Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by the Centre for Social Justice

About the Centre for Social Justice (CSJ)

1. The CSJ was founded by the current Secretary of State for Work and Pensions, the Rt Hon Iain Duncan Smith MP.

2. Through its analysis and policy recommendations the CSJ has led a debate about worklessness in Britain. The CSJ reports Breakthrough Britain and Dynamic Benefits have heavily influenced the Coalition Government’s reform agenda.

3. This response considers the progress toward the implementation of Universal Credit. Universal Credit, developed by the CSJ, is a programme to simplify the benefit system and improve work incentives. Our research shows that it will help to reverse social breakdown in our most deprived communities by making work pay.

4. This submission is to clarify our position on the progress toward implementation. This follows CSJ involvement in media coverage of the Work and Pension Select Committee enquiry into this topic.

5. We would be delighted to provide further assistance to the Select Committee if required, or to give evidence in person to the commission.

General Implementation Challenges

6. Universal Credit is a radical recasting of the benefit system, shaping it into a system that supports positive decisions in the lives of recipients. These decisions include in particular the decision to move into work, to progress in work and to take steps toward independence.

7. Our understanding is that the principles of Universal Credit retain cross-party support, the support of welfare rights groups and of the majority of the British public, particularly those with experience of the current welfare system.

8. It is critical that the implementation of Universal Credit is properly scrutinised. A change on the scale of Universal Credit will undoubtedly raise concerns and create uncertainty. People will want to know how it will affect them. Alongside this, there will undoubtedly be difficulties in the implementation of Universal Credit, and questions raised about the decisions that were made along the way.

9. However, we firmly believe that these are challenges to be overcome. They should not derail a fundamental reform of the benefit system that is long overdue.

10. There is time to develop solutions to the challenges raised, and not all of these solutions should come from central government. One of the reasons for complexity in the current system is that the welfare system has tried to tackle the symptoms of a range of problems, when the root causes are better tackled elsewhere.

11. One aspect of Universal Credit is to make receiving income from benefits similar to income from work. We found that difficulty in managing the transition from benefits to work acted as a barrier to employment.

12. Universal Credit pilots have begun to try ideas and find evidence based solutions to overcome these challenges. Our evidence to the commission is based on research for our report “Dynamic Benefits”, and on time spent independently with over forty local authorities on the implementation of welfare reforms.

13. The CSJ’s aim is to help build a constructive dialogue between government and all stakeholders to work together and transform our dysfunctional benefit system into a system that supports people into work.

Specific Implementation Challenges

14. This response focuses on three specific challenges to the design and implementation of Universal Credit:

Online claims: The government is designing the system so that the majority of Universal Credit claims are made and managed online.

Payment of Universal Credit: Universal Credit will be a paid monthly and on a household basis, into a single account managed by the household.

Involvement of stakeholders: Universal Credit will have an impact on a range of stakeholders, including local authorities, housing associations and employment advisors.

15. We would be pleased to respond with our views on a range of other challenges facing the implementation of Universal Credit, including the IT and system risks, the challenges in ensuring core policy objectives are not undermined prior to launch, and the readiness of delivery agencies including Jobcentre Plus and local authorities.

Online Claims

16. The Government has an aspiration to have 80% of Universal Credit claims managed online. The CSJ believes that this is a sensible aspiration, and achievable over the longer term. It also recognises that at least 20% of claimants will need alternative methods to make, manage and authenticate claims.

17. Access to the internet is growing through home internet access, mobile phones, tablet computers and through internet service points such as libraries. Online claims provide automated verification reducing both fraud and error and local authorities have managed to achieve significant increases in online takeup and faster processing through online housing benefit and council tax benefit claim forms.

18. It is our understanding that the DWP implementation team and local authorities through the Universal Credit pilots will be testing alternative pathways to make Universal Credit claims. The DWP will have telephone support available and local authorities are looking at options including “assisted claims”, where the claim is made online, but with the help of an adviser.

19. For example, Manchester City Council developed a relationship with registered social landlords and other providers. This helped many people that required additional support to make claims and provide the necessary evidence.

Monthly Payments

20. CSJ visits across the country have shown that a majority of low-income households manage their finances well, making small sums stretch incredibly far. The majority of UC recipient households will be in work and will be able to manage monthly payments without any problems.

21. There will also be households that struggle to manage the shift from fortnightly to monthly payments. However, it is important to understand how big a problem this is for households, and how best this problem can be overcome. We await the findings of the direct payment pilots.

22. A part of Universal Credit is to make receiving income from benefits similar to income from work. If people have difficulty managing their budgets on benefits, then they are likely to also struggle to manage their benefits in work. Our evidence for Dynamic Benefits found that difficulties in managing the transition from benefits to work included budgeting, and that this could act as a barrier to employment.

23. Where households do struggle to manage a monthly budget, changing the frequency of payments gets to root of the problem.

Single Household Payment

24. A major problem of the current benefit system is that it has multiple benefits, all with different rules. Some, such as housing benefit are paid on a household basis, while others such as Jobseekers’ Allowance are paid on an individual basis.

25. CSJ evidence found that claimants want consistency. A choice must be made over whether Universal Credit payments are made on a household basis or on an individual basis.

26. The CSJ believe that the benefits of a single household payment outweigh the disadvantages, which can be mitigated.

26.1The welfare system exists in large part to meet household costs such as rent and utility bills. A majority of the claimants we spoke to said that household payments would be easier to manage for this reason. Evidence from the Personal Finance Research Centre at the University of Bristol appears to reach the same conclusion.

26.2Couple households with one partner in work have to be able to manage a single household income and distribute it across all members within the household. If a workless household were to move into work, they would need to overcome the same challenges.

26.3Safeguards can (and must) be in place in instances of coercion or of domestic violence. However, if this is the case there are clearly difficulties in the relationship between the couple and these should be tackled through effective relationship support, counselling, or through the criminal justice system, and not through benefit payments.

Involvement of Stakeholders

27. Deven Ghelani of the CSJ has been working independently with a range of stakeholders on the implementation of Universal Credit and would be pleased to give evidence to the commission in an independent capacity on stakeholders’ preparedness for Universal Credit and their role in overcoming some of the challenges of implementation.

Concluding Summary

28. The current benefit system acts as a significant barrier to work for millions of benefit claimants. People have grown accustomed to and learned to overcome the many problems it creates in their day-to-day lives, from low levels of take-up, high levels of fraud and error and the overpayment and underpayment from in-work support.

29. Universal Credit is designed to avoid recreating the problems of the current benefit system. The benefits of its design will only realised in its effective implementation.

30. The implementation should also (to the extent possible) avoid creating new challenges for claimants and administering agencies. However, the scale and nature of these new challenges should be considered in the context of the benefit system we have today.

31. Change on this scale will create challenges and problems. Overcoming these challenges will require determined effort from all stakeholders involved in its implementation, and support across two parliaments. However, there is time to learn how to overcome these challenges, in the pilots and as Universal Credit is rolled out across the country in a four year process.

32. The CSJ welcomes the efforts of the scrutiny committee. We would be pleased to give detailed evidence in person if requested to do so by the committee, or give any additional support if required.

13 September 2012

Prepared 21st November 2012