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Universal Credit not value for money, says watchdog

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Media captionUniversal Credit has proved controversial almost from the beginning

The government’s flagship benefits system has been too slow to roll out, causes hardship, and is not delivering value for money, a watchdog has warned.

The National Audit Office said the £1.9bn Universal Credit system could end up costing more to administer than the benefits system it is replacing.

Some claimants waited eight months for payment amid the switch to UC, which rolls six benefits into one, it adds.

The government said UC would bring a £34bn return over 10 years.

It said more people would get into work – and stay there longer – and that it had taken a “listen and learn” approach to the introduction of the programme.

The move to UC has long been criticised for its delayed and flawed implementation, with more than 110,000 people paid late in 2017 alone.

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Media captionSpeaking in September 2017, claimants told the BBC about the problems they faced

Rebecca Smidmore, a full-time carer for her disabled son, said the system was confusing and had taken more than a year to understand.

One of the problems, she said, was that if her husband’s pay day came one or two days early, the UC system calculated that he had earned double the amount for that month.

“In that case our universal credit is heavily reduced,” she told Radio 4’s Today programme.

“We don’t qualify for free prescriptions or dental treatment which we would do normally.”

What is Universal Credit?

Universal Credit merges six benefits (income support; income-based jobseeker’s allowance; income-related employment and support allowance; housing benefit; child tax credit; working tax credit) into one.

It was designed to make claiming benefits simpler. A single payment is paid directly into claimants’ bank accounts to cover whichever benefits they are eligible for.

Claimants then have to pay costs, such as rent, out of their UC payment. It can be claimed by people whether they are in or out of work – but payment decreases as you earn more.

What is universal credit – and what’s the problem?

Meg Hillier, chair of the Public Accounts Committee said the introduction of UC had been “one long catalogue of delay with huge impact on people’s lives”.

And the Child Poverty Action Group questioned whether the government should push on with a programme that was “demonstrably failing”.

‘Unproven assumptions’

But the public spending watchdog’s report found that so many changes had been made to job centres and working practices that there was no “alternative but to continue”.

The government’s expects UC to deliver £8bn of net benefits annually, but the report said the figure depended on “unproven assumptions”.

Ministers would never know if their aim of putting 200,000 extra people in work, or saving £2.1bn in fraud and error, would work, the NAO said.

It said UC currently cost £699 per claim – four times as much as the government intends when the systems are fully developed.

And eight years after work began on UC, only 10% of the total number of people expected to claim were on the system, the report said – with one in five not receiving their full payment on time.

A significant minority of those paid late, some 20% – usually the more needy and complicated cases – were waiting five months or more to be paid.

And yet “the Department for Work and Pensions does not accept that UC has caused hardship among claimants”, the report said.

It pointed to a recent internal departmental report that showed 40% of claimants were experiencing financial difficulties.

It said the DWP had not shown sufficient sensitivity towards some claimants as it would not accept late payments had caused hardship to people, because advances were available.

The result was the “unhelpful impression of a department that is unsympathetic to claimants”.

Analysis of DWP payment data revealed that in 2017, around one-quarter (113,000) of new claims were not paid in full on time.

Late payments were delayed on average by four weeks, but from January to October 2017, 40% of those affected by late payments waited in total around 11 weeks or more.

Some 20% waited almost five months and about 8% had to wait for eight months.

Despite recent improvements, one-fifth of new claimants in March 2018 did not receive their full entitlement on time. Some 13% received no payment on time.

‘Financial misery’

A spokesman for the DWP said: “We are building a benefit system fit for the 21st Century, providing flexible, person-centred support with evidence showing Universal Credit claimants getting into work faster and staying in work longer.”

He insisted Universal Credit was good value for money and repeated the forecast that it would realise a return on investment of £34bn over 10 years against a cost of £2bn, with 200,000 more people in work.

“Furthermore, 83% of claimants are satisfied with the service and the majority agree that it ‘financially motivates’ them to work,” he said.

Jane Ahrends, of the Child Poverty Action Group, said the NAO presented a “justifiably bleak” picture.

“Today’s report must give ministers pause for thought,” she said.

“Will the government press on with a programme that is demonstrably failing – causing financial misery for families – or will it restore the money that’s been taken out of Universal Credit in an effort to rehabilitate it for struggling families.”

Emma Revie, chief executive of food bank charity The Trussell Trust, called for more support to be put in place for “groups of people most likely to need a food bank, and debt advice to be offered to everyone moving on to the new system”.

Shadow work and pensions secretary Margaret Greenwood said: “This report shows just how disastrously wrong the Conservatives have got the roll out of Universal Credit.”

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