Progress in implementing Universal Credit – Report Summary

Summary

The Department for Work & Pensions (the Department) makes bold claims about the benefits that Universal Credit is generating and we recognise that its evaluations show that Universal Credit has a positive impact on employment in the short term. We remain sceptical, however, that this evidence supports the Department’s claims that Universal Credit is realising the scale of economic benefits, over £6 billion, that it projected in its latest business case.

The Department also intended that Universal Credit would generate significant benefits by reducing fraud and error, but cannot measure impact in this area. This Committee has been examining Universal Credit for more than a decade, tracking its implementation and impact. During that time we have regularly highlighted increasing levels of fraud and error and made recommendations for improvement. However, rather than providing us with assurance about the actions it is taking, the Department fell back again on its explanation of a societal increase in the propensity to commit fraud. We are not convinced why this must inevitably lead to growing losses to the taxpayer. We encourage our successor Committee to keep a close eye on this issue and to continue to hold the Department to account for its progress.

The Department is in the process of moving 900,000 claimants of legacy benefits to Universal Credit, having started with claimants of HM Revenue & Customs’ Tax Credits. It says it is not concerned that so far 21% of claimants have not transferred to Universal Credit when invited to do so but it has limited assurance that people are not, as a result, missing out on benefits they are entitled to. It should not conclude that all is well simply because it received only 20 complaints about the migration process from April to December 2023. The Department now has the more challenging task of moving claimants of its own legacy benefits, some of whom are likely to be vulnerable. Although the Department expects only around 4% of these claimants will not switch to Universal Credit, we would be very concerned if large numbers of these people did not transfer and were to lose their benefits. It is vital that the Department helps these claimants to make the switch, including offering face-to-face support and making sure people fully understand the process, including the arrangements for transitional protection.

The Department is not scheduled to complete full implementation of Universal Credit until 2028 at the earliest following the Government’s decision to delay the move of income-related Employment and Support Allowance claimants to Universal Credit to make savings in benefit payments. Because of this delay, some people will receive less benefit income in the coming years than they otherwise would have. The Department must capture the learning from its current programme about how to move vulnerable claimants effectively and safely to Universal Credit so it is well placed to undertake this activity in four years’ time.