THE BLOG

Universal Credit - All Stick and No Carrot!

08/01/2014 16:40 GMT | Updated 10/03/2014 09:59 GMT

Following the Guardian's revelations about Cabinet tensions over Universal Credit, I thought it might be helpful to take people back to what the government said was the central purpose of the project - to make work pay. UC was meant to improve claimants' incentives to look for jobs - the carrot - while ensuring the consequences of not doing so were clear - the stick.

Unfortunately the delivery of the carrot is receding rapidly, and all we are left with is the stick!

Devil in the detail

The overall concept of Universal Credit is not a bad one, insofar as it seeks to simplify the benefit system and would make the process of moving from unemployment to employment (and vice versa) much easier.

Whether UC will have good or bad outcomes for people depends in large part on the details, such as the levels of payment, the rates at which these payments drop off as earnings rise, and the levels of additional payments to meet special needs. These have been set in such a way as to allow people to start work on fewer hours with comparatively limited impact on their benefits.

However it is impossible to draw any conclusions on whether these levels, rates and payments will have the desired effect because UC's rollout has been so slow and limited.

Delays and more delays

The original plan was that by October 2013 all new claimants for the two main out of work benefits - Job Seekers Allowance (for the unemployed) and Employment and Support Allowance (for those who can't work due to sickness or disability) - would be on UC. But in September 2013 only 2,100 claims for UC had been dealt with across the whole of the UK.

Despite this as recently as September the Work and Pensions secretary Iain Duncan Smith was still insisting that the whole process would be complete by 2017. But then last month the government admitted that its projection - that it would have 4.4million people claiming UC by 2015/16 - was being slashed to 400,000!

IT write offs

£41million of software has been written off and a further £91million is being 'written down' over five years. It appears that what has been developed so far isn't going to be able to do the job, and is only a stop-gap measure for handling claims, while yet another system is being developed.

This new 'digital solution' is not to be confused with 'digital by default', which was constantly talked of during the passage of the legislation. We were told this would enable people not only to fill out a claim form online - which is already possible for JSA - but also do things like report changes in circumstances, enabling levels of payment to be adjusted automatically. Unfortunately it appears that no Minister thought about security and identity verification for such transactions, and the idea has been quietly dropped.

IDS - a man losing friends?

Every time the Secretary of State comes before the Work and Pensions Select Committee (most recently in December) he admits things are going slower than he had hoped, but always assures us that the DWP now fully understands what has gone wrong, has pressed the 'reset' button, and all is 'essentially' on track.

He professes to being surprised that we don't believe his latest reassurances that everything is rolling out as planned. Even when his previous words are read back to him he brushes them aside. But when he spoke to the Commons about this, his cabinet colleagues were conspicuous by their absence, as were supportive backbenchers.

All stick and no carrot!

Does it matter if the roll out is all much slower than expected? Well yes - I think it does. For a start it increases the costs and reduces the supposed savings. It also leaves a lot of uncertainty for claimants and advisers.

But more importantly for individuals, a change associated with Universal Credit is happening NOW - the 'Claimant Commitment'. This is the 'stick' that I referred to earlier, and it replaces the old Jobseeker's Agreement. It requires those on JSA to demonstrate that they are looking for work for 35 hours per week, and failure to do so can lead to a loss of benefit. I have already been contacted by several constituents who have been treated very harshly by this new regime.

So despite the government's constant claims about Universal Credit making work pay, all we have at present is the sizeable stick of the Claimant Commitment, long before any of the carrot is in sight!