Catastrophic disasters have multiple causes.
Beneath the immediate trigger, like Lehman Brothers in the financial crash, deeper forces are at work. Underlying risks are often made worse by unwise policies, hastily implemented as people treat symptoms instead of the problem.
Universal credit displays symptoms of a future catastrophic disaster. Underlying weakness is made worse through unwise policy choices. One such choice was the government’s decision to scrap council delivery of universal support to benefit claimants.
It is common knowledge that universal credit is in trouble. It will now take 12 years to deliver instead of six. The system consistently makes errors for 20% of claimants. The online identity verification system only works for 38% of users.
Costs are not under control. In June the National Audit Office reported processing costs of £699 per claimant. The final target is £173.
So far 815,000 people, less than 10%, have been transferred to universal credit. Next July the harder part will begin, transferring almost 4 million on existing benefits. The National Audit Office says government is just not ready.
Yet project viability depends on moving more people onto universal credit to cut unit costs. So even when the evidence says think carefully, the budgets says rush forwards. It is a recipe for disaster.
As the problem gets harder, so the need for tailored support to claimants grows. Councils deliver universal support for that purpose. They add value by connecting support to other services including housing benefit, discretionary housing payments, local welfare assistance and council tax support.
London boroughs stepped forward for pilots on universal credit and have added to these five services with comprehensive debt avoidance strategies such as the Croydon Gateway. This addressed the unfunded demands of the Homelessness Reduction Act and saved millions. Last year the Department for Work and Pensions praised these councils as “exemplary”.
Only local government can add value in this way, bringing together different services and offering support that meets the needs of the whole person. The National Audit Office understands this and called for more systematic listening to delivery partners and for better data sharing systems. Last year Whitehall officials agreed.
Then during the conference season ministers announced a new plan for universal support. Funding was increased from £17m to £39m. Yet Citizens Advice replaced councils as delivery partners for the service, demolishing the links to other council services that allow support to reflect peoples’ needs instead of budget headings.
Can £22m make up for creating a fragmented service? Did recent universal credit controversy make trying something new irresistible? So far we have no explanation. From the outside it looks like attacking the symptoms not the disease, a step towards catastrophe.
Dick Sorabji, corporate director for public policy and affairs, London Councils