Questions about Tackling Fraud , Error in the Benefits System as Universal Credit System still ‘Undeveloped”.
There is more to this than meets the initial headline.
Spending watchdog urges clearer plans for cutting benefit system fraud and error.
Reports Welfare Weekly.
Efforts to tackle fraud and error in the benefits system must be stepped up following the “meltdown” over Concentrix’s role in the tax credit system, the Commons spending watchdog has said.
The cross-party Public Accounts Committee (PAC) said fraud and error remained a “significant problem” for the Department for Work and Pensions and HM Revenue and Customs (HMRC).
Outside contractor Concentrix was tasked with reducing fraud and error in the tax credits system but HMRC announced last month that its contract would not be renewed following complaints that claimants’ payments were wrongly cut.
The PAC welcomed some of the action taken by DWP and HMRC to tackle the problems in the benefits and tax credits systems, but demanded more action.
The report said: “While it is encouraging to see the departments targeting the causes of losses, such as misreported income, they also need clearer plans to reduce fraud and error in other challenging areas such as cohabitation and claimants pretending to live in the UK who live abroad.
“Recent issues relating to HMRC’s contract with Concentrix to investigate suspected fraud and error by tax credit claimants highlights the need to get these plans right.
“We remain disappointed by the absence of stretching targets for tackling fraud and error.”
So far so sadly predictable.
But Lo! there is this:
The committee also raised fresh concerns about the troubled Universal Credit programme, the Government’s flagship welfare reform aimed at simplifying a series of separate benefits into one payment.
The MPs warned that “systems underpinning Universal Credit are still underdeveloped and there are signs of pressure on staff”.
They also raised concerns that the “rigid” monthly assessment period could cause problems for claimants whose pay or rent were based on four-weekly cycles.
The report Universal Credit and fraud and error: progress review section on Universal Credit says,
The Department started to roll out its “full service” version of Universal Credit to jobcentres in May 2016. It is rolling out at a rate of five centres a month and the Department had planned to scale up to 50 centres a month from February 2017. But on 20 July 2016, just hours before we took oral evidence on this inquiry, the new Secretary of State for Work and Pensions released a written ministerial statement, outlining a further delay to the roll out of the programme. The statement outlined a slower roll-out of the Department’s full service systems, which would continue to roll-out to only five centres a month until June 2017, before increasing the speed of the roll-out. The Department now envisages that the full service will be available in every jobcentre by September 2018 rather than June 2018, and that the roll-out of Universal Credit will now be complete by March 2022, 12 months later than previously announced and four and a half years after October 2017, the planned completion date at the start of the programme.
3.The Department attributed the delay in roll-out to scope changes following policies announced in the Summer Budget 2015. These include removing eligibility for housing elements from 18 to 21 year olds, reducing the “limited capability for work” element to zero and restricting the number of children that Universal Credit will pay for to a maximum of two. These policy changes were announced in July 2015; well before our last evidence session in December 2015, and before the Department submitted its Outline Business Case to HM Treasury for approval in September 2015. The Department has therefore had a long time already to consider how to apply the policy changes to its systems, and actually had 21 months in total to implement the changes before they come into force in April 2017.
4.The Department for Work & Pensions denied that it was attributing wider operational problems to changes in policy, and told us that a recent internal review of the Universal Credit programme concluded that it would have been on track to deliver 50 jobcentres in February 2017, if the Department did not have its issue of new scope to deal with. The Department told us that this new timetable should be feasible if no further policy changes are announced. Universal Credit has often been described as simplifying the benefit system. But these new delays suggest that the systems underpinning Universal Credit’s design are not adaptable to changes in policy or entitlement, raising questions about the promised flexibility of the new systems.
14.The Department expects people who are in work that earn less than the equivalent of 35 hours per week at the minimum wage to look to work or earn more. This “in-work conditionality” regime is still at a very early stage of development and the Department is undertaking a national trial to see what the best ways are of intervening. Approximately 40% of the current Universal Credit caseload are in work (approximately 112,000 claimants) and are moving into the trial. But longer term, the majority of households likely to fall within these requirements will be the 4.4 million families currently in receipt of tax credits, who are not used to such conditions being attached to their entitlement.These requirements may lead to families being ‘sanctioned’, or facing a financial penalty, if they cannot demonstrate that they have been looking to increase earnings during their assessment month. The Department stressed to us that the idea of this is to encourage people to work more hours and increase their earnings, not to be a system of punishment, but the Department must be sensitive to individual families’ circumstances (for example varying shift patterns and overtime requests) if the system is to prove effective. The Work and Pensions Select Committee has looked into this area in depth and we will also continue to take an interest in this area as plans develop and in work claimant numbers increase.
If you have a strong stomach this is worth reading: from the Conclusions,
The Department has not updated its assessment of the expected benefits of Universal Credit in the light of policy and operational changes. The Department has now spent £1.16 billion on implementing Universal Credit, which has a caseload of around 280,000, compared to the over 6 million claimants expected in the long term. Despite having previously estimated that a six month delay to the programme could reduce net benefits to the taxpayer by £2.3 billion, the Department now maintains that the net benefits of the programme have not changed significantly from the £20 billion quoted in its 2015 outline business case. The Department rejected the recommendation we made in February 2016 that it should explain how the business case has changed following changes in policy to Universal Credit and other working age benefits, on the grounds that revising a business case takes four months. However the Department told us that it does have ready-reckoners and is able to model the effect of changes quickly, suggesting that it should have been able to accept our recommendation without causing disproportionate extra work.
Recommendation: We reiterate our previous recommendation that the Department should set out clearly the changes to the business case for Universal Credit since its outline business case in 2015. It should include a brief summary of the policy changes and, using its ready-reckoners, a clear explanation of the impact on the programme’s costs and benefits.
3.Systems underpinning Universal Credit are still underdeveloped and there are signs of pressure on staff. We welcome the fact that the Department has changed its mind and has now accepted our recommendations and those made by the previous Committee concerning the need for better contingency planning. But the Department still has a long way to go before systems will be ready to scale up Universal Credit significantly; we heard, for example, that only 25% of claims in the new full service are paid automatically. We also received written evidence that staff are concerned about the lack of training and the pressures of work preventing adequate testing and learning within the new service.
Recommendation: Before the speed at which Universal Credit is rolled out is increased, the Department should ensure that there are sufficient opportunities for staff to engage in testing and learning processes, and set out for the Committee what it has done to address staff concerns. The Department should write to the Committee to inform it of action taken by May 2017.
4.Universal Credit’s rigid monthly assessment period causes difficulties for claimants whose pay or rent are based on four-weekly periods. Claimants whose pay or rent cycle does not match the monthly assessment period used for Universal Credit may experience difficulties, such as a drop in payment without warning. Similar issues arise when people are paid early for Christmas. The Department’s only solution appears to be to try and persuade employers and landlords to change their pay and rent practices, rather than seeking to make its own systems more flexible. With the number of employees and landlords the former is unlikely to be feasible.
Recommendation:The Department should ensure that claimants whose pay or rent cycles do not align with Universal Credit assessment periods are made aware of this issue and the potential consequences, and are informed of what support is available should this be needed. The Department should also examine what it can do to adapt its systems to cater for these circumstances or provide more information about what it is doing to secure change with employers and landlords.
6.The Department for Work & Pensions’ understanding of the level and causes of fraud and error in Universal Credit and some other benefits is incomplete, potentially undermining efforts to reduce losses. While the Department expects Universal Credit to reduce fraud and error overpayments by £1 billion a year when it is fully rolled out, initial estimates indicate that the level is currently higher than the Jobseeker’s Allowance that it is replacing. The Department attribute this to the difficulty of developing a suitable methodology to measure fraud and error in Universal Credit, as the new benefit is designed to support both those in work as well as those out of work, and to cases where the Department was unable to contact claimants to verify the payment made. The Department does not regularly measure fraud and error across all its other benefits; for example, fraud and error in the payment of Carer’s Allowance has not been measured for 20 years.
Recommendation: The Department for Work & Pensions should: establish and agree with the National Audit Office a robust method for estimating Universal Credit fraud and error; and undertake regular risk assessments to improve its understanding of the causes of fraud and error in those benefits where it has not been measured for some time or at all.
Our conclusion: there are problems about
- “In-work conditionality” is “at a very early stage of development”: that is they have no clear idea of what the hell it means and what the rules are.
- There are new opportunities for – sanctions and “financial penalties”.
- The system is not yet ready to cope with all claims.
- Both potential Fraud and Error are a greater problem now for those on Universal Credit (” initial estimates indicate that the level is currently higher than the Jobseeker’s Allowance..”)
- Rent and Pay cycles are not aligned with Universal Credit so that, claimants may “experience difficulties, such as a drop in payment without warning.”
Ho, ho ho!