COMMONS

Shambolic” Universal Credit may never realise promised benefits

15 June 2018

A devastating report published today by the NAO concludes that “Universal Credit has not delivered value for money and it is uncertain that it ever will”. 

The report catalogues a series of extraordinary failures of design and implementation, and portrays a Department ‘stuck’ making slow, fraught progress on a policy that it cannot now go back on – with neither direction offering value for taxpayer money.

Commenting on the NAO’s report, Rt Hon Frank Field MP, Chair of the Work and Pensions Select Committee, said:

“This report blows up the DWP’s constant assertion that everything is going well and that any criticism comes from those who wish to make trouble for Universal Credit. The points that individuals have raised with the Select Committee are now writ large as systemic faults within the system, and the Government is caught in a trap of its own making. Because ministers were taught to be in denial earlier the programme, it has advanced to a stage where there is now a mega cost to scrap it and a mega cost to taxpayers to continue with it. Either way, too many claimants are being screwed down into destitution while the DWP insists that all is okay. The Universal Credit we have seen is a shambles, leaving a trail of destruction in its wake. Sadly this report will make little difference if the senior officers running Universal Credit remain firmly entrenched in La La Land.”

Progress:

  • The Department is stuck: it is making much slower progress than expected. As such, “Universal Credit is still at a relatively early stage of progress”. It cannot halt the programme, however. Its “incremental approach has led the Department to make many changes to its jobcentres, its digital systems and the working practices of the 12,000 people working on Universal Credit. As it has rolled out Universal Credit to more claimants and areas, these changes have become increasingly embedded across the Department. It would be both complex and expensive to revert to legacy benefits at this stage”. Consequently, the Department “does not have a realistic alternative but to continue”.
  • The business case approved at the end of May 2018 “should have been the final check” on the decision to invest in UC: but it was produced “at a time when the Government was already committed” to rolling out the programme. It is therefore questionable whether it constitute a “check” at all, given the existing commitment to the programme.

Effect on claimants:

  • The NAO “cannot quantify” how many UC claimants are experiencing difficulties with UC or hardship as a result. The organisations the NAO spoke to “referred to sufficient numbers of individual cases to indicate that at least a significant minority have been adversely affected”.
  • The Department has not measured the impact on claimants or assessed how much hardship they suffer. It told the NAO that “the policy intent is to help people get used to monthly budgeting, and it does not accept claimants have suffered hardship as a result of UC”.

Payment delays:

  • “Claimants who do not receive full payment on time have faced average delays of four weeks in addition to the five to six week waiting period. From January to October 2017, of those new claims to full service that were not paid in full and on time, 40% (20,000 households, which equates to one in ten of new full service claims) waited in total around 11 weeks or more for full payment; and 20% (10,000 households) waited almost five months or more.
  • Even once the first payment has been processed correctly, claimants can also face delays in subsequent assessment periods
  • “The majority of claimants do not have the money to manage [waiting for payment]. Take up of new claim advances is now 60%. Most claimants manage over this period by taking on additional debt”

There is also evidence that the “fix” the Government introduced to ameliorate the hardship caused by the design of the policy and processing delays —allowing claimants to receive up to 100% of their award in advance of the first payment—is causing problems of its own. The NAO report states:  “The changes to the rules regarding advances creates some challenges for the Department. Some people request an advance at a very early stage in the claim process. However, having received the advance, they do not continue with their claim and the claim is closed. This can make it harder for the Department to ensure the advance is repaid. The Department’s research found some individuals have made multiple claims, including one individual who has received 18 advances without following through to a fully completed Universal Credit claim.”

“Industrialisation”:

To make its promised efficiency gains, UC needs to become a far more automated system, and the delays to the rollout and automation of the digital service further reduce projected efficiency savings. The Independent Project Assessments received and analysed by the Committee unfortunately called for the “industrialisation” of UC for complex cases and vulnerable customers.  In those stark terms, however, it epitomises the challenges facing the UC programme. The Department last week released research showing that just 54% of claimants are able to apply for UC online without help.

The NAO report reveals further problems with the online systems. Verify—the Government’s online identity verification process—is vital to the Department achieving its efficiency objectives on UC. DWP was aiming for 90% of claimants to use the system, and is now aiming for 80%. But only 38% of claimants who try to use Verify manage to do so successfully, and 30% of claimants don’t try.

The Committee began its inquiries into Universal Credit in the last Parliament, and has maintained pressure on the Government to account for the impact and effects of the massive welfare reform, consistently questioning the policy’s design and DWP’s assertions about it. The three latest letters questioning program director Neil Couling further on the policy and DWP’s analysis and claims are attached. The table below summarises the current position, setting some of DWP’s claims about UC against the NAO analysis:

The Department said: The NAO said:
“This Business Case clearly demonstrates that Universal Credit provides value for money and huge benefits for claimants, the broader population and the economy as a whole. […] Universal Credit supports people into work, will help them to progress whilst in work, and represents clear value for money for the whole economy.”[1]

“Both we, and the Department, doubt it will ever be possible for the Department to measure whether the economic goal of increasing employment has been achieved. This, the extended timescales and the cost of running Universal Credit compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.”[2]

“We cannot be certain that Universal Credit will ever be cheaper to administer than the benefits it replaces”[3]

Neil Couling: “I did a detailed analysis for Baroness Hollis because she asked me about the 250,000 extra people we think will go into work as a result of Universal Credit. I am very happy to provide that for the Committee for you to see and reflect upon.”[4]

Alok Sharma: “Neil is obviously going to share the reports on the extra 250,000 people who will be in work as a result of Universal Credit.”[5]

David Gauke: “Those who are on UC versus equivalent people on legacy benefits, six months down the line you are more likely to have worked if you are on UC than if you are on the legacy benefits […] That is consistent with the modelling that was done at the beginning of the process that suggests that UC will result in 250,000 more jobs in this country when it is fully rolled out than would otherwise have been the case versus the legacy benefits.”[6]

“The Department will never be able to measure whether Universal Credit actually leads to 200,000 more people in work, because it cannot isolate the effect of Universal Credit from other economic factors in increasing employment.”[7]

“The Department says it cannot measure whether it is achieving 200,000 additional people in work because of Universal Credit (the employment impact). This is because it cannot isolate the effect of Universal Credit from other economic factors in increasing employment. It does, however, seek to evaluate whether individuals who receive Universal Credit are more likely to then go on to employment than those receiving legacy benefits (the individual’s employment outcome). This is not the same as it does not fully capture the net impact on the nation’s employment rate.”[8]

Neil Couling: “We are going to continue trying to match, get properly constituted comparator groups, and then understand what the labour market effects are […] I think [providing analysis on families on the Live Service in early 2018] is entirely possible, yes.”[9] “The Department had intended to assess the impact of Universal Credit Live Service for families and couples without children by December 2016 […] It has not done so. It now believes it cannot extend its current method of analysing the employment outcomes […] because it needs a control group of legacy service claimants. These are becoming unavailable as full service rolls out.”[10]
“The thing I would say about landlords not renting in the future is there was a very similar threat in 2008, when the then Labour Government stopped paying rent direct to private landlords […] You will be able to find individual landlords who will move away, but that happens now. […] I am not overly concerned, but we are looking at it and of course we keep it under consideration.”[11]

“As a result of the delay in receiving rent payments the private landlord and their representatives that we spoke to told us that from a business perspective there is increasing reluctance to rent to Universal Credit claimants […] In the Hastings area, a property agent told us that only one in 10 private landlords using their agency in the town will rent to benefit claimants.”[12]

Further information

Image: DWP

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