Universal credit not value for money, says NAO

15 Jun 18

Universal credit is pushing additional costs onto councils, while the overall scheme may never provide value for money, according to the National Audit Office.

The government spending watching also slammed the Department for Work and Pensions for showing a lack of “sensitivity” to some claimants and the financial hardship they had experienced.

In a highly critical report, published today, the watchdog found that a universal credit claim costs an average of £699 to administer compared to the target of £173 per claim, by 2024-5. Roll out of the scheme had also been “considerably slower” than intended.

“It was due to complete in October 2017, but after a number of problems, eight years later only around 10% (815,000) of the final expected caseload are currently claiming universal credit,” the report stated.

The flagship scheme, which consolidates six benefits into one, has been beset with operational problems and delays as well as being widely criticised for the hardship imposed on claimants, many of who have experienced significant delays in receiving payments.

The NAO noted a rise rent arrears had been reported by councils, housing associations and private landlords since the benefit was introduced, and some private landlords were now reluctant to let to UC claimants. Food bank use had also increased in three out of four areas visited by the NAO.

PF reported last year that councils were having to step in to offer emergency hardship payments to help people struggling with rent arrears or waiting for delayed payments.

This was reflected in today’s NAO report, which noted that councils were incurring costs. However, in order to be reimbursed, they needed to provide evidence of expenses.

The department did not systematically collect data on these wider costs and therefore had no understanding of the wider monetary impact universal credit was having on other organisations.

Nor was the department able to measure whether of not the programme would meet its economic aim of increasing employment, the watchdog said.

The NAO calculated that the cost to date of operating the scheme stands at £1.9bn- comprising of £1.3bn on investment and £0.6bn on running costs.

Amyas Morse, head of the NAO, said: “The Department [for Work and Pensions] has pushed ahead with universal credit in the face of a number of problems, but has show a lack of regard in failing to understand the hardship faced by some claimants.

“The benefits that it set out to achieve through universal credit, such as increased employment and lower administration costs, are unlikely to be achieved, yet the department has little realistic alternative but to continue with the programme and hopefully learn from past mistakes.”

Nick Forbes, senior vice chair of the Local Government Association, called on central government to listen to the councils’ concerns about the effect of universal credit on residents and services.

He said: “The ongoing challenges with the transition to UC are being borne out by some local evidence on issues including household debt, increased queries and requests for support and rent arrears.

“This is putting pressure on councils’ revenues and benefits services and wider support to low income households at a time of significant funding reductions.

He called for the government to restore funding for local welfare assistance schemes to provide local safety nets.

A DWP spokesperson said the government was “building a benefit system fit for the 21st century”.

“Universal Credit is good value for money and is forecast to realise a return on investment of £34bn over ten 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,” they said.

“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 job centres nationally by the end of 2018.”

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