The covid-19 pandemic has reminded us of the importance of individuals and families having enough money to tide them over during difficult periods. While income adequacy is rightly the centre of this debate, the role of income change in short periods of time is often missing. Often it is monthly or yearly income that is discussed as representing the financial realities of households, but we know less about the experience of managing income as it changes between weeks and within people’s day to day lives.
The article this blog is linked to draws on in-depth interviews with 15 households and income diaries for periods of up to five months to focus on how income changes in short periods and how people manage and cope with these ups and downs. We found that households on a low income had limited options, particularly in short periods and that their access to relational support from friends and family was central to their experience. By tracking income and expenditure in short periods and focusing down on differing day to day experiences in longitudinal interviews, the research could look more closely at relational coping strategies, what they reveal about the experience of low income, and how it can be better addressed through policy.
Relational support is defined as financial and non-financial support provided by family, friends, and acquaintances. Whether this help was available at the right time was critical to how households coped. In accessing relational support, participants were found to belong to three broad groups: those who had help available when needed; sometimes available when needed; and rarely available when needed. Those who had help available when needed generally had higher incomes and at least one closer relationship with a family member or friend who had a developed understanding of their needs and who could provide responsive and flexible support. Those who sometimes had help available had incomes that were closer to average within the sample and were more likely to experience relational costs when receiving support, which was more likely to be one off, from those who had less understanding of their needs and with clearer dynamics of control and reciprocity. Those who rarely had help available usually had lower incomes and weaker relationships with those giving support, which was often inflexible, short-term and one off. When help was not available, this group accessed charitable support and experienced hardship.
Flexibility and responsiveness
The most effective relational support was flexible and responsive and based on a detailed understanding of a household’s circumstances and needs. For those who don’t have help available, the role of social security benefits and charitable support is even more important. This research reminds us of the importance of assessing claimants needs and suggests more detail and understanding of a households circumstances would improve support. For example working with organisations to understand how debt constrains finances even when income is high in specific periods.
Balancing responsiveness and stability
Balancing responsiveness to change and income stability is a policy challenge for means-tested benefits. Universal Credit’s monthly payment and assessment was designed to respond to income change in the following month. This can work well for some claimants, but others have experienced inadequate and unstable income as a result with detrimental impacts on their lives. Other households do not receive the money they need, when they need it and rely on relational support such as borrowing from family and friends, to smooth income and cover periods of low income.
Others have suggested policy changes to address these issues. One option to increase income security is for Universal Credit to provide a fixed income for a longer period. However, this could mean it becomes less responsive and may need a mechanism for responding to drops in income within this longer assessment period (such as happens with the recalculation of Working Tax Credits within the year).
Outside of means-tested benefits, it is important to look at wider social security provision and the balance of universalism and means-testing. For families with children, income security could be ensured through increasing rates of Child Benefit. However, this research has identified a need to address the needs of single person households who are less likely to have access to relational support.
The experience of income change
Income change played an important role in participants experience and most were concerned with having enough money in the short periods of time in which they lived their lives. These findings show how important the timing of both income and expenditure are for low-income households and how relational strategies often involve smoothing income or addressing need as it arises over time
There is a great deal to learn from how relational strategies are used to manage income change in short periods. As well as reminding us of the importance of the timing of income and expenditure, it shows how the best forms of support are responsive, flexible and ensure that people’s needs are met over time. This suggests a need to consider the short-term experiences of claimants and to provide more personalised support through social security provision. Focussing down on how claimants experience short term income change and using this experience in policy design would increase the likelihood that income security could be achieved with ongoing flexible and responsive support when it is needed.
About the author
David Young is a Research Fellow at the University of Salford.