Universal Credit: security and volatility

An important aim of Universal Credit is to be responsive to earning fluctuation in order to smooth transitions into (and out of) work. However, this means Universal Credit is not a fixed payment; if monthly earnings fluctuate or the claimant experiences a change of circumstance, so entitlement can change, potentially affecting the amount of benefit paid. This raises the possibility that Universal Credit may itself be a source of income fluctuation.
While still under researched, there is also growing evidence of wage volatility in the UK labour market. A recent study by the Resolution Foundation found that pay fluctuations were the norm for the majority of employees and more common for those on the lowest incomes (Tomlinson 2018). Research has also highlighted the importance of focusing on income change within the year in addition to the more usual year to year perspective (Jenkins 2011; Hills et al. 2006).
This raises important questions about the role Universal Credit may be playing in ameliorating or perpetuating income insecurity in low-income households, particularly over short periods where monthly income may be fluctuating. However, to date, there has been very limited attention paid to income instability arising from the monthly payment and assessment of UC, and the consequences for people on low incomes. Based on data drawn from an ongoing doctoral research project, this paper examines the experience of changes in income and circumstances over relatively short time periods for a sample of fifteen households in receipt of means–tested benefits. The research comprised a series of face to face, longitudinal interviews conducted with households, together with analysis of income diaries completed by participants over a three-month period.
Early findings suggest that Universal Credit may itself be experienced as unpredictable, often leaving claimants with little money to meet their everyday needs, as well as unsure of future payments. While claimants with regular earnings or stable circumstances seemed well suited to Universal Credit, those with fluctuating earnings or frequent changes of circumstance were more likely to experience it as a destabilising factor in their income and their lives, creating feelings of insecurity.