Universal Credit has its defenders, and the Daily Express has come out fighting:
“disruptive” proposals could hammer 30 million Britons, cost tens of billions of pounds and send taxes soaring.
The middle bit of this could be true, because all major reforms have a price tag; introducing Universal Credit had cost more than £2bn by last year, though that figure ignores the false start and ‘reset’. The very belated Final Business Case claimed 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. The National Audit Office has told us that “We cannot be certain that Universal Credit will ever be cheaper to administer than the benefits it replaces”; their 2018 report said that
the extended timescales and the cost of running Universal Credit compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.
We now know that the figure on fraud and error is wrong, and that Universal Credit has made fraud and error much worse; and ‘distributional improvements’ don’t save money, they move it to a different place. So the only possible saving could be by encouraging people into work, and given that only a very small proportion of claimants are continuously unemployed – the majority of claimants are too ill to work, carers, short-term unemployed or already working on low incomes – it isn’t going to be anything like £24.5bn. If I had to guess, I would estimate the net gain, by comparison with the previous system, at something closer to zero.
That leaves us with the extraordinary claim that 30 million benefit claimants will be affected. Yes, that really is what the Express article says:
It would immediately impact around one million people currently on Universal Credit, but it would likely also have an impact on the 30 million-plus people receiving some form of benefits.
To get anywhere near 30m, that has to include all pensioners, and every child where the families receive Child Benefit. It seems that the lives of children and pensioners have been turned around by the prospect of a benefit that neither group gets, and they can all look forward to a brighter future, if only this benefit remains in place. But perhaps I mistake the argument, and the Britons in question are the occupants of a parallel dimension, like the Man in the High Castle, where everything is subtly different. Suddenly, everything in the Express starts to make sense.
I have spent a little time this week preparing for an evidence session of the Commons Scottish Affairs Committee, which was reviewing the development of social security in Scotland. The hearing, scheduled for next Tuesday, has now been cancelled, because everyone is currently more concerned with High Politics; the process may resume in due course, or it may not.
I’d been focusing on the back half of the committee’s remit, which was concerned with the relationship between the Scottish system and the UK system. In the process, I’ve spoken with people from a range of organisations, including the Scottish Federation of Housing Associations, Glasgow Welfare Rights, Citizens Advice Scotland, Clydebank Independent Resource Centre, Child Poverty Action Group and One Parent Families Scotland. I’ve also seen the written submissions from Inclusion Scotland, Poverty Alliance and the Scottish Campaign on Rights to Social Security: the written submissions should be published more generally shortly, but publication has to be approved by the Committee first. Thanks to you all. I also found a SPICE paper, on administrative costs and relationships with the DWP, particularly helpful.
There have been very positive things said about a couple of the new benefits that rely heavily on the cooperation of the DWP, particularly the Carers Allowance Supplement and the Best Start Grant. There are more reservations about the operation of variations in Universal Credit, partly because the system from direct payment of rent to landlords isn’t adequately integrated, and because there seems to be some hesitation about applications. That may reflect advice from housing associations, and there have been some problems with some rent being paid monthly while income is bi-monthly; but I’d guess that it may also be because bi-monthly payments don’t get over the outstanding problems of an unpredictable, fluctuating level of benefit.
PRESS RELEASE: UC APPG responds to childcare announcement
From the APPG I have the news that people on Universal Credit will be able to get a loan or advance to pay for their child care. Whenever someone gets a loan or an advance they have to pay it back, usually by deductions from their benefits. That means that, whatever their benefit entitlement may be, in the future they will get less than that entitlement.
I apologise for stating something that should be painfully obvious to anyone after a moment’s thought. (‘Painfully’ was not the first adjective that sprang to mind. I thought it better to moderate my language for public consumption.)
The All Party Parliamentary Group on Universal Credit has published a detailed report on Universal Credit, including something in the region of 50 reasonable proposals to help the system work better. The group has notable expertise in the field, and there is no recommendation I wouldn’t agree with, but I don’t think it goes anything like far enough. The fundamental design flaw, which they point to at the outset, is this:
many claimants say they cannot understand how their UC is worked out, and it is subject to so many variations that it is far harder to budget on UC that it was on tax credits.
That instability of income is built in to the system. Some of the fluctuations would be damped down by the group’s proposals, including modifications to work allowances, a review of the treatment of self-employed people and 53-week years, but they would not prevent the wild fluctuations in the amounts being paid month by month. To stop that happening, the system needs
(a) to make payments on a uniform date, rather than a personalised one which varies with weekends and bank holidays;
(b) routinely to make rental payments direct to landlords, as Housing Benefit did; and
(a) to relate entitlement to a preceding period, rather than the current one. As this report says,
This mismatch of pay cycles and assessment periods and the ‘whole-month’ approach to changes of circumstances, can leave people struggling to budget with unpredictable and arbitrary awards.
A major fraud has been reported affecting Universal Credit. Over the course of the last eight and a half years, I’ve frequently commented on the vulnerability of the UC system to fraud and error, despite repeated assertions from the government – and the falsification of the business case – to claim the opposite. This fraud is different from most, because it represents organised criminal activity that is neither attributable to claimants nor to DWP officials. The criminals pretend to be other people, both claimants and people who have not claimed, to register for short term loans before any checks might be made. (This is not, for the most part, ‘identity theft’; it is personation. A fraud of this sort is typically a fraud on the DWP, not on the claimaint.)
It should have been obvious from the outset that computer-based identification wouldn’t be sufficiently secure for the purposes of the DWP. There was something close to an admission of this more than three years ago, when Verify, the successor to the failed “Identity Assurance”, was cut adrift. But the problem is not only down to poor tech. The situation has been produced by a system that relied on online verification, rather than claims in person; that left claimants without resources for well over a month; and replaced a system capable of processing the vast majority of claims within 14 days with one that struggled to do it in six weeks, and sometimes could take as long as three months. Universal Credit is error-prone by design. Its vulnerability to deception is only a part of that.
An inquiry in London is asking how Universal Credit can be replaced. I’ve previously supported calls to ‘pause’ or stop its roll-out. Unfortunately, with more than two million people enrolled, we’re well past the point where it can be stopped or cancelled in its present form. The most important stage passed when UC moved past its previous focus on unemployed people and started to enrol other people with a wide range of needs. Most people who are unemployed cease to be unemployed within a few months, but longer-term claimants are much more likely to be chronically sick or disabled. They need stable, secure protections. Universal Credit is not good at providing them, because of the fluctuations in the level of support provided, but the support cannot just be removed while a new system is sorted out. Transfers from existing benefits can be stopped, but new enrolments can’t be – there have to be benefits available for sickness, unemployment, low earnings.
What can be done, then, to deal with this catastrophe? Forget the easy, unified solutions; that’s how the mess was made in the first place. The only practical approach is to start to dismantle the system by moving to new, compartmentalised benefits dealing with the principal contingencies. Start with invalidity, or long term sickness: it needs to be removed from the principle of work-testing, because the whole point of the provision is that it is supposed to deal with people who it’s not reasonable to expect to work. Most of the regulations introduced for ESA or UC have been screamingly inappropriate. Think about child care; it may be best to take it out of the benefit system altogether. The changes to Pension Credit are new – couples where one person is still of working age can transfer back to the pension system with no loss. Housing Benefits are still largely in place – they won’t be for long, and local authorities have been losing expert staff, but the long-heralded abolition of Housing Benefit for pensioners hasn’t happened yet, and that system could keep going.
I’m not going to go through every aspect of the benefit in the same way, but the principle should be clear. Whenever you have a complicated problem, the way to deal with it is not with a single, complicated answer. To deal with an unmanageable problem, break it up into slightly less complicated ones; break those up in turn into smaller ones, and keep going until there’s a group of problems that it’s actually possible to deal with.
This is, of course, the opposite of what Universal Credit was supposed to do. The approach is made a little easier by the fact that Universal Credit is not, and never could have been, a unified system: it already has compartments for different aspects of the service (unemployment, employment, housing and so forth). The system can’t be abolished overnight. It has to be taken apart piece by piece.
In any benefit reform, there are likely to be winners and losers; unless there is a substantial increase in the budget, the gains for some can only be made because others are being paid less. A fascinating report from Mike Brewer and his colleagues at the Institute of Fiscal Studies looks at the difference between short- and long-term gains and losses from Universal Credit. The difference is important, because Universal Credit has in theory been designed to maintain contact with large numbers of people over extended periods of time.
What the IFS report finds includes
- greater losses for people on long-term low incomes,
- losses for people with disabilities
- short term losses for self-employed people with low earnings, that are less likely to last as their circumstances change, and
- some large gains and losses in the short term, which are not always reflected in the long-term outcomes.
The report is concerned with entitlement, rather than the actual amounts of benefit received – the serious problems there have been in practical delivery, and the impact of conditionality and sanctions, are going to mean that many more people are worse off than they ought to be on paper. Short term losses matter, too. For people on very low incoimes, a short-term loss means, in practice, that people have periods of severe privation, often going without food and accumulating debts.
As Universal Credit extends its icy grip, the tone of press coverage has been changing; it is more focused on personal experiences, and it is ever more serious. These are from the last few days; the headlines speak for themselves.
The High Court judgment on Universal Credit payments has implications beyond the immediate issues. It condemns the DWP for simply following through an automated process for income testing rather than considering the actual circumstances of the claimants – in this case, the early payment of monthly salary.
When the idea of making assessments in ‘real time’ was first mooted, in 2010, I was critical of the idea. In the course of the last eight years – yes, it’s that long – I’ve posted a range of comments about the effect of assessing income on the basis of the current month. I’ve just been reading through my old posts to make a list:
- it deals with uncertain information
- it requires the system to process information that it doesn’t have access to
- it deals with information from diffuse sources
- it’s not applicable to the circumstances of self-employed people
- it puts claimants into default when things go wrong
- the system can’t cope with irregularities in the calendar, like bank holidays or Februaries
- it provides an income that is fluctuating, unstable and unpredictable.
To this, we can now add another point: mechanical calculation yields arbitrary and unreasonable results.
Surely, people in favour of means-testing might reasonably ask, there’s no real difference in principle between monthly assessment and the assessments we used to have? That may be true. Many of the problems we’re seeing are problems that we’ve known about for years. They include:
- the problem of offering fluctuating incomes to people on very low incomes – a system, the Ombudsman commented about Tax Credits, fundamentally unsuited to the needs of low income families
- the problems caused by tapers, which mean that people can’t tell when they’re entitled to benefits and when they aren’t
- the problems posed by changes of circumstances, and
- the devasting effect when changing entitlement to one benefit (such as Income Support) spills over into suspension or recalculaltion of another (such as Housing Benefit) .
Universal Credit, I’ve previously written, “brings together every major feature that has caused administrative meltdown in the course of the last forty years … It is as if the designers had painstakingly identified all of the elements of the benefit system that are known not to work and built the new benefit around them.”
A couple of recent announcements suggest that planning Universal Credit has been subject to a “rethink“. The actual changes amount to something less than that. There is a delay in the rollout, which will affect those people currently being transferred from existing legacy benefits. The largest group of people affected by the decision are those who are currently on Employment and Support Allowance, because that is the largest group of people of working age who receive benefits for longer periods. Most people who were unemployed and in receipt of JSA have already been transferred, and anyone who signs off benefits and then needs to make a claim will have to claim through the Universal Credit. Amber Rudd has said that even with the ‘pause’, the numbers of people receiving Universal Credit is expected to grow to three million in the normal course of events – more than double the existing figure.
The other major change has been the revision to the two-child policy, which limits support to the first two children. That does not mean that two children will get fed when the third doesn’t; it means that every child in a larger family gets less support, and that is why the policy is exepcted to have such a large effect on child poverty. The change is confined to children born before April 2017, which is why it will only benefit 15,000 families.
The treatment of Universal ‘Credit in the press has become increasingly critical, but I’m not sure that most have yet appreciated just how deep the hole is. It doesn’t help that benefits are paid monthly, that it expects people to be online, or that strict and lengthy penalties are being applied for non-compliance, and the idea that people with no other income can have their benefits stopped for 5 weeks or more is simply outrageous. Any of those could be stopped in short order. That would still leave us with all the other problems with the scheme. MPs are well aware of those problems – their constituency surgeries are inundated with them. The government is trying to offer enough tweaks to defuse the discontent. It will take more than a few tweaks.