Tag: Universal Credit

I looked at the report of the Resolution Foundation on Universal Credit when it came out, but wasn’t particularly excited by it.  It seems to say that the system can still be made to work given time and effort, and I’m not convinced that it can.  I referred to a number of the “teething” problems, so-called, in a previous post: they included

• the difficulties people have in making digital claims
• the lack of reasonable adjustments for people with disabilities
• requiring claimants to make claims in order to migrate, and using mistakes or omissions as a reason to demand  fresh claims
• insufficient levels of ‘universal support’
• obstacles to cooperation with welfare rights advisers
• the DWP’s apparent inability to engage with the process by which claimants report changes, the electronic ‘journal’, and
• the inappropriate use of sanctions.

But there are many more problems, where the system simply cannot operate as intended.  Those include

• the muddled system for verification, which cannot be done online
• the demand for instant assessment, rather than basing claims on previous, known income
• the unpredictability of a system where entitlements can be revised at short notice before payment date
• the use of individuated payment dates
• the lack of effective coordination with taxation
• the confused treatment of self-employed people
• the alterations to work allowances, which mean among other things that contact will no longer be maintained
• the effect of fluctuating entitlement on household management, particular evident in the treatment of rent
• the impact of the system on housing finance, and
• arrangements for transition that  lead to major income loss.

Beyond that, in terms of the overall design of the benefit, there are several systemic flaws:

• the complex means test
• the reliance on digital systems
• the reliance on immediate access to information that people cannot know about
• the high taper rates
• the failure to individuate claims
• the lack of flexibility, and
• the central confusion about employment and job-seeking – once the system is fully rolled out, most claimants on Universal Credit will not be seeking work.

The operational problems are all difficult, requiring a rethink of policy and administration to make the system work .  However, even if they were all to be resolved, the fundamental defects in the system would remain.

The National Association of Welfare Rights Advisers (NAWRA) has made a submission to the Social Security Advisory Committee about ‘managed migration’ to Universal Credit.  They point to a series of problems:

• the difficulties people have in making digital claims
• the lack of reasonable adjustments for people with disabilities
• requiring claimants to make claims in order to migrate, and using mistakes or omissions as a reason to demand  fresh claims
• insufficient levels of ‘universal support’
• obstacles to cooperation with welfare rights advisers
• the DWP’s apparent inability to engage with the process by which claimants report changes, the electronic ‘journal’
• the inappropriate use of sanctions.

All of this implies a need to “pause and fix”.  But even if that happens, the fundamental problems in the design and delivery of the benefit will still be there.

The DWP has just released statistics that tell us that

83% of new claims to Universal Credit Full Service received full payment on time.

94% of new claims received full payment within 4 weeks of the payment due date.

97% of new claims received full payment within 8 weeks of the payment due date.

This is an improvement.  According to the NAO report, in 2017 a quarter of new claims were not paid on time, and in March it was 21%.  However, it’s still woefully sub-standard.  The DWP has five weeks to process claims; the complexity of the system means that many claimants have already suffered delays before they get that far; by this account, some of them will not have received payment within three months.

Is it possible to do it faster?  Supplementary Benefit, a complex benefit delivered to cover more than six million claims a year without the benefit of computers, used to have a target of 14 days.  The Conservative minister Linda Chalker told Parliament in March 1980:

I should like to say a few words about our intentions. Regulations will be made to put the supplementary benefit position broadly on a par with the similar provisions for national insurance … That means that benefit officers will be required to determine new and repeat claims as far as is practicable within 14 days of the time when they are in possession of all the information necessary to make a determination. I emphasise that, as my right hon. Friend said in Committee, the vast majority of new and repeat claims for supplementary benefit are cleared well within the 14-day period. But I accept that regulations along the lines that I propose will serve as a useful reminder of the need for speed in resolving claims.

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 silly 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 – just one – into a job? 

If governments seriously wanted to get people into work, it would be cheaper, fairer and easier to make jobs instead.

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?

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 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.

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:

• Shoplifter became desperate and stole meat after her benefits were stopped
• Man_returns_to_crime_after_benefits_stopped
• Thief committed first offence in three years after her benefits were stopped
• Bridgnorth man with six inch knife hunted rabbits after losing benefits
• Mum died alone in her freezing home after her benefits were stopped