Tagged: Universal Credit

More evidence (if you needed it) that Universal Credit is failing

It’s not been a good month for Universal Credit.  Hard on the heels of the release of the Full Business Case, there has been a critical report from the National Audit Office and a troubling review of the operation of Universal Credit based on the experience of claimants.  Neither of them shows the system in a good light.  The NAO report casts doubt on the efficiency of service delivery and questions whether any of the claimed advantages of the reform can be realised.  They write:

We cannot be certain that Universal Credit will ever be cheaper to administer than the benefits it replaces.

There is no clear reason to suppose that the system will save money or that fraud and error will be reduced, and the impact on employment  is unknown and unknowable.  The review of the system’s operation finds that the system is complex, difficult to access and the support is inadequate.   Only half the claimants managed to claim without help, and the NAO found that rather less than half managed to get through the verification procedures online.  A quarter of claimants couldn’t submit a claim online at all. There were particular problems for older claimants and people with health conditions.  Then, after claiming. getting on for half the claimants were falling behind on bills or experiencing major difficulties.

One of the points that the NAO picks up on is timeliness in payment.  This little gem offers  the DWP’s reasons for late payments:

2.20  … The Department has told us that the performance had
declined because payment timeliness is sensitive to staff availability. It believes the lower performance can be attributed to:
• poor weather leading to office closures;
• February being a shorter month and therefore incorporating fewer working days to administer payments; and
• the Easter bank holidays.

Who could have guessed that there would be bad weather during the winter, that February would be shorter than other months, or that there would be a bank holiday at Easter?

Depressingly, the NAO  thinks we’re committed – this has gone on too long to be unwound again.  But there were still only 815,000 claimants in March, 325000 of them on ‘live service’ using legacy systems; that means that there are half a million people on full service, when the system is supposed to deal with 8.5 million.  It still makes sense to pause the rollout and fix what can be fixed.

Additional note, 15th June:  This is not so much an additional note as a reminder.  We’re being told, yet again, that Universal Credit was a great idea and everyone liked it.  I first objected to the ideas behind Universal Credit in October 2010, starting on the day that Iain Duncan Smith announced the scheme.  I argued then that the proposal was simplistic and impractical.  “There is no reason to believe that this scheme will increase incentives to work. There is no reason to suppose it will reduce fraud or error – quite the contrary. And there is no real basis for supposing it will make any difference in getting people to work instead. The government’s hopes for the new scheme look like wishful thinking.”  More than eight years later, there’s not a word of that I need to change.

 I might add, though, an objection to the fatuous argument that UC is a success because more people receiving Universal Credit are getting into work while on the benefit.  The Resolution Foundation comments on the basis that 110,000 more people are in work; the DWP says that 200,000 will be.  The NAO has already commented that we can’t know whether this has anything to do with benefits at all, but let’s assume for a moment that it’s true.  This is a scheme intended to cover eight and a half million people (the figure is on page 4 of the  NAO report).  If 200,000 more people work, that covers less than one person in 42.  If it’s 110,000, it’s one person in 77.  For every person who gets more work than before, there are something between 40 and 75 who don’t. Universal Credit is  a scheme that introduces confusion and hardship for  roughly  half of all claimants.  Does it really make sense to make twenty or thirty people suffer to get one of them into a job?  If governments seriously wanted to get people into work, it would be cheaper, fairer and easier to make jobs instead.

 

The DWP has published the Full Business Case for Universal Credit.

I have to confess to a weakness for fantasy fiction, but there are times when the willing suspension of disbelief doesn’t come easily.   The DWP’s Full Business Case for UC, Neil Couling’s entry for the Man Booker Prize for Fiction, scores well for imagination but lacks conviction.

There’s been a fairly dedicated attempt to avoid direct comparison with the equally unbelievable business case published in 2014.  At that time, the DWP was claiming that  Universal Credit would bring benefits of  £35.9 billion, consisting of  £9.1 bn for reduced worklessness, £21.1 bn in distributional improvements, higher takeup and entitlement, £1.5 bn in reduced fraud and error, £3.7 bn in reduced admin costs,  and £0.5 bn in improved health.  Now the claim is that UC will gain £24.5 bn in people choosing to work more, £10.5 bn in distributional improvements, and £9.1 billion in reduced fraud and error.

We’re being asked to believe that a system that has greatly reduced work allowances, and gets withdrawn much more rapidly than originally envisaged, will do vastly more to get people into work than was claimed last time.  And (given that the error figures have jumped across categories) we’re also supposed to believe that savings on fraud are six times greater than they were before, at a time when all the indications are that UC is more vulnerable to fraud than the previous system was.  What is supposed to make this plausible?

 

Universal Credit: more complexity for self-employed people

Five years ago, I was writing about the unsuitability of the Universal Credit scheme for the circumstances of self-employed people.  Lots of self-employment is fictitious – a fraud by employers – but there’s real self-employment, too.  Income from genuine self-employment tends to be lumpy – unevenly distributed, and slow to match either with costs or the time when the work is actually done.  In the short term, it can be difficult to tell what one’s income actually is. I’ve just had a quick look at my own accounts – fortunately, I don’t have to rely on Universal Credit.  Last year I received self-employed income in five months, got nothing in five more, and paid out in two others.  That last bit is not at all unusual – tax is usually due in January and July.

We are shortly due to have another change in the way that self-employed income is calculated.  The system began with the idea that everyone would have their benefit calculated in ‘real time’, and then, for self-employed people, that they would have their circumstances calculated monthly on the basis of a notional “minimum income floor”, even if they had none – or if, like me, their costs happen to exceed their income in that month.  The new system will  take larger income payments and distribute any nominal surplus to later months.   What it won’t do, as far as I can tell, is to take proper account of losses and liabilities, because the minimum income floor still applies  to loss-making months.  Nor will it be geared to the tax system, because while HMRC has started routinely taking six-monthly payments on account, self-employed people’s liability to tax still typically gets settled well after the event.

The Work and Pensions Committee is less critical of Universal Credit than it merits

The House of Commons Work and Pensions Committee has been reviewing the Project Assessment Reviews of Universal Credit, and their report was published yesterday.  In a nutshell, the plans are gobbledegook, there is no evidence, but the DWP assures us it is on track and that things have greatly improved.  The press coverage picks out some of the critical comments, but to my mind the report is remarkably restrained.  The project was, and remains, years behind schedule.  With billions spent, it still has not submitted its business case.  The management documents that have found their way into the public domain  substantially fail to relate to the task in hand – see John Slater’s comments on my blog.  The Committee has had clear evidence that they were deliberately misled about previous progress.   Universal Credit was, and is, a national scandal.

Universal Credit and “good intentions”

A blog from LSE, and a recent article in the Times (behind a paywall), suggest that we should acknowledge that politicians have “good intentions”, even if the policies go wrong: Universal Credit is the model.  There are certainly many people who accept the view that Universal Credit was intended to be simpler, more effective and capable of getting people into work.  I’m sceptical that that captures the true intention.  In 1994, Iain Duncan Smith made a case in the Daily Mail (13 April 1994) for a single, unified benefit in very different terms.

ODD, isn’t it, that as Britain’s standard of living has steadily improved, the number of people claiming State benefits has increased, rather than declined?

… The problem lies in the very way the system works. Far from merely providing people in need with a national minimum level of subsistence, it encourages dependency. … Vast sums of money are lavished on running something which is, inevitably, prone to abuse on a massive scale. What we need are fundamental changes – and soon. …

At present we make payments to the old, the sick and those with children, regardless of their financial situation. This nonsense means that a major part of the expenditure goes to help people who don’t need the money in the first place. … people become trapped, remaining dependent on the State rather than on their working abilities. No matter how much someone wants to work, a job is not a particularly attractive option if it means financial loss.  What’s more, the system actively encourages people to change or disguise their lifestyles in order to maximise their benefit entitlement. Who can doubt, for example, that some of the mothers now claiming single-parent benefit are actually living with a partner more or less full-time?  … It should make us all angry that while many deserving cases are failed by the system, the greedy and workshy profit from it.

So what can be done… ? …  There should be just one, income-assessed benefit, with all the relevant factors taken into account to cater for the needs of the individual and his family. This should be administered by one body, instead of the multitude of offices, each handling one type of benefit, we have now. …  The new benefit must also aim to make going back to work a more attractive option for the unemployed. The benefit should not be set too high and would need to be ‘tapered’ so that if people took jobs paying less than current benefits, they would not lose all their benefits immediately.

This is not, of course, the account famously given by IDS, as a New Statesman article showed, but the elements of Universal Credit were there long before his supposed ‘conversion’.  The basic argument for what became Universal Credit was that it was going to save money, prevent abuse and discourage dependency – not that it would give people a more secure, predictable income when moving in and out of work.

I’ve pointed to many of the deficiencies in the design of Universal Credit, but the worst problems with Universal Credit are not there just because it is a clunky, means-tested benefit.  There are two other aspects of the reforms which have created particular problems.  The first was the assumption that benefits were aimed at people who ought to be working instead.  Most benefits go to pensioners – something else that Duncan Smith disapproved of in his Mail article.  Most of the rest of the benefits have no direct relationship to people who are not working – Tax Credits, disability benefits and housing benefits go to people in or out of work.  Most of the rest after that were people who were not expected to work – single parents and people with incapacities, both the target of punitive and work-related action.  And most people claiming as unemployed – about 80% – return to work in the course of a year regardless.  Universal Credit was initially supposed to go to 7 or 8 million people (the target numbers have been falling); the primary target group for employment-related action was certainly less than half a million, if we include single parents and people on ESA, and less than 200,000 if we don’t.  Redesigning policy around readiness to work – a process begun by the previous Labour government – is an imposition of the wrong policy on the wrong people.

The second problem has been the abandonment of the idea that no-one should be left completely destitute.  Benefits are being stopped cold for a variety of reasons – sanctions, reappraisals, revisions and, unjustifiably, administrative transition to the new system. Some people have been driven to our “uplifting” food banks.  Here are a few more outcomes to lift you up:

What benefits are for

A response to my post yesterday on Twitter asks:  “Wondering what “directed to the wrong purposes” really means?” Twitter isn’t a good medium for discussion, so I’m going to try to deal with it here.  This government believes, I think genuinely, that the primary purpose of benefits is to help people into work.  That was the view not just of the Coalition before them, but the Labour government after 1998:  people may remember the slogan, “work for those who can, support for those who cannot”.

I tackle this point in my book, What’s wrong with social security benefits?  Most people on benefits aren’t expected to work (actually, most of them are pensioners); most people of working age aren’t expected to be in the labour market; most of the rest are working.  Benefits are there for lots of reasons – among them, meeting need, relieving poverty, economic management, social inclusion, subsidy, compensation, and so on.    When we get to particular categories of people, such as disability, the aims multiply; for example, I gave a special presentation last year about the provision available for people with mental health problems, and the list I’ve just given here doesn’t cover the ground at all.  When we get to the issues of Universal Credit, pat formulas about work miss the point; and the incongruity of lumping together issues such as self-employment together with incapacity, homelessness and child care  helps to explain not just why the system isn’t working, but why it can’t.

 

Tinkering with Universal Credit

The announcement of modifications to Universal Credit in the Budget fall a little short of what is needed.  Para 6.14 outlines proposed changes:

  • advances on entitlements for those ‘in need’ – effectively an interest free loan repayable over twelve months.  UC will continue to be paid in arrears.
  • the reduction of waiting time by 7 days; it will still be 5 weeks for most claimants.
  • continuation of Housing Benefit for two weeks.  That should reduce rent arrears by two weeks – it is not enough to ensure continuous payment.
  • ‘easier’ arrangements for payment of rent to landlords.
  • a slower roll out, still to be completed by December 2018; and
  • a limited trial of ‘innovative” approaches to improve earnings.

What the proposals didn’t include was

  • a review of tapers
  • a review of work allowances – the current allowances are too low to lead to continuity of contact
  • a review of the treatment of children
  • pause and fix, or
  • any announcement of measures to deal with the administrative problems.

Para 6.12 and 6.13 defend the system’s design. The government evidently thinks that the scheme is okay because people on it are working, and that if there are residual problems it’s because people are not getting out and working.  They haven’t realised that most of the people on working age benefits, and so most of the people the scheme is going to deal with in due course, are unable to work, and most of the rest are working already.  (Universal Credit should ultimately be there for 6 to 7 million people; only 1.4 to 1.5 million of them are ‘unemployed’, that is not working and available to work.)  The roll-out of Universal Credit began by focusing on a particular category of claimant, mainly younger single applicants; but as the scheme expands, more and more of the people who are being dealt with will be in other categories. That’s why problems such as self-employment or telling people who are working to come in to the office are only really emerging now.  The scheme is not so much ‘unfit for purpose’ as directed to the wrong purposes – and that means that no amount of reinforcement is ever going to make it appropriate to people’s needs.

Universal Credit: what took everyone so long?

There’s been a flurry of calls for the rollout of Universal Credit to be delayed (e.g. from two reports from Citizens Advice, and concerns from  Louise Casey and a clutch of Conservative MPs).   It’s still possible to hear people saying what a good idea Universal Credit is, how it was going to simplify everything and how it would help work incentives. “The trouble with Universal Credit”, a New Statesman article tells us, “is that everyone thinks it’s a good idea.”

There are four sorts of problems.  First, there were the basic flaws in the design.  I wrote this in a paper published in 2013:

Means tested benefits are not, of course, the only benefits which are subject to problems.  There are other aspects of the benefits system which are cumbersome, badly designed and problematic for claimants and administrators alike. They include, for example,

  • benefits which people cannot work out they’re entitled to
  • the problem of repaying money that people did not know they should not receive
  • rules that tell people they must work at the same time as recognising that it‟s not reasonable to work (the current position for ESA)
  • the medical reassessment of claimants
  • benefits which penalise claimants for circumstances outside their control
  • the cohabitation rule, and
  • complex assessments that require people to report changes across multiple dimensions.

Universal Credit has the lot. It is as if someone has started with a list of everything in the benefits system that causes problems and designed the new benefit round it.

Then there was the abandonment of all the benefit’s objectives, one by one. All the primary objectives – such as simplification, work incentives, reducing in-work poverty, smoothing transitions and cutting back on fraud and error – have been fatally compromised. The marginal rate of deduction is much higher than intended. The cuts in work allowances have removed any incentive for most claimants to remain in contact with the system if they find work.

Third, there were the problems of implementation.  None of the innovative methods envisaged – real-time processing, smooth tapers, digital by default – was achievable. There is no effective system for coordinating and pooling all the information required in one place – the new system has come to rely primarily on returns from claimants about changes. The system makes complex demands of claimants (for example, those relating to security, agreements by couples or job search) which are almost impossible to police.  It system relies on accurate information from claimants, and people cannot respond sensibly to questions they do not know the answer to.

And then, last of all, there are the so-called ‘teething’ problems – miscommunication, lost payments (surely that ought to be a priority concern?), and the difficulties of introducing the new benefit at the same time as managing a large injection of additional rules such as  conditionality and housing. With or without Universal Credit, we are already in the position where nearly a quarter of unemployed claimants have had benefits stopped.  Universal Credit is not just threatening  a major breakdown in the safety net; it has already happened.

I did wonder, before I started, if I really needed to bother writing all this again.  I’ve been making the same sorts of criticisms of Universal Credit for nearly seven years now – try this blog from October 2010,  when I was arguing that the scheme was simplistic, impractical and wouldn’t either enhance work incentives or reduce administrative errors.  While it’s encouraging that so many people are waking up to the problems – it’s never too late to make things a bit better, at least – I have to ask: what took everyone so long?

John Slater explains the thinking behind the project management of Universal Credit

John Slater has been responsible for a series of Freedom of Information requests about the Universal Credit fiasco.  Yesterday he sent me a copy of the project management plan  introduced by Howard Shiplee, who was responsible for the development of Universal Credit from May 2013 until his departure, following illness, in September 2014.  Shiplee had previously been responsible for building construction for the 2012 Olympic Games.

I was puzzled by the plan, and wrote back to John:

I’m baffled – I can see no relationship between the steps to be taken and the design of a social security system. It looks more like a plan for building a McDonalds outlet, where all the groundwork’s laid and you know exactly what you want to do, so it’s all about delegating tasks. … I think you’re a project manager, John – – can you explain it to me?

I found John’s response so marvellously clear and helpful that I asked him if I could share it on the blog.  Here it is.

“Hi Paul,

You are right my background is programme and project management (my first degree was IT so I understand that aspect as well). You aren’t far off with your McDonalds analogy.

The plan is a classic case of an organisation focusing on the IT side of a major change programme. UC is one of the biggest change programme ever undertaken and nothing I’ve ever seen produced by the DWP reflects this.

The 100 day plan is a classic example of people that have been on a training course (e.g. Prince2 or Management Successful Programmes) but have never done the job for real. If you look down the left hand side of the ‘plan’ you’ll see the following headings:

  1. Key dates & decisions
  2. BT – Business (I suspect BT means business transformation)
  3. BT – Service Design & Build (I suspect BT means business transformation)
  4. BT Interfaces (I suspect BT means business transformation)
  5. Pathfinder Day 2
  6. Programme Approach
  7. HR
  8. Finance
  9. Assurance
  10. Security
  11. Comms (Communications)
  12. Stakeholder
  13. Supplier

With the exception of point 1 these are typically referred to a work streams. The idea is that each of the workstreams goes along their merry way cooperating with each other to deliver the programme. The reality of this approach with any complex programme is that it always goes horribly wrong.

If you look at points 2 to 5 then it is utterly focused on the IT. The plan looks like something to produce a software product of some sort. There is no mention of culture change, process engineering (this should be done before any software is produced) and the biggest issue of all people! This covers the claimants, DWP employees, Council Employees, Welfare Advisors and so on. They are just expected to magically learn and make it work. The trouble is human beings don’t work that way.

Part of the issue is that the DWP employees working on UC at the time hadn’t ever done anything like this before so didn’t have a clue. The put people in roles (e.g. programme manager, programme office manager etc) but they hadn’t done it before and had just been sent on a training course.

I’ve been doing this stuff for 30 years and I would have struggled to get UC up and running (and I’m very good at this aspect of complex programmes). Bringing in someone like Howard Shiplee was always going to fail. I’ve run programmes involving a lot of construction and it’s a different world and a totally different mindset. I suspect if you looked at the approach used for construction during the London Olympic build it wouldn’t look dissimilar to this plan. With construction the focus is generally on design and then build (known as D&B). The key factor is the supply chain and can the main contractor get the materials and people on site on time and in the right order. If you look at the plan again I don’t think it’s unreasonable to see the left hand side of the dark vertical as ‘design’ and the right hand side as ‘build’. This is what Howard Shiplee understood and it was so deeply ingrained I doubt he could have done anything else.

In respect of the pathfinder system released at Wigan it was a cobbled together lobotomised version of the IT that would ultimately be required for the complete UC. At this stage of the programme IDS knew the IT was fundamentally flawed, hence the talk of large sums being written off at the time. He also knew that they had to start over again but couldn’t admit that as it would be politically disastrous. Therefore, they rolled out the lobotomised version that only covered a small subset of people claiming JSA and claimed success. While this version was being rolled out painfully slowly the DWP was working desperately to produce a brain new IT system that ultimately will be the UC IT System.

Personally I think the new IT system will also fail. The methodology (Agile) as it’s been used by the DWP means that too much has been done in isolation. The system is going to be extremely complex and as bugs appear I’m not convinced the DWP will be able to find out the cause and then develop a solution that doesn’t result and another problem.

Kind Regards

John”

 

Changing Universal Credit (again)

There are two days left for the consultation about limiting Tax Credits and Universal Credit to two children.  I’m not making a submission.  This is not a consultation about the policy, but about what exceptions should be made, including multiple births and the children of rape.  It’s a depressing process, which illustrates a general problem: if governments create stupid rules they then have even more problems to stop the anomalies  from spiralling out of control.

I’ve some sympathy for a comment made from the IFS in their work on the Autumn Statement, which included a change in the UC taper rate but maintained the swingeing cuts in the work allowance.  Stuart Adam pointed out that to date there have been four changes in the work allowance, one to childcare support and now one to the withdrawal rate.  It’s exceedingly difficult to know what the effect of cumulative small changes to Universal Credit will be, and maybe they shouldn’t be done unless we do.