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September 4th, 2018

Universal Credit System in the UK from 2010 to 2014

The United Kingdom’s 2010-2015 coalition government announced Universal Credit (UC) in 2010. The initiative was introduced in the Welfare Reform Act 2012 as a means of bringing together six benefits, including housing benefit, working tax credits and jobseeker's allowance, within one scheme. However, a number of problems in the implementation of the programme ensued, including project overruns, overspending, minimal take-up and late payments to recipients, with the result that Universal Credit was "reset" in February 2013 and the national rollout planned for 2013 delayed to 2017.

The initiative

The proposed solution to the plurality of benefits and payments was Universal Credit (UC), which replaces six existing benefits for people of working-age in the UK: JSA, WTC, CTC, Housing Benefit, income-based ESA and Income Support.[3] Once a beneficiary starts claiming UC, the economic support awarded will be based on the individual's income and circumstances at the time of the last assessment period. UC payments are made on a monthly basis.[2] The idea of UC first appeared in a 2009 report by the Centre for Social Justice (CSJ), an independent think tank established in 2004 by British politician Ian Duncan Smith.  In the report, CSJ reviewed the UK's tax credit and benefits system proposing UC as a solution to improve the British social security system by making it more fair and simple.[4]

Between July and October 2010 the coalition government led a consultation exercise to collect views on the welfare reform. Following the consultation, UC was announced at the Conservative Party annual conference in 2010 by Ian Duncan Smith, who was secretary of state for work and pensions at the time. In November 2010 the Department for Work and Pensions (DWP) published a White Paper that detailed its plans for UC.[4] In support of the UC programme £2 billion were pledged for the following four years. The government expected UC to provide better incentives for unemployed people to re-engage into employment, and DWP estimated UC would deliver net benefits of £38 billion over a 12 year period to 2022-23, followed by a yearly net benefit of £ billion.[4] The initiative was introduced as a new benefit in the comprehensive welfare reform package known as the Welfare Reform Act 2012 introduced by the coalition government.[4] Nationwide rollout of UC was originally set for October 2017, however, the programme was reset in February 2013 delaying the timeline to 2023.[5]

In January 2011 the design of the programme and build work started. The original plan was to complete transferring all claims onto the new system by October 2017. In 2011 the DWP identified more than a hundred different types of UC users and decided to design an individual IT solution for each type of circumstance. Only by early 2012 did the DWP take a step back to reassess what the programme might look like. That summer DWP realised the challenges UC was facing. The first alerts were raised in July by a supplier-led review commissioned by secretary of state Ian Duncan Smith. Internal lines of monitoring, intervention and defence had not worked properly until this point.[1]

During this early implementation period DWP had relied on external, ad hoc reviews showing occasional snapshots of the programme rather than implementing effective internal monitoring systems. Also, a flawed culture developed where emerging problems were denied and reporting only “good news”. Such culture came from senior staff wanting to publicly demonstrate their capability to deliver the programme at the expense of adequate controls or listening to concerns regarding UC delivery. Once aware of the issues, DWP attempted to redirect the programme and change the culture of the UC team, however, it continued to publicly deny the programme had problems. DWP's attempts to solve UC's problems were insufficient and in February 2013, following a report by the Major Projects Authority (MPA), the programme was reset.[1]

In April 2013 The Universal Credit Regulation 2013 came into force. This is a statutory instrument under Part 1 of the Welfare Reform Act 2012 where the DWP defined the UC scheme. [6] By the time UC regulation came into force, DWP had spent £425 million on the programme, “including £303 million with suppliers for IT development”.[1] Although problems surrounding the implementation of DWP have continued in the years following the reset of the programme, DWP continues to work towards National rollout, expected for April 2023, with a projected expenditure of £2.4 bn.[1]

A change in management policy established Job Centre Plus (JCP) under the umbrella of the DWP to administer UC, reinforcing the intention to simplify the benefits system. With UC replacing tax credits for in-work claimants, and also including housing elements, agencies involved and applications required to claim benefits were expected to reduce.[7] Thus, UC sought to bring together payments to in-work and out-of-work claimants.

The challenge

The coalition government which took power in 2010 inherited from the previous Labour government a benefits system that included the following benefits payments: income-based Jobseeker’s Allowance (JSA), Housing Benefit, Working Tax Credit (WTC), Child Tax Credit (CTC), income-based Employment and Support Allowance (ESA) and Income Support. In the 2012-2013 fiscal year these six benefits accounted for £67 billion in expenses across 13 million claims.[1] JSA had been around for many years in one form or another, while WTC and CTC had been introduced in the Tax Credits Act 2002 and had encountered a number of difficulties since then. Tax credits are social benefits that are calculated every year as an annual amount and paid in monthly or weekly instalments throughout the tax year. WTC is paid to working people with a low income, and CTC is paid to people with children under 16.[2] There was a perceived need to make the system more coherent and combine in-work benefits, such as the WTC, and out-of-work benefits, such as JSA, to make the system more efficient and accessible to citizens.

The public impact

The take-up of UC was very limited. The target set for the spring of 2014 was of a million participants, however, at the time roughly 4,000-5,000 recipients signed up.[8] Although UC participant numbers increased to 75,427 in July 2015, engagement fell 4.38 million short of the 4.46 million subscribers the government had predicted for 2015-16.[9]

Moreover, the initiative had been design to simplify the complexity of benefits, and it turned out that participants mostly belonged to the simplest category: unemployed, single young men, without home ownership.[8]

Overall, the outcome of UC's early implementation years did not match the resources invested in the initiative. In April 2014 the UK political magazine New Statesman stressed the public funding effort, Whitehall infighting, political unrest, and IT failure, resulting in a UC take-up rate below 4,000 subscribers. The source also reported the costs UC would represent for the state budget. The DWP argued that the £312 million spent on UC would be balanced with ultimate economic benefits from UC of £35 billion. However, at the time the DWP conceded losses of £40 million and a further £90 million was to be “written down” in the following five years. This was seen as a significant change in accounting treatment by the National Audit Office.[10]

The unsuccessful implementation of UC caused great disappointment. New Statesman quoted Rachel Reeves, Pensions Minister at the time, who considered “Millions of taxpayers' money has been wasted. And only a handful are now claiming UC despite ministers promising a million by April 2014. Francis Maude, former Tory Minister for the Cabinet Office, was right to say the roll-out of UC was ‘lamentable'. Ministers need to urgently get a grip of their flagship welfare reform.”[10] It should be noted that Maude's criticism of the policy was of its execution.[11]

As more people claimed UC the situation became more serious for many participants. In early 2017, the UK news source the Guardian found evidence of thousands of UC claimants from low-income groups facing eviction and dependant on food banks. MPs were increasingly concerned over flaws in the design of the policy and in February 2017 an official inquiry was launched. According to the Guardian “The Commons Work and Pensions Committee said it was compelled to launch a full investigation after mounting evidence that built-in payment delays and administrative blockages were creating severe problems for claimants and landlords.”[12]

Written by Cristina Figaredo and Diptasri Basu

Stakeholder engagement

The main stakeholder in UC is the DWP, which is assisted by JCP in its implementation. JCP was formed as a single agency to administer UC, reinforcing the intention to simplify the benefits system. With UC replacing tax credits for in-work claimants, and also including housing elements, agencies involved and applications required to claim benefits were expected to reduce.[7]

There was no direct involvement of HMRC or the Treasury in UC, but HMRC was engaged in some aspects, for example in starting the Real Time Information (RTI) pilot in April 2012. RTI is an IT system for employers to instantly report PAYE (Pay As You Earn) payments to HMRC rather than waiting to the end of the fiscal year. By late July 2012, the RTI platform provided records for 1.8 million workers across 700 different PAYE systems. Ministers expected employers to have full RTI coverage by October 2013.[7]

Local authorities and their associations were indirectly involved in the scheme as it related to housing benefit and council tax. UC implications and details concerning benefits for housing and a new strategy for council tax costs were to be discussed with the Department for Work and Pensions.[13]

There were a number of private sector organisations involved in the IT project tasked with delivering the scheme, using an agile methodology. However, according to New Statesman, “experts say that the project was never truly agile in the first place. This was due to the way contracts with fixed features were set up with major IT suppliers such as IBM, Accenture, Atos and Hewlett-Packard, and the requirements for a 'big bang' launch in October 2013 (a deadline which, of course, it missed).”[10]

Another important group of stakeholders consisted of recipients and supposed recipients of UC. The House of Commons Public Accounts Committee (PAC), the House of Commons Work and Pensions Committee, and the National Audit Office (NAO) have been involved in monitoring and reporting on the scheme.

Political commitment

The UC programme was launched with strong commitment from Iain Duncan Smith, the secretary of state for work and pensions from 2010 to 2016. Allegedly his condition to accept the work and pensions secretary role was to be allowed to implement this benefits reform.[14] The promise of Duncan Smith was "to make it easier for people to access benefits.”[15]  Some of the improvements suggested in the reform included reducing costs and errors, and dealing more effectively with fraud. As stated before the House of Commons, the former secretary of state was aiming to solve a number of social problems including: “5 million people of working age are on out-of-work benefits; 1.4 million people have been on out-of-work benefits for nine of the past 10 years; 2.6 million working-age people are claiming incapacity benefits, of which about 1 million have been claiming for a decade; and almost 2 million children are growing up in workless households — one of the worst rates in Europe.”[15] Even after resigning from cabinet over cuts to disability benefits in March 2016, Duncan Smith has continued to publicly support UC.[16]

Despite the broad support across the DWP and civil service at the outset of the programme, there was not universal support for UC in the government. For example, Francis Maude declined several times to back UC publicly despite having worked closely with Ian Duncan Smith as well as DWP officials involved in the initiative.[10][14] However, Maude's reservations apparently concerned the implementation of UC, not the initiative itself. According to the Telegraph, the former Minister of the Cabinet Office commented in January 2014 about the UC: “It's [UC] a brilliant policy and it's completely the right thing to do. But the implementation was pretty lamentable and the public accounts committee have highlighted that.”[11]

In the first two years of UC's implementation major problems around the design of the project and its execution threatened the success of the reform.[10] What is more, throughout the initial development phases, reports of limited progress were apparently overlooked.[8] Rachel Reeves argued that Ian Duncan Smith insisted repeatedly on UC committing to the timeline and the budget, and that Ministers rejected warning reports that the schedule would not be met.[10] In line with this perception of DWP not acknowledging the scale of the problem, in 2013 the PAC reported that “The lack of oversight allowed the Department's Universal Credit team to become isolated and defensive, undermining its ability to recognise the size of the problems the programme faced and to be candid when reporting progress.”[1]

In 2016 four UC documents dating from 2012 were disclosed to the public confirming that statements made by the secretary of state and the DWP in 2012 and 2013 about UC did not represent the reality of the programme at that time.[17]

Despite the problems around the early implementation period, the DWP maintains its commitment to deliver UC. The program was redesigned in 2013 and the timeline extended to 2023.[1] The scheme continues to be in place, with the latest revision available dating from 28 February 2018.[6]

Public confidence

The original proposal to simplify the benefits system was broadly supported across the DWP, civil service, private sector and charities attempting to tackle poverty.[14] In its September 2013 report, the NAO summarised the initiative. "Universal Credit is a significant reform to welfare in the UK. The Department for Work & Pensions (DWP) will use UC to replace six means-tested benefits for working-age households. The DWP and HM Revenue & Customs (HMRC) spent £67 billion on these benefits in 2012-13 - one-third of their combined spending on benefits, state pensions and tax credits."[18]

However, the problems in the implementation of the program through the first two years, the lack of transparency, and the inaccuracy of government predictions damaged public confidence on DWP's capabilities to deliver UC.[10]

Moreover, in 2012 John Slater, an independent project manager, and Tony Collins, investigative journalist and former executive editor of Computer Weekly, submitted a Freedom of Information (FoI) request for the DWP to disclose four key documents regarding UC. The reason to request the FoI was “because there was obviously a gulf between the scale of what was being promised by the programme and the published completion date of October 2017.”[17] DWP resisted disclosure until forced by court ruling in 2016 to release the documents. The information on the files indicated the DWP was aware of the shortcomings of the initiative by mid-2012.[17]

When considering the experience of UC participants, comments were generally unfavourable. A London resident and UC claimant stated “Universal credit has been a nightmare […] It's like getting blood out of a stone to get money you're entitled to.'”[19] This experience in the capital was echoed in Plymouth, Devon, where an alarmed Chris Penberthy, Labour councillor and Cabinet member, argued the systems were not ready.[20]

The revisions to UC have not necessarily increased the likelihood of its success. David Finch, former senior economic analyst at think tank the Resolution Foundation, warned not to underestimate the challenges remaining to complete the implementation. Finch outlined several built-in complications that were likely to raise problems, including mandatory monthly reporting for the self-employed, and requiring the UC rent element being paid directly to claimants. According to Finch, expert recommendations against a number of these complicating elements were disregarded in the design of the policy.[14]

The House of Commons Work and Pensions Committee kept an open mind on UC, but was not confident that it would escape its legacy of failure. The chair of the committee, Dame Anne Begg, stated: “UC has the potential over the longer term to substantially reduce fraud and error in the benefits system. However, this could be seriously undermined because of the uncertainty about how DWP will administer the housing element of universal credit without increased risks of fraud and error.”[21]

Clarity of objectives

The overall objective was to simplify the benefits system by bringing together six in-work and out-of-work benefits in a single scheme. In the DWP's 2010 paper on UC, the following specific objectives were defined:

  • "Minimise the need for recipients to contact government, unless integral to managing conditionality, preventing fraud or error or providing support;
  • "Maximise use of online channels to provide straightforward and accessible information about claims and better job search support whilst providing focused help for those unable to use online channels;
  • "Ensure the continuous delivery of high-quality, joined-up, effective and consistent service;
  • "Minimise disruption to recipients and organisations during the transition to UC;
  • "Work closely with partner delivery organisations to develop a service to meet the diverse needs of recipients;
  • "Build in flexibility to allow for delivery of wider services in the future; and
  • "Maximise overall government efficiency."[13]

However, these objectives are not clearly stated in the Welfare Reform Act 2012 or the Universal Credit Regulations 2013.

Strength of evidence

The policy was based on the widely accepted premise that the previous government's policy of tax credits was a failure and needed reform. There was also a certain amount of research of views and experience from key stakeholders, such as DWP representatives, and advice and delivery agencies. A 2012 report by the Centre for Social and Economic Inclusion (CSEI)—currently known as the Learning & Work Institute—reviewing the implementation of UC, argued that time constraints limited the analysis of other countries' experience in implementing similar benefits reforms, including France, Austria and Germany. Though, the OECD stated that UC was the first attempt of a country aiming “to fully implement the ‘radical option' of a single working age benefit."[7]

There were also pilot schemes from April 2012 to July 2012 in specific areas of the country to test the Real Time Information (RTI) system, the platform UC payments would rely on. As explained in the stakeholder engagement analysis, this feature was to be introduced by HMRC to change the way in which employers report PAYE payments. CSEI reported at the time that “The systematic approach the government is taking towards testing its systems before implementation is the right one”.[7] In its report, CSEI also mentions the relevance of solving IT issues before the scheme goes live in April 2013 to avoid errors and delays in payments.

However, when setting quantifiable objectives the evidence used by DWP was found inadequate in some instances. For example, in the initial plan, the DWP set a target of 80 percent of JCP subscribers to manage UC claims via digital channels. The CSEI 2012 report considered this target especially challenging based on statistics showing only 17 percent of users in 2011 opted for online claims. Moreover, the DWP failed to provide the PAC with rigorous proof for such target. Instead the department referred to figures showing 86 percent of JSA customers already using the internet and 67 percent having home access. However, only some 40 percent were ‘ready, willing and able' to use JSA services online. Consequently, the DWP was not able to achieve its own targets, either for 80 percent of JCP subscribers managing their UC claims via digital platforms, or the 4.46 million claimants to use UC (see Public impact above).[7]


There were several feasibility tests conducted before the implementation of UC's IT systems. For example, the DWP applied user-centred design testing to understand the behaviour and needs of claimants as potential users of the scheme, and DWP and HMRC staff as programme administrators, throughout the development of the project. During the development of the user-centred design programme, which ran from March to October 2011, the department also tested both offline and online features, as well as several online ‘user journeys'. [7]

However, this testing failed to alert staff to the scale of the problems they might encounter. "Since the 2012 estimate, DWP has been forced to tear up its original plans for the troubled programme, writing off millions of pounds in scrapped IT development and revising the timetable for roll-out."[22] This resulted in significant increases to total lifetime cost estimates of the UC program. In its 2015 annual report the Major Projects Authority (MPA), now known as the Infrastructure Projects Authority, indicated UC costs increased nearly £3 billion between 2012 and 2015 reaching £15.8 billion.[22]

What is more, the documents disclosed in 2016 as a result of the 2012 FoI, described in Public Confidence above, indicated that DWP officials were aware by mid-2012 that UC could negatively impact the welfare reform with cost overruns and delays. Nevertheless, the DWP insisted that there were no problems with the project until the ‘reset' of the program in early 2013.[23]


The management structure gave a major role to JCP, reporting to the DWP. Prior to UC a number of government departments managed the different income-related benefits and delivery was transferred to corresponding delivery agencies. The changes UC brought included bringing together different support elements that were previously delivered by separate agencies through different benefits. The outcome was a combined payment delivered by JCP which was integrated within DWP.[7]

In terms of the digital requirements of the program, the IT development was poorly managed. In  September 2013 the NAO reported that the DWP had not achieved “value for money” since the start of the program up to April 2013 and that it failed to assess the value of the IT project it had invested £300 billion to develop.[18] According to the Guardian, investment in IT represented most of project spending, which aimed to develop a system to manage data for 184,000 claimants. Of the spending on IT £34 million had been written off and the systems developed showed “limited functionality”.[24] In an earlier 2013 report by the MPA it was found that the IT system failed to recognise potentially fraudulent claims and that manual checks were needed.[18]

As a result of the 2013 MPA report raising serious concerns regarding the program, the UC plan was ‘reset'. The team managing the process was tasked to design a new plan for UC, as well as delivering the delayed pilot of the project, and finding a replacement for the 'senior responsible owner' of the project. In this process the lifetime costs of the scheme were reviewed, millions of pounds invested in IT development were lost to cancelled systems, and the roll-out timetable for UC was reviewed.[22] Once UC was reset, DWP assumed a 'twin-track' strategy to implement UC. In parallel to the roll-out of the externally built ICT system, named the 'live service', a new digital service developed in-house was being delivered, designed to improve functionality, allowing to incorporate all six benefits.[14]

The ‘reset' of the programme added to the high turnover of UC leadership. Between mid-2012 and September 2013, the senior leadership of the programme changed up to four times, including one unexpected death and the ‘reset' of UC, having up to five different senior responsible owners throughout the period.[18]

The project management as a whole was not able to keep control of UC delivery. Poor management of the project led to a poor implementation of the scheme. The PAC was aware of this problem reporting in 2013 that “Management of the Universal Credit programme has been extraordinarily poor”. PAC considered the UC programme was feasible but that senior managers had failed to understand the nature and enormity of the project. According to the Committee, managers also failed to regularly monitor and challenge progress, and to quickly intervene when problems appeared. It was through ad hoc reviews by external parties that senior managers appreciated the problems, exposing the failure of internal reporting arrangements and information management.[1][8] According to PAC “the Department lacked an overarching business transformation strategy, and focused its effort on the programme's IT aspects.”[1]


As indicated by the PAC, the initial implementation of UC demonstrated a failure to monitor and challenge progress regularly. This poor monitoring and evaluation determined the scheme from the beginning. In its September 2013 report the NAO considered DWP lacked appropriate, timely management reporting to assess UC progress and relied instead on periodic external reviews. The NAO assessed that the DWP was not being transparent and had a 'good news' culture. The department was also found to have poor financial controls on the programme and lacking a detailed plan.[10][18]

However, NAO did acknowledge the autumn 2012 attempt by DWP to address concerns and substantially restructuring the programme. Nevertheless, “by then [DWP] had to focus on the short-term delivery of pathfinders.”[18] The UC director and the director of IT were replaced by the senior responsible owner who assumed a ‘phased approach' giving individual directors the responsibility for the pathfinder, October roll-out, and migration of claimants on to UC. Towards the end of 2012 the DWP had mostly stopped system development for national roll-out to focus efforts on preparing short-term solutions for the pathfinder. The senior responsible owner at the time seems to have also attempted to improve programme and supplier management.[18]

Unfortunately, DWP's attempt arrived late and was not enough. The department fell short of fully implementing two-thirds of the recommendations made by internal audit and the MPA in 2012.[18] As a result, in February 2013 the MPA raised concerns that had already appeared in earlier reports, and the government decided to ‘reset' the program that same month. Despite the various recommendations over time from internal reports and external assessments from NAO and the MPA, the DWP was slow to address the key pain points.[10]


The scheme suffered from weak alignment from ministers, DWP leadership, UC's senior responsible owner, MPA, the NOA, private sector, and contractors. The initial implementation of UC failed to meet its objectives due to mismanagement and delay in executing the appropriate decisions at regular intervals. Internal and external stakeholders were not aligned with each other and, as stated in Measurement above, DWP leadership did not implement the recommendations of the monitoring bodies, by the time actions were taken it was already too late.[18]

In November 2013 PAC released a report on the early progress of UC in the period leading to the reset of the programme. The report acknowledges the poor management of UC and the inadequacy of internal reporting practices. Also, PAC found there had been a lack of oversight of the UC team, allowing such team to “become isolated and defensive, undermining its ability to recognise the size of the problems the programme faced and to be candid when reporting progress.”[1] The team seemed to develop a “fortress culture” as a result of protected resources and an ambitious timescale. PAC considers that stronger monitoring by DWP seniors over the UC team's progress might have provided an earlier insight of the programme's divergence of the actual plan. The DWP had the means to identify and act on the problem earlier but failed to do so. [1]

Additionally, private sector contractors were failing to deliver results to the DWP and this was having a very profound adverse effect on the individual claimants who were the supposed beneficiaries of UC. Furthermore, DWP acknowledged in 2013 that value for money had been risked due to a weak management of suppliers. Contracts for IT systems with the four main suppliers IBM, Accenture, British Telecom and Hawlett Packard, had not been actively managed and did not have financial controls in place.[1]


[1] Universal Credit: early progress, House of Commons Committee of Public Accounts, 4 November 2014

[2] Tax credits, Low Income Tax Reform Group, 27 June 2018

[3] Background to Universal Credit, Revenue Benefits, 29 May 2018

[4] Hear Us Open Forum: Benefit Changes Explained, Eventful

[5] Universal Credit (UC) roll-out 2018,

[6] The Universal Credit Regulations 2013, The National Archives,

[7] Implementing Universal Credit Will the reforms improve the service for users? Amy Tarr and Dan Finn, October 2012, Centre for Social and Economic Inclusion

[8] The Blunders of our Government, Anthony King and Ivor Crewe, 2013 (revised 2014), Oneworld Publications

[9] Universal Credit: The IT project that will outlive us all, Kat Hall, 25 January 2016, The Register

[10] Universal Credit: the anatomy of a government failure, Charlotte Jee, 11 April 2014, New Statesman

[11] Francis Maude: Implementation of Universal Credit was 'pretty lamentable', Georgia Graham, 8 January 2014, The Telegraph

[12] MPs launch official inquiry into universal credit as criticism grows, Patrick Butler, 22 February 2017, The Guardian

[13] Universal Credit: welfare that works, November 2010, Department for Work and Pensions

[14] Has the 'reset' saved Universal Credit? Colin Marrs, 3 August 2015, Civil Service World

[15] Welfare Reform, The Secretary of State for Work and Pensions (Mr Iain Duncan Smith), 11 Nov 2010, House of Commons Hansard

[16] In full: Iain Duncan Smith resignation letter, 18 March 2016, BBC

[17] Fighting the ‘fortress mentality' at DWP - my search for the truth about Universal Credit, John Slater, March 2016, Computer Weekly

[18] Universal Credit: early progress, 5 September 2013, National Audit Office

[19] The farce and the agony of trying to get universal credit payments, Frances Ryan, 28 July 2016, The Guardian

[20] Alarm bells ringing over new Universal Credit system, 3 November 2014, Western Morning News

[21] Universal credit uncertainty could undermine benefit fraud detection, Heather Spurr, 15 April 2014, Inside Housing

[22] Universal Credit costs leap by more than 20% to £15.8bn, Bryan Glick, 25 June 2015, Computer Weekly

[23] DWP knew of Universal Credit problems in mid-2012 despite insisting all was well, Bryan Glick, 12 April 2016, Computer Weekly

[24] David Cameron's £2.4bn universal credit project riddled with problems, Rajeev Syal and Shiv Malik, 5 September 2013, The Guardian

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