Background: Universal Credit (UC) was introduced in the UK in 2013 to gradually replace six benefit schemes by a single benefit scheme. UC has been criticized for its complex online application system, lengthy wait period, and its association with increased financial hardships among claimants. Previous studies have highlighted the system’s challenges, but this study aims to assess multiple health-related outcomes and financial implications of transitioning to UC.

Methods: Utilizing data from the UK Longitudinal Household Survey, this quasi-experimental study applied the Callaway and Sant’Anna difference-in-differences (CSDID) method, to account for the staggered implementation of UC and treatment effect heterogeneity. The sample included working-aged individuals (16-65) who were recipients of one or more of the six benefit schemes, which included those who transitioned to UC (treatment group, n=1627), and those who remained in the original schemes (control group, n=9641). Outcomes assessed included psychological distress, life satisfaction, impairment/disability, and changes in benefit and net income.

Results: We found that the transition to UC led to increased psychological distress and life dissatisfaction, with no significant effects on physical impairment. Furthermore, transitioning to UC led to a reduction in social benefit income; however, those who transitioned did not have significantly decreased personal or household net income over time.

Conclusions: Transitioning to UC is associated with adverse health outcomes and decreased benefit income, underscoring its potential to intensify financial challenges for recipients. Despite UC’s goals to simplify the welfare system and encourage employment, the findings call for urgent policy adjustments to genuinely support claimants’ well-being and financial health, ensuring that welfare reforms do not inadvertently harm the very individuals they aim to assist.

Co-authors

Chungah Kim; Kristine Ienciu; Dr Antony Chum, York University, Canada