The Universal Credit business case

Belatedly, because I blinked and missed it, here are some details about the Universal Credit business case. The full business case has not been published itself, but there is a glossy report out, entitled Universal Credit at work, dated October 2014.  The press release, under a different title, is dated 22nd October, but the properties on the PDF file say the report was finalised on 30th October.   According to the document (p 31), the Treasury finally signed off the business case in September, fully a year after a Treasury official told the Commons Work and Pensions Committee that they were waiting to see it.  Further note, 12th December.  It transpires that this is not accurate.  What the Treasury signed off is the Strategic Outline Business Case, and that does not mean that they accept the figures.  There are two further stages before a case can be said to be signed off:  an Outline Business Case, and a final Business Case.  This was explained by Sharon White, speaking for the Treasury to the Public Accounts Committee on 10th December. 

This is the current statement of costs and benefits, from page 32 of the new report.

Universal Credit: Steady state value per annum and values to 2023 – 2024 (£ billion)

Steady state value
per annum
Total value to 2023/2024
Reduced worklessness:
employment impacts
2.4  9.1
Redistribution effects
(higher takeup and entitlement;
distributional impact of
reduced worklessness)
2.7 plus 0.8 21.1
Reduced fraud and error 0.2  1.5
Reduction in administration costs 0.7  3.7
Other benefits to wider society
(health)
0.1  0.5
Total gross benefits  6.9 35.9

 

I raised questions last year about the figures that had been released to the National Audit Office for the business case, which seemed to claim a 12-year benefit of £38 billion.   The total of £36 billion looks to be comparable to last year’s £38 billion, but actually it is claiming that the gains are much higher; the difference is that this table (unlike last year’s figures) does not include savings to the government in benefit payments, all of which should be set against the income lost to  claimants.  It’s not clear in these new figures whether there is any adjustment for net present value.  There is also one clear mistake.  On the previous page the text states that there is

“a net reduction in administrative costs of £0.1 billion a year, as annual savings of £0.7 billion from closing down numerous legacy benefits, and an enhanced Digital Service, outweigh the £0.6 billion additional costs of delivering a labour market conditionality regime to a wider group of people (including those in low paid work).”

The figure in this table has the gross figure of £0.7 billion, not the net figure of £0.1 billion.

This is a glossy report, not the business case itself, and detailed comments will have to wait until the business case is finally published – if it ever is: the DWP has been fighting tooth and nail to stop previous impact assessments from being released (the next hearing is in December).  However, the figures in this report are just as implausible as the previous lot.  What evidence is there that errors will not increase, rather than being cut?  Why should we suppose that takeup will increase?   The plan now aims to have all new claims, not legacy claims, on the system by 2017: where are the social benefits going to come from, if the scheme is not fully implemented?

 

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