If Universal Credit (UC) was a horse, it would be shot – repeatedly. The DWP has just released a flurry of reports which paint a picture of a deeply troubled system. Despite their best efforts at a positive spin there is no hiding the problems. I am sure I will go into detail in other pieces but here I will just give the low-lights starting with the amusing and ending with the terrifying.
1. The Universal Credit Full Business Case (FBC) Summary was published on Thursday – around 5 years late.
The FBC is the Government’s economic justification for UC and must be agreed before the Treasury funds the program. However it appears that justifying £60bn per year requires less care and attention than my daughter’s homework as amusingly the Full Business Case contained grammatical errors, incorrect internal references and astonishingly the track changes were left in.
The DWP are now on their second revision and have removed some of the more egregious errors. The linked research methods document was happily not so error strewn but is catalogued on the DWP website as a piece of “ad hod” research amongst the “ad hoc” papers.
2. Does Universal Credit work?
The Business Case’s introduction says proudly that UC will lead to 200,000 people entering employment. The DWP has nodded to the National Statistician’s instruction to explain their workings – but has left some suspicious and important gaps. What we can see is unconvincing and at times just laughable.
The 200,000 number is made up of 3 components.
a. Financial Incentives lead to 110,000 jobs (ish): The most credible component is that 110,000 will go into work because families are allowed to keep 37p of every £1 earned. This is comparable with independent estimates but it should be noted that most of the jobs are expected to be of low hours. Importantly this number should come with enormous margins of error – but these are suspiciously not mentioned at all.
It should also be noted that lots of assumptions are used – one of which is that there is always a job available for everyone at their preferred number of hours!
Another assumption is that reducing benefits always helps people into work. Or to put it another way the starving and the destitute will be more likely to get a job than the average person.
Such assumptions may be necessary to construct a workable mathematical model – but that is why you have margins of error to tell everyone that you can’t place a lot of confidence in this
b. More sanctions mean 30,000 more jobs? Expanding conditionality and sanctions to 1 million working people and more sick people (amongst others) is estimated to deliver 30,000 extra jobs.
This is an extraordinary claim as government research indicates that sanctioning sick people harms job prospects. We also know that no-one has ever tried sanctioning working people before and the DWP trial showed no positive effects.
The DWP explains the 30,000 number by using the success rate of a study on unemployed people – but doesn’t identify which study. The job entry rate from unreferenced research is then divided by 3 because (without evidence) the DWP claims this accounts for the difference between sick people and unemployed people. Why divide by 3 and not 2 – or even your granny’s age? We are not told but I am afraid I can guess. [1] We have an FOI in to try clarify this mess
c. 60,000 jobs because UC is simple and efficient: The DWP customer survey suggests UC isn’t that simple or efficient but how does the DWP get to this number? They go to studies which show improvement rates when new benefits for single parents were introduced in the early 2000s. Bizarrely they then arbitrarily reduce these improvement rates because they admit these studies bear little resemblance to Universal Credit. Again no explanation is given for the numbers used.
To top it off the DWP admit that by simply adding the 3 numbers together the same person could be counted 3 times. They dismiss the huge problem of triple counting by stating that their estimates are “conservative”.
The 200,000 number is straightforwardly misleading if given without context, confidence intervals and strong warnings as to its reliability. At best this is informed guesswork with a conveniently rosy tint. The problem is this number is not used as a torch to illuminate the effects of Universal Credit, instead it is a crutch to prop up support for a clearly troubled policy. Honestly and clearly stated this number is not even up to that job.
3. “A social return to the economy of £34bn” isn’t what you think.
The headline figure in the Full Business Case is £34bn. But this is not spending cuts or even money in people’s pockets – it is a measure of the much more slippery concept of “social value” over the next 10 years.
The biggest (£19bn) component of this £34bn comes from the dubious promise of additional employment.
The assumption that spending £1 on the poorest families has a social value of £2.40 makes the next component. The government thinks that UC’s simplicity will mean a larger proportion of eligible people will claim when they are entitled to. This moves money from the average taxpayer to the poorer UC claimant and then each £1 moved across is counted as having a value of £2.40.
While the logic is sound – less well-off families value each £1 more than better off people – applying this principle here is conveniently flattering to UC. A similar principle applied to the benefit freeze would give a negative “net social value” of £72bn [(£3bn annual cut) x (£2.40) x (10 years)].
The benefit freeze is only a fraction of the cuts incorporated into UC but is not included in the calculation of “social return to the economy”. All of this is technically above board but let us be clear the predicted £34bn of social value close to filling the bellies that the cuts inside UC have left empty.
….and finally the frightening.
Foodbank use goes up 52% in UC areas and 13% in areas without UC. The DWP has published its first UC claimant survey. Read it in detail [2] see here for Child Poverty Action Group’s excellent and short summary and you will see that the story it tells is that families are simply not coping, they are borrowing money, going into rent arrears and generally being unable to make ends meet. The DWP however prefers to claim success due to “behavioural responses” and claimants being more likely to obey instructions when looking for work.
Whatever its “social return” the whole point of the benefit system is to ensure that families can make ends meet during hard times. UC is failing to do that and the statistics in the Full Business Case cannot hide this fact.
UC fails to give people even the most basic dignity of food and a secure roof. If we believe that each person affected by UC is wonderfully created in the image of God then we should be appalled – and if our society doesn’t view these families as worthy of that basic dignity, then we should be ashamed.
