HQN blog: National Audit Office reports on Universal Credit

A blog by Jules Birch

National Audit Office (NAO) reports on Universal Credit (UC) follow a familiar pattern.

First, the financial watchdog makes trenchant criticisms of the new benefit system, or politely questions the entire rationale for introducing it in the first place, or reveals revelations of yet more delays in progress towards the promised land.

Next, the Department for Work and Pensions (DWP) acknowledges the report but argues that it is out of date and does not reflect improvements made since the auditors carried out their work and that UC will be a tremendous success.

And so it fell to work and pensions minister Alok Sharma to deliver the good news that the NAO report was written before the introduction of £1.5bn-worth of improvements including allowing claimants to get 100% advances on their first UC payment. “We’ve not seen the full impact of these very positive changes,” he told the Today programme.

As usual there is an element of truth in what the minister said – the recent changes have improved things for claimants and landlords – but as a former housing minister he will be well aware that huge problems remain.

UC remains very long on heroic promises and assumptions and very short on evidence to back them up.

Completion of the project was originally due in October 2017 but yet another delay announced in early June means this has now slipped to March 2023. Though full service is still expected in all jobcentres by the end of this year, that is how long it will take to migrate existing claims.

Some elements are working well but come claimants are suffering significant hardship and one in five do not get their first payment on time.

As local authorities and housing associations will need no reminding, UC is creating extra costs for them in administration, rent arrears, and demand for advice services. Needless to say, the DWP’s business case (finally approved by the Treasury in May) does not include these local costs in its estimates of the overall costs of the programme.

The only DWP research on the impact of UC on rent arrears is based on ‘very limited analysis with one housing association’ showing a familiar pattern of a rapid increases that starts to plateau after 10 to 12 weeks – though it says it intends to extend this to an extra five housing providers.

It dismisses claims that UC causes hardship for claimants on the basis that it makes advances available and so hardship should not happen and ‘gives the unhelpful impression of a department that is unsympathetic to claimants’.

As for private landlords, the NAO found one who had previously worked with the council to house people that had pulled out of the market as a direct result of UC, and interviewed a property agent in Hastings who said only one in 10 of its landlords would now rent to benefit claimants.

Looking to the future, the NAO says the DWP’s claim that UC will eventually deliver benefits of £8bn a year depends on ‘unproven assumptions’ and it is not clear that it will cost less to administer than the existing benefits system.

The department does not know if it is reducing fraud and error, it will never be able to measure whether UC is really leading to the 200,000 more people in work that it claims, and the value- for-money case is ‘unproven’.

But for all that ‘there is no practical alternative to continuing with Universal Credit’.

And so the pattern continues. Never mind a few icebergs, full steam ahead!