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Fix Universal Credit or risk irreparable Covid scarring, says Citizens Advice
Urgent changes to Universal Credit are needed to stop those most impacted by the pandemic being left behind as the economy recovers, according to a new report from Citizens Advice.
The charity warns that inappropriate or stressful job-seeking requirements, a lack of support with upfront childcare costs and rigid benefit rules for disabled people are all barriers that can prevent people entering the labour market.
An estimated 360,000 people - equivalent to the population of Nottingham - who lost their jobs in March or April 2020 are still unemployed a year on. A further 2.4 million people on Universal Credit are still looking for work, with four job-seeking claimants for every vacancy.
Citizens Advice warns groups already at a disadvantage when job-hunting have been hardest hit in the pandemic, risking an unequal recovery and long-term economic scarring:
Under 25s were five times more likely to lose their job in the first lockdown than the rest of the working population. In total, more than 200,000 young people have been out of work for six months or more
Over one in three unemployed disabled people have now been looking for a job for more than a year, compared to one in seven non-disabled people
One in three unemployed single parents have been looking for work for over a year, compared to one in five working age adults
The charity's frontline advisers have seen hundreds of cases where the rules in Universal Credit are making it harder for people to find work. These include a parent considering an expensive loan to meet the upfront costs of a nursery place so they can work because Universal Credit will only reimburse the fees retrospectively. Another staff member supported a domestic abuse survivor who spent up to 40 hours-a-week job hunting after pressure from their work coach, despite suffering acute distress and anxiety.
While vacancies are picking up in some sectors, the charity’s research found around two in three (62%) unemployed people on Universal Credit say they were not confident of finding work in the next six months. Nearly nine in 10 (88%) Universal Credit claimants said their financial situation is having a negative impact on their mental health.
Citizens Advice says it fears a ‘K-shaped’ recovery, with some rebounding quickly, while others struggle to find work. It cites particular concerns over long-term unemployment, now growing at the fastest rate since 2010.
'A one-size fits all approach just doesn’t work’
Kat Kryvokhat'ko-Furlong, an adviser at Citizens Advice Southwark, said:
“The longer you’re out of work, the harder it is to get back in. After a while people can lose confidence. They get ground down from being asked to apply for jobs that aren’t suitable and it leaves them feeling really hopeless.
“It’s particularly a struggle for people with a gap in skills or who may need flexibility because they’re disabled or have children to care for. A one-size fits all approach when it comes to job-seeking just doesn’t work.”
Rules fit for real life
Citizens Advice has supported more than 450,000 people with one-to-one advice on Universal Credit since March last year. With the highest-ever number of people on Universal Credit looking for work, the charity is calling for changes to ensure the rules set out by DWP are fit for real life.
This includes greater flexibility from DWP work coaches to ensure that people aren’t given unsuitable job-seeking requirements that could result in them cycling in and out of insecure work or being sanctioned.
The charity is also calling for the government to remove barriers faced by disabled people and parents by providing childcare costs upfront and reviewing eligibility rules for disability work allowances.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said:
“This has been an unequal crisis and we now face an unequal recovery, with those hardest hit by the pandemic facing an uphill struggle to find work.
“As the economy reopens, the government has a crucial opportunity to prevent irreparable scarring from this crisis.
“Key to this will be making sure the rules in Universal Credit are fit for real life. That means supporting people into work, not pushing them into unsuitable jobs or adding to their stress and worry with the threat of sanctions.”
Notes to editors
The report ‘Roadblock to Recovery: Why the rules in Universal Credit are creating barriers to work’ is available here.
Long term-unemployment is a term for people who’ve been jobless for more than 12 months. After the last recession in 2008, people who’d been unemployed for over a year were over two times less likely to move into employment in the next quarter, compared to those unemployed for three months or less.
The work allowance in Universal Credit allows disabled claimants and parents to work a limited number of hours without seeing a fall in the amount of their benefits.
This figure is an estimate for the UK. To estimate the number of people who were made long-term unemployed due to coronavirus, we used Understanding Society data to estimate the proportion of people who lost their job in March and April 2020 who were still out of work 12 months later. We then applied this proportion to Office for National Statistics population estimates.
The long term unemployment rate is the proportion of unemployed people who have been unemployed for more than 12 months. In January - March 2021, the rate increased by 2.6 percentage points to 23%. The biggest previous increase was in February - April 2010, after the 2008 financial crash when the rate increased by 3 percentage points. See Office for National Statistics (2021) Unemployment by age and duration.
Figure comes from Nottingham County Council’s population estimates for 2019
In April 2021, Office for National Statistics data shows that 2,629,000 people were claiming out-of-work benefits. In February - April 2021, the Office for National Statistics estimated there were 657,000 job vacancies in Great Britain.
To look at how duration of unemployment has changed during this crisis across different groups and areas of the UK, we used the Labour Force Survey to compare the duration of unemployment for different groups and areas in March 2020, on the eve of the crisis, to March 2021.
From January - March 2020 to January - March 2021, the number of disabled people who had been unemployed for over 12 months increased by 49%.
The latest data from the Labour Force Survey shows that in January-March 2021, over 200,000 under 25s have been unemployed for more than 6 months. The Office for National Statistics state that coronavirus has impacted data collection for the Labour Force Survey. They urge a cautious interpretation of levels reported in the survey (the number of people), but rates (the proportions of people) remain robust.
ICM Unlimited surveyed a representative sample of 1,806 adults living in a household claiming Universal Credit on behalf of Citizens Advice. The sample has been weighted to the profile of adults claiming Universal Credit in Great Britain and is weighted by age, gender and region. Respondents who said they were looking for a new job in the next six months were asked how confident they felt about it, including 195 unemployed people. In total, 62% said they were ‘not confident’ or ‘not at all confident’ of finding work in the next six months. Fieldwork took place between 25th March and 9th April. Respondents were also asked if they had ever lost sleep, felt depressed, felt anxious, or felt stressed due to their financial situation. Nearly nine in 10 (88%) said they sometimes or often felt one of these negative impacts on their mental health due to their financial situation.
Citizens Advice data on people supported with Universal Credit and employment covers the period from March 1 2020 - 28 May 2021
Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
Our network of charities offers impartial advice online, over the phone, and in person, for free.
We helped 2.8 million people face to face, over the phone, by email and webchat in 2019-20. And we had 34.5 million visits to our website. For full service statistics see our monthly publication Advice trends.
Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,600 service outlets across England and Wales.
You can get consumer advice from the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 for Welsh language speakers.
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