Research and analysis

Summary: Are household formation decisions and living together fraud and error affected by the Living Together as a Married Couple policy?

Published 6 July 2023

Dr Madeline Nightingale, RAND Europe
Giulia Lanfredi, RAND Europe
Lucy Gilder, RAND Europe
Joanna Hofman, RAND Europe
Dr Chris van Stolk, RAND Europe

Overview

• Living together fraud and error (LTFE) refers to situations where a claimant has a partner but is receiving benefits as a single person (whether intentionally - i.e., fraud - or due to error). LTFE is a widespread issue in the UK, costing the taxpayer an estimated £760m per year.^{[footnote 1]}
• This evidence review conducted by RAND Europe for DWP summarises the evidence on how the UK’s Living Together as a Married Couple (LTAMC) policy affects LTFE and how this relates to contextual factors such as changing social attitudes, gender relations and patterns of household formation.
• While the review focuses on the UK context, where possible international evidence is used to locate the UK in an international perspective, drawing on examples from other OECD countries.^{[footnote 2]}

Research Context

• Although claims for Universal Credit (UC) UC are made on an individual basis, in couple households, both partners’ circumstances are taken into consideration in determining the benefit amount. Reflecting the economies of scale associated with living with a partner, the couple rate is lower than the amount paid to single adults.
• DWP guidance on Living Together as A Married Couple (LTAMC)^{[footnote 3]} is used by decision-makers to assess whether unmarried adults living in the same household are a couple. UC payments are usually paid to one adult in the household, although under certain circumstances separate payments may be made to each partner.

Methodology

• This evidence review addresses five research questions:
  • What are the prevailing attitudes and approaches to household formation in the UK and internationally (OECD countries)?
  • How can a household/benefit unit be defined in social policy?
  • What is the relationship between household composition and household finances?
  • What is the role of women in the household?
  • Does the Living Together policy affect partnering and cohabitation decisions? If so, how?
• Two quick scoping reviews (QSRs) were conducted, one focusing on how to define the household or benefit unit for the purposes of social policy and the other on broader social and economic changes: household formation and composition, household finances and money management.
• The QSRs focused on sources published in English, relating to the UK or other OECD countries and published between 2011 and 2021.
• A total of 10 interviews with subject experts were conducted to complement the QSRs and fill any outstanding gaps in understanding of the LTAMC policy, its effects on LTFE or the role of contextual factors.

Key findings

Overview of the existing literature on this topic

• There is little direct evidence on LTFE and how this is shaped by living together policy. Literature in this area is predominantly comprised of small scale, qualitative studies. Whilst these studies generate rich data and valuable insights, no impact assessments of living together policy were identified from which to draw causal inferences. In some areas, links between living together policy and LTFE are theorised but not empirically tested or substantiated.
• There is a need for further research to explore how LTFE is shaped by factors including policy design, and to evaluate the effect of policy reforms introduced in the UK and other OECD countries to address the issue.

Living together policy and LTFE

• Despite the lack of direct evidence, the wider literature points to factors that might affect or contribute to LTFE:
  • Research suggests that living together policy may discourage some people from living with a partner (although there is scarce evidence on whether these factors also contribute to LTFE). Claimants may be concerned about the financial implications of being jointly assessed with a partner and whether their income will go down (reflecting the couple rate). However, research highlights low awareness and understanding of the rules around cohabitation and benefit entitlement.
  • Claimants may be concerned about whether they will have full access to benefit income and control over how it is spent (particularly if UC is paid to a partner). Concerns about access to benefit income are particularly pronounced for claimants who have reasons to doubt the reliability of their partner - for instance if their partner is over-indebted, has a history of insecure employment or issues with drugs, alcohol or gambling – or those who are in a new relationship.
  • Undergoing joint assessment with a partner may be risky from the perspective of financial and other forms of domestic abuse, although further research is needed to substantiate this.
• Conclusions about the effects of living together policy on claimant experiences and behaviour should be taken as indicative only due to the lack of direct evidence on this topic.

LTFE and the changing social context

• Living Together Policy inevitably reflects assumptions and expectations about who will financially support each other, and in what circumstances. Certain principles underpinning living together policy may be out of step with the behaviour and preferences of some couples:
  • Living together policy is based on the idea that couples pool resources and that financial support in couples is coterminous with living together, but evidence suggests that increasingly, couples choose to keep their income separate.
  • The increasing instability and plurality of family forms in the UK (and other OECD countries) makes it more complex to delineate the couple and identify the benefit unit. A growing number of people are rejecting marriage or delaying it until later in life. Cohabitation is on the rise, whether as an alternative or precursor to marriage. A growing number of couples live apart together (LAT i.e., in separate household), for a variety of reasons. Increasingly, society is comprised of a diversity of family forms: single parent families, blended families, extended families etc. These changes may make the application of living together policy more complex, and they may call some of the assumptions on which it is based (for instance, about financial support) into question.
• There is a lack of direct evidence on how changing social norms and behaviours contribute to LTFE, so conclusions must remain tentative.

Options for policy form

• Drawing on the available evidence, this report considers whether there is scope to reform living together policy with a view to reducing LTFE.
• This is a complex policy area, with no clear or easy solutions. Different approaches are associated with advantages, disadvantages and trade-offs. Reflecting the complexity of the issue and the lack of policy evaluations in this space, the policy discussion is descriptive rather than directive (i.e., no recommendations are made).

Move away from the household as the unit of assessment

• Reducing reliance on household means-testing represents one option for reform, for instance by taking certain components out of UC and establishing them as separate, individual benefits. However, household means-testing is designed to target support to those most at risk of experiencing financial hardship, who are disproportionately adults living without a partner.
• Another policy option is to only take a partner’s income into consideration only above a certain threshold of individual income. This would in effect mean that the couple rate for UC would only apply to those earning above this threshold.
• Widening the circumstances in which split payments can be used or making this the default might also help to address LTFE. However, this raises complex questions about how the award should be split across the two partners (50/50, reflecting roles and responsibilities or allowing couples to decide).

Allow greater flexibility in deciding who should be considered a couple household

• It has been suggested that DWP could introduce a transition period in which couples do not have to undergo joint assessment. This would entail an initial period, for example the first six months that the couple is living together, when the partners can still be assessed individually if they choose.
• Allowing decision makers greater discretion could allow LTAMC assessments to take into consideration a broader range of factors. However, a system with greater discretion is more costly to implement and leaves greater room for bias and discrimination.

1. UK Government (2021). Fraud and error in the benefit system for financial year ending 2021. Accessed 02.03.22: https://www.gov.uk/government/statistics/fraud-and-error-in-the-benefit-system-financial-year-2020-to-2021-estimates/fraud-and-error-in-the-benefit-system-for-financial-year-ending-2021#def-1 ↩

2. Organisation for Economic Co-operation and Development (viewed on 4 May 2022) https://www.oecd.org/about/members-and-partners/ ↩

3. UK Government (2013). Advice for Decision Makers: staff guide. Chapter E4: Universal Credit - Living together as a married couple. Accessed 06.05.22: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/661551/adme4.pdf ↩