The Department for Work and Pensions’ flagship Universal Credit reform may never be value for money, but changes made across the department mean it is too late to reverse the programme, the National Audit Office has warned.
In a report looking at the rollout of the reform, which is merging six existing benefits into one payment and has so far been eight years in the making, auditors stated that the changes may cost more than the benefits system it replaces, while the DWP will never be able to measure whether it has achieved its stated goal of getting an additional 200,000 people into work.
The review found £1.3bn has been invested in UC, with an additional £600m spent on running costs, but only about one in ten (around 815,000) of the eventual number of claimants were currently using the new system. It is expected the full transition will not be completed until March 2023.
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This spending has not delivered value for money and it is uncertain that it ever will, according to the report. Auditor general Amyas Morse said that the department had kept pushing the Universal Credit rollout through a series of problems, including a project reset in 2013 amid IT issues.
“We recognise both its determination and commitment, and that there is really no practical choice but to keep on keeping on with the rollout,” Morse said, but he added that value for money was “unlikely to be demonstrable at any point in future".
The report highlighted that even since the department began rolling out the full UC service in May 2016, it has changed the schedule four times. In July 2016, it announced it would roll out the service more slowly, completing the full service rollout across the country by September 2018, and full transition of all existing benefit recipients by March 2022. Then following the November 2017 Budget, policy changes required a further three-month delay to December 2018 to completing full service rollout. A further delay to rollout in Wales, due to delays completing its Welsh language service, was announced in March this year, while last week it announced the completion date would move to March 2023 in order to adapt the system to accommodate further transitional changes announced by government.
Although the NAO said UC is “still at a relatively early stage of progress” other changes the department has made would make halting implementation difficult.
"Its incremental approach has led the department to make many changes to its jobcentres, its digital systems and the working practices of the 12,000 people working on Universal Credit," said the report. “As it has rolled out Universal Credit to more claimants and areas, these changes have become increasingly embedded across the department.
"It would be so complex and costly to return to legacy benefits at this stage that the NAO believes there is no practical alternative but to continue with Universal Credit."
Since the NAO’s last UC report in 2014, the auditors found that DWP has made some progress in managing the programme. But it also found that claims under the new scheme are more than four times above planned levels, with running costs £699 per claim against an ambition of £173 by 2024-25.
Responding to the report, Work and Pensions Select Committee chair Frank Field said the report was “devastating” and revealed the department was "stuck making slow, fraught progress on a policy that it cannot now go back on".
"This report blows up the DWP’s constant assertion that everything is going well and that any criticism comes from those who wish to make trouble for Universal Credit,” he said. “Because ministers were taught to be in denial earlier in the programme, it has advanced to a stage where there is now a mega cost to scrap it and a mega cost to taxpayers to continue with it. Either way, too many claimants are being screwed down into destitution while the DWP insists that all is okay. The Universal Credit we have seen is a shambles, leaving a trail of destruction in its wake.”
He accused the senior officers running UC of being “firmly entrenched in La La Land” and he contrasted the claims made by DWP’s UC director general Neil Couling with the NAO’s evidence.
In the business case for Universal Credit, which was only approved last month despite the government already being committed to the reform, Couling wrote: "This business case clearly demonstrates that Universal Credit provides value for money and huge benefits for claimants, the broader population and the economy as a whole. […] Universal Credit supports people into work, will help them to progress whilst in work, and represents clear value for money for the whole economy.”
However, Field highlighted that the NAO stated that “both we, and the department, doubt it will ever be possible for the department to measure whether the economic goal of increasing employment has been achieved”.
Field also highlighted the NAO finding that claimants who did not receive their full payments on time have faced average delays of four weeks in addition to the five- to six-week waiting period, with 20% of new claimants between January and October 2017 waiting five months or more.
In his comments, Morse said the department had not shown "the same commitment to listening and responding to the hardship faced by claimants" as it had demonstrated in its determination to keep the programme going. "Maybe a change of mind set will follow the publication of the claimant survey on 8 June. We think the larger claims for Universal Credit, such as boosted employment, are unlikely to be demonstrable at any point in future," he added.
A DWP spokesman said: “Previous administrations poured billions into an outdated system with a complex myriad of benefits, which locked some people into cycles of welfare dependency. Whereas we are building a benefit system fit for the 21st century, providing flexible, person-centred support, with evidence showing Universal Credit claimants getting into work faster and staying in work longer.
“Universal Credit is good value for money and is forecast to realise a return on investment of £34bn over 10 years against a cost of £2bn, with 200,000 more people in work. Furthermore 83% of claimants are satisfied with the service and the majority agree that it 'financially motivates' them to work.
“As the NAO acknowledges, we have made significant improvements to Universal Credit as part of our ‘listen and learn’ approach to its rollout, and it's on track to be in all jobcentres nationally by the end of 2018.”