Universal Credit implementation: monitoring DWP's performance in 2012-13 - Work and Pensions Committee Contents


2  Progress with Universal Credit implementation

Original timetable for UC implementation

12. The Government first set out an implementation timetable for UC in November 2011. The transition to UC was planned to take place between April 2013 and the end of 2017, by which time it was expected to be paid to 7.7 million households.[11] Under this timetable, national roll-out would take place between October 2013 and April 2014 for new claimants, who would claim UC in place of six existing working-age benefits and tax credits ("legacy benefits"). During this period, claimantsof legacy benefits would be moved on to UC if their circumstances changed. Under the second phase of implementation from April 2014, the Government would give priority to migrating to UC "households who will benefit most from the transition." The final implementation phase would involve three million existing claimant households being transferred to UC betweenlate2015 andthe end of 2017, by local authority area.[12]

13. The Government announced in May 2012 that it intended to establish a "Pathfinder" in four Jobcentresin the North West of England, to test the system with local authorities, employers and claimants in a live environment, beginning in April 2013; the locations were Ashton-under-Lyne, Oldham, Wigan and Warrington.[13]However, just before the Pathfinder was due to begin, the Government announced that it would only operatefrom April in one Jobcentre, Ashton-under-Lyne; Oldham, Wigan, and Warrington would now begin accepting UC claims from July 2013.[14]We visited Ashton-under-Lyne and Oldham in June 2013 to discuss UC implementation.

14. The scope of the Pathfinder is very limited. Claims are only being accepted from claimants who are single, newly claiming benefits, have no children, are fit for work and who would have claimed Jobseekers Allowance under the existing system.

Changes to implementation timetable announced in 2013

Changes announced in July 2013

15. On 10 July 2013, the Secretary of State gave oral evidence to us on Universal Credit. At the start of the meeting he announced changes to both the scope and timing of the planned implementation.

16. Instead of a national roll-out, expansion of UC implementation from October 2013 would be restricted to six further Pathfinder Jobcentres and claims would continue to be limited to new claimants in the simplest circumstances. Tax credits would not be part of UC claims at this stage and the roll-out would not yet be extended to existing benefit claimants. Only the Claimant Commitment(which is replacing the current Jobseekers Agreement for JSA claimants), and the enhanced job-search requirement elements of UC would begin to be implemented nationally from October 2013.[15]

17. Although this was not made clear to us by DWP witnesses during our July evidence session, the changes to the implementation timetable had been made in response to serious concerns expressed about the UC programme by the Major Projects Authority (MPA) in February 2013. It later became apparent that the Government had in fact initiated a "reset" of the UC programme between February and May 2013. This resulted in a new "blueprint" for Universal Credit from May 2013 and the development of a new delivery approach under a new Senior Responsible Owner (SRO), Howard Shiplee CBE.[16]

CHANGES ANNOUNCED IN OCTOBER 2013

18. A further delay in the implementation timetable was indicated in October 2013. All six additional Pathfinder Jobcentres were supposed to move over to UC claims from October 2013. However, in a press release on 28 October, announcing the expansion of UC to the Hammersmith Jobcentre, DWP said that "Universal Credit will expand to Rugby, Inverness, Harrogate, Bath and Shotton by the spring [2014]."[17]Rugby and Inverness Jobcentres started taking UC claims in November, and Bath and Harrogatein February 2014, bringing the total number of Pathfinder sites to nine.Only Shotton now remains outstanding.[18]

CHANGES ANNOUNCED IN DECEMBER 2013

19. We held the first of our delayed evidence sessions on the ARA with the Secretary of State and the Minister for Welfare Reform on 9 December 2013. DWP had known since September that we intended to focus on Universal Credit during this session.On 5 December, DWP issued a Written Statement on Universal Credit.This set out a further substantially revised programme for taking UC forward. DWP submitted a short piece of written evidence to us that covered the same points.

20. The revised plan was for UC claims to continue to be limited to the 10 Pathfinder Jobcentresand to the most straightforward claims from single people. This would be broadened in summer 2014 to claims from couples,and then to claims from families in autumn 2014. DWP stated that, when these processes had been "safely tested" in the Pathfinder, the roll-out would be expanded to cover "more of the Northwest of England".[19]

21. Some more detail was provided during the oral evidence session on 9 December. Howard Shiplee, DWP's SRO for Universal Credit, indicated that all 90 DWP offices in the North West would begin to be brought into UC between autumn 2014 and the early part of 2015. Tax credits would be subsumed into UC for claimants in the North West when the system was operating effectively, probably in 2016. It would then be widened to other regions. Mr Shiplee was very reluctant to say how many UC claimants there might be by December 2014, but when pushed said "the furthest I would go is that it will be into tens of thousands".[20]

22. The "current planning assumption" was that UC would be fully available in the whole of Great Britain during 2016; new claims to legacy benefits would be closed down by then; and "the majority of the remaining legacy caseload" would move to UC during 2016 and 2017. However, DWP stated that "final decisions on these elements of the programme will be informed by the development of the enhanced digital solution" (see below).[21]

23. Although not set out in the official statements on 5 December, it became clear in media reports, and was subsequently confirmed in the oral evidence session, that about 700,000 claimants in the Support Group of Employment and Support Allowance (ESA—one of the out-of-work benefits which will be incorporated into UC)would not be migrated to UC until after 2017 because, in the Secretary of State's view:"this is a very vulnerable group and [...]they need careful attention and I would not want to rush them through".[22] DWP had provided this information to the Office for Budget Responsibility (OBR) for its Economic and Fiscal Outlook published in December 2013.[23]

Implications of delayed implementation

24. As we have noted, under the original timetable for UC implementation, all new claims across Great Britain for benefits subsumed into UC were meant to begin from October 2013 and migration of existing claimants of these legacy benefits was due to beginbetween October 2013 and April 2014. DWP announced on 20 March 2014 that, under the revised and much more limited implementation programme, there were 4,280 people claiming Universal Credit in the Pathfinder at the end of December 2013.The statistics confirmed that the majority of these UC new claims are limited to claimants in the simplest circumstances: 70% are under 25 years-old, male, single, unemployed, childless and non-home-owning.[24]

25. To understand the scale of the outstanding implementation challenge facing DWP it is worth comparing these numbers to those for Jobseekers Allowance (JSA), which is one of the key benefits to be subsumed into UC. Some 241,500 individual claims for JSA were accepted in January 2014 and the total claimant count for JSA in that month was 1.22 million.[25]

COST IMPLICATIONS

26. DWP has not provided an assessment of the likely impact of the changes to the migration process on the estimated costs and savings of the UC programme. The OBR's December2013 forecast indicated that the delayed implementation would reduce projected spending by £0.2 billion in 2014-15 and £0.5 billion in 2015-16 "as households that would have been eligible to slightly more generous entitlements under the new benefit no longer move across". This then has an impact in subsequent years as the migration process catches up.

27. The OBR has also made lower fraud and error savings assumptions in the initial stages to reflect the delayed migration which, together with higher transitional costs, increases spending in 2017-18.It also highlighted that there were "broader uncertainties over the eventual cost of Universal Credit, notwithstanding the speed of implementation", including the uncertainties about claimant behavioural responses and the scope for fraud and error savings.[26]

28. In its March 2014 forecast, the OBR made further downward revisions to the forecasts of additional UC expenditure. However, these adjustments were due to factors other than the delayed migration, including; changes in economic assumptions and up-rating of benefits; and finalising of UC disregards and disability additions.[27]

29. The DWP Director General for Finance, Mike Driver, told us that the cost implications of the delays in UC implementation would be taken into account when the revised Business Case was presented to the Treasury. The original Business Case had indicated that UC would deliver "£38 billion of broader benefits".DWP would now be "reflecting on the adjustments that we are making and, over time, seeing what happens to that net present value."[28]Howard Shiplee told us in December2013 that the new Business Case would go to the Treasury "in the early part of next year" and the Secretary of State confirmed that this was likely to happen in "January or February". He said that it was not normal practice for Business Cases to be published or made available to this Committeebut that he could look at whether this was possible.[29]We understand that DWP has now submitted the Universal Credit Strategic Outline Business Case to the Treasury for approval and expects to receive a final response in mid-April.

30. The Government has made significant changes to the UC implementation timetable—first in July 2013 and then again in December 2013. Whilst we strongly support the aim of ensuring that the system works effectively for claimants before it is extended, DWP needs to be clear and frank about all the implications of the changes.The governance concerns raised in 2013 still remain. Due to the very slow pace of the roll-out to date, it is also difficult to envisage how the volumes required to meet the most recent timetable are to be achieved.

31. DWP told us that it intended to clarify the impact of the changes to the implementation timetable on the overall costs and savings of the programme in the revised Business Case for Universal Credit, which it has now presented to the Treasury. We recommend that DWP makes its revised Business Case available to this Committee. We further recommend that, in its response to this Report, DWPset out: revised estimates of UC caseloads and costs for each year to 2017-18; and the future programme management and governance arrangements for UC.

ADMINISTRATION OF HOUSING BENEFIT

32. Housing Benefit will eventually be incorporated into Universal Credit but, as the Secretary of State acknowledged, the implementation delays mean that local authorities will now continue to administer HB as a separate benefit for the majority of claimants until 2016, much longer than previously anticipated. He said that there was already a budget allocation for providing funding support to local authorities for this. The Minister for Welfare Reform added that "We will be having a detailed, longer term migration to discuss with local authorities because it is quite clear they do need to know how to handle their housing benefit departments." The Director General for Finance confirmed that DWP would "pick up local authority costs under the new burdens regime".[30]

33. Local authorities need greater clarity on the implications for them of being required to continue to administer Housing Benefit for longer than anticipated, due to the delays to Universal Credit. We recommend that, in response to this Report, DWP sets out the details of the financial support which will be provided to local authorities in 2014-15 and 2015-16 to cover the additional costs of continuing to administer Housing Benefit.


11   HC Deb, 1 November 2011, col 36WS Back

12   HC Deb, 1 November 2011, col 36WS and DWP Press Release, 1 November 2011, "Iain Duncan Smith sets out next steps for moving claimants onto Universal Credit" Back

13   DWP Press Release, 24 May 2012, "Iain Duncan Smith: Early roll out of Universal Credit to go live in Manchester and Cheshire" Back

14   DWP Press Release, 29 April 2013, "Universal Credit launches in Manchester",  Back

15   HC Deb, 10 July 2013, cols 21-22 WS and DWP press release 10 July 2013 "Universal Credit: Roll out from October 2013". See also Oral evidence taken on10 July 2013, HC 569-i.The six additional Pathfinder sites were: Bath, Hammersmith (London), Harrogate, Inverness, Rugby and, Shotton. Back

16   NAO Report, Summary, para 11 and paras 2.4-2.5 Back

17   DWP Press Release, 28 October 2013, "Universal Credit expands to London" Back

18   DWP press release 25 November 2013 "Universal Credit expands to Rugby and Inverness". See also HC Deb 22 November 2013, col 1075w.DWP Press Release, 19 February 2014, "Universal Credit: new claimant figures".  Back

19   HC Deb, 5 December 2013, cols 65-66WS; see also DWP written evidence, 5 December 2013 and oral evidence taken on 9 December 2013, HC 867 Back

20   Oral evidence taken on 9 December 2013, Qs he furthest I would go is that it will be into tens of thousands"might be by December 2014 but when pushed said the system was 45-49 and Q 69 Back

21   DWPwritten evidence, para 21 Back

22   Oral evidence taken on 9 December 2013, HC 867, Q53 Back

23   OBR, Economic and Fiscal Outlook, December 2013, Box 4.5. See alsooral evidence taken on 9 December 2013, HC 867, Qq46 and 53-54 Back

24   DWP Press Release, 20 March 2014,"7 ways Universal Credit will be a better deal" and DWP, Universal Credit: experimental official statistics to December 2013, March 2014 Back

25   Office for National Statistics (ONS), Labour Market Statistics, Claimant count statistics, February 2014 Back

26   OBR, Economic and Fiscal Outlook, December 2013, p 135, Box 4.5 and Table F Back

27   OBR, Economic and Fiscal Outlook, March 2014,Cm 8573, Box 4.1 and Table 4.23 Back

28   Oral evidence taken on 9 December 2013, HC 867, Q135 Back

29   Oral evidence taken on 9 December 2013, HC 867, Qq118-9 Back

30   Oral evidence taken on 9 December 2013, HC 867, Qq55 and 70-71 Back


 
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Prepared 9 April 2014