Credit where it’s due?


Martin Taulbut, Public Health Information Manager, NHS Health Scotland discusses Universal Credit, public health and the Scottish labour market.

 “You’ve got to support Iain Duncan Smith’s welfare reforms”. That was the argument put in a provocative, after-dinner speech to public health professionals I attended three years ago. So the question is – should we welcome the former Secretary of State’s flagship policy, Universal Credit? Ensuring good work for all – more people in employment that protects workers and their families against poverty, and improves their physical and mental health – can play an important part in improving population health and reducing health inequalities. And when Universal Credit was announced in 2010, it appeared, at least in part, to be consistent with these aims. The change was justified as helping to reduce poverty and help people move into and remain in work, with likely positive effects on health.

 

At its most fundamental, Universal Credit is based on the concept that more work will solve all problems, with the implicit assumption that there is sufficient unmet demand for labour (jobs and hours) to achieve this. This core assumption needs be tested.

For those out of work, demand for labour is weakest in those places where the proportion of people claiming out-of-work benefits is greatest. In an article for Regional Studies, we argued that “even if labour market demand were to return to pre-recession levels, the scale of occupational and geographical mismatch in British unemployment would remain substantial.” This conclusion remains valid. In Scotland in 2015, there were twice as many unemployed[1] (159,000) as unfilled vacancies (74,000). On the same basis, while there were more vacancies than unemployed people for professionals, caring and leisure occupations, demand was much weaker for those seeking jobs in elementary occupations (e.g. cleaners, catering assistants, warehouse workers), managers and sales and customer service staff. Geographically, only in Aberdeen City and Shire did the number of unfilled vacancies exceed the number of unemployed – and demand was particularly weak in Ayrshire, Dumfries and Galloway and Fife.

 

An innovative component of Universal Credit is in-work conditionality. In brief, it means individuals and those in low income households must do all they can to increase their earnings, supported by a new DWP ‘in work service’. But increasing hours and earnings may also be easier said than done. An estimated 59,000 people in Scotland are on zero hour contracts, 102,000 are working part-time hours because they can’t find a full-time job, and more than 216,500 working adults would like to increase their hours. And crucially, as Professor Nick Bailey has shown, almost 4 in 10 of the working poor are already working full-time. Gaining in-work qualifications is also no guarantee of pay or progression. In 2014, only a third of Scottish employers reported that achieving a vocational qualification would always/generally lead to a pay increase, and only a quarter that it would always/generally lead to a promotion or increase in job status.

 

It is true that the National Living Wage will help mitigate these financial pressures (at least for the over 25s). The changes announced to the in-work taper for Universal Credit now make it unlikely that the number of winners from UC will offset the number who will lose out, with the average lone parent in work likely to be £1,000 a year worse off under the new system.

 

There is also a more fundamental problem here. Universal Credit is reliant on individual low paid workers being able to negotiate effectively, on a one-to-one basis (perhaps with some support from a work coach), with their employers for hours and earnings. But this ignores the real imbalance of power between workers and employers, and indeed between claimants and work coaches. As the Fair Work Framework for Scotland points out: “individual voice is not, however, a substitute for collective voice, especially for workers with little labour market power”. If an employee has low levels of discretion over how they go about their daily tasks (and one third do[2], including at least one quarter of DWP staff[3], are they really likely to in a position to negotiate with their employers over pay and hours? An increased role for collective institutions, such as trade unions, might be a more credible route to achieve these aims – though the UK Government appears to be unconvinced that trade union power should be strengthened.

 

We also have to remember that the system will continue to be underpinned by the threat of reduction and (in some cases) complete withdrawal of financial support by the state. Numerous reports have raised concerns about the risks to health associated with the stricter sanctions regime. The level of conditionality is set to tighten still further when Universal Credit is fully rolled out. In the three years since the stricter sanctions regime began, 101,547 JSA and ESA claimants have been sanctioned in Scotland. What can we expect once UC is introduced for everyone? There are already examples of in-work conditionality being applied. It is also worrying that previous periods of increased conditionality in Scotland were associated with periods of worsening mental health problems among low-income working age adults.

 

Public health professionals should be wary about whether Universal Credit really can improve health and reduce health inequalities. Unless more attention is given to the demand-side of the labour market and the quality of work on offer, it may risk driving some people not in work off benefits without improving their health. For those in work affected by the change prospects are mixed. Employees able to access good quality support from work coaches, and whose employers are willing and able to increase hours and earnings, are likely to benefit from the process. But where one of these components fails – where work coaches struggle, employees fear for their jobs, or where employers are unable to increase pay or expand hours due to market conditions – credit could rapidly turn into debit.

 

 

 

 

[1] Using the Government’s preferred International Labour Organisation measure: http://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment

[2] In 2013, 31% of adults in employment in Scotland reported that they sometimes/seldom/never had a choice in deciding how they did their work: http://www.gov.scot/Topics/Statistics/Browse/Health/scottish-health-survey/Publications/Supplementary2013

[3] In 2015, 61% of DWP staff strongly agreed or agreed that they had a choice in deciding how they did their work, 26% disagreed/strongly disagreed, with 13% neither agreeing or disagreeing: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/495907/dwp-people-survey-2015.pdf