The impact of the roll-out of Universal Credit on the Claimant Count

Summary

The Claimant Count is a measure of the number of people claiming benefits principally for the reason of being unemployed, based on administrative data from the benefits system. It provides a timely indication[1] of unemployment and allows for detailed analysis to be produced.

Before 2013 it was measured using the number of people claiming Jobseeker’s Allowance (JSA). Following the introduction of Universal Credit, the Claimant Count is now measured as the number of people claiming JSA plus the number of Universal Credit claimants who are required to look for work.

The administration of Universal Credit requires more people to look for work, and so includes a broader group of people within the Claimant Count. Further, the Department for Work and Pensions administrative systems on which the count is reliant are still bedding down the transition to the new benefit. As a result, the ONS has decided to remove the Claimant Count from its UK Labour Market and Regional Labour Market statistical bulletins for the foreseeable future, since it may now be providing a misleading representation of the UK labour market.

This note sets out in more detail some of the issues that have emerged in the Claimant Count data series as part of the ongoing roll-out of Universal Credit. These changes affect the level of the Claimant Count series, its seasonality, the comparability of the series over time, and the comparison of London estimates with national estimates.

What is Universal Credit?

Universal Credit (UC) is a new benefit administered by the Department for Work and Pensions which has started to replace six existing benefits and tax credits with a single combined monthly payment. It will eventually replace:

  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Working Tax Credit
  • Child Tax Credit
  • Housing Benefit

By bringing together out-of-work benefits and tax credits, Universal Credit is available to people who are in work and on a low income, as well as to those who are out-of-work. Roll-out is taking place gradually across Great Britain.[2] Whether you can claim Universal Credit and how you manage your claim depends on where you live and your personal circumstances.

  • In Job Centre Plus areas with Live Service, Universal Credit is mainly limited to claims which are relatively simple. For more complex claims, people continue to claim the legacy benefits;
  • In Full Service Job Centre Plus areas, Universal Credit is available to all types of claimant.

UC Live Service was first introduced in April 2013 in four postcodes in the North West of England. This began with claims from single people before extending to couples and families with children in 2014. The roll-out of Live Service was completed by Spring 2016, so that Universal Credit is now available in all Jobcentres – at least for new single claimants. By September 2018, all new claimant groups should be transferred onto UC Full Service across the country. The remaining benefit and tax credit claimants will then be moved onto Universal Credit by ‘managed migration’, with the latest end date set at March 2022.[3]

In London, UC Live Service has been available for all new claims from single jobseekers since April 2016. A limited test of UC Full Service was launched in Sutton in November 2014, and has expanded to other areas since – with 13 Jobcentre Plus offices now offering Full Service.[4] Overall, there were 95,900 people claiming Universal Credit at London Jobcentre Plus offices in June 2016, of which 55,400 were out-of-work and subject to labour market conditionality.[5]

How does UC affect the Claimant Count?

The Claimant Count is a measure of the number of people who are claiming benefits principally for the reason of being unemployed. It is based on information extracted from Department for Work and Pensions administrative systems.

Between 1996 and 2013, the Claimant Count was measured using the number of people claiming Jobseeker’s Allowance (JSA). Following the introduction of Universal Credit in 2013, the adjusted Claimant Count is now measured as the number of people who continue to claim JSA plus the number of Universal Credit claimants who are required to look for work.

Under Universal Credit a broader span of claimants is required to look for work than under the previous tax/benefit system where only those on JSA were required to actively seek work. The principal groups now required to seek work include partners of claimants and claimants awaiting or appealing Work Capability Assessments.[6] This means that, with the roll-out of Universal Credit, the level of the Claimant Count series is likely to be higher than it would be otherwise, even if the overall level of unemployment is not.[7]

The impact on the Claimant Count so far?

The roll-out of Universal Credit has also impacted on the seasonality of Claimant Count estimates. While it was initially assumed that Universal Credit would have a similar seasonal pattern to JSA, as roll-out has progressed it has become clear that this is not the case. The reason is not entirely clear, but may be linked to differences in administrative processes.[8] Consequently, the seasonally-adjusted Claimant Count series has become more volatile and is failing to reliably capture underlying labour market trends.

In addition, the impact of the broader span of claimants covered by the Claimant Count is increasingly noticeable in areas where Universal Credit is in more progressed phases of roll-out. As Figure 1 shows, this is having a significant impact on the data for London, with a marked increase in the number of claimants in Jobcentre Plus offices operating Full Service.

Figure 1: Index of Claimant Count in London, Full Service vs. Live Service JCP Offices

Index, Jan 2013=100. JCP office classification based on UC service status at July 2017.

Source: ONS Claimant count by sex and age

The Claimant Count increased by 52.5% in Full Service offices in the year to June 2017, compared to a 1.8% rise for Live Service offices.[9] This is to be expected as more people are brought within the coverage of the Claimant Count. However, it is undermining the comparability of the series over time. Similar trends are evident nationally.[10]

As roll-out progresses, not necessarily evenly across the country, it is also impacting the comparability of London and national estimates.[11] As Figure 2 (overleaf) shows, there has been some divergence between the London and Great Britain Claimant Count series over the last year or so, but the introduction of Universal Credit is making it difficult to interpret these trends (i.e. it is not clear to what extent this reflects underlying labour market trends or differences in the staging of UC roll-out across the country).

Guidance on interpreting the data

The ONS now believes the seasonally adjusted Claimant Count series may be providing “a misleading representation of changes in the UK labour market” and, given the ongoing process of Universal Credit roll-out and future planned expansions, “these problems are likely to persist for some time”.[12]

Therefore, the ONS has withdrawn the Claimant Count from the UK Labour Market and Regional Labour Market statistical bulletins for the foreseeable future. The status of the series will be kept under review as the Universal Credit roll-out takes place and relevant databases develop further. The ONS will, however, continue to publish the Claimant Count data.

As the Claimant Count is a widely-reported series, GLA Intelligence are currently continuing to provide it through London Datastore.

Figure 2: Index of Claimant Count, London and Great Britain

Index, Jan2013=100

Background / Further Information

 

[1] Although not the official measure of unemployment, which comes from the Labour Force Survey and is based on a concept defined by the International Labour Organisation.

[2] Welfare reform in Northern Ireland was delayed and is now being implemented to a timetable starting in September 2017.

[3] Although roll-out of Universal Credit has been ‘substantively delayed’ several times. See, for example, Autumn Statement 2015: Policy Costings; p33

[4] Department for Work and Pensions (2017) Universal Credit: 29 Apr 2013 to 8 Jun 2017

[5] Department for Work and Pensions (2017) Conditionality Regime by Month and Jobcentre Plus (Stat-Xplore). Note: these figures are based on the JCP office the claimant is attending, not necessarily where they live.

[6] Subject to certain exceptions, see: House of Commons Library (2017) Universal Credit and the Claimant Count

[7] The roll-out of UC will not directly affect the main measure of ILO unemployment estimated from the Labour Force Survey. At the same time, other factors may also be influencing the Claimant Count series in an uncertain way, including benefit sanction decisions.

[8] Claimant Count is a seasonal indicator, affected by things like tourism, Christmas and the academic year. The ONS adjusts national and regional data to strip out these variations and show underlying trends more clearly. However, there is not enough data to accurately judge how seasonal factors affect the number of UC claimants because it is still a relatively new benefit.

[9] The designation of JCP offices here (as ‘Live Service’ or ‘Full Service’) is based on their UC service status at 8 June 2017. Source: DWP (2017) Universal Credit: 29 Apr 2013 to 8 Jun 2017

[10] House of Commons Library (2017) Universal Credit and the Claimant Count

[11] Once Universal Credit roll-out is complete, this should no longer be an issue, although there may be differences in how the expansion of coverage affects the overall Claimant Count in different geographies.

[12] https://www.ons.gov.uk/news/statementsandletters/publicationarrangementsfortheclaimantcount