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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