Universal Credit Designing and Implementing an Out of and In- Work Benefit Richard Lloyd 30 November 2015
Introduction Universal Credit an Overview Key Features and Issues Progress with Roll-out Evaluation Framework and Key Findings Conclusions and Topics for Discussion 2
Aims and Rationale for Universal Credit Main aims of the Universal Credit policy are to: Reduce welfare dependency by maximising labour market participation and supporting progression in work; and Reduce poverty by providing a minimum level of benefit, raising living standards and promoting individual responsibility for financial management. Ensuring work is the main route out of poverty for those who are able to: With additional support those who are not, and for the most vulnerable in society Rationale underpinned by the following objectives: Reducing the complexity of the current system and replacing six previous benefits; Reducing administrative costs through simplification, reduced fraud and error, etc; Providing an incentive to work ensuring that work always pays for those in low paid/limited hours jobs Maximising individual potential escape the benefit trap by removing the risks associated with entering work, and supporting progression within it And aligned with/contributing to Government agendas on independence and personal responsibility, digitisation and poverty reduction 3
Universal Credit Key Features (1) UC represents a key element in the reform of the welfare system in the UK A single benefit, combining six previous benefits: Reducing complexity and improving clarity for claimants and stakeholders A single monthly, rather than fortnightly, payment, to: Emphasise personal independence and responsibility, and budgeting/financial management skills; Reduce administration costs; and Emulate the world of work. Payable to individuals out of and in work (on a tapered basis), to: Counter existing disincentives and ensure work (and extra work) always pays; Support the transition to work by mitigating the risks associated with leaving benefits; and Encourage progression in the workplace through tapered payments - which reflect earnings in real time (allowing flexibility and offering clarity over income). 4
Universal Credit Key Features (2) Digital by design : Initial claim process, and management of claim once established, via on-line system; Links between DWP and HMRC IT systems will allow real time changes in payments, for those entering work, changing hours worked or otherwise changing their circumstances The claimant commitment: The contract between the PES with the claimant, and reviewed on a regular basis Developed in two way discussions with advisors, including type of work sought and barriers Sets out clearly what is required to comply with conditionality jobsearch, change of circumstances, etc Reinforced conditionality: With a focus on jobsearch activity, not simply availability for work Common expectation for 35 hours jobsearch activity per week Jobsearch activity recorded through using on-line vacancy system - Universal Jobmatch 5
Concerns A series of concerns have been raised from interest groups, primarily: Can all claimants manage their budgets on a monthly basis, particularly the most vulnerable? Will the single payment lead to negative effects e.g. rent arrears? Will the wait for first payment risk claimants taking on debt? Will any claimant group, and particularly the most vulnerable and families living in poverty, lose out? A series of measures introduced to address or minimise negative impact: Budgeting advice made available through Jobcentre Plus and local partners; Ability to receive payment on a fortnightly or weekly basis in certain cases; Ability for direct payments to be made in certain situations /claimant circumstances e.g. rent payments direct to landlords Universal Credit Advance available to bridge gap to first payment must be repaid from subsequent payments Checks in place to help ensure no groups are disproportionately negatively affected by Universal Credit particularly challenging given complexity of individual circumstances 6
Progress with Roll-Out A staged programme of roll-out in place: With an evaluation framework to ensure development/delivery is evidence based First Pathfinder testing in April 2013: In a single Jobcentre area, expanding to 14 areas to March 2014 Focused on simple claims single people, no children, many young/living with parents Claimant group extended to focus on couple claims, and subsequently couples and lone parents with children, from summer 2014: Allowed system to be tested with more complex cases across a wider area (26 offices) As at November 2015 Universal Credit available in over 500 Jobcentre Plus offices the majority for single claimants but also to couples and families in nearly 100 By Spring 2016 Universal Credit will be live in all 714 Jobcentres: New claims to legacy benefits will begin to close during 2016, so claims to legacy benefits will progressively decline and migrate to Universal Credit. A steady increase in case load and claims over the roll-out period 7
Progress with Roll-Out At September 125,887 claimants on UC caseload, from 216,088 new claims: By comparison, representing around 20% of the existing Jobseekers Allowance caseload A steady increase in both the caseload and numbers of new claims: Caseload 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Claims 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 17-Sep-14 17-Sep-15 8
Evaluation and Universal Credit UC Evaluation Framework developed to inform implementation and delivery: Five themes delivery/implementation; attitudes and behaviours; impacts and impact measurement; testing and experimentation; and cost benefits analysis Based on a test and learn approach, with small scale trials also providing learning of relevance to wider welfare reform, and the use of monitoring data and wider research Key evaluation activity to date: Evaluation of the Pathfinder sites longitudinal survey of over 900 UC claimants, survey of similar JSA claimants, qualitative interviews with recent claimants (published 2014) Evaluation of Couple and Family claims combined quantitative and qualitative research with couple and family claimants (2014-ongoing) Behavioural research to explore claimant decision making in terms of job search and moving into work (ongoing) Testing of the Universal Credit enhanced digital service including providing on-line accounts for claimants to test the end-to-end process, with a mix of simple and complex cases (ongoing) Production of Universal Credit at Work reports which include analysis of monitoring data and comment on the performance of the policy 9
Key Evaluation Findings to Date (1) Drawing on the Pathfinder Evaluation and the Universal Credit at Work reports The Pathfinder Evaluation focused on early delivery and simple claims, found: Understanding of benefit and conditionality clear, although being better off in work options not always understood; Making a claim vast majority submitted on line, found process straightforward, viewed positively when compared to JSA; Claimant commitment viewed positively, considered helpful to find work, but not all felt their circumstances had been fully considered; Conditionality majority reported completing 35 hours jobsearch, although a few expressed concerns over evidencing time spent and the level of detail required Payments/budgeting most confident of managing monthly payments, but UC claimants less likely to keep up with payments than JSA comparators, and relied on friends/family Influence and impact compared to their JSA equivalents, UC claimants were : More optimistic of finding a job in three months; Think the benefit system is effective in encouraging people to find work; and Undertake more job search activity compared to JSA claimants. 10
Key Evaluation Findings to Date (2) Early indications of impact the Universal Credit at Work (Spring 2015): Universal Credit at Work compared labour market outcomes for UC claimants to those of matched JSA (the main legacy benefit) claimants Found a positive, statistically significant effect on employment outcomes and earnings In the first four months of their claims, and compared to JSA claimants, UC claimants: Were five percentage points more likely to be, and spend four more days in, work; and Earn on average 50 more than JSA claimants. In summary, early evaluation findings suggest: Understanding and operation of the policy appears as intended Impacts of UC on employment outcomes, and other behavioural effects are positive in comparison to JSA Some areas of improved clarity/emphasis, and changes in delivery model, proposed notably around continuing claims in work, and promoting financial incentives Better off in work calculator, money management advice and alternative payment options introduced as response to evaluation findings. 11
Conclusions Good progress being made to implement UC and progress towards its intended aims and objectives but key questions remain: Will the positive early findings for more simple cases be reflected across the wider Universal Credit caseload? Will the IT systems required for implementation work effectively? Will the required cultural change be achieved amongst: Claimants in terms of monthly single payment and benefit conditionality?; and Jobcentre Plus staff to understand the new regime and address claimant comments, and the competences needed to encourage/support claimants to progress in work? Are the measures introduced to support transition effective? For example: For claimants advanced payments, budget and money management advice, and additional support for those unable to use the IT route; and For Jobcentre Plus staff the training programme for advisors, and for new areas of support about sustaining and progressing within work. For partners and stakeholders through Universal Support delivered locally - to provide services in partnership for vulnerable claimants. 12
Topics for discussion Universal Credit offers a number of lessons as roll-out continues such as: What are the key issues for planning and implementing an anti-poverty benefit, which takes account of individual family circumstances? What are the Member States experiences of providing increasingly digitised services, and what does this means for the customer experience? What are the key considerations and practical lessons for monitoring and evaluating new and multi-faceted developments like Universal Credit? More specific areas of interest, and where learning could be shared between the host nation and others, include: What are effective approaches to combatting under-employment including experiences of how to most effectively intervene with claimants in-work? How can people be most effectively incentivised to move towards, and within, work? What are other Member States experiences of single payment benefit systems, and of extending payment periods, to help develop financial management skills for claimants? 13