Retention of ‘living together’ policy in universal credit, with its focus on the household as the unit of assessment, continues to impact claimant behaviour and contribute to welfare fraud and error

However, evidence review acknowledges that moving to a fully ‘individualised’ benefits system would be costly and less effective at targeting resources at those most at risk of experiencing financial hardship

DWP-commissioned research into social security fraud and error linked to the UK’s living together as a married couple (LTAMC) policy has highlighted that retention of the policy in universal credit, with its focus on the household as the unit of assessment, continues to impact claimant behaviour and contribute to welfare fraud and error.

Setting out the objectives of the evidence review, the researchers advise that –

'The aim of this review was to gather evidence on specifically: (a) how the LTAMC policy contributes to welfare fraud and error; (b) how this relates to contextual factors, such as changing social attitudes, gender relations and patterns of household formation; and (c) how the LTAMC policy compares with international examples from other OECD countries'

The research examines evidence of the changing context of living together fraud and error (LTFE) – described as situations where a claimant has a partner but is receiving benefits as a single person (whether intentionally through fraud or due to error) – that draws out key trends including –

  • increasing numbers of adults are living without a partner;
  • fewer people are choosing to get married, and marriage is occurring later in life
  • decisions about household formation and composition are partly influenced by economic and financial factors;
  • adults living without a partner (alone or as a single parent) face an elevated risk of poverty; and
  • increasingly, couples choose not to pool all financial resources.

In addition, the report highlights evidence showing that the configuration of the benefits system can also contribute to financial hardship, in particular, suggesting that the policy design of universal credit – that depends on income and earnings of both members of a couple and family needs and costs – makes it more difficult for claimants to budget for the upcoming month if they have experienced a change in family circumstances.

Turning to the impact of the LTAMC policy on claimant behaviour and fraud and error, the report notes that the introduction of universal credit in 2013 retained the living together policy from the legacy benefits system, with its focus on the household as the unit of assessment. This means that issues that were evident in the legacy system – such as the couple rate creating financial disincentives to living with a partner and concerns that means-testing assessments may increase the risk of financial and other forms of domestic abuse – continue to impact claimant behaviour.

As a result of findings from the evidence review, the report highlights that there is scope to reform aspects of the LTAMC policy to have a positive impact on rates of LTFE such as by –

  • reducing reliance on household means-testing by placing greater emphasis on benefits and services that are not means-tested or by taking certain elements out of universal credit and establishing them as separate, individual benefits;
  • only taking a partner’s income into consideration above a certain threshold of individual income. This would in effect mean that the couple rate for universal credit would only apply to those earning above this threshold;
  • widening the circumstances in which split payments can be used or making this the default; and
  • introducing a transition period in which couples do not have to undergo joint assessment, for example the first six months that the couple is living together, when the partners can still be assessed individually if they choose to be.

However, while greater individualism in the assessment of benefits may lead to less LTFE, the researchers do not suggest this is a solution without inherent issues, and instead suggest a mixed approach –

'This is a complex policy area, with no clear or easy solutions. Different approaches are associated with advantages, disadvantages and trade-offs. LTFE ceases to exist if the household is no longer the unit of assessment. However, a fully ‘individualised’ benefits system would be costly and less effective at targeting resources at those most at risk of experiencing financial hardship. Steps may be taken towards individualisation without abandoning the household as the unit of assessment.'

Concluding the report, the researchers highlight that despite limitations associated with the evidence base on the topic – there are few research studies that directly address or refer to LTFE, and those that do are generally small-scale and qualitative studies where data is not empirically tested or substantiate – the available literature –

'… provides some insight into the social and political context in which LTFE is embedded and points to how policy change might be levered to create a welfare system where the risk of LTFE is lower. There is, however, a need for further research to substantiate the extent to which these factors have an effect on LTFE, as well as to evaluate the effect of policy reforms introduced in the UK and other OECD countries to address the issue.'

For more information, see Are household formation decisions and living together fraud and error affected by the Living Together as a Married Couple policy? from gov.uk