Pandemic caused surge in young people claiming universal credit, study finds

27 Aug 2021 By Jessica Brown

Think tank says Covid crisis has reversed decades-long decline in number of benefit recipients, and urges employers to target hiring practices towards under-25s

The number of young people aged 16 to 24 claiming Universal Credit (UC) during the pandemic jumped by two-thirds – the largest increase than any other age group, according to new research by a think tank. 

The Resolution Foundation’s latest report, Age-old or new-age, found that the proportion of young adults claiming income-related benefits increased from nine to 15 per cent during the pandemic.

The proportion of 25 to 29-year-olds claiming UC had also risen sharply, from 17 to 24 per cent, while the number of 30 to 59-year-olds claiming benefits increased more slowly from 22 to 27 per cent.

In the first three months of the pandemic, 1.3 million more families claimed UC, with a further 600,000 families going onto the benefit since then, according to the study. 

This, the think tank said in its report, was helping to reverse a decades-long fall in the share of people receiving benefits. 

In 2005, 72 per cent of people lived in households that received at least one benefit, but this had fallen to 62 per cent just before the pandemic. Now, 64 per cent of people receive benefit income in their household. The government expected the number of families receiving benefits to remain higher this year and next, compared to pre-crisis levels, the Resolution Foundation highlighted. 

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The figures demonstrate that young adults have been hardest hit by the pandemic, the report stated. Official figures released in April this year also revealed that young people are among those worst affected by unemployment in the pandemic

Karl Handscomb, senior economist at the Resolution Foundation, said while the Covid crisis had led to a “surge” in claims, with 1.4 million more families now claiming UC, it had been “driven by young people”.

Young people have traditionally been the least likely to claim benefits, Hanscomb added, which “reflects the fact that they have been by far the hardest hit”.

“One legacy of the pandemic is likely to be more families receiving benefits, and particularly more families receiving Universal Credit. That will mean that future decisions on UC, such as whether to keep the welcome £20 a week uplift, will have a bigger impact on family living standards than ever before,” he said.

Laura-Jane Rawlings, chief executive of Youth Employment UK, said employers needed to consciously reach young people.

“As the economy re-opens and employers find confidence in hiring, employers are also finding a shift in the labour market and are now struggling to recruit labour for their needs. 

“This is down to a number of factors, but not least that young people find it hard to identify these opportunities. Employers need to consider their hiring practices, where they are recruiting and which partners they work with to reach young people in their communities,” she explained.

Charles Cotton, senior reward and performance adviser at the CIPD, suggested employers had a financial wellbeing policy to help support staff on money issues and offer “targeted financial education support” to people when they first start working and help them progress.

The Learning and Work Institute is also calling on the government to address the challenges young people are now facing. Its latest labour market analysis found that young people accounted for nearly two-fifths (39 per cent) of the fall in employment through the pandemic, despite making up just 12 per cent of total employment. 

The analysis highlighted that while employment was recovering for young people, 16,000 more 16-24 year olds are unemployed since the last pre-pandemic figure and the number of 18-24 year olds claiming unemployment-related benefits has risen 75 per cent on pre-crisis levels.

Sam Windett, deputy director of the Learning and Work Institute, said that as the UK transitioned from pandemic support to jobs recovery, more than 200,000 young people faced the final ‘un-furlough’ and another 500,000 young people were due to leave education over the summer. 

“The chancellor must address these challenges in his spending review and deliver the ‘opportunity guarantee’ on jobs and skills that young people deserve,” Windett added.

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