The Department for Work and Pensions (DWP) is introducing Universal Credit to replace six means-tested benefits for working-age households: Jobseeker’s Allowance, Income Support, Housing Benefit, Employment and Support Allowance, Working Tax Credit and Child Tax Credit.
It hoped that it would encourage more people into work, reduce fraud and error and reduce the costs of administering benefits.
However, the policy has been plagued with technical problems and faced a number of setbacks, with the National Audit Office now stating that it is “not value for money”.
Universal Credit has a long history of problems dating back to its inception, over eight years ago. The programme was initially being developed by a handful of suppliers – including Accenture, IBM, HP and BT – but was later ‘reset’ after it was found that the technology was not in tune with the policy requirements.
DWP then started developing a digital version in-house, known as the ‘full service’, but decided to keep the initial system in play to learn from at the same time. This twin-track approach was expensive and £837 million has been spent on the old system, despite DWP aiming to retire it by July next year.
Despite £1.3 billion spend so far, over multiple years, the National Audit Office report states that Universal Credit is still at a relatively early stage of progress. This is because about 10% (815,000) of the eventual number of claimants are now claiming Universal Credit. The department aims to complete full migration in March 2023 (some five years late).
Furthermore, one in five claimants do not receive their full payment on time, Universal Credit is creating additional costs for local organisations, and there has been an increase in the use of food banks in at least some areas where Universal Credit’s full service has been introduced.
Amyas Morse, head of the National Audit Office, said today:
The Department has kept pushing the Universal Credit rollout forward through a series of problems. We recognise both its determination and commitment, and that there is really no practical choice but to keep on keeping on with the rollout.
We don’t think DWP has shown the same commitment to listening and responding to the hardship faced by claimants. Maybe a change of mind set will follow the publication of the claimant survey on 8 June. We think the larger claims for Universal Credit, such as boosted employment, are unlikely to be demonstrable at any point in future. Nor for that matter will value for money.
Still not good enough
The report also claims that DWP still has a lot to do to improve the efficiency of Universal Credit systems. It states that so far the Department has provided enough functionality to run a basic system, but many processes are still “manual an inefficient”.
For example, DWP significantly overestimated the number of claimants that would be able to confirm their identity online with only 38% (compared with its expected 90%) succeeding in using Verify, the government’s online identity verification tool.
DWP hopes to “improve automation over the next few years”, but until then it will need more staff so it can undertake work manually.
To make matters worse, the department’s estimated net benefits (£8 billion a year), its aim to move an additional 200,000 people into work as a result of Universal Credit, and its claim it will reduce fraud and error by £1.3 billion a year, are all unproven.
As a result, the National Audit Office cannot guarantee that Universal Credit is proving its worth. The report states:
We think that there is no practical alternative to continuing with Universal Credit. We recognise the determination and single-mindedness with which the Department has driven the programme forward to date, through many problems. However, throughout the introduction of Universal Credit local and national organisations that represent
and support claimants have raised a number of issues about the way Universal Credit works in practice. The Department has responded to simple ideas to improve the
digital system but defended itself from those that it viewed as being opposed to the policy in principle.
The Department has now got a better grip of the programme in many areas. However, we cannot judge the value for money on the current state of programme management alone. 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 bene ts it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.