UC: value for money?

Issue 265 (August 2018)

Barbara Donegan describes an independent report which raises some fundamental questions about the operation of universal credit (UC).

The report

On 15 June, the National Audit Office (NAO) published Rolling out Universal Credit, its latest report on the operation of UC. The report was accompanied by a summary, a press release and a video on the NAO website.1 Confusion in some quarters over how to interpret a key recommendation, however, meant that the report received rather more attention than might otherwise have been expected.

The report begins by revisiting UC’s aims, which are to:

  • encourage greater numbers into work by improving financial incentives, simplifying processes and increasing the requirements that claimants search for work;
  • reduce fraud and error; and
  • reduce administrative costs.

Evaluating these objectives against results to date, the NAO concludes that:

‘Both we, and the Department [for Work and Pensions (DWP)], 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

As to fraud and error, the NAO concludes that the DWP does not currently know whether UC is reducing these, and will not finish developing the systems to identify potential fraud, nor be able to publish UC full service figures on fraud and error, until spring 2019.3

Key findings

The report’s findings include the following.4

  • As of March 2018, 815,000 claimants received UC: around 10 per cent of the predicted caseload when all eligible claimants are migrated from legacy benefits.
  • The DWP has no practical alternative to continuing with UC. The various changes made in jobcentres, digital systems and the working practices of staff mean that it would be too costly and complicated to revert to legacy benefits now.
  • In visits to jobcentres, NAO staff observed good relationships between work coaches and claimants: jobcentre staff reported that systems had improved significantly since their introduction.
  • The DWP’s own most recent claimant satisfaction survey indicated that 83 per cent of UC claimants expressed satisfaction with the service. (All UC claimants surveyed were in live service areas.)
  • The DWP has problems identifying and tracking vulnerable claimants. Lacking systematic means of gathering intelligence from partners, it has not measured how many claimants are having difficulties with their claims.
  • During 2017, 25 per cent of new claims were paid late – on average, four weeks late. One in five claimants did not receive their full payment on time. Delay is more likely to be an issue where verification of an element is required – eg, of rent or childcare costs.
  • The NAO estimates that between 270,000 and 338,000 new claims will be paid late during 2018.
  • UC is creating additional costs for the local organisations which support claimants.
  • Organisations working with claimants said that the DWP was unresponsive when they reported problems, and did not accept that UC caused hardship, since UC advances are available. This was despite the fact that the DWP’s own survey (June 2018) showed that 4 in 10 of the claimants surveyed reported financial difficulties.
  • The Department has considerable work to do to improve the efficiency of its systems – eg, enabling claimants to verify their identity online.

Recommendations

The NAO recommends that the DWP should:5

  • be more open in reporting on UC’s progress towards delivering the benefits promised; encourage third parties both to review assumptions it makes and to monitor its progress; assess the impact of UC on third parties, and, when calculating and budgeting the implementation costs of UC, include the cost to third parties;
  • ensure that performance and costs improve sustainably before increasing caseloads through managed migration; assess the readiness of its systems to support increased caseloads before beginning migration; not expand the UC programme before business-as-usual operations can cope with higher claimant volumes;
  • establish a shared evidence base with partners, looking at how UC is working in practice, ensuring that feedback from partners on implementation issues and the impact on claimants is considered along with the feedback it already collects from its frontline staff and programme managers; collect, analyse and publish this evidence, producing a shared understanding of what is happening on the ground and how it is addressing any issues raised;
  • make it easier for third parties to support claimants. Such actions might include: allowing those who support claimants to have access to a version of their journal so thatthey can view appropriate shared information and communicate with the DWP; extending the concept of the landlord portal to simplify verification processes (eg, for childcare costs); sharing information with third parties with the claimant’s consent, and allowing the bulk upload and download of information where this would be helpful to claimants (such as rent changes).

Morse code

In July, Sir Amyas Morse, the Comptroller and Auditor General, wrote an open letter to Esther McVey, the Secretary of State for Work and Pensions, taking issue with the way she was representing the contents of his Office’s report in the House of Commons.

He wrote that it was odd that she was now saying that the report did not taken into account recent improvements, as her department had signed off the report only days earlier. Further, the NAO had not complained that UC was being rolled out too slowly: it had recommended that the Department ensure it was ready before it started to transfer claimants over from legacy benefits. The letter concluded by questioning the minister’s assertion that UC was working. ‘The department has not measured how many universal credit claimants are having difficulties and hardship. What we do know from the department’s surveys is that although 83% of claimants responding said they were satisfied with the department’s customer service, 40% of them said they were experiencing financial difficulties, and 25% said they couldn’t make an online claim. We also know that 20% of claimants are not paid in full on time and that the department cannot measure the exact number of additional people in employment as a result of universal credit.’6

Shortly after publication of the letter, the Secretary of State came to the despatch box to offer an apology for ‘inadvertently misleading’ MPs regarding what the NAO said about the pace of the rollout; however she insisted that the NAO had not been able to take into account the impact of recent changes to UC.7

 


Please be aware that welfare rights law and guidance change frequently. Older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.