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A jobcentre in London
Vulnerable people may struggle to make a claim, say the NAO in a critical report on universal credit. Photograph: Yui Mok/PA Media
Vulnerable people may struggle to make a claim, say the NAO in a critical report on universal credit. Photograph: Yui Mok/PA Media

Cost of rolling out universal credit rises by £1.4bn, say auditors

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NAO says benefit may not be able to meet aim of getting more people into work

There is still no evidence that universal credit benefit is meeting its central aim of getting more people into work – while the costs of implementing it have risen by £1.4bn and it remains beset by delays, according to the government spending watchdog.

In a critical report, the National Audit Office said that although more claimants were being paid on time, the controversial five week wait for a first universal credit payment continued to exacerbate many claimants’ debt problems and push them into hardship.

Vulnerable claimants – including those with physical, mental or learning disabilities, people with few digital skills, or with chaotic lives – were more likely to struggle with their claim, the NAO said, with the complicated process of moving onto the benefit causing payment delays and financial problems for these claimants.

“The Department for Work and Pensions needs to better understand and address the needs of vulnerable people and those with more complex claims, who may be at greater risk of struggling under the universal credit regime,” the report concluded.

Gareth Davies, the head of the NAO, said: “The DWP needs to improve its understanding of vulnerable claimants and how best to support them to ensure that no one is slipping through the net. This is only going to become more important as the economic upheaval caused by Covid-19 continues.”

Although its study was completed just before the coronavirus pandemic started in March, the NAO said the unprecedented recent surge in claims for universal credit amid rising job losses would have a “significant impact” on the overall costs of the benefit, which had already risen from £3.2bn in 2018 to £4.6bn.

There are currently 5.3m claimants on universal credit – up from 2.9m in February – as the economic fallout from the pandemic continues. The chancellor, Rishi Sunak, announced that the number of work coaches in jobcentres would double to 27,000 over the next year to cope with rising numbers of people signing on.

Although the DWP has claimed universal credit would get 200,000 more people into work, the NAO insisted there was still no evidence to prove that was achievable. Another key aim of universal credit was to reduce fraud and error, but the NAO found that £1.7bn of payments – more than £1 in every £10 in 2019-20 – were overpaid.

It follows an earlier NAO study from 2018 which also described a delayed and costly system that was struggling to meet its strategic aims. The watchdog concluded that universal credit was by then too complex and expensive to scrap. It is now running seven years behind schedule, and not due to be fully rolled out by September 2024.

Since its previous report, the NAO says that the DWP has successfully improved the timeliness of the initial universal credit payments – up from 55% in 2017 to 90% in 2020. It said the DWP “deserved credit” for this – although hundreds of thousands of vulnerable claimants still longer than five weeks, with 6% waiting for 11 weeks.

Although the NAO said the DWP was not at fault for the majority of delayed claims – which often resulted from claimants failing to provide key documents to prove eligibility – it said vulnerable claimants were more likely to struggle to understand how to claim, and the DWP needed to do more to help them do so.

A DWP spokesperson said universal credit was delivering in unprecedented times, with more than 2.5m new claims processed since mid-March. “As the report shows, significant improvement has been made in the proportion of universal credit claimants receiving their first payment on time and in full, currently around 90%.”

Meg Hillier, the chair of the Commons public accounts committee, said: “DWP spent years denying just how badly the universal credit programme was going. Now that it is past the point of no return, it has finally admitted that seeing it through to the end will cost the taxpayer an extra £1.4bn.”

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