In brief

The coalition government introduced Universal Credit in its 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 ensued, including project overruns, overspending, minimal take-up and late payments to recipients, with the result that Universal Credit was "reset" in 2015. However, it remains beset by implementation problems and has failed to live up to its original goal of simplifying the complex UK benefits system.

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, Child Tax Credit, income-based Employment and Support Allowance and Income Support. JSA had been around for many years in one form or another, while working and child tax credits had been introduced in the Tax Credits Act 2002 and had encountered a number of difficulties since then. There was a perceived need to make the system more coherent and combine in-work benefits, such as the working tax credit, and out-of-work benefits, such as JSA.

The initiative

The proposed solution to the plurality of benefits and payments was Universal Credit (UC), which was announced by the secretary of state for work and pensions, Iain Duncan Smith, at the Conservative Party annual conference in 2010. "It was stated the reform was designed to bring 'fairness and simplicity' to the British social security system. It was one of several wide-ranging welfare reforms introduced by the 2010-2015 coalition government in the Welfare Reform Act 2012."[1]

UC was defined in The Universal Credit Regulations 2013, a statutory instrument under Part 1 of the Welfare Reform Act 2012. In its September 2013 report, the National Audit Office (NAO) summarised the initiative. "UC 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."[2]

There was a change in management policy, as a result of which a single agency was formed to manage UC, reinforcing the intention to simplify the benefits system. “UC will be administered by JCP [Job Centre Plus], with overall responsibility resting with one department, the DWP. As UC will include a housing element, and will replace tax credits for in-work claimants, this will reduce the number of agencies a service user must apply to (and the number of applications they must make)."[3] Thus, it sought to bring together payments to in-work and out-of-work claimants.

The public impact

In the event, there was very limited take-up of UC, roughly 4,000-5,000 in 2014 and few more later on:

  • "The original target was for there to have been fully a million such recipients by the spring of 2014. The total actually achieved was in the order of five thousand, with the majority of those falling into the simplest of categories: single young men, unemployed and not owning their own home. In other words, a scheme intended drastically to simplify complexity was managing to cope only with simplicity."[4]
  • "Despite all the money wasted, the political turmoil, Whitehall infighting, failed IT and departmental chaos described above, the benefit is being claimed by less than 4,000 individuals in the UK."[5]
  • "Civitas noted: 'the government predicted in March 2013 that there would be 4.46 million claiming UC in 2015-16. The actual number in July 2015 was a mere 75,427 registered claimants (although this doesn’t confirm they were receiving benefit), 4.38 million short of the projected total for that date'."[6]

And UC did indeed result in a significant waste of public monies:

  • "The official DWP line is that, of the £312m spent on UC so far, £40.1 million will be written off, a figure which a spokesperson says 'should be balanced against the overall economic benefit of £35 billion that UC will ultimately bring'. The DWP has admitted that beyond the £40m in losses, a further £91m is being 'written down' over a five-year period, a plan described by the National Audit Office as a “major change in accounting treatment...
  • “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, 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.”[7]

(It should be noted that Francis Maude described the policy as "brilliant"; his criticism was of its execution.)

The current situation, now that more people are coming within its sphere of influence, is becoming serious for many claimants. "MPs have launched an official inquiry into universal credit amid growing concerns that design flaws in the new benefits system are leaving thousands of low-income claimants facing eviction and reliant on food banks. 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. A Guardian investigation this month found widespread evidence that thousands of tenants on universal credit were running up rent arrears and debts because they could not manage the minimum 42-day wait for a first payment."[8]

Have an idea for a case study? Print

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Stakeholder Engagement Good

The main stakeholder in UC is the DWP, which is assisted in its implementation by JCP. "UC will be administered by JCP, with overall responsibility resting with one department, the DWP. As UC will include a housing element, and will replace tax credits for in-work claimants, this will reduce the number of agencies a service user must apply to (and the number of applications they must make)."[9]

There was no direct involvement of HMRC or the Treasury in UC, but HMRC was engaged in some aspects, for example in the Real Time Information (RTI) pilot: "HMRC met its milestone to start its RTI pilot in April 2012 and by the end of July 2012 the system was handing records for 1.8 million employees in 700 PAYE schemes with Ministers confident of ensuring full RTI coverage of employers by October 2013".[10]

Local authorities were indirectly involved in the scheme as it related to housing benefit and council tax. "The Department for Work and Pensions will hold further discussions with local authorities and their associations about the detail and implications of UC for their housing benefit operations and of the new approach to council tax costs."[11]

There were a number of private sector organisations involved in the IT project tasked with delivering the scheme, using an agile methodology. "However, 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)."[12]

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

Political Commitment Fair

There was strong commitment at the outset from Iain Duncan Smith, the secretary of state for work and pensions from 2010 to 2016. "We will cut through complexity to make it easier for people to access benefits. We will cut costs, reduce error and do better at tackling fraud... Let me remind the House of the problem that we are trying to solve: 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."[13]

This commitment continued throughout the initial development phases, despite reports of limited progress:

  • “Ministers have repeatedly refused to listen to reports that UC was falling behind schedule, with Iain Duncan Smith insisting time and again that UC was ‘on time and on budget'.[14]
  • “The department for work and pensions appears either unable or unwilling to level with parliament and the public about universal credit,” Hillier said."[15]

However, there was not universal support for UC in the government: "Similarly, Cabinet Office Minister Francis Maude, who has worked closely with Iain Duncan Smith and DWP officials on the programme, has declined to publicly back UC on a number of occasions."[16]

Despite the failures, the policy continues to be in place, with the latest legislation being The Universal Credit (Transitional Provisions) (Amendment) Regulations 2016.

Public Confidence Weak

The general expectations of UC are low: "given the inaccuracy of past predictions and continuing reluctance to be transparent, it is hard to have much faith in the department’s plans."[17] And the experience of individuals on UC is generally unfavourable. “'Universal credit has been a nightmare,' Imogen Groome says from her flat in Greenwich. 'It’s like getting blood out of a stone to get money you’re entitled to.'”[18] This experience of a pilot scheme in the capital is echoed in Devon. “In Plymouth, Labour councillor and Cabinet member Chris Penberthy said the alarm bells were ringing. 'We don’t think the systems are ready,' Cllr Penberthy said.”[19]

The revisions to UC have not necessarily increased its likelihood of its success. "David Finch, senior economic analyst at think tank the Resolution Foundation, says the hurdles remaining to final delivery should not be underestimated. He lists a number of in-built complications which are likely to cause problems, such as the requirement that the rent element of UC is paid directly to claimants, and imposing monthly reporting requirements for the self-employed. 'There are some unnecessary complications that have been decided on as policy despite experts – not vested interests – warning they were not a good idea,' says Finch."[20]

The House of Commons Work and Pensions Committee is keeping an open mind on UC, but is not confident that it will escape its legacy of failure. “Dame Anne Begg, chair of the committee, said: ‘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]

Policy

Clear Objectives Fair

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."[22]

The "reset" of UC modified the objectives of the scheme. "The team in charge of the process was charged with developing a proper plan for the programme, implementing the delayed piloting of the project and searching for a new 'senior responsible owner' of the project. Following the reset, DWP adopted a 'twin-track' approach to delivering UC. This meant continuing to roll out the ICT developed by external suppliers, dubbed the 'live service', while simultaneously delivering a new 'digital' service built in-house, aimed at improving functionality, enabling all six benefits to be incorporated."[23]

Evidence Good

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 elsewhere. "There was limited time to consider changes in other countries that have implemented analogous reforms in their benefit systems, such as Germany, France and Austria (albeit that the OECD has noted that, prior to UC, no member country had as yet sought to fully implement the ‘radical option’ of a single working age benefit)."[24]

The DWP has not been able to achieve its own targets, either for 4.46 million claimants to use UC (see Public impact above) or "for 80 percent of JCP customers [dealing] with their UC claim using digital channels”.[25] There was inadequate evidence to support this claim. "In evidence to the Public Accounts Committee, DWP was unable to provide a sound evidence base for its 80 percent target but referred to figures which show that 86 percent of JSA customers indicate they already use the internet and 67 per cent have access in their homes, though only just over 40 per cent are ‘ready, willing and able’ to use online JSA services (House of Commons Public Accounts Committee, 2011b)."[26]

There were also pilot schemes to test out UC in specific areas of the country (see Stakeholder engagement and Public confidence above).

Feasibility Fair

There were several feasibility test conducted before the implementation of UC's IT systems. "The department has also utilised user-centred design testing to consider ‘the needs and behaviours of potential users (current claimants) and administrators (DWP and HMRC staff) of UC’ throughout the development of the system (Rotik and Perry, 2012). A number of possible online ‘user journeys’, as well as both online and offline features, were tested on this basis during the course of the user-centred design programme which ran between March and October 2011."[27]

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."[28] This has resulted in significant increases to cost estimates. "The total lifetime cost of the UC welfare reform programme has increased by nearly £3 billion in the past three years to £15.8 billion, according to figures from the government’s Major Projects Authority (MPA)."[29]

Action

Management Weak

The management structure gave a major role to JCP, reporting to the DWP. “Currently, overall responsibility for the different income-related benefits is managed by a number of government departments and their administration and delivery are ultimately devolved to their respective delivery agencies. UC will change this by subsuming separate elements of support, previously provided by different agencies through different benefits, into a composite payment delivered by JCP, which is now integrated within DWP and no longer has the status of an executive agency.”[30]

The IT development has been poorly managed:

  • “Confusion and poor management at the highest levels have already resulted in delays and at least £34 million wasted on developing IT. If the department doesn’t get its act together, we could be on course for yet another catastrophic government IT failure.” [31]
  • "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. That process, labelled as a “reset” in 2014’s MPA report, allowed the revised lifetime costs to remain under wraps until now."[32]

The project management as a whole has failed to keep control of UC delivery. "The poor implementation of the project was largely owing... to poor project management... The Public Accounts Committee clearly believed that it could be managed but was not being. 'Management of the UC programme has been extraordinarily poor. Oversight has been characterised by a failure to understand properly the nature and enormity of the task, a failure to monitor and challenge progress regularly, and a failure to intervene promptly when problems arose. Senior managers only became aware of problems through ad hoc reviews, mostly conducted by external reviewers, as inadequate management information and reporting arrangements had not alerted them that things were amiss.'"[33]

Measurement Fair

As the Committee indicated, the implementation of UC demonstrated a failure to monitor and challenge progress regularly. This poor monitoring and evaluation dogged the scheme from the beginning. "The NAO’s September 2013 report was a searing indictment of the programme. The spending watchdog accused the DWP of having a 'good news' culture, a lack of transparency, and inadequate financial controls on the project and, perhaps most damagingly, a lack of any detailed plan. It is clear that the programme had significant issues right from day one."[34]

Policymakers at the DWP did not implement the recommendations of the NAO after the review. "Perhaps worst of all, the DWP was failing to learn from its mistakes. The NAO said that recommendations from the department’s own internal assurance reviews were not being implemented. “Although the nature and emphasis of its recommendations changed over time, the key areas of concern raised by the Major Projects Authority in February 2013 had appeared in previous reports,” it said."[35]

Alignment Weak

The implementation of UC has thus far 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, policymakers were ignoring the recommendations of the monitoring bodies. "The Public Accounts Committee is concerned such delays will 'postpone' the programme and create 'uncertainty for claimants, advisers, and local authorities, and makes it difficult for parliament and taxpayers to hold the department to account'. The DWP has also failed to update its implementation schedule to take account of the spending review and autumn statement, the committee found."[36]

The 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. There was also a reluctance of the DWP to reveal the true situation to Parliament. 'The department for work and pensions appears either unable or unwilling to level with parliament and the public about universal credit,' Hillier said."[37]

Sign up to stay updated on news about our meetings, our insights and our other activities.
Back to top