Universal Credit is Not Good Value for Money

It is finally official. Universal Credit is not good value for money and probably never will be. It has taken a good few years, but finally the authorities have come to the same conclusion most landlords saw at the beginning.

I am unsure whether it is worth celebrating, but it is worth marking on the calendar; very rarely would the National Audit Office (NAO) find itself in total agreement with private sector landlords about Universal Credit. Too late to step back from Universal Credit, but it is nice to know that the private landlords branded as greedy sceptics, underestimating their tenants financial abilities, have the NAO in some agreement with them.

Private sector landlords raised their concerns as far back as 2010, when the plan was first mooted to incorporate the 6 benefits then payable into one – Universal Credit. The decision to go down this route was made following publication of Stephen Brien’s 370-page report ‘Dynamic Benefits’, written in 2009. Iain Duncan Smith is the politician who seems to bear the blame, but it was this report which provided the template for what was enacted.

The Department for Work and Pensions (DWP) introduced the new system from October 2013, stating that introduction would be in a managed way, rolling it out progressively from October 2013 and to be completed by the end of 2017. This end date was changed to 2018 but it now appears that March 2023 is a more likely completion date. 

To give DWP their due, there have been changes made along the way to improve the system, but it is by no means perfect. All the repercussions which private landlords foretold have come to pass, with others, such as an enormous increase in rent arrears in the social sector, being unexpected, and with it the implications for future funding.

Universal Credit was introduced in the belief it would i. Encourage non-workers into work and ii. Save money. The DWP believed that there would be an annual net saving of 8 billion.  So far, it has cost £1.9 billion to roll-out the scheme and the NAO states ‘Both we, and the Department, doubt it will ever be possible for the department to measure whether the economic goal of increasing employment has been achieved. This, the extended time-scales and the cost of running Universal Credit compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its’ future value for money is unproven’.  

When a voice with the authority of the NAO can make such strong pronouncements, one wonders where it can go from there. Whilst statistics prove that there appear to be more people in employment how many of them are on short-hours or zero-hour contracts and still entitled to benefits, which their progress into work should have made no longer necessary? 

Whilst we can question the value of the work that some have gone into, has it achieved its’ other goal of saving money? It appears not. Every claim now costs £699 to process; the DWP believe it should only cost 25 per cent when systems are fully operative. It has taken five years already. When will these savings be seen?

Universal credit is complex; it is hard for tenants, who must wait a minimum of 5 weeks before payments are processed. It is hard for landlords, both social and private, who see their tenant’s rent arrears rising and the spectre of eviction up ahead. 

The Government don’t need to listen to landlords; they do not understand what the Government wants. So listen to your own people. Listen to those who do not depend on benefits to pay their rent, or to landlords who use the income they receive from tenants to live on and to keep their properties up to standard. Listen to the National Audit Office. What have they got to gain by being honest about  the value for money of a  procedure that has not been properly thought out?

For advice on buy to let issues – Ask Sharon

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