This briefing paper explains how Universal Credit is acting to increase the number of people claiming unemployment benefits, by requiring a broader group of claimants to look for work than was the case under Jobseeker’s Allowance. There has been a marked increase in the claimant count over the past year in areas operating Universal Credit “Full Service”, where the rollout of Universal Credit is more advanced.Jump to full report >>
The claimant count is the number of people claiming benefits for the principal reason that they are unemployed. Before 2013, this was just the number of people claiming Jobseeker’s Allowance.
Following the introduction of Universal Credit from 2013 onwards, the claimant count is now measured as the number of people claiming Jobseeker’s Allowance plus the number of Universal Credit claimants who are required to look for work.
Universal Credit is a new benefit which is being rolled out in stages. It replaces six existing benefits and tax credits (“legacy benefits”):
By bringing together out-of-work benefits and tax credits, Universal Credit provides both in- and out-of-work support to claimants. It was introduced with the aim of simplifying and streamlining the benefits system, improving work incentives, tackling poverty among low income families, and reducing the scope for error and fraud.
Full Service and Live Service describe the computer systems used to deliver Universal Credit.
Rollout of Full Service commenced in certain pilot areas at the end of 2014. All Live Service areas are due to switch to Full Service by September 2018.
People in Full Service areas who started a claim for legacy benefits before Full Service was rolled out are still receiving those legacy benefits. This group of existing claimants will only be moved across to Universal Credit after the rollout of Full Service to all jobcentre areas is complete.
All jobcentre areas in Great Britain are either operating Universal Credit Full Service or Live Service. Universal Credit has not yet been introduced in Northern Ireland, but is expected to be rolled out in Northern Ireland from September 2017.
There was a marked increase in the claimant count over the last year in areas operating Universal Credit Full Service. The claimant count increased by 29.0% in the year to February 2017 in jobcentre areas operating Full Service, compared to a fall of 1.6% across the rest of the UK.
The effect of Universal Credit on the claimant count is more pronounced in those areas that have been operating Full Service for longer. In jobcentres where Full Service had been rolled out for at least six months, the claimant count increased by 50.4% in the year to February 2017, compared to a 1.5% fall across the rest of the UK.
Full Service areas still account for a relatively small proportion of all claimants. The total UK claimant count was 803,600 in February 2017 (not adjusting for seasonal factors). This included 65,200 claimants in areas operating Full Service at February 2017, 8.1% of the total.
There are at least two main reasons why the claimant count is increasing as rollout of Universal Credit progresses:
For example, someone not in work who previously claimed Child Tax Credit or Housing Benefit but not Jobseeker’s Allowance was not required to look for work. This is no longer the case under Universal Credit, subject to certain exceptions.
Similarly, under Universal Credit, the partners of claimants are now required to seek work. Previously, if someone was in employment and claiming tax credits or housing benefits but their partner was not in work (and not claiming Jobseeker’s Allowance), there was no requirement for their partner to look for work. This is no longer the case, subject to an earnings threshold and certain exceptions.
From the point of view of the statistics, this has the effect that more people are brought within the coverage of the claimant count.
There are reports that claimants who under the legacy system would previously have claimed Employment and Support Allowance (ESA) are initially subject to all work-related requirements upon starting a new claim to Universal Credit, pending their Work Capability Assessment.
Since these Universal Credit claimants are being required to look for work, they are included in the claimant count statistics. We might expect some to drop out of the claimant count again once the Work Capability Assessment has taken place, assuming they are judged to have limited capability for work. However, a backlog in assessments means claimants can remain on full conditionality for an extended period (and thus remain in the claimant count statistics).
In such cases Jobcentre staff have discretion as to whether they place work-related requirements on claimants. However it appears this discretion is not always being used. In December 2016, the Child Poverty Action Group reported:
There have been strikingly different approaches from work coaches in relation to clients’ claimant commitments while they are waiting for a work capability assessment. In one full service area, work coaches appear to be satisfied with regular contact with the client, reducing the claimant commitment accordingly. However in the other full service area, work coaches expect clients to comply with full work search conditionality despite submitting medical certificates stating that they are unfit for work. The DWP advised that work coaches should be using their discretion and adjusting claimant commitments where appropriate.
The claimant count follows a seasonal pattern. For example, the number of people claiming is affected by factors such as tourism, Christmas and the academic year. Consequently, the Office for National Statistics (ONS) adjusts national and regional data to strip out these seasonal variations, so that the underlying trend in the claimant count can be seen more clearly.
However, in the case of Universal Credit, there is not enough data to judge how seasonal factors affect the number of people claiming since it is still a relatively new benefit. The ONS originally assumed that the number of Universal Credit claimants required to seek work would have a similar seasonal pattern to Jobseeker’s Allowance, but it is now apparent this is not the case. Consequently, the adjusted claimant count series is failing to reliably capture the underlying trend in the claimant count.
The problem with determining seasonality of the Universal Credit series is of less concern at the constituency level, since at this level we have only ever had non-seasonally adjusted claimant count data. This was also the case before the introduction of Universal Credit in 2013.
ONS now believes the seasonally adjusted series may be providing “a misleading representation of changes in the UK labour market. Given the ongoing process of Universal Credit roll-out and future planned expansions, these problems are likely to persist for some time.”
The claimant count statistics had already been designated as “experimental” from June 2015 (meaning the statistics are still in development) due to the impact of Universal Credit.
Consequently, ONS has stopped including the seasonally adjusted claimant count in the PDF version of its monthly UK Labour Market and Regional Labour Market Statistics bulletins from March 2017. However, data is still included in online tables published alongside the bulletins on the ONS website.
ONS continues to publish non-seasonally adjusted data for parliamentary constituencies, local authorities and other geographies on the Nomis website.
The Library continues to publish constituency data on our Constituency Profiles intranet site and in our monthly briefing paper, People claiming unemployment benefits by constituency.