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
- 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
A response to my post yesterday on Twitter asks: “Wondering what “directed to the wrong purposes” really means?” Twitter isn’t a good medium for discussion, so I’m going to try to deal with it here. This government believes, I think genuinely, that the primary purpose of benefits is to help people into work. That was the view not just of the Coalition before them, but the Labour government after 1998: people may remember the slogan, “work for those who can, support for those who cannot”.
I tackle this point in my book, What’s wrong with social security benefits? Most people on benefits aren’t expected to work (actually, most of them are pensioners); most people of working age aren’t expected to be in the labour market; most of the rest are working. Benefits are there for lots of reasons – among them, meeting need, relieving poverty, economic management, social inclusion, subsidy, compensation, and so on. When we get to particular categories of people, such as disability, the aims multiply; for example, I gave a special presentation last year about the provision available for people with mental health problems, and the list I’ve just given here doesn’t cover the ground at all. When we get to the issues of Universal Credit, pat formulas about work miss the point; and the incongruity of lumping together issues such as self-employment together with incapacity, homelessness and child care helps to explain not just why the system isn’t working, but why it can’t.
The announcement of modifications to Universal Credit in the Budget fall a little short of what is needed. Para 6.14 outlines proposed changes:
- advances on entitlements for those ‘in need’ – effectively an interest free loan repayable over twelve months. UC will continue to be paid in arrears.
- the reduction of waiting time by 7 days; it will still be 5 weeks for most claimants.
- continuation of Housing Benefit for two weeks. That should reduce rent arrears by two weeks – it is not enough to ensure continuous payment.
- ‘easier’ arrangements for payment of rent to landlords.
- a slower roll out, still to be completed by December 2018; and
- a limited trial of ‘innovative” approaches to improve earnings.
What the proposals didn’t include was
- a review of tapers
- a review of work allowances – the current allowances are too low to lead to continuity of contact
- a review of the treatment of children
- pause and fix, or
- any announcement of measures to deal with the administrative problems.
Para 6.12 and 6.13 defend the system’s design. The government evidently thinks that the scheme is okay because people on it are working, and that if there are residual problems it’s because people are not getting out and working. They haven’t realised that most of the people on working age benefits, and so most of the people the scheme is going to deal with in due course, are unable to work, and most of the rest are working already. (Universal Credit should ultimately be there for 6 to 7 million people; only 1.4 to 1.5 million of them are ‘unemployed’, that is not working and available to work.) The roll-out of Universal Credit began by focusing on a particular category of claimant, mainly younger single applicants; but as the scheme expands, more and more of the people who are being dealt with will be in other categories. That’s why problems such as self-employment or telling people who are working to come in to the office are only really emerging now. The scheme is not so much ‘unfit for purpose’ as directed to the wrong purposes – and that means that no amount of reinforcement is ever going to make it appropriate to people’s needs.
There’s been a flurry of calls for the rollout of Universal Credit to be delayed (e.g. from two reports from Citizens Advice, and concerns from Louise Casey and a clutch of Conservative MPs). It’s still possible to hear people saying what a good idea Universal Credit is, how it was going to simplify everything and how it would help work incentives. “The trouble with Universal Credit”, a New Statesman article tells us, “is that everyone thinks it’s a good idea.”
There are four sorts of problems. First, there were the basic flaws in the design. I wrote this in a paper published in 2013:
Means tested benefits are not, of course, the only benefits which are subject to problems. There are other aspects of the benefits system which are cumbersome, badly designed and problematic for claimants and administrators alike. They include, for example,
- benefits which people cannot work out they’re entitled to
- the problem of repaying money that people did not know they should not receive
- rules that tell people they must work at the same time as recognising that it‟s not reasonable to work (the current position for ESA)
- the medical reassessment of claimants
- benefits which penalise claimants for circumstances outside their control
- the cohabitation rule, and
- complex assessments that require people to report changes across multiple dimensions.
Universal Credit has the lot. It is as if someone has started with a list of everything in the benefits system that causes problems and designed the new benefit round it.
Then there was the abandonment of all the benefit’s objectives, one by one. All the primary objectives – such as simplification, work incentives, reducing in-work poverty, smoothing transitions and cutting back on fraud and error – have been fatally compromised. The marginal rate of deduction is much higher than intended. The cuts in work allowances have removed any incentive for most claimants to remain in contact with the system if they find work.
Third, there were the problems of implementation. None of the innovative methods envisaged – real-time processing, smooth tapers, digital by default – was achievable. There is no effective system for coordinating and pooling all the information required in one place – the new system has come to rely primarily on returns from claimants about changes. The system makes complex demands of claimants (for example, those relating to security, agreements by couples or job search) which are almost impossible to police. It system relies on accurate information from claimants, and people cannot respond sensibly to questions they do not know the answer to.
And then, last of all, there are the so-called ‘teething’ problems – miscommunication, lost payments (surely that ought to be a priority concern?), and the difficulties of introducing the new benefit at the same time as managing a large injection of additional rules such as conditionality and housing. With or without Universal Credit, we are already in the position where nearly a quarter of unemployed claimants have had benefits stopped. Universal Credit is not just threatening a major breakdown in the safety net; it has already happened.
I did wonder, before I started, if I really needed to bother writing all this again. I’ve been making the same sorts of criticisms of Universal Credit for nearly seven years now – try this blog from October 2010, when I was arguing that the scheme was simplistic, impractical and wouldn’t either enhance work incentives or reduce administrative errors. While it’s encouraging that so many people are waking up to the problems – it’s never too late to make things a bit better, at least – I have to ask: what took everyone so long?
John Slater has been responsible for a series of Freedom of Information requests about the Universal Credit fiasco. Yesterday he sent me a copy of the project management plan introduced by Howard Shiplee, who was responsible for the development of Universal Credit from May 2013 until his departure, following illness, in September 2014. Shiplee had previously been responsible for building construction for the 2012 Olympic Games.
I was puzzled by the plan, and wrote back to John:
I’m baffled – I can see no relationship between the steps to be taken and the design of a social security system. It looks more like a plan for building a McDonalds outlet, where all the groundwork’s laid and you know exactly what you want to do, so it’s all about delegating tasks. … I think you’re a project manager, John – – can you explain it to me?
I found John’s response so marvellously clear and helpful that I asked him if I could share it on the blog. Here it is.
You are right my background is programme and project management (my first degree was IT so I understand that aspect as well). You aren’t far off with your McDonalds analogy.
The plan is a classic case of an organisation focusing on the IT side of a major change programme. UC is one of the biggest change programme ever undertaken and nothing I’ve ever seen produced by the DWP reflects this.
The 100 day plan is a classic example of people that have been on a training course (e.g. Prince2 or Management Successful Programmes) but have never done the job for real. If you look down the left hand side of the ‘plan’ you’ll see the following headings:
- Key dates & decisions
- BT – Business (I suspect BT means business transformation)
- BT – Service Design & Build (I suspect BT means business transformation)
- BT Interfaces (I suspect BT means business transformation)
- Pathfinder Day 2
- Programme Approach
- Comms (Communications)
With the exception of point 1 these are typically referred to a work streams. The idea is that each of the workstreams goes along their merry way cooperating with each other to deliver the programme. The reality of this approach with any complex programme is that it always goes horribly wrong.
If you look at points 2 to 5 then it is utterly focused on the IT. The plan looks like something to produce a software product of some sort. There is no mention of culture change, process engineering (this should be done before any software is produced) and the biggest issue of all people! This covers the claimants, DWP employees, Council Employees, Welfare Advisors and so on. They are just expected to magically learn and make it work. The trouble is human beings don’t work that way.
Part of the issue is that the DWP employees working on UC at the time hadn’t ever done anything like this before so didn’t have a clue. The put people in roles (e.g. programme manager, programme office manager etc) but they hadn’t done it before and had just been sent on a training course.
I’ve been doing this stuff for 30 years and I would have struggled to get UC up and running (and I’m very good at this aspect of complex programmes). Bringing in someone like Howard Shiplee was always going to fail. I’ve run programmes involving a lot of construction and it’s a different world and a totally different mindset. I suspect if you looked at the approach used for construction during the London Olympic build it wouldn’t look dissimilar to this plan. With construction the focus is generally on design and then build (known as D&B). The key factor is the supply chain and can the main contractor get the materials and people on site on time and in the right order. If you look at the plan again I don’t think it’s unreasonable to see the left hand side of the dark vertical as ‘design’ and the right hand side as ‘build’. This is what Howard Shiplee understood and it was so deeply ingrained I doubt he could have done anything else.
In respect of the pathfinder system released at Wigan it was a cobbled together lobotomised version of the IT that would ultimately be required for the complete UC. At this stage of the programme IDS knew the IT was fundamentally flawed, hence the talk of large sums being written off at the time. He also knew that they had to start over again but couldn’t admit that as it would be politically disastrous. Therefore, they rolled out the lobotomised version that only covered a small subset of people claiming JSA and claimed success. While this version was being rolled out painfully slowly the DWP was working desperately to produce a brain new IT system that ultimately will be the UC IT System.
Personally I think the new IT system will also fail. The methodology (Agile) as it’s been used by the DWP means that too much has been done in isolation. The system is going to be extremely complex and as bugs appear I’m not convinced the DWP will be able to find out the cause and then develop a solution that doesn’t result and another problem.
There are two days left for the consultation about limiting Tax Credits and Universal Credit to two children. I’m not making a submission. This is not a consultation about the policy, but about what exceptions should be made, including multiple births and the children of rape. It’s a depressing process, which illustrates a general problem: if governments create stupid rules they then have even more problems to stop the anomalies from spiralling out of control.
I’ve some sympathy for a comment made from the IFS in their work on the Autumn Statement, which included a change in the UC taper rate but maintained the swingeing cuts in the work allowance. Stuart Adam pointed out that to date there have been four changes in the work allowance, one to childcare support and now one to the withdrawal rate. It’s exceedingly difficult to know what the effect of cumulative small changes to Universal Credit will be, and maybe they shouldn’t be done unless we do.
A report by Nicholas Timmins for the Institute of Government suggests that Universal Credit has recovered from its initial disasters and is now on the road to recovery. He has been told, and seems to accept, that the DWP and the Treasury have finally got a grip and sorted out the basic mistakes, and something like Universal Credit will be established.
Timmins’ report is largely based on interviews with senior politicians and civil servants. The report is basically a chronological account of how the policy developed, how it went wrong and what’s been done subsequently to get it right. But he would have done well to seek out some other perspectives. The failures in design are fundamental – and because critical analysis through the usual channels was suspended, they have still not been adequately considered. Amongst the many failures of Universal Credit,
- all the primary objectives – such as simplification, work incentives, reducing in-work poverty, smoothing transitions and cutting back on fraud and error – have been fatally compromised
- there is no effective system for coordinating and pooling all the information required in one place – the new system has come to rely primarily on returns from claimants about changes
- the system relies on accurate information from claimants, and people cannot answer questions they do not know the answer to. No computer system can go faster than the information that goes into it
- the marginal rate of deduction is much higher than intended
- the cuts in work allowances remove any incentive for most claimants to remain in contact with the system if they find work
- the system makes complex demands of people, (for example, those relating to security, agreements by couples and job search) which are almost impossible to police.
The administrative failures of Universal Credit largely reflect a cavalier disregard for any practical experience derived from the benefits it is supposed to replace. Even if everything had been done well, the scheme would have foundered; it was trying to do the wrong things in the wrong way. There is little indication that the present implementation has done more than re-christen existing benefits with some tweaks in the rules, and as things stand many of those tweaks (such as rules on rent, reporting and conditionality) are not working too well.
The Register reports a small glitch in the Universal Credit scheme. Access to the online system was closed for more than 24 hours after an upgrade went wrong. A DWP spokesperson described this as a ‘minor issue’.
When the Royal Bank of Scotland crashed access to cash for its customers with a botched upgrade in 2012, it led to a flurry of political statements, consideration by the Treasury Select Committee, the intervention of the regulator and fines for banks. I might have asked, rhetorically, if there was any prospect of treating the DWP in a similar way, but we all know there isn’t.
Universal Credit was supposed, through some process I can’t claim to understand, to reduce fraud and error in the benefit system. According to the Business Case, there were supposed to be reduced overpayments worth £14 billion over twelve years, or £1.16 billion per annum. I commented in 2012, and again last December, that I found this claim implausible: Universal Credit doesn’t do anything about most of the circumstances which lead to fraud and error, but it does add layers of complexity to make confusion and mistakes more likely. Now we have the first figures from the DWP on fraud and error in Universal Credit. Universal Credit was overpaid by 7.3%, compared to 5.0% of JSA (the nearest comparable benefit) and 5.2% of Housing Benefit. It was underpaid by 2.6%, while JSA was underpaid by 0.8%. The system makes more mistakes in both directions. The DWP points to the complexity of managing some claims – but that, of course, is the point.
The DWP summary pleads that the difference between UC and JSA is ‘not statistically significant”, and that in any case UC and JSA are not directly equivalent. True enough, but Universal Credit was supposed to cut fraud and error by somewhere between a third and a half of all overpayments. If UC was supposed to save a third but is actually costing nearly fifty per cent more, the level of fraud and error is running at more than double what was expected. If it was supposed to save half, it’s three times what it should be.