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Universal Credit value for money ‘unproven’, says NAO

National Audit Office is uncertain DWP’s flagship benefits reform programme will ever achieve value for money, but says it’s too late to turn back

The Department for Work and Pensions’ (DWP) flagship benefits reform programme, Universal Credit (UC), may never achieve value for money, according to the National Audit Office (NAO).  

The programme to introduce a fully digital service for claimants, replacing six different in-work welfare benefits with a single payment, has suffered significant delays, and may end up costing more than the benefits system it’s aiming to replace, a report by the NAO has found.

The UC programme first began in 2010, before a restart at the very end of 2013/early 2014 when DWP began rolling out the new benefits system in stages. By the end of 2015, it had rolled out a limited version of the system, referred to as the “live service” but targeting only the simplest of claims and using an IT system run by external providers that was rarely updated. 

The department began deploying the “full service” countrywide in May 2016, covering the full replacement of six different in-work welfare benefits with a single payment. DWP now aims to complete the roll-out of the full service digital system by March 2023.

However, the NAO report added that the current system was “is not as automated” as envisaged by DWP in the beginning, as payment calculation, appointment booking and management of advances are not fully automated.

“The department has not set out future milestones for delivering this automation and the remaining functionality. It believes this is in line with its agile approach and it does not need to tie down delivery dates for the system in this way,” it said.

Value for money doubtful

DWP’s business case, which was published this month, claims that UC remains “deliverable, affordable and provides value for money, with a net present value (NVP) of £34bn” over 10 years, generating £8bn in economic value. 

However, an NAO report said these benefits depended on “some unproved assumptions” and were purely theoretical.  

It added that the department now had a “better grip” on the programme, but that the value of money could not be judged on the “current state of programme management alone”.

“The larger claims for UC, such as boosted employment, are unlikely to be demonstrable at any point in future. Nor, for that matter, will value for money”
Amyas Morse, NAO

“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,” the NAO report said.

“This, the extended timescales and the cost of running UC compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.”

NAO head Amyas Morse said DWP had continued to push the UC roll-out forwards throughout a series of problems.

“We recognise both its determination and commitment, and that there is really no practical choice but to keep on keeping on with the roll-out,” he said. “We think the larger claims for UC, such as boosted employment, are unlikely to be demonstrable at any point in future. Nor, for that matter, will value for money.”

Problems with Verify

Universal Credit is designed to rely on the Government Digital Service's Gov.uk Verify identity assurance system when claimants make online applications. However, as revealed by Computer Weekly in January 2018, most claimants are unable to use Verify successfully, which means Jobcentre staff need to manually check people's identities.

“Only 38% of claimants who attempt to use the Gov.uk Verify online system to confirm their identity are able to do so, against the department’s plan of using it for 90% of claimants,” according to the NAO report.

The report also revealed that DWP is now "reducing its ambitions for online verification" and added that "manual verification could cost in the region of £40m over 10 years".

DWP was warned in 2015 that performance problems with Verify could undermine its plans for "digital by default" applications for Universal Credit.

DWP dismissive of concerns

During the course of the roll-out, several organisations have raised concerns about the approach DWP is taking to UC. Last summer, a report by charity Citizens Advice revealed several problems with the digital service, including claimants struggling to verify their identity online and lacking the digital skills to use the system.

The charity called for the roll-out to be paused until the issues had been addressed, but DWP said that, despite the concerns, the roll-out would continue.

The NAO said DWP’s view of the success of UC “contrasts sharply” with the views of external organisations it spoke to. The report added that DWP did “not accept that UC caused hardship among claimants, because it makes advances available, and believes that if claimants take up these opportunities hardship should not occur”.

“This has led it to often dismiss evidence of claimants’ difficulties and hardship instead of working with these bodies to establish an evidence base for what is actually happening. The result has been a dialogue of claim and counter-claim, and gives the unhelpful impression of a department that is unsympathetic to claimants,” it said.

Commenting on the NAO report, Liberal Democrat DWP spokesman Stephen Lloyd called for a halt to the roll-out, and said it was a “devastating indictment” of a “cruel and incompetent roll-out”.

“Not only is UC years behind schedule and unlikely to either deliver value for money or increase employment, it is also causing severe hardship among claimants, which the government consistently refuses to acknowledge or address,” he said.

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