Universal Credit on the way to recovery

Three years ago, almost exactly to the day, the National Audit Office reported that Universal Credit – by far the biggest and most ambitious reform to Britain’s welfare system – was heading for nowhere but the rocks.

Today, a new study from the Institute for Government finds that Universal Credit looks on the way to recovery. At the time in 2013, the NAO detailed poor management, poor governance, poor financial control, confusion among the suppliers building it, plus the continued absence “of a detailed view of how Universal Credit it meant to work”. It disclosed that, uniquely, the entire multi-billion programme had had to be “reset” – in other words, almost started again.

But just three years later, IfG Senior Fellow, Nicholas Timmins, argues that the reforms are in a much better state, and something that is recognisable as Universal Credit may well emerge at the other end.

In Universal Credit: From disaster to recovery?, Timmins says the single biggest cause of the initial failure was a wholly unrealistic timetable that saw the Department for Work and Pensions seeking to build Universal Credit before it had been properly defined.

Following interviews with some of the key players, and using National Audit Office reports and Parliamentary proceedings, Timmins tries to explain what went wrong and what then went better. He seeks to draw lessons from both periods from which other big government projects could learn.

Today, around 300,000 people are actually receiving Universal Credit, against the many millions who would have been under the original timetable. Completion is not due until 2022, a dozen years after the white paper announcing it, and five years later than originally planned.

It remains a hugely ambitious project. One intended to replace six in and out-of-work benefits, including tax credits, with a single, simpler system intended to ensure that any amount of work pays more than being on the dole. Its scope remains vast. If and when completed, it is due to affect some 8 million households, many more people, and around a third of working-age population.

Nicholas Timmins, Senior Fellow at the IfG and report author, said: “It is far too soon to tell whether Universal Credit will finally do the business. There are elements of the policy that are still not entirely clear and others that may well need changing. Huge challenges remain – not just taking on new claims but transferring the many millions on existing benefits and tax credits, including some of the most vulnerable on Employment and Support Allowance. Its generosity has repeatedly been cut.

“But the lessons from how it has been turned around from the brink of disaster to something that may eventually work could prove valuable for other government projects. And crucially, it now has a timetable that may finally prove realistic.”

Emma Norris, IfG Programme Director, said: “The story of Universal Credit has lessons not just for implementing welfare reform, but for delivering other major projects on government's books today. It underlines the importance of thorough planning – Universal Credit was a huge change to the benefits system, but failed to sweat out the details or engage with users early enough. Understanding the people a policy is supposed to affect is a vital starting point for change. It also demonstrates the importance of having enough capacity to deliver – when Universal Credit began, DWP had twelve other major change programmes on its books and staff numbers were being reduced. And finally, it shows the importance of policy, operational and technical people working together from the very start. Policies can’t be created in a vacuum.”

The report outlines lessons from the turnaround, including DWP acquiring the ability to build a new version of Universal Credit in-house - correcting the mistakes of the 1990s and 2000s when not just the ability to build IT but to manage the contracts was outsourced across government. It has tied policy, IT build and operational staff together in a “test and learn” approach that is allowing the programme to adapt to how staff and claimants cope with it.

The full paper can be found here