Universal Credit, Employment and Mental Health

The Government claimed that Universal Credit would reduce unemployment by 200,000 and save the tax-payer £8 billion.

On the 7th June 2018, Esther McVey (The Secretary of State for Work and Pensions) told parliament that: "Universal Credit is forecast to incentivise 200,000 more people to take employment than would have under the previous system and deliver £8bn of benefits to the UK economy per year." (see here)

However, the National Audit Office (NAO) found that "The Department will never be able to measure whether Universal Credit actually leads to 200,000 more people in work, because it cannot isolate the effect of Universal Credit from other economic factors in increasing employment. The 200,000 is based on the Department’s modelling. Instead of measuring the exact number of additional people in employment as a result of Universal Credit” (see here)

In October 2018, Ruth George MP asked the DWP Ministers to respond to the NAO’s report but her question has never received anything more than a holding reply that the government believed that Universal Credit would 'save money'. (see here)   

The DWP has failed to monitor any kind of control group so its data will never be able to reveal if Universal Credit had had any effect on employment beyond what would be expected from national employment trends. (see here)  

However, the UKRI-funded Understanding Society is one of the largest longitudinal household panel surveys in the world and this week the Lancet Public Health published the results of a quasi-experimental analyses which compared the outcome of people who had received Universal Credit with a control group, the study involved 52,187 individuals of working age (16–64 years) in England, Wales, and Scotland between 2009 and 2018. (see here)

The study found "No evidence that Universal Credit exposure was associated with moving into employment"

The study also estimated that about 64,000 people had had their mental health negatively affected by this welfare policy, of whom almost 22,000 are likely to have become clinically depressed. 

In response, to this careful academic study which has managed to do the analyses the government cannot, the Government simply claimed that "that there was no evidence of a causal link in the study." (see here)

The Lancet Public Health study was of course a causal study, which used a quasi-experimental design and a causal analytical methodology (difference in difference modelling), so the government’s response would be laughable if it was not for the tragic fact that tens of thousands of people have had their health damaged by the introduction of Universal Credit and thousands more will pointlessly suffer in the future.

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Publication date: 
Mar 4 2020