Under the legacy benefit system, if you are suddenly made unemployed, you would probably go to the Jobcentre.
They would send you home to make a telephone call to arrange an appointment, you would complete a 50 page form, then provide various paper copies as evidence, in order to collect around £70 a week. They may or may not tell you about Housing Benefit, where you can go through the same process with your council to get your rent covered. If you move into part-time work, the benefit system would take almost all of your earnings, leaving you maybe £15 per week better off for 15 hours of work a week. If you work enough hours, you can make another claim, this time with HMRC for tax credits.
I began working on welfare policy in 2007 after my own experience of being unemployed. This led to a short paper on simplifying the benefit system, and a role at the Centre for Social Justice where I led their work on welfare policy for over three years.
It was clear to me from being caught up in it that the benefit system is time-consuming, inefficient and too often favours inertia over initiative.
Compare that to a system with a single point of contact, where you receive a single payment, that feels supportive and generous when you take steps toward independence. The rationale for Universal Credit becomes clear.
However, Universal Credit currently feels far from this promised land. For the 54 per cent of claimants with the ability to make and manage a Universal Credit claim unassisted, it can feel like a better system. But one in six are not paid on time, 30 per cent struggle with verification, and around half of people on Universal Credit say it is not easier to claim.
The Department for Work and Pensions has made some adjustments and will continue to improve Universal Credit, but some of the flaws go deeper.
Universal Credit is being introduced at a time when the government has pledged to make £12bn-worth of savings to working age benefits, with more to come in the years ahead. This includes over £2bn-worth of cuts to work incentives in Universal Credit. In short, the cuts undermine one of its key pillars. The government cannot say it wasn’t warned. In 2015, then-Chancellor George Osborne reversed similar cuts to tax credits after pressure from backbenchers. These cuts make Universal Credit less generous than the benefit system it replaces.
The benefit freeze in particular means that more and more people are struggling to make ends meet, since rents and living costs continue to rise. In this context, people moving onto Universal Credit do not have the financial bandwidth to manage a change to their income, and are finding this harder each year.
Some changes are being brought in as part of Universal Credit, when really they are separate cuts which could be applied to the legacy system – but it was seen politically less painful to hide them within the government’s flagship reform. These include limiting support to two children, and the “minimum income floor”, which makes the benefit system less generous for low earning self-employed people,
The benefit cap, bedroom tax, and the localisation of council tax support are all salami-sliced cuts to the benefit system that act against the original aims to Universal Credit. They make it less generous, add complexity and take focus and resources away from efforts that could otherwise be used to make Universal Credit work. The sheer number of changes is pushing the support network around the benefit system to its limits.
The process to make a claim remains complicated. An online form followed by a call to make an appointment and multiple visits to the Jobcentre are all required before your claim is complete. Online verification works in only one-third of cases, and the need to produce paper copies continues.
The way Universal Credit is paid, as a single monthly payment to the household, is a big change from current benefits. While the intent is to ease the transition into work, it makes sense to leave defaults as they are, but give people choice over how frequently they are paid. Claimants find it difficult to know how much support they will get because awards are calculated only a week before they are paid, which in turn makes planning and budgeting tricky.
The ability of DWP staff to explain the system and quickly resolve issues is inconsistent. This is partly because people’s lives, and therefore their benefit claims remain complex. But the support sector that has the expertise to help vulnerable claimants also finds it hard to engage with the system, and often has to explain the rules and guidance to the department.
The DWP has made significant changes to Universal Credit to make it work, but we are told that they don’t have the resources to develop on all fronts simultaneously. The spending pressure the department is under means that it has too often focused on controlling administrative expense, over a customer focus, when the sheer scale of Universal Credit make this a false economy.
The transition to a new benefit system has always been difficult. Despite the bad publicity, I believe the fundamentals of Universal Credit are sound, and the foundations of a good benefit system are in place.
Problems with the implementation of tax credits and the localisation of housing benefit in the 1980s were resolved by spending money. Two weeks of the Universal Credit personal allowance, paid as a one-off on the day you move onto the new system, would ease the transition and help low income families who are already under pressure from existing cuts.
The government needs to not only allow Universal Credit to become more generous, but also allow the department to invest in delivery. Transition to a new system was always going to be difficult. History tells us you can’t do welfare reform on the cheap.
Deven Ghelani is CEO and founder of Policy in Practice, and specialises in welfare policy and its implementation. He has worked on Universal Credit since its inception and has written extensively on welfare policy, government spending and employment. He set up Policy in Practice, a social policy, software and consulting business, to simplify the delivery of welfare policy on the frontline.