Tag: Universal Credit

The TUC proposes a ‘replacement’ for Universal Credit

It’s been obvious for many years that Universal Credit is failing. On this blog, I’ve considered a long series of critical reports.  When I first made criticisms of the benefit – that was done on the same day that Iain Duncan Smith announced the measure – my concerns were about the concept and its practicability.  Then the criticisms moved on to its implementation, and the impact of further complexity to make up for the deficiencies.  Nowadays, the areas of concern are more likely to be focused on the abundant empirical evidence of failure – for a benefit that has still not fully been rolled out.

The TUC has realised that Universal Credit is a ‘disaster‘, and a new report makes proposals for its ‘replacement’.  The detailed report covers six main areas:

  • making work pay
  • increasing the level of benefit
  • changing rules about conditionality and the initial waiting period
  • changing the process
  • altering the assessment periods, and
  • changing rules for payment.

These are all ways to improve the benefit.  I don’t think this goes anything like far enough.  The fundamental problems will remain:  a tapered benefit, a central focus on getting people to work  when most of its claimants are either already in work or aren’t going to be in the labour market, and a reliance on information that can’t be supplied or managed. The TUC’s proposals are well meant, but they leave all of those elements in place.

 

 

 

Computer says ‘no’

It’s admittedly difficult to get resources to people given the state of the benefits system.  The Chancellor has pleaded that it’s difficult to get higher benefits paid to people, because so many benefits don’t run on the shiny new systems introduced for Universal Credit.  Many people are still on legacy benefits, which rely on older computer systems.

A focus on Universal Credit may seem the best option available, but there are two large deficiencies in that.  The first is the deliberate exclusion of so many people from Universal Credit itself.  The coverage of UC is limited by design: the limitations are produced by

  • work requirements
  • people excluded from recourse to public funds
  • sanctions (the largest number being for people who have missed a meeting)
  • limited entitlements because of notional (or imaginary) income
  • capital rules
  • the arbitrary changes in entitlement coming from fluctuating incomes, and
  • Inaction/suspension because information required

At slightly higher income levels, people may also drop out of the UC system because of the benefit cap or the two child limit.

The second problem, of course, is that people may not have claimed UC although they were entitled to it. The government seemes to be working on the wholly implausible assumption that takeup is about 83% – which would mean that the takeup of UC was markedly better than the previous takeup of Pension Credit, Job Seekers Allowance or any disability benefit, and that that would be true despite UC’s special blend of all the factors identified as deterring takeup in previous research (PDF file).

There are other ways of getting money to people on the lowest incomes.  Cold weather payments  (ignore the weather bit) provide one obvious mechanism: they make it possible for the government to transfer money automatically to  recipients of Pension Credit, UC, Income Support, income-based JSA or ESA.   Or, if that’s too finicky, Winter Fuel Payments (which aren’t actually assessed in winter anyway) go to every pensioner, and Child Benefit goes to every child – that covers, in a simple and practical way, a substantial majority of people on lower incomes.   Putting money into pensions and Child Benefit as well as UC would be hugely more helpful than UC alone.  The targeting is not perfect, but it’s practical and a more effective than tax reductions could ever be.

The Way to Work … won’t work

I didn’t respond immediately to the Government announcement of new rules for unemployed people, because I can’t actually make sense of those rules.  All I’ve found to go on is a press release, which tells me that unemployed people will be expected to find work in any job, regardless of skills, after four weeks.  More specifically, the press release says this:

 those who are capable of work will be expected to search more widely for available jobs from the fourth week of their claim, rather than from three months as is currently the case. … Under existing rules claimants have 3 months to find a job in their preferred sector before facing the prospect of sanctions. New rules will mean that sanctions could begin 4 weeks after their initial UC claim, if they’re not making reasonable efforts to find and secure a job in any sector or turn down a job offer.

The way the system is supposed to work is this.  People make a claim for Universal Credit when they become unemployed.  They are then invited to a meeting with a work coach who gets them to sign a claimant commitment.  They do not receive benefit before five weeks.  So it seems that

      • the claimant commitment will be established and signed at a point where the obligations allow them to specify what their expertise and competence makes reasonable.
      • After four weeks, the claimant commitment will have to be torn up and replaced with other obligations.
      • The renegotiation is going to happen before claimants are actually paid anything.

I may have this completely muddled – I can’t tell from the details that have been made available – but if this is right, what I’d expect to happen is this. Some work coaches will  jump the gun – if they don’t, it would double their workload. People with skills will not bother claiming at all, because the extreme economic prejudice of taking any job will outweigh the potential benefit. Others will be sanctioned because they don’t turn up to a second meeting with the work coach. Employers will be flooded with inappropriate applications.

Stepping back from the details, there’s much more wrong with this policy.  The first misconception is that sanctions encourage people to get into work.  There’s no evidence to back that up.  The main use of sanctions in practice is to ensure compliance with the benefit rules – the vast majority of sanctions are given for not coming to meetings – and it’s not clear that they even do that.  Second, there is the myth that unemployed people won’t work otherwise.  Before the government started messing about, about 90% of unemployed people were back to work in a year.  That figure has fallen to about 80%, I suspect largely because of the forced transfer of many people from Incapacity Benefit or ESA – those who are too sick to work.  And the third is the ridiculously misconceived position that Universal Credit is mainly a benefit intended to get people into work.  It isn’t. It covers people on low wages, and as the transfer is proceeding there are increasing numbers of people without jobs who  are chronically sick or caring for young children – people who would previously have been receiving Incapacity Benefit/ESA  or Income Support.  The numbers of long-term unemployed people are relatively small, but policies have been driven by the myth that dealing with them is the main purpose of the benefits system. No wonder it’s a mess.

 

Universal Credit never fails to confuse

A research report from the IPR at Bath University began by trying to examine the impact of the £20 uplift on claimants, but hit a snag; many claimants haven’t a clue about how the uplift works, or even if they were receiving it. “Of the 56 participants, less than half said they were aware of the uplift (25/56); over half (31/56) were either not aware (28/56), or not sure (3/56).”

I didn’t even notice to be honest … because it doesn’t say that on the statement I don’t think … because his wage … can be different every
month, I never really know what we’re going to get UC, it doesn’t stay the same …

This shouldn’t come as a surprise.  Over time I’ve reported a catalogue of problems with the design of the benefit, and this one comes up repeatedly. More than ten years ago, I was complaining that “It can be hard for claimants to know whether they are entitled, how much they are entitled to and – just as important – when they should stop receiving the benefit.” The same point has been made by an All-Party Parliamentary Group.  The IPR report concludes:

We hesitate to call these effects ‘unintended’ or ‘design flaws’ because, in the main, they reflect how UC is intended to work.

Is the government replacing its £6bn cut in Universal Credit with a £1bn reduction in the taper?

It’s being proposed, apparently, that the way to compensate for cutting Universal Credit by £20 a week is to reduce the taper from 63% to 60%.  This is, from the point of view of claimants, a very small concession.  It would mean that, if they earn £200pw, they would be able to retain all of £6pw in UC, or potentially less than £4 pw lif they’re then subject to tax, National Insurance or loss of Council Tax Reduction.

This very marginal change will cost, according to government sources, will cost £1bn, in place of the £6bn that the current uplift is costing. The second of these figures makes some kind of sense.  There are currently about 5.8 million claimants of UC, and at £1040 per year the cost would come to just over £6bn.  But the first figure is one I can’t untangle at all, and the scrappy information available on the DWP’s Stat-Xplore site doesn’t help much.

I’ll start with a previously published figure, one which I have to admit I’d simply let pass without even noticing it. It was a claim, when the taper came down from 65% to 63%, that the cost would be £700m. On that basis, each percentage point on the taper costs the government £350m or so.  From that, it seems to follow that pulling down the taper by another 3% would cost  over £1bn.

When I start to think about it, however, that crude calculation doesn’t look as if it can be right. On current estimates (a forecast for this year) there are 2.3 million people  working and receiving UC. Cutting the taper for someone who is already earns £10 pw would allow them to keep an extra 30p in benefit. (If they’re not working, and have no other additional income, they wouldn’t get anything extra.)  To cost £1bn, the average income of people who are working and claiming benefit would have to have an income in the region of £300 pw – more or less, a full time minimum wage – and that would bring them all to the point of paying tax and National Insurance, which would claw back more than a quarter of the apparent benefit.  Are all the working people who get UC on at least a full time minimum wage?  Perhaps others can find the data to support this, but I can’t tell.

The situation is more complicated,  because the rules are complicated.  The work allowances (which aren’t actually ‘allowances’, but let’s not go there) are only there for families with  children, who might well use them, and people with limited capacity, who probably won’t.  There’s a difference in the allowances between people who rent and people who don’t. For higher total incomes, there’s a benefit cap.  It’s hard, then, even to say how many UC claimants are directly subject to the taper, or what their total income will be. The tally will certainly include single persons in employment, and it will probably include low-income families who are buying  a house, but I haven’t been able to extract figures that give me a sensible size for either group.  What I think I can say, at least, is that there isn’t a firm, clear constituent group who will certainly benefit from this concession.

It would be possible, and distributively fairer, not to reduce the taper, but to increase the work allowance, ideally making it available (as it used to be) to people without children. That would give a limited but determinate benefit to anyone  who works while on UC.  A government that was better disposed towards people on low incomes might be more inclined to retain the £20 uplift; but then, a government that was better disposed wouldn’t have introduced this nightmarishly complex system in the first place.

The simplicity of Universal Credit

I’ve just finished giving evidence to the Commons Scottish Affairs Committee about welfare in Scotland – the video is here, the transcript here.  The main point I stressed in the hearing is that we no longer have either a minimum threshold for income, or an effective safety net.  The first part is true because there are reasons for benefits not to be paid in full: the repayment of advances, notional income, the two-child limit  and overpayment recovery.  The second part is true because people may find themselves with no support: that can apply because of the five week wait, the 3 week wait for legacy benefits, sanctions, self employment status, immigration status or the treatment of capital.

I have to admit that I’m completely flummoxed by the repeated claims from politicians that Universal Credit is ‘simple’.  This seems to mean, that the UC works by comparison with the legacy benefits; but many of the complexities of legacy benefits, such as managing overpayments, conditionality, assessments and the benefit cap, are recent introductions.

Universal Credit is complicated by design.  It brings together disparate benefits within a common framework of rules. Pre-existing rules relating to worklessness, incapacity, and housing largely remain, and that means that UC is really a group of benefits clumped together under a shared masthead – a ‘portmanteau’ benefit.  Lumping benefits together doesn’t make them simpler.  First, there are the complications built into its design.  People can’t tell when they’re entitled, how much for, or when entitlement stops.  The amounts of benefit can change suddenly and unpredictably.  Second, there is the reliance on technology to fix the problems – tough for those who don’t have the facilities, tougher still when they’re locked down and free sources are cut off.  And then, third, there are all the rules  – multiple, finely discriminating rules, which turn the process into an obstacle course.  Examples are the rules for partners, reporting changes across multiple dimensions, capital rules and managing overpayments.  There are too many rules, and too many moving parts.

 

 

Comments from Twitter:

Couling strikes again: the DWP continues to be in denial about the failings of Universal Credit

Neil Couling, the ‘Director General’ of Universal Credit and the Senior Responsible Officer accountable to Parliament, has a long track record of denying what everyone else can see.   In 2012, he was the one who claimed that there were no targets for conditionality and sanctions, despite the detailed  evidence provided by the PCS and Guardian.  In 2013, he fronted the UC Full Business Case, where he wrote that

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.  Some of the most compelling aspects of Universal Credit are also highlighted here: the £2bn total cost of investment against a social return to the economy of £34bn over ten years; and an increase of people in employment of 200k.

The National Audit Office expressed its doubts, as well it might; there was no evidence to back up those claims.

This year, it fell to Couling and his colleagues to defend the DWP’s perverse practice of pretending that there were no bank holidays.  LJ Rose, for the Court of Appeal commented:

Mr Couling’s evidence is that as at the date of his statement in September 2018 the universal credit IT system had cost £1.3 billion to build and the estimate was it would need another £1 billion to finish the task. Any additional adjustments would increase this cost. Building another calculator to allow the amendment of assessment periods would, he says, require a complete rebuild, therefore substantially increasing the cost to the taxpayer by at least many hundreds of millions of pounds. …  Taking full account of all the SSWP’s evidence … I cannot accept that the programme cannot be modified … This case is, in my judgment, one of the rare instances where the SSWP’s refusal to put in place a solution to this very specific problem is so irrational that I have concluded that … no reasonable SSWP would have struck the balance in that way.

And now we have the latest report of the House of Commons Work and Pensions Committee, which takes Mr Couling to task over several points. First, he wanted to deny that people on UC were falling behind on their rent.

“When asked about the comparison between arrears, in Universal Credit and the legacy system, Neil Couling, the Senior Responsible Owner for Universal Credit, said that it was not possible for him to create a counterfactual” (pp 14-5)

Then he wanted to deny that the DWP had failed to provide the recommended support mechanisms for vulnerable claimants:

“We cannot agree with  the  assertion  made  by  Neil  Couling,  Senior  Responsible  Owner  for  Universal Credit, that the Department is currently providing a “de facto Universal Support”. ( p 46)

And he also wanted to claim that UC was not slower to deliver benefits for people with disabilities than other benefits have been:

the NAO found that, while 84% of claims from people receiving Personal Independence Payment (PIP) and Disability Living Allowance (DLA) were paid the core elements of their Universal Credit claim on time, only 75% of claims were paid in full and on time. … Neil Couling told us that the data on whether disabled claimants are paid in full and on time can “overstate” the degree of lateness … He told us : “Some of the lateness is artificially created by the way in which we are forced to collect the data, which is much better than the legacy system, I am hastening to add …” (p 53)

There is a pattern of behaviour here.  The Public Accounts Committee reported in 2018, after it had received evidence from Mr Couling and his most senior colleague, that

The Department’s systemic culture of denial and defensiveness in the face of any adverse evidence presented by others is a significant risk to the programme.

I am less concerned about the risks to UC, which has never been able to live up to its sales pitch, than I am with the effect on claimants.  The impact of cumulative delays, restrictive conditions, sanctions, an over-reliance on technological wizardry, debt and the devastating removal of minimum entitlements, has subjected millions of people to privation.  But it doesn’t help to be told that none of this is happening.

Universal Credit isn’t working: the Lords Economic Affairs committee’s judgment on UC

The report on Universal Credit by the House of Lords Economic Affairs Committee will not come as a great surprise to anyone who’s been following the evidence.  (Except, perhaps, me: I submitted an evidence paper  myself in March, and in the wake of moving house, and major illness six weeks after that, I’d quite forgotten that I’d done it until I saw it quoted on page 12.)  The chair of the committee, Lord Forsyth, has suggested that the report approves of UC in its ‘concept’, but that there are problems with its design and its administration.  Given the questions that the committee raises about real-time information, digital access and fluctuating incomes, I think the criticisms go beyond that.  The problems they recognise also include a familiar litany of failures:  among them, the 5 week wait, unpredictable benefit streams(“impractical” and “fundamentally unfair”), conditionality, the two-child limit and inadequate levels of benefit.  Despite all that, the system is “not broken irredeemably”.

The initial request for evidence asked whether UC had achieved its objectives.  As the statement of objectives has frequently shifted for political expediency, it’s hard to say even what the current tests are, but the committee proposes a range of distinct principles: dignity, adequacy, providing a predictable income, flexibility, fairness, achievable ends and comprehensibility.  They suggest that there could be a two-week payment up front, a three month fixed level of payment, and that child support could be taken out of the system altogether – those all seem to me to be good ideas.   But the fundamental problems will remain:  a tapered benefit, an obsession with getting people to work  when most of its claimants are either already in work or aren’t going to be in the labour market, and a reliance on information that can’t be supplied or managed.

Yet more failings of Universal Credit

“To govern”, Polly Toynbee writes, “is also to deliver”.  For anyone looking for further evidence of governmental incapacity and incompetence, Universal Credit is the gift that goes on giving.  A new report from the National Audit Office  focuses in the main on the problems facing new claimants, but on the way it points to a series of other issues.   The most immediate problems are

  • The effect of the 5-week delay before first payment.  57% of claimants seek advance payments, which means that their benefit is subsequently reduced to repay the advance; a further 22% delay claiming and incur debts as a result.  So, taken together, 80% of claimants face financial difficulties because the benefit is not designed to provide help when it is needed.
  • ‘Fraud and error’ – a figure which lumps together a load of different problems – is running at 10.5% of payments, almost a record for benefit payments.  Most of this, the NAO reports, is down to fraud by claimants;  we’re not told what type of fraud, but if so, UC is even more untypical of other benefits than it seemed to be at first.
  • The cost of implementing the benefit is increasing: the current estimate is £4.6 billion.

It’s worth reflecting on the last of these.  The Full Business Case for UC had claimed that UC would yield £24.5 bn in people choosing to work more, £10.5 bn in distributional improvements, whatever they are, and £9.1 billion in reduced fraud and error.   The ‘distributional benefits’ are unclear: UC has imposed a terrible cost on the people it has failed to serve, with most claimants suffering financial hardship and (despite some moderation) a ridiculously large number having benefits stopped in the name of discipline – nearly 90% of all  sanctions in 2019 were imposed as a penalty for missing appointments.  The last figure is obviously wrong, and in the wrong direction.  For the first, if there was ever any basis for the DWP’s claim that 200,000 more people would move into work – there probably isn’t – £4.6 billion would cost £23,000 for every one of these.  For the same price, the government could have created rather more than 200,000 useful jobs.

The administration of Universal Credit is judged to be irrational and unlawful

In an extraordinary judgment, the Court of Appeal have declared that an element of the assessment of Universal Credit is so irrational as to be unlawful.  Gareth Morgan has explained, at some length, how Universal Credit manages to take information about regular, predictable incomes and rent, and convert that into an irregular and unpredictable stream of income. The point of contention in this case is a small part of that, but the problem the court was looking at is pretty straightforward.  Banks do not operate on bank holidays and weekends, and the Universal Credit assessment ignores that.  That has meant, for people unlucky enough to have an assessment marked down for an awkward date, that regular income will be  counted as too high, or too low, and the amount they receive will fluctuate wildly.  The court was not impressed by the DWP’s arguments that changing the assessment in this case would be expensive or inconvenient.

“The Secretary of State for Work and Pensions’ refusal to put in place a solution to this very specific problem is so irrational that I have concluded that … no reasonable SSWP would have struck the balance in that way. “

How, we might reasonably ask, did the DWP get in this mess?  There have been three recurring problems.  First, Universal Credit was designed by people in a mental bunker, determined not to share, consult or engage people who understood how benefits work – including their own front-line staff.

Second, the system has been built around the capacity and convenience of the ICT, rather than the tasks that needed to be done.  The technology has never been capable of doing the sort of things that are needed to run a system properly – the failure of the verification system  is an illustration.  The process we now have in place is cumbersome, complex, slow, very expensive and difficult to change.  We did things faster, and cheaper, forty years ago.

Then there is the failure of the safeguard, which depends on the scrutiny of regulations by the independent Social Security Advisory Committee.  I’ve been critical in the past of the SSAC’s approval of policies and regulations that I cannot believe would stand the test of judicial review, such as mandatory reconsideration or the sanctions regime.  (Both policies violate the centuries-old principle of audi alteram partem, or natural justice: no legal penalty should be imposed without first giving the person sanctioned the opportunity to be heard.)  The problem is, I think, that the SSAC tries to reach decisions through consensus, and an insistence on compromise  is fundamentally inconsistent with the role of independent expert advisers in identifying specific issues that fall within their area of expertise.  Illegality should not be treated as being open to negotiation.  The bulk of the SSAC’s work is confidential, but in the light of this judgment they need now to review whether they had identified the fatal legal flaws in the regulations,  and if not why they failed to do so.

I’m not keen on Gareth Morgan’s proposed fix for the problem of dates, which is designed to tweak the assessment for the people affected while minimising disruption to the information that the DWP gathers.  By all means, let’s disrupt this. Real-time assessments are beyond our capacity to deliver; whole month assessments, delivered at the end of the same month, lead to radically unstable income streams; individual variations in payment arrangements lead to complexity and confusion.   I lean towards the French system, which is to use, as far as possible, retrospective information about means, and the same predictable, common dates for everyone: it makes a huge difference to the predictability and stability of income.