Tag: Universal Credit

Getting ready for a crash

Several pieces have appeared today expressing fears about the Universal Credit system. The voluntary sector expressed its fears yesterday about vulnerability, debt and the impact of cuts. The Chartered Institute of Housing is worried about the effects on the poorest claimants. Several of today’s reports (here’s an example) are prompted by the Work and Pensions Committee, which is urging the DWP to revise the timetable. A coruscating analysis from opposition MP Stephen Timms points to problems in the design of the system, IT, the link with PAYE and the timetable. It’s beginning to feel like living a street where all the burglar alarms are being set off in rapid succession.

It’s in no-one’s interests to see this system fail, and while I don’t go along with the general consensus that it looked like a good idea at the time, the obvious question now is what can be done to limit the damage. The first thing is to do less. Any one part of the government’s programme – the Work Programme, monthly payments, medical reassessment, CTB decentralisation, integration with PAYE – is ambitious. So pick one element, get it in place, and secure it before moving on. To make monthly payments work, for example, the delivery of the system needs common time periods, budget support, negotiation with landlords and utility companies, and an IT system that supports it. This is quite enough to be getting on with. It will take two years in itself – do it, by all means, but don’t try at the same time to introduce other measures, such as direct payments, that will cut across it.

Second, slow things down. There’s no good reason to begin with instant adjustment and real time processing. Offer benefit entitlements for three or six months, so that constant declarations and amendments aren’t needed. (It’s been done before, for Family Credit).

Third, protect vulnerable claimants. Limit the degree of personalisation, which creates uncertainty. If the system is going to be based in IT, take steps to ensure they have access to IT. Reduce people’s vulnerability to debt by amending the laws on short term debt. Revise the overpayment rules.

Fourth, ask people. The surest way to avoid making an unholy mess of benefit reform is to consult with the people who know – and the surest way to guaranteee a crash is to keep things secret.

Universal Credit: failing IT

Computer Weekly’s editor asks whether Universal Credit has to fail as an IT project. Universal Credit, he comments, “is perhaps the last of the mega-projects that was set up under the old rules”; in time to come, new approaches should stop the stream of bad decisions. But Universal Credit is not, first and foremost, an IT project; it’s about benefit delivery, and information management is secondary to the basic objectives. The reason why the programmers can’t deliver the programme yet is not because of the problems of coordinating IT, challenging as they are; it’s because the government has failed to work out what the circumstances are it’s dealing with, what needs to be coordinated and what needs to be delivered. No computer system can possibly answer those questions.

Words fail

The DWP has apparently ordered trials of voice-recognition technology as a means of identifying claimants online. For those who haven’t noticed, the proposal for making benefits ‘digital by default’ relies on millions of people using broadband and computers they currently don’t have access to; much of the software has not yet been released, tested or consulted on; massive IT contracts have been associated with major problems of control and continuity; the development of the system is faltering. And yet we have a proposal that depends on eight million people having something to speak into, understanding the processes and the questions, and speaking recognisably, clearly and consistently; and, because exclusion from the system will be obstructive to the administration and disastrous for claimants, there have to be no mistakes. It seems to be another case where the promises of IT specialists simply fail to relate to the conditions they are being asked to provide for.

Additional note, 10th December 2013.  In evidence to the Work and Pensions Select Committee, Howard Shiplee explained that a system that was fully digital and online could not be feasible, because it could never satisfy the requirements of security.   Banks, for example, require people to present themselves to open account.

Universal Credit and the poverty trap

A report for Gingerbread by Donald Hirsch claims that Universal Credit will not much help single parents on lowish incomes. The figures are uncertain, because the government has provided so little information about what the levels of benefit and the tapers will be. Hirsch’s central point is that if the effect of withdrawing Universal Credit is combined with the deductions of tax and national insurance contributions, the marginal rate of deduction – the ‘poverty trap’ – will be well above the headline figure of 65% or so that the DWP has been working on. It’s unclear whether the ‘poverty trap’ has ever had the effect on incentives that is attributed to it – it could happen, but people have to claim the benefit, know what the amounts of benefit are, and what the effect of extra work will be. It does reflect, however, on the fairness of the system – and a high marginal rate of deduction is built in to the design of benefits which are tapered as income increases. One of the key claims for UC was that it would bring the marginal rate of deduction down with a bump. It can’t do that unless both tax and NI thresholds are put beyond the scope of low incomes – a policy which Hirsch condemns as regressive.

"Glitches" in Universal Credit

The Independent on Sunday reports today that the Universal Credit pilots are in trouble. The national roll-out will be delayed, with more focus on regional pilots, costs have over-run, staff have left and the Treasury has identified the programme as being in crisis. Some parts of this were previously revealed by Computer Weekly. The Independent cites a ‘government advisor’: “IDS, like other ministers before him, has been hypnotised by promises of what an online system can deliver. Warnings were given to him more than a year ago. They were ignored.”

It’s hard to believe in retrospect, but it’s now over two years since I first warned in this blog that the scheme was impractical. I’m still hopeful that enough might be done to avoid catastrophe for millions of people. That can only be done through a process of development which is more reflective, more open, less presumptuous and slower.

Extra note, 14th November: another remarkable report from Mark Ballard at Computer Weekly suggests that Iain Duncan Smith has been kept in the dark about how badly things are going. That contrasts with his own conviction, previously reported in CW, that he is personally engaged and fully in control.

Weekly rents and monthly benefits

In Housing Scotland magazine recently, I wrote that when Universal Credit is introduced, “RSLs (social landlords) who continue to use weekly rents will not be helping their tenants”. I’ve been asked if I could explain what I meant, so here is the point at greater length.

Under Universal Credit, people aren’t going to be paid benefit every week; they’re going to be paid by the calendar month. If their circumstances stay the same, they’re going to get the same benefit every calendar month. If the landlord charges rent weekly, there’ll be no connection between the benefit cheque and when the rent falls due. A weekly rent means that tenants pay four times a month in some months, and five times a month in others; but a tenant who has to pay rent five times in one month will have to pay it from the same benefit which is used for four times a month. In the same way, with fortnightly rents, there’ll normally be two fortnights a year which have to be paid as an extra out of one month’s benefit.

Because there won’t normally be direct payments, these are bills that people will have to pay themselves out of their monthly benefit. I think this is going to make budgeting really tough for tenants, but fortunately the problem is easily avoided. All an RSL has to do is to charge by the calendar month, which is what most private landlords do, and the problems disappear.

Implementing Universal Credit

A new report for the Joseph Rowntree Foundation, published today, raises questions about the implications of the introduction of Universal Credit. The report focuses on three main issues: simplification, work incentives and conditionality. The authors of the report, Amy Tarr and Dan Finn, raise particular concerns about the pace of change, the division of responsibility with local administrations and the impact of the procedures on claimants.

Julia Unwin of JRF still thinks the principle of Universal Credit is sound. I don’t share that view. The creation of a portmanteau, mean-tested benefit could never hope to achieve the claims that were being made for it, and the design of UC has managed to build in elements from a long series of administrative failures – detailed and frequent means tests, tapers, over-reliance on computers, unstable entitlements, recovery of innocent overpayments, claims that depend on other parties and so on. The lack of thought about its relationship to other benefits, which this report stresses, further undermines any claim it might make to simplify the system.

Who benefits?

In Parliament this week, David Cameron rejected arguments that benefits for people with disabilities will be lower. This is from Hansard on 17th October:

Mr Bain: … Last week the Prime Minister promised that work would always pay, but this morning Baroness Grey-Thompson and the Children’s Society have revealed that his current plans for universal credit next year will mean that up to 116,000 disabled people in work could lose as much as £40 a week. Does not that say everything about how this divisive Prime Minister always stands up for the wrong people? At the same time as handing huge tax cuts to 8,000 people earning over £1 million a year he is going to penalise some of the bravest strivers in our country.

The Prime Minister: The hon. Gentleman raises an extremely serious issue; let me try to deal with as fully as I can. The money that is going into disability benefit will not go down under universal credit; it will go up. The overall amount of money will go from £1.35 billion last year to £1.45 billion in 2015. Under the plans, no recipients will lose out, unless their circumstances change. All current recipients are fully cash-protected by a transitional scheme. On future recipients, we have made an important decision and choice to increase the amount that we give to the most severely disabled children, and there will be a new lower amount for less disabled people. That is a choice that we are making. As I have said, we are increasing the overall amount of money and focusing on the most disabled. That shows the right values and the right approach.

Some of the points here are unclear. There is no such benefit as ‘disability benefit’, so it is hard to tell just what the PM is referring to – it is not ESA or the Income Support that is going to be included in Universal Credit. I am not sure which benefit cost £1.35 billion last year, but my best guess is that it was Disability Living Allowance for children, which was forecast in the last budget to be £1.31 billion. If that’s right, the figure is irrelevant – this is not a benefit that is going to be affected by Universal Credit at all. Current recipients are only protected ‘unless their circumstances change’, and that will include movements into and out of work, and reaching school leaving age.

Probably more important than the precise figures, however, is the general message. The PM says here that the government is “focusing on the most disabled” and that this is “the right approach”. But this approach was apparently rejected by Lord Freud, the responsible minister, in last month’s evidence to the Work and Pensions Committee, when he explained that the priority was to liberate disabled people by giving them opportunities to work (see my note on A zero-sum game, 11th October). Is the government giving priority to those who are most disabled, or those who might be able to work? They are not often the same people.

A zero-sum game

I spent part of yesterday evening relaxing in front of the BBC Parliamentary Channel, listening to evidence given by DWP ministers to the Select Committee on 17th September. (This is, I know, a sad admission about my domestic life. I will try to get out more.) I was struck by the following statement by Lord Freud:

Glenda Jackson MP: We also had evidence that specific groups of disabled people will have a significantly lower income on Universal Credit than under the current system, even when they are not fit for work. What is the policy rationale behind this?

Lord Freud: It is just not true.

Glenda Jackson: Oh, good. Fill us in then.

Chair: When the severe disability premium goes, it is.

Lord Freud: We have maintained the amount of spending within the disabled community. We have adjusted how it is distributed.

Back to first principles. If overall spending stays at the same level, and there is any reallocation of resources at all, someone must be worse off. It is mathematically unavoidable. In this case, what I understand the government to have done is to prioritise disabled people who have prospects of work – that was the basis of Lord Freud’s spirited defence of the new system. That must mean that those who are not part of the labour market – and so, those with the most severe disabilities – get less.

Universal Credit implementation

The BBC reports this morning that it has been able to view evidence about growing concern on Universal Credit. That should not be surprising, because the evidence to the Work and Pension Committee is public: it is available here.

There are valuable comments on the process of implementation from UNISON, South Lanarkshire Council and East Riding of Yorkshire Council. The Institute of Chartered Accountants also makes an important point I have to admit I’d not much thought about before – the situation of self-employed people, small businesses and independent workers means they will have to return their books monthly when currently many struggle to do it annually.

Much of the evidence consists of apprehension either about principles or about elements of the scheme which have not been settled. There is a growing sense, beyond that, that the problems that have to be resolved cannot be tackled in the time-scale that is planned, and that we are heading for a crash.