Report

Cliff edges and precipitous inclines

This report from UK think tank the Institute for Policy Research looks at the interaction between Universal Credit and additional means-tested help

This report explores the interaction between Universal Credit (UC), earnings, ‘passported’ benefits and other means-tested help for working claimants. These are income-based forms of financial and in-kind help with essential living costs that are administered and assessed separately from the main working-age benefits. This additional help is of increasing interest to politicians and policymakers due to the vital role the different schemes play in supporting low-income households. Also important to understand is the impact these schemes can have on work incentives when the help is withdrawn as earnings rise. 

The research found that while all participants had levels of earnings low enough to entitle them to UC, only in rare instance did UC receipt of itself automatically qualify them for help. Not only were application processes typically onerous and time-consuming, but 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. Those whose earnings rose above a certain level could find themselves financially worse off, undermining UC’s fundamental goal to ‘make work pay’. These ‘cliff edges’ discouraged some people from working longer hours and earning more.