DWP accused of ‘clumsy’ attempt to defend Universal Credit using IFS research

Written by Richard Johnstone on 26 March 2018 in News
News

MPs criticise “airy and irrelevant” responses from the department after committee raises questions over the projected employment boost from benefit reform​

The Department for Work and Pensions has been accused of inaccurately using research from the respected Institute for Fiscal Studies to justify the projected employment boost from the flagship Universal Credit benefit reform.

The Work and Pensions Select Committee today released emails from IFS director Paul Johnson stating that the think-tank could not support the DWP’s assessment that Universal Credit, which will merge six benefit payments into one, would result in 250,000 more people in employment

However, the DWP said the committee's statements were misleading and  that the committee had not taken up an offer to receive a list of published academic literature which supports the department’s estimates.


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According to evidence given to the committee by employment minister Alok Sharma, this figure is based on three constituent parts – 150,000 more due to increased financial incentives to work, 50,000 more due to increased conditionality on benefits payments and 60,000 due to “simplification" of the benefit system.

After the committee sought further details on these figures, Sharma stated “the approach to our analysis underpinning these estimates was reviewed by the Institute for Fiscal Studies”.

However, IFS chief Johnson told the committee that “at no stage did we review their approach to estimating the impact of increased conditionality or simplification, to which they attribute 50,000 and 60,000 respectively of the overall 250,000 forecast effect on employment””

In a letter to committee chair Frank Field, he said that the IFS reviewed part of the DWP methodology used to calculate this figure in 2012, but this only covered the element related to the changes to financial incentives. He was also unable to assess whether the improvements recommended at the time were implemented.

“The employment impact of UC is highly uncertain. The move to UC involves a number of changes for which it is hard to find comparable precedents (especially UK precedents),” Johnson’s letter stated.

“Sadly, it will be difficult even after the event to produce convincing estimates of the overall employment impact of UC. The early impact estimates that DWP have published – cited in the minister’s letter of 12 March – apply only to a small group of claimants who are not affected by UC in the same way as most other claimants.”

Publishing the correspondence, Field said the “ongoing lack of evidence to back up the much-vaunted employment impact of Universal Credit” was disappointing, and he describes the department’s response to the committee’s queries as “airy, irrelevant and, it appears, plainly inaccurate”.

He added: “This clumsy and ill-judged attempt to piggyback on one of the most trusted, unimpugnable authorities on public policy and finance would be farcical if it was not so deeply worrying.”

However, a DWP spokeswoman told Civil Service World the committee’s claims were “false and misleading”, and highlighted that the IFS review of the 150,000 estimate for the number of people that would move into work found it to be reasonable, adding that the IFS had not questioned the DWP’s claim that simplifying the system and bringing more people into conditionality would have an even greater impact, which the department said represented “mainstream labour market theory”.

She added: “Research already shows that through Universal Credit people are moving into work faster and staying in work longer than under the old system. And we have said we can supply further information that supports our estimate that 250,000 more people will be in employment once UC is fully rolled out.”

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