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 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:
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The Department said:
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The NAO said:
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“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]
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“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]
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Neil Couling: “I did a detailed analysis for 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]
: “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]
: “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]
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“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]
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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]
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“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]
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“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]
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“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]
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Notes:
The Committee’s inquiries:
Universal Credit Project
Assessment Reviews
Universal Credit
