Two hundred thousand people ineligible for Universal Credit because of their partner’s earnings
A new WASD study looks at people who were ineligible for benefits at the start of COVID-19 but may be in financial need – including 500,000 who lost 10% or more of their income and may have been financially struggling but were still ineligible for benefits.
The report has been funded by the Health Foundation and links to our Welfare at a (Social) Distance project; a major national research project funded by the Economic and Social Research Council which is part of UK Research and Innovation. Our project is led by the University of Salford, working in collaboration with the University of Kent, the University of Leeds, the LSE and Deakin University, Australia.
It finds that last July/August, among people who may have been struggling financially, there were around 200,000 people ineligible for Universal Credit (UC) solely due to their partner’s earnings, 200,000 ineligible solely due to savings, and at least 50,000 ineligible solely due to their migration status.
More broadly, there were around 500,000 people who had lost 10% or more of their household income during the pandemic and may have been struggling financially but were ineligible for both UC and contribution-based benefit (‘new style Jobseeker’s Allowance’).
Financial strain among most of these groups was relatively high (except for those ineligible solely due to savings). Around 40% of each group reported severe financial strain – e.g. falling behind on bills or not being able to afford regular fresh fruit and vegetables – and around 50% of each group reported poor mental health. Seventy thousand people had skipped meals in the past fortnight after their income fell but they were ineligible for benefits.
These were not employees that had completely lost their jobs but were primarily people with reduced income/hours (including furlough) or who were self-employed and not getting enough work. Many people in these groups had strong feelings about the fairness of being ineligible - among people who may have been struggling financially, the majority of those ineligible due to their migration status felt it was unfair, as did around half of those ineligible due to savings or partner earnings, or who had experienced an income shock.
The report also finds that nearly 300,000 people unsuccessfully tried to claim benefits (UC, JSA or ESA) during the start of the COVID-19 pandemic – mostly people who applied but were rejected.
The most common reasons for rejection were that they/their partner were still earning too much money (45.4%) or had too much in savings (23.9%). Often these were because of people’s partners, rather than the respondent themselves, again raising issues around how benefit eligibility is based on partner income as well as people’s own.
Many of these people were struggling financially. Nearly half (46.9%) reported severe financial strain. Some (15.2%) had been hungry because they had skipped a meal in the previous two weeks, equivalent to 45,000 people. Unsuccessful claimants also had much higher levels of mental ill-health than the general population (excluding claimants).
Dr Ben Baumberg Geiger, lead author of the report and a Senior Lecturer at the University of Kent, said: “The benefits system targets those struggling the most – but this misses out people are struggling, but not quite enough to be eligible for anything. To make matters worse, people’s awareness of benefits based on National Insurance contributions (rather than need) is low. We need to think about how to redesign the benefits system so that it both helps those most in need, and provides broader support to other people that are struggling.”
Professor Lisa Scullion, Co-Director of SHUSU at the University of Salford and project lead, said: “There are relatively high levels of need amongst people who apply for benefits but are rejected, and irrespective of any changes to eligibility criteria, it should be straightforward for the DWP to offer additional guidance when telling people that they are ineligible for benefits.
“This could include information on other benefits that they may be eligible for and other sources of financial support that may be available.”
David Finch, Senior Fellow at the Health Foundation, said: “The pandemic has highlighted how Universal Credit currently fails to support many people facing periods of financial strain. These findings show the scale of the issue and the significant impact it can have on people’s physical and mental health.
“It is vital that the government takes the opportunity to reconsider social security design to better protect against shocks to income and better support health.”