do voluntary work or training. In many instances, people are too cautious. Those strong, good opportunities to learn on the job through voluntary work or to do some training after having a child allow people to not only secure any work but good work.

Ms Fran Bennett:

I endorse everything Professor Patrick just said. I was thinking of the Child Poverty Action Group work with potential “second earners”, which was called Your Work Your Way. It might be worth looking at that as a specific example of what might help, in particular regarding activation for women and couple households.

I also want to say something about take-up. I have just done a review of recent evidence on take-up. It is published with open access so it is quite easy to get to and googling “Fran Bennett" and "take-up” would probably get you there. One of the things raised was that we currently talk a lot about automation as a way of trying to improve take-up. That would be worth looking at, although with a somewhat critical eye because of various issues that I raise in the article, although I will not go through those now. In particular, if you have a conditional benefit, it is rather difficult to see how you would have an automatic award of benefit because somebody has to agree to the conditions in order to get that benefit. It is also quite difficult for me to see how to do an automatic award for a couple because one has to follow each of the circumstances of each partner and also decide they are living together as “husband and wife” in order to do that.

There are a lot of take-up initiatives. There was a recent conference in Paris that discussed take-up in France and Europe, so it is a very big issue. France has 39 "zero non-take-up" territories that are experimenting with take-up initiatives at the moment. It would be worth having a look at those and I can give the committee a contact for that as well.

There is a lot going on. Automation tends to be looked at as the solution. I think it may be one solution among others but not necessarily a solution in and of itself.

Professor Jane Millar:

On take-up, the benefits with the best take-up are the universal benefits such as child benefit, so “Do not means test if you want good take-up” might be a short answer to that.

On the incentives, it has always struck me that far too much attention is paid to the financial incentives as if that is all that matters, and so as long as someone gets more money in work than out of work, they have that incentive. Actually, as Professor Patrick was saying, it is about your life more generally, how you fit work in with your childcare and your other caring responsibilities, where you live and all sorts of things. A much more holistic approach to thinking about that is needed. When we think about people with ill health or disability, that is tremendously important because it is their circumstances that often make it difficult for them to be in constant employment.

That takes me to the role of employers. It is increasingly recognised that we need to take account of how employers approach supporting people and how they make it possible for people to take up jobs and stay in work. There is interesting work going on in the UK, where Dr. Katy Jones is working with employers to identify and address these issues. Employers have a role to play in what it is they have on offer to people to enable them to work.