Drawing on the findings from a wider qualitative longitudinal research study exploring the experience of working claimants on Universal Credit (UC), the University of Bath explore the interaction between UC, earnings, ‘passported’ benefits and other means-tested help.

Passported benefits and other means-tested help are income-based forms of financial and in-kind support with essential living costs delivered by a range of government departments, local authorities and utility providers, to which UC claimants (together with legacy benefit recipients and other targeted groups) may be entitled, depending on their circumstances. The support is typically provided in the form of reductions, concessions or discounts in charges, or in-kind help – such as vouchers – but cash benefits may also be paid.

Eligibility criteria, application processes and income thresholds are the responsibility of the particular government department, devolved administration, local council or utility company that owns and administers the different schemes. Better-known examples include council tax reduction (CTR) schemes, free school meals and free prescriptions, but there are many lesser-known schemes, including healthy food vouchers for new mothers and reduced (or social) tariffs on utility bills. The devolved governments of Scotland and Wales operate a further set of means-tested benefits and grants. Though the thresholds differ, the support is reduced or ended entirely, as it is for UC, in circumstances where household earnings rise above a certain level.

‒ For working people with low earnings and low hourly rates of pay struggling to afford the rising costs of housing, utility bills and food, any extra help they can get to top up their income from earnings and UC payments could often be a lifeline, acting as a vital safety net.

‒ In the absence of a substantial rise in benefit levels and/or wage rates, sources of means-tested help that sit outside Universal Credit are likely to continue playing a crucial role in supporting the living standards of working individuals and families for the foreseeable future. 

‒ While all participants had levels of earnings low enough to entitle them to Universal Credit, only in rare instances (such as the Government’s Cost of Living payments) did UC receipt, of itself, automatically qualify them for help. 

‒ Many working claimants were ineligible for support due to the very low earnings thresholds which applied to most of the schemes. Others had variable earnings which meant they dipped in and out of eligibility from one month to the next. Some were unaware that additional help was available. Others were put off from applying because they had insufficient time; application processes could be onerous and time-consuming. 

‒ The patchwork of independently administered, often discretionary, schemes has grown with little coherence or strategic overview. It is generally left to the designated government department, devolved administration, local council or utility provider to raise awareness of their schemes and to determine how much help any particular applicant, in any particular year, may get. 

‒ Whether people knew about, were entitled to, able to apply for and successfully awarded any help was a hit-and-miss lottery of postcodes, personal circumstances and happenchance. 

‒ Separate entitlement rules, earnings thresholds and application procedures add complexity to the social security landscape, creating barriers to access and administrative burdens for claimants, and countering UC’s goal of simplification. The schemes can also be complex and costly for administering authorities to deliver, particularly when people’s earnings are subject to frequent change.

‒ Different income thresholds attaching to the different schemes undermine the policy rationale of having a single taper rate in UC as earnings rise, making it hard for claimants to calculate or reliably estimate the financial impact that working longer and earning more will have. Fluctuating earnings and monthly assessment in UC, in which entitlement can vary from month to month, compounds this difficulty. 

 

 

 

‒ A review of passported benefits and means-tested help that sit outside the main working-age benefits is needed, exploring, in particular, their interaction with UC and the effects on work incentives.

‒ Entitlement rules and earnings thresholds of the different means-tested schemes need to be simplified and standardised. Fairer and more consistent methods are also needed for withdrawing support as earnings rise.

‒ Entitlements should be regularly uprated to keep pace with inflation and to better support work incentives.

‒ The income volatility and work disincentives caused by the interaction between UC and council tax reduction schemes need to be reduced.

‒ Entitlement to free school meals should be extended beyond households with earnings below the current £7,400 threshold, to a much wider group of UC claimants.

‒ The social tariffs offered by some telecoms and broadband companies should be offered by other utility providers, with eligibility extended to all UC claimants.

‒ Communication about and signposting to the different means-tested schemes needs to be increased and enhanced, making better use of the UC journal and technology more generally. 

‒ Auto-enrolment and the automatic passporting of entitlement should be increased.

‒ The interaction between earnings, passported benefits and other means-tested support should be included as part of the Government’s formal review into UC and commitment to ‘make work pay’.

‒ Additional means-tested help, and the link with employment and work incentives, should also be included in the remits of the Government’s new Child Poverty Taskforce and Child Poverty Unit, as part of their work to develop a new child poverty strategy.