Universal Credit: DWP tries to lie its way out of trouble

Paul Morrison explains why the debate around Universal Credits shows politics at its worst. The evidence that it gets families into work is being exaggerated while the real evidence showing that families are being driven to crisis is being ignored.

Universal Credit (UC) is supposed to get more people into work. Government insists that problems designed into UC – such as the debt inducing 5+ week wait for a payment – are justified because they are necessary to get more people working more hours. If this does not happen then we must live the all too obvious design flaws of UC, without any positive effects in return.

The evidence that UC improves employment chances is incredibly weak – even 5 years after the start of the program. This is why when the Government has been asked about UC and employment it has chosen to evade, dissemble and on some occasions straightforwardly lie.

Sarah and Universal Credit

Last week I met Sarah^[1]name changed to maintain confidentiality at a kids playgroup in a South London Church – she is in her 30’s, working, going to college and a single mum. She cried when she told me about the choices she was facing because she is being moved onto Universal Credit. I have read the Government impact assessment of the small rule that will lead to Sarah’s benefits being cut and her needing to take out a large and frightening loan. The Government believes that cutting her benefits will “improve [her] children’s life chances” by incentivising work.^[2]p9 Benefit Freeze Impact Assessment. Since 2015 the Impact Assessments of  benefit cuts have included the assertion that the cut to benefit will improve children’s lives – by making the … Continue reading

The claim that Sarah’s pain is part of a grand plan to increase work is at the heart of welfare reform.  It is a big claim that demands evidence. It is frankly insulting to her and millions like her that the Government chooses to defend this central claim with nothing more than rose tinted spectacles and clumsy deception.

 

Work: Universal Credit’s last line of defence

In September 2017 research from Housing associations, Citizens Advice and Trussell Trust was showing conclusively that people moving onto Universal Credit were facing huge difficulties. Increases in debt, rent arrears and foodbank use were being driven by the roll-out of Universal Credit.

The Government was on the back foot and needed to justify why they were pressing on with this obviously troubled system. Their explanation was that UC was getting more people into work. To support this two lines of evidence were used. Neither were portrayed accurately, neither stand up to much scrutiny and astonishingly one was defended with a playground quality lie.

 

Claim 1: “Once fully rolled out, Universal Credit will boost employment by around 250,000—equivalent to around 400 extra jobs for every constituency”^[3]Both quotes referenced come from the Statement to both Houses of Parliament by Secretary of State for Work and Pensions, 23rd November 2017. The lines of argument had been used repeatedly over the … Continue reading

This number is easy to say but extraordinarily difficult to get to with any confidence. DWP must imagine employment rates in two different worlds – one where UC is fully rolled out and another almost identical world were UC doesn’t exist. The difference between the worlds is entirely based on the assumptions the DWP makes around how families react to changes in the benefit system. The DWP will tell us its beliefs, but won’t tell how it has converted them into numbers.

Even a good and impartial estimate would have wide margins for error, but the DWP gives a definite unqualified number without any indication of how accurate it feels it to be.

In response to a query from JPIT the National Statistician has asked that when the DWP releases its full estimates of employment and UC, that it explains how it was calculated and tells us its margins of error.

DWP falsely claims their numbers have been independently checked

When the DWP was asked to publish its calculations it refused. Instead it claimed that its estimate was credible because the respected economists at the IFS have reviewed it.^[4]Letter from Employment Minister to the Parliamentary Select Committee for Work and Pensions  That turns out to be untrue.^[5]Paul Johnson IFS Director responds to a request from Parliament to explain DWP figures, as the DWP has refused to. IFS was asked as the Government Minister had stated “The approach to our analysis … Continue reading

The head of the IFS denied helping the DWP with this estimate saying they had provided some advice six years ago for one component of the calculation but they don’t know if the advice was heeded. Moreover the letter outlines the huge margins for error that any estimate will necessarily have.

The Government’s 250,000 number is large, certain, and convenient. Government won’t show its workings but instead falsely claims it has been independently scrutinised. Just how much weight should we really put on it? It seems an incredibly weak reason to continue rolling out UC in the face of the real evidence of UC causing harm to many families.

 

Claim 2: “Under universal credit, people are moving into work faster and staying in work longer than under the previous system”^[6]Statement to both Houses of Parliament by Secretary of State for Work and Pensions, 23^rd November 2017. 

This is not a direct lie, but without context it is difficult to describe it as true.

Because of IT problems Universal Credit was rolled out in two phases. The first system was given to the simplest cases: single, unemployed, healthy, childless, renters. These are the most flexible and easiest families to get into work.

A group of these early UC claimants was compared to a similar group of people on the old unemployment benefit. The DWP emphasises that those on UC were 8% more likely to have worked at some stage over the first 9 months of claiming benefit. It chooses not to emphasise that they did not do very much work – earning on average £60 more over the entire 9 months.

The study was repeated on a larger group and the DWP’s preferred headline number was reduced to UC claimants being 4% more likely to have worked (this time within a 6-month time frame). It is unfortunate that the second study chose not to look at earnings, but it remains clear that UC did not lead to many more hours worked.^[7]Fantastically the Employment Minister in a letter to the Work and Pensions Select Committee explains this low number by saying that the current system was extraordinarily good and world leading and … Continue reading

Ideal conditions, less than ideal results

This is the easiest to help group. These claimants are on a resource intensive trial system being served by newly selected and trained advisors. If UC doesn’t perform in these circumstances it is hard to see when it will. Perhaps most telling is that after reviewing this evidence the Office of Budget Responsibility is choosing not to include the positive effects of UC in it forecasts.^[8]Primary research 1^st study and 2^nd study.

This work and its implication is authoritatively summarised in OBR Welfare Trends 2018 p10 – 114

 

What about Sarah?

Many of the design choices in UC are hard for families to live with. The 5+ week initial wait is the most obvious, but is only one of many. The pay-off was to be more work. At the moment it appears the cost to families is much higher than was ever envisaged and the Government is taking extraordinary and clumsy steps to exaggerate the pay-off.

I am angry because what we are seeing is politics at its worst. For one group UC is a flagship policy that cannot be seen to fail, for another sinking that flagship will bring huge political reward. Evidence is fashioned into weaponry rather than being used for its true purpose of shining a light on what UC is actually doing to real families. The one group who are almost entirely absent from this fight are people like Sarah who have no choice but to live with UC for years to come.

I am angry because UC sees Sarah as someone who needs to have a poorer life while on Universal Credit in order to motivate her into action – but what I saw was an exhausted mum endlessly working, desperate to give her two girls the best start possible. Statistical games and deceptions aside – I cannot see how her increasing her hardship helps anyone, but it is a mathematical certainty that that is exactly what Universal Credit will do.