The Government’s flagship benefits scheme has been savagely criticised by the National Audit Office, who say Universal Credit is unlikely to deliver the planned savings for the taxpayer but is inflicting untold misery on tens of thousands of claimants through incorrect and delayed payments.

UC combines six benefits including housing benefit, job seekers allowance and child benefit into a single monthly payment, which puts more onus on the claimant to manage their finances. It is heavily based on IT and was meant to be simpler and more streamlined – to claim, process and to pay. MPs from all political parties support its intentions but are highly critical of its implementation. So far it has cost around £1.9bn to introduce the new benefit system and only 10 per cent of the planned number of claimants are receiving it, instead of the millions who were expected to be on UC by now. Amyas Morse, the head of the NAO, said: “We think the larger claims for Universal Credit, such as boosted employment, are unlikely to be demonstrable at any point in future. Nor for that matter will value for money.” The NAO say we probably have to proceed with the new system but UC has been beset by problems and delays and is years behind schedule. Each claim is costing £699 to process (four times the estimate) and some claimants are having to wait up to eight months for their payments. This in turn is causing problems for landlords in areas where the UC has been introduced because many of their tenants on the new benefit system are struggling to pay their rent and arrears are climbing. It is also increasingly difficult for landlords to differentiate between tenants who won’t pay and those who can’t pay their rent.

Challenges

The Department for Work and Pensions remains adamant that UC is good value for money and is set to save the public purse some £34bn over 10 years while helping 200,000 back in to work. They also say over 80 per cent of claimants are satisfied. All of this is challenged by the NAO and many charities, who point to the lack of hard evidence to back up the DWP claims as well as the increased use of foodbanks, higher rates of evictions, mental health issues and suicides. Ministers are accused of being in denial about the problems. Official surveys have shown that two out of five claimants were experiencing financial difficulties. Parliamentary debates have been littered with examples of people being left in dire circumstances through delays in timely processing. MPs forced a number of concessions from the DWP last year while the film I, Daniel Blake presented a stark critique of the system’s impact on individual claimants. A particularly contentious element of the UC scheme is the heavy use of sanctions, whereby deductions or a complete suspension of benefits are used as penalties for missed appointments or failing to apply for jobs. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. The architect of UC, Iain Duncan Smith has said these cuts have undermined many of the planned outcomes. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move on to universal credit, reducing their work incentives. Despite the NAO’s criticisms, Work and Pensions Secretary Esther McVey hailed Universal Credit as a “great British innovation” just a week after the report’s publication. She said the cost per claim had been reduced by seven per cent since March this year and it was due to fall to £173 by 2025. “This is around £50 less per claim than legacy cases currently cost us to process,” she claimed. Meg Hillier, chair of the Public Accounts Committee said the introduction of UC had been “one long catalogue of delay with huge impact on people’s lives”. Frank Field, who chairs the Commons work and pensions select committee, said the report exploded constant assertions by ministers that all was well with UC. The Labour MP said a culture of ministerial denial about the project’s problems over the years meant it was now “mega-costly” to either continue or halt it.

Misery

Campaingers feel the time is right for a thorough review of UC before the new system is rolled-out to more claimants. Jane Ahrends, of the Child Poverty Action Group, said the NAO presented a “justifiably bleak” picture. “Today’s report must give ministers pause for thought,” she said. “Will the government press on with a programme that is demonstrably failing – causing financial misery for families – or will it restore the money that’s been taken out of Universal Credit in an effort to rehabilitate it for struggling families.” Emma Revie, chief executive of food bank charity The Trussell Trust, called for more support to be put in place for “groups of people most likely to need a food bank, and debt advice to be offered to everyone moving on to the new system”.

David Smith, Policy Director for the Residential Landlords Association, said: “While it’s clear that Universal Credit is here to stay, the NAO report recognises the difficulties faced by tenants and landlords as a result of rent arrears. The RLA’s most recent research found that 38 per cent of landlords have experienced Universal Credit tenants going into rent arrears over the previous 12 months. The RLA has previously called for a pause to the roll out of UC and it would seem prudent to do so as the DWP undertakes its promised work to understand the impact of the policy on rent arrears.” In the past year DWP ministers and officers have made a series of concessions including shortening the waiting period for initial payments and increasing the size of cash advances – but these are in effect loans which are repaid by reducing the amount of subsequent payments. The direct payment of rent to landlords is only permitted in limited circumstances and this is a major point of contention, with landlords feeling they are bearing the cost of the new benefits system. This is reducing the money available for other tenancy services and the building of new homes.

The NAO report received extensive media coverage following its publication with the Government’s defence of UC getting little sympathy. It was originally due to be fully implemented by 2017, but the long running series of expensive blunders means that only about 10 per cent of claimants are receiving UC and problems in its operation and delivery continue to mount. It’s full roll-out has now slipped to March 2023, although Ministers have a poor record of hitting UC deadlines thus far!