Universal Credit criticised by National Audit Office | Rent Income Excellence Network news

Universal Credit criticised by National Audit Office

Several aspects of Universal Credit have been criticised by the National Audit Office in its latest report on the welfare policy.

The NAO note that the cost of implementing the policy has now risen from £3.2bn to £4.6bn due to the department changing the date on moving claims over to UC from March 2023 to September 2024.

This implementation cost is without factoring in Covid-19.

The report also found that Around 57% of households making a new claim take a Universal Credit advance payment to help them manage during this period.

Claimants and representative organisations told the NAO the wait for the first payment "contributes to financial hardship and debt", despite the availability of advances.

Repaying the advance can cause claimants difficulties if they are not able to manage on the resulting reduced monthly payments.

The DWP’s own research showed that nearly half of claimants (49%) had no earnings in the three months before they applied. It also showed that rent arrears generally start before a Universal Credit claim but then increase more rapidly until the first payment.

People delaying their claims can further exacerbate problems.

A fifth of claimants (22%) surveyed by the DWP did not claim as soon as they became eligible because, for example, they did not know what to do or thought they would get another job quickly.

The report also notes that DWP has made poor progress in reducing fraud and error. Over one in ten pounds paid through Universal Credit is incorrect.

The DWP estimates £1.7bn (9.4%) of Universal Credit payments were overpaid in 2019-20.

This is the highest recorded rate of overpayments for any benefit other than Tax Credits (administered by HM Revenue & Customs), which peaked at 9.7% in 2003-04. The DWP also underpaid 1.1% of total payments. It had forecast the level of overpayments would be below 6.4% in 2019-20.

Even before the COVID-19 pandemic, the DWP had identified that its staff were under pressure. The number of cases each of its case managers handles had increased from 154 at March 2018, to 573 at February 2020, in line with plans.

When the NAO last reported in 2018, the DWP expected the number of cases per case manager to rise to over 900 by 2024-25.

The DWP told the NAO that many staff were already spending more time than expected to ensure claimants were paid on time. It also had concerns around the volume of telephone calls case managers are receiving and increased absence levels.

But there were some positives from the NAO for Universal Credit and the Department of Work and Pensions.

For example, the NAO say there were "significant" improvements in the proportion of claims paid on time, from 55% in January 2017 to 90% in February 2020.

However, as the number of people claiming Universal Credit has grown, the number of people paid late has also increased from 113,000 in 2017 to 312,000 in 2019.

In 2019 those new claimants who were paid late faced average delays of three weeks in addition to the five-week wait. Some 6% of households (105,000 new claims) waited around 11 weeks or more for full payment.

The DWP has demonstrated a clear focus on paying more people on time and has made improvements to its systems to address problems that were blocking large numbers of payments.

However, the NAO found that the DWP needs to better understand and address the needs of people with more complex claims, who may be more likely to struggle to make and maintain a claim, despite the changes to improve payment timeliness.

The DWP has reduced the cost of administering each claim, but it is still not certain that Universal Credit will be cheaper to administer than the benefits it has replaced.

The overall administrative cost per Universal Credit claim reduced from £699 in June 2018 to £301 in February 2020.

This is still more than the £173 per claim that the DWP forecast in its business case that Universal Credit would cost in 2024-25 after it is fully rolled out.

Gareth Davies, head of the NAO, said: “The DWP deserves credit for improving its processes so that 90% of claimants are now getting their first Universal Credit payment on time.

"However, it is concerning that vulnerable people and those with complex claims may struggle with their Universal Credit claim and face financial difficulties.

"The DWP needs to improve its understanding of vulnerable claimants and how best to support them to ensure that no one is slipping through the net. This is only going to become more important as the economic upheaval caused by COVID-19 continues."