The way Universal Credit has been designed is troubling, especially for couple households that will be paid a single monthly payment in one account. Yet while the difficulties of managing a monthly budget have been acknowledged, the idea has almost universally been lauded as a good one. Rita Griffiths explains the various reasons why this is not the case.

The recent outcry about the six-week wait before Universal Credit is first paid has seen calls for a pause in its roll-out and a degree of government back-pedalling. The decision to abolish the 7-day waiting period and increase the amount and accessibility of advance payments represent hard-won concessions. However, concerns over the length of time claimants wait before a first Universal Credit (UC) payment have tended to obscure another aspect of the benefit that could prove to be equally problematic – namely, the single monthly payment. Yet there is poor understanding about what such a radical change to the way the benefit is paid actually means for couples who live together, or what the wider impact might be.

Rolling all benefits payable together in one lump sum per couple effectively reverses the previous reform which allowed child tax credit and the childcare element of working tax credit to be paid to the main carer. Under UC, other than in ‘exceptional circumstances,’ for example proven cases of domestic or financial abuse, the only choice couples can exercise is to nominate the account into which UC is paid. If this is not a joint account, one member of the couple will receive the entire award which could include financial support for rent and childcare costs. Feminist academics and campaigning organisations have sought to raise awareness about the effect these changes could have on reducing women’s financial independence. Recent research based on in-depth interviews with low-income mothers suggests that the way in which UC is paid to couples could also have unintended consequences for family formation and the stability of relationships.

Paying UC into only one account upholds the government’s conviction that it is not their role to dictate to couples how to manage their money. A joint bank account, they suggest, might be one means of allowing both partners in a couple to have access to the benefit. However, research studies show that joint accounts provide no guarantee that money paid to a couple reaches the individual partners. If UC is paid into the male partner’s account, or a joint account to which the female partner has no or limited access, this would represent a significant intra-household redistribution of income from ‘purse to wallet,’ reinforcing the economic dependence of some women and potentially trapping some in abusive situations.

Widely acknowledged research also testifies that having different sources and amounts of income coming into the household at different times often helps with budgeting in low-income families. A single monthly payment could therefore increase the risk of debt and rent arrears, undermining household financial security, and potentially increasing women’s and children’s poverty. Absorption of child tax credit and the childcare element of working tax credit into a single household award also undermines the principle, evidenced by research, that these payments are most effective in reaching their intended beneficiaries when paid to the caring parent. The incorporation of housing benefit into UC could increase the likelihood of eviction if money intended for rent is withheld or spent in other ways by one of the partners. Although certain claimants can request that the housing element of UC is paid direct to a private landlord, both members of the couple must agree to such alternative payment arrangements.

Credit: Pixabay/Public Domain.

Recent research provides evidence that changing the way in which couples are able to access benefits and manage their household finances under UC could destabilise relationships and deter lone parents from repartnering. As part of a study exploring the influence of the UK social security system on family structure, interviews with a diverse sample of lone and partnered mothers indicated that regulations which can reduce a woman’s financial independence if she lives with a partner acted as a deterrent to cohabitation and family formation. How the mothers weighed up the pros and cons of living with or apart from a partner, their perceptions of the attendant risks, and how these were managed or avoided, was strongly influenced by social security rules governing the treatment of co-resident couples.

At the heart of the issue are two poorly understood aspects of UK social security – the ‘Living Together as a Married Couple’ regulation (known as the cohabitation rule) and the family-based system of means testing. Based on a definition of cohabitation as ‘marriage-like’ and outdated notions of breadwinning, couples who share the same household have no independent right to claim means-tested benefits or tax credits; if eligible for help, they must claim jointly. Although couples can currently choose to pay certain tax credits to the main carer, there is no legal obligation on the person who receives the benefit to transfer any part of the joint payment to their partner.

Equally troubling for the mothers in this research was joint assessment in which eligibility and entitlement is assessed against the combined income and earnings of the couple. When a low-income mother starts to live with a partner, she therefore risks losing her benefit or tax credit entitlement altogether. In this context, who in a couple was earning, who was entitled to claim benefits and tax credits, who received payment and how household income was accessed and distributed under different partnership and living arrangements, mattered a great deal.

Of particular concern was the loss of income and financial autonomy that cohabitation often entailed. Not only was financial dependence on a partner felt to be unacceptable in a modern-day relationship but when a woman is not married to her partner, the stakes are considerably higher, more especially if he is not the biological father of her child or children; unlike spouses, cohabitees are under no legal obligation to financially support one another. Ceding responsibility for safeguarding the family’s financial well-being to a new or unproven partner was seen to be a particularly risky arrangement. Though lone parenthood was not without its own challenges and risks, some single mothers ruled out any form of relationship while they were reliant on benefits. Others with partners in low-paid or insecure work chose to ‘live apart together’.

Significantly, it was not only lone parents or those contemplating cohabitation who could be adversely affected by these rules. Inability to access the family’s benefit income when claiming jointly had also de-stabilised some couples’ relationships, contributing in some cases to family breakdown. More broadly, findings suggest that in the context of a precarious labour market for low-skilled men and an ever stringent social security system, far from being protective, living together as a couple had come to represent an arena of increasing uncertainty, insecurity and risk.

No one knows what the actual impact will be of such a radical upheaval in how and to whom in a household benefits are paid and distributed. The government’s piecemeal roll out and circumscribed programme of research mean that the effects of UC on intra-household financial distribution, family formation, and relationship dynamics may not become apparent for some time. However, extrapolating from this research, findings suggest that with the potential to erode women’s financial independence more than under the current system, merging six benefits into one and paying UC monthly into a single bank account could add significantly to the perceived risk of family formation. For couples struggling to stay together under conditions of economic austerity, switching to a monthly payment regime could also pose a significant challenge. Without a meaningful policy adjustment, for example enabling the child-related elements to be paid to the nominated lead carer or, as in Scotland, allowing joint claimants to split the UC payment equally, the government’s claim that that UC has been designed to promote self-reliance and personal independence has something of a hollow ring.


Note: this draws on the author’s article published in the Journal of Social Policy.

About the Author

Rita Griffiths is Partner at Insite Research and Consulting.



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