Urgent changes to Universal Credit are needed to stop those most impacted by the pandemic from being left behind as the economy recovers, according to a new report from Citizens Advice.

The charity warns that inappropriate or stressful job-seeking requirements, a lack of support with upfront childcare costs and rigid benefit rules for disabled people are all barriers that can prevent people from entering the labour market.

An estimated 360,000 people – equivalent to the population of Nottingham – who lost their jobs in March or April 2020 are still unemployed a year on. A further 2.4 million people on Universal Credit are still looking for work, with four job-seeking claimants for every vacancy.

Citizens Advice warns groups already at a disadvantage when job-hunting have been hardest hit in the pandemic, risking an unequal recovery and long-term economic scarring:

  • Under 25s were five times more likely to lose their job in the first lockdown than the rest of the working population. In total, more than 200,000 young people have been out of work for six months or more

  • Over one in three unemployed disabled people have now been looking for a job for more than a year, compared to one in seven non-disabled people

  • One in three unemployed single parents have been looking for work for over a year, compared to one in five working-age adults

The charity’s frontline advisers have seen hundreds of cases where the rules in Universal Credit are making it harder for people to find work. These include a parent considering an expensive loan to meet the upfront costs of a nursery place so they can work because Universal Credit will only reimburse the fees retrospectively. Another staff member supported a domestic abuse survivor who spent up to 40 hours a week job hunting after pressure from their work coach, despite suffering acute distress and anxiety.

While vacancies are picking up in some sectors, the charity’s research found around two in three (62%) unemployed people on Universal Credit say they were not confident of finding work in the next six months. Nearly nine in 10 (88%) Universal Credit claimants said their financial situation is having a negative impact on their mental health.

Citizens Advice says it fears a ‘K-shaped’ recovery, with some rebounding quickly, while others struggle to find work. It cites particular concerns over long-term unemployment, now growing at the fastest rate since 2010.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said “This has been an unequal crisis and we now face an unequal recovery, with those hardest hit by the pandemic facing an uphill struggle to find work.”

“As the economy reopens, the government has a crucial opportunity to prevent irreparable scarring from this crisis.

“Key to this will be making sure the rules in Universal Credit are fit for real life. That means supporting people into work, not pushing them into unsuitable jobs or adding to their stress and worry with the threat of sanctions.”