Universal Credit Contents

Conclusions and recommendations

1.The Department’s systemic culture of denial and defensiveness in the face of any adverse evidence presented by others is a significant risk to the programme. The Committee has regularly commented on the Department’s blinkered approach to risks and problems with Universal Credit’s implementation. We are disappointed that this culture of denial remains firmly in place. Local organisations have found the Department unresponsive to issues they have raised, and told us that the Department is not learning lessons and applying them to the programme. In addition, when the Comptroller and Auditor General raised concerns over the implementation of the programme in his report, the Department repeatedly questioned the substance of the report both in the media and in Parliament. The Department’s defensive approach was further evident in the way it responded to criticism during our evidence session, refusing to accept that Universal Credit causes hardship for many claimants, and believing that issues raised were reflecting the policy not the implementation. But unless the Department learns to listen, it will not be able to adapt the programme to make it a success.

Recommendation: As a matter of urgency the Department needs to identify specific measures that demonstrate a step change in its attitude to listening and responding to feedback and evidence from its partners. We will hold the Department to account for its progress when we next meet and will expect frontline organisations to report that they have seen a tangible difference.

2.Universal Credit causes financial hardship for claimants including increased debt and rent arrears, and forces people to use foodbanks. Universal Credit is taking too long to pay people money they need to live on. The Universal Credit design means that claimants face an initial mandatory five week waiting period for payment. Around 20% of claimants do not receive their full payment on time and can face delays of several weeks on top of the initial wait. The Department does not expect the situation to improve significantly in 2018. Around 60% of claimants receive an advance from the Department to tide them over during the initial weeks, a clear indication that most claimants do not have enough money to cope over this period. Advances then contribute to the debt faced by claimants, which can be deducted at up to 40% of a claimant’s standard allowance, and reduces the amount of money claimants have to live on. The Department’s own survey found that 40% of claimants were experiencing financial difficulties eight or nine months into their claim. This is reflected in recent surveys of housing providers that found that many claimants face rent arrears as they move onto Universal Credit, with one finding that claimants can take 18–24 months to clear this debt. It is therefore unsurprising that the Trussell Trust has seen foodbank use increase more rapidly in areas where Universal Credit has been rolled out. It is astonishing that, despite this wealth of evidence, the Department refuses to accept that Universal Credit has caused hardship amongst claimants. The Department could not explain how it measures hardship as a result of Universal Credit, or provide evidence for its assertion that it does not exist. As a matter of urgency the Department must resolve the issues around the first payment delay, as part of addressing the hardship being caused for many claimants.

Recommendation: In order to mitigate financial hardship for claimants, the Department must:

3.The Department is failing vulnerable claimants because it places too much reliance on the discretion of its work coaches to identify and manage the needs of people requiring extra support. The Department relies on work coaches in Jobcentres to tailor aspects of Universal Credit to a claimant’s individual needs, such as the number of hours they must spend looking for work. But appropriately tailored conditions are not always being set in practice, resulting in claimants being subject to unrealistic expectations, leaving them at risk of sanctions and in some cases exacerbating health issues. The Department’s own research has highlighted that staff reported feeling ‘overwhelmed’ by the number of claimants with health conditions that they are dealing with. It is likely the pressure on work coaches will increase, as the number of claimants per work coach is set to increase fourfold. The Department is not able to monitor the treatment of vulnerable claimants, such as those with mental health problems, as it does not collect data on these groups within its systems. The Department is working on developing a ‘text-mining’ approach which it plans to use to obtain management information on different vulnerability groups. However this approach is reliant on the text that work coaches write in a claimant’s journal, and will not provide the Department with clear data to allow it to measure what challenges certain vulnerable groups face or how well its solutions are working for them.

Recommendation: In its response to this report, the Department must set out, what more it will do to ensure that work coaches are well equipped to provide the right support packages for claimants including those with health needs and other vulnerabilities, and how it will measure and ensure this is happening in practice.

4.The package of support to help claimants adjust to Universal Credit is not fit for purpose. ‘Universal Support’ is funded by the Department and commissioned by local authorities. It provides personal budgeting support and assisted digital support to help claimants make an online claim and manage their money. Despite the existence of this support, the Department’s own survey showed that 25% of people reported not being able to make a claim online, and 40% reported financial difficulties. Providers have told us that claimants are not always offered the support, and for those that are, it often does not come at the right time or meet their needs. For instance, personal budgeting support is often offered to claimants when they are already in debt, but it is focused on helping them to manage a monthly budget and does not include debt advice. One local authority has told us that the funding provided by the Department is insufficient to cover costs, as a result of which it has not been able to put personal budgeting support in place.

Recommendation: The Department must work with others to reassess precisely what support claimants need, and how this can be best provided. It should demonstrate what impact this support is having. The Department must update us in six months on what is has done and learnt and how it will measure whether there is sufficient support in future.

5.Universal Credit is pushing costs onto the local organisations that support claimants - including local authorities, housing associations, and foodbanks. The Department provides some administrative funding to local authorities for the implementation of Universal Credit. However, local authorities are facing additional costs which the Department does not cover, and have been forced to cover the costs of their local area moving to Universal Credit. Housing providers report increased rent arrears because of Universal Credit; for example arrears owed to Newcastle City Council doubled from £1 million to £2 million pounds in the year to March 2018. Local authorities are also finding that their ability to recover overpaid housing benefit has been impaired by Universal Credit and outlined increased administrative burdens. Furthermore, organisations that support claimants, such as Citizens Advice and foodbanks, have seen a substantial increase in demand for their services in areas that have introduced Universal Credit. But the Department does not seem to be listening and is not giving sufficient credence to the issues raised by frontline organisations. When it does speak to external organisations it attributes many differences to views about policy rather than the implementation of Universal Credit.

Recommendation: The Department should set out what it will do to understand and measure the additional costs and burdens for local organisations and what it will do to ensure organisations can cope as the number of claimants on Universal Credit increase.

6.The Department is unable to measure its objective of getting 200,000 more people into work. Both ministers and the Department have repeatedly claimed that Universal Credit will get an additional 200,000 (originally 300,000) people into work. However the Department now admits that it will not be able to measure the additional jobs in the economy as a result of Universal Credit. It says that the assumptions on which it based its forecast support its claim of an additional 200,000 people in work and argues that ‘just because you can’t measure it, it doesn’t mean it doesn’t exist’. We do not believe this is a sufficient argument. The Department predicates £5 billion of economic gains–more than half of the expected annual economic benefits claimed in its business case–to increased employment gains. The Department’s inability to support claims for more people being in work as a result, along with questions over whether Universal Credit will ever be cheaper to administer than the welfare benefits it is replacing, cast doubt on whether the additional cost of Universal Credit will ever prove to be value for money.

Recommendation: In future the Department must make sure that all claims for Universal Credit are supported by empirical evidence rather than theoretical models.

7.We are seriously concerned about the Department’s ability to transfer around 4 million people from existing welfare benefits to Universal Credit without causing further hardship to claimants. The Department expects a total of 8.5 million people to be on Universal Credit by 2023. Just over half will move to Universal Credit naturally through new claims or changes in circumstance, as the digital system moves to their area. The remaining four million people on legacy welfare benefits, who have not experienced a change in circumstance, will move over during ‘managed migration’–which the Department accepts will be the most challenging part of the programme. Despite this, and the official start date for beginning the transfer being less than a year away, the Department has not formalised detailed plans for the process and still needs to engage with stakeholder groups about the best way to tackle the challenge. It anticipates that the number of claimants moving over to Universal Credit each month could be up to 100,000, and says it would struggle to deal with a number higher than this. The process involves claimants needing to make a new claim for Universal Credit before their old benefit is stopped. The Department recognises that this brings a risk that claimants could be left without financial cover if they do not move over in time, and acknowledges that claimants have not always responded as it expected in the past. As the number of new claims coming onto Universal Credit each month increases, the pressure on the Department’s staff, systems and organisations supporting claimants will increase. As a result there is a real risk that we will see claimants facing hardship on a much larger scale.

Recommendation: We will be challenging the Department again on its preparedness for managed migration. It is more important that the Department gets migration right than it unthinkingly sticks to its timetable. Before it goes ahead it must be transparent about:

8.Since our evidence session, the Secretary of State for Work & Pensions has announced that the roll-out of Universal Credit will be delayed once again. The roll-out of the next phase of the programme will start later in 2019 rather than in January as planned. The Secretary of State also announced that the Department’s roll out would be “slow and measured” with just a small number of claimants–some 10,000–to ensure the system is working before being rolled out more widely in 2020. But this slowdown is no guarantee that the problems facing claimants will be resolved and will address the hardship so many have experienced.

Recommendation: Given the Secretary of State has acknowledged that some claimants will be worse off on Universal Credit, we expect the Department to take on board our recommendations as part of this new approach and accept the hardship its previous approach has caused.

Published: 26 October 2018