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Wed, 15 July 2020

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Universal Credit ‘may cost more to run’ than old benefits system, says Government watchdog

Universal Credit ‘may cost more to run’ than old benefits system, says Government watchdog
3 min read

Universal Credit has failed to deliver value for money and may end up being more expensive to run than the system it is replacing, the Government’s spending watchdog has revealed.


In a damning assessment, the National Audit Office (NAO) said they were “uncertain” that the beleaguered system would ever prove cost-effective, while taking aim at the fact it had taken “significantly longer to roll-out than intended”.

However despite the criticisms, their report, which is their first on Universal Credit since 2014, said there was “no practical choice” but to continue pursuing the policy, given it would be “so complex and costly to return” to the legacy system.

In a major blow to the Department for Work and Pensions, the NAO's figures suggest Universal Credit may cost more to administer than its predecessor – despite ministers’ intention for it to cost £99m less per year.

The body shows current running costs at £699 per claim, against an ambition of £173 per claim by 2024-25.

The report also takes aim at the fact that only 10% of the final expected caseload are currently claiming Universal Credit, despite the programme having been expected to be up and running by October last year.

Elsewhere it criticised administrators for not showing “sufficient sensitivity” towards some claimants, despite figures from this year showing around one in five of new claims were not paid in full on time, while more than one in ten received no payment on time.

And it expects that even amid attempts to improve the system, between 270,000 and 338,000 new claimants will not be paid in full at the end of their first assessment period throughout 2018.

The authors also blasted the Department’s expectation that most claimants would have enough money to cope over the initial waiting period, when “in reality, nearly 60% of new claimants receive a Universal Credit advance to help them manage before receiving their first payment”.

Furthermore the NAO pointed to their own studies which suggested an increase in rent arrears, reluctance on the part of landlords to accept claimants as tenants and an increase in foodbanks were linked to areas where Universal Credit had been rolled out.

Head of the NAO, Amyas Morse, said the Government should give the same commitment to listen to those affected by the system's failings as they have to trying to improve it.

"The Department has kept pushing the Universal Credit rollout forward through a series of problems," he said.

"We recognise both its determination and commitment, and that there is really no practical choice but to keep on keeping on with the rollout.

"We don’t think the DWP has shown the same commitment to listening and responding to the hardship faced by claimants.

"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. Nor for that matter will value for money."

Responding to the report, mental health charity Mind urged the Government to delay the roll-out of Universal Credit

Chief executive Paul Farmer said: "The Government has to address the serious problems with the system before they begin to move over 1 million people with mental health problems onto Universal Credit next year.” 

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