Universal Credit – Time to take stock

UNISON welcomes Labour’s announcement that it would pause Universal Credit (UC) so a review and audit can be undertaken. The chaotic catalogue of events that culminated in the Major Projects Authority listing Universal Credit as a new project 4 years after it started shows that UC has become a byword for government ‘incompetence’.

Next May the first thing to do is see what is and isn’t working so UNISON agrees with all of the recommendations set out in the UC Rescue Committee report.

As Reeves suggested, the National Audit Office (NAO) is well placed to oversee the review. Quarterly reports to Parliament will provide an opportunity for an open and transparent look at how the pilots are working in practice.

The Rescue Committee report says “We regard the role of local authorities and their partners in supporting Universal Credit claimants as crucial”. UNISON believes that a quality UC service is a critical issue central government and for local authorities.

The impact of the quality of the Universal Credit service on the health and wellbeing of individuals, households and families; on the needs of people with mental illness, physical disability or those fleeing domestic violence; and on children ( including the potential to add to their financial insecurity), makes the quality of that service a critical issue for local authorities. But a quality local UC service is also a critical part of preventative strategies in a wide range of social policy areas that impact on local public service expenditure including health, police and local government.

That is why UNISON argues that localism must be placed at the heart of the delivery of UC. Instead of only being able to apply online, we think that applicants should be able to apply at their local ‘Universal Credit Centre’. A local ‘Universal Credit Centre’ would use the skills, expertise and experience of the 20,000 staff currently employed by local authorities or their contractors already delivering housing and council tax support.

There are many roles that the Local Universal Credit Centre could provide. An important example would be to assist councils to meet local housing need (and reduce homelessness costs). The evidence suggests that private landlords are increasingly reluctant to let properties to people in receipt of housing benefit. That’s because the introduction of UC is accompanied by payment direct to the tenant and landlords are concerned about growth in rent arrears. Local authority housing benefit sections already have well established arrangements with landlords locally and will intervene to resolve disputes, prevent evictions and subsequent homelessness that may also result in an additional cost to the local authority. These potential additional costs are substantial.

Taking stock also provides an opportunity to address the wider issues around the working relationship between the labour market, wages, gender equality and the need to support low income households. Entrenched employer dependency on state benefits and housing costs are critical issues for the public purse. After all, one million people in work are in receipt of housing benefit and recently we’ve seen the growth in zero hours contracts, lack of decent skilled work, accompanied by a rise of underemployment and self employment and growth in multi-job holders.

The review needs to look at how UC will work for the low paid to ensure work incentives are maintained. Unless the review looks at how poor labour market polices and low wages could be addressed the social security system will remain a low wage subsidy rather than the collective safety net for times in need it was designed to be.

But the ways in which UC payments are made also needs to be changed. The Rescue Committee report recommends “that the elements of UC relating to children should be paid to the main carer of the children, usually their mother, even when the balance of the UC payment is made to the other member of a couple.”

UNISON argue that choice needs to extended in two other important respects:

• Choice of fortnightly or monthly payments
• Choice of payment of the housing element directly to landlords or automatic direct payment to landlords

Another challenge facing Labour is whether the financial design of Universal Credit can deliver better outcomes.

The central question is whether UC redesign can improve employment outcomes by improving work incentives, reducing poverty and protecting the most vulnerable in society.

UNISON would like to see the review take forward modelling that examines a range of issues such as those that arise for second earners, people with limited capabilities, support for childcare, extending the disability allowance and the highly contentious issues of the level of the work allowance, the interface with council tax support and where eligibility for free school meals ends.

UNISON wants Labour to publish the DWP reports on Universal Credit IT and the joint collaboration with HMRC on Real Time Information (RTI) and to be open and transparent.

Many issues remain unclear and unanswered. The complexities of some of these issues around UC calculations have been set out by UNISON already. And the rescue committee has pointed Labour in the right direction.

Allison Roche is a Policy Officer for UNISON