Universal Credit doubles claimants in debt – payday loans could leap nine-fold – new report from DWP
The first official report from the Universal Credit Pathfinder scheme was quietly slipped out yesterday (Friday) afternoon at 4:44pm by the Department for Work and Pensions (DWP) when journalists were already on their way home… Are the five spelling mistakes in the report characteristic of the rush job to get it out just before the weekend? DWP has previous form on burying news items on Universal Credit…
The report is upbeat, but hidden on page 11 are worrying statistics…
Let’s look more closely:
By moving claimants from weekly to monthly payments, Universal Credit (UC) has nearly doubled the number of Pathfinder claimants borrowing money (from 18% to 34%). Try telling your family to tighten their belts when there are 31 days in a month. Or your children that they cannot go the the swimming pool this weekend because it is the fifth weekend this month. DWP have revealed that under the new monthly payment scheme, 8% of Universal Credit Pathfinder claimants had to be given special advances by DWP staff to help – an eight-fold increase. Without this wide-spread use of special advances, payday loans could have increased to 9% of UC Pathfinder claimants. Worryingly, borrowing from friends and family also increased by 8%.
The Universal Credit Pathfinder guinea-pig claimants understand the stick rather than the carrot. 95% of claimants were in no doubt as to when to report extra earnings. This could, perhaps, lead to a significant reduction in fraud and error in claims. UC claimants reported spending 27 hours looking for or preparing for work compared to 14 hours for the JSA comparator group, and made 60% more job applications. This is a dramatic change in behaviour, and could be due to the very strict terms of signing-up to the UC Claimant Commitment. But only 19% understood the fundamental incentive that Universal Credit is intended to offer: for every £1 extra earned by doing work, claimants will keep at least 35p of benefits.
Only 901 claimants took part in this analysis. The UC Pathfinder has been running since April – why so few? Well, only ‘plain vanilla’ claimants can join the ‘Pathfinder’ scheme. There are 27 hurdles that a claimant must overcome before being admitted (see end of blog). These hurdles are in place to keep the calculations simple, and the manual processing by Job Centre staff manageable, given that the main IT system is still not ready for use. A very limited temporary IT system is in use to record initial applications. And, as the Parliamentary Accounts Committee found out earlier this year during a site visit to a Pathfinder Job Centre, the payment process is held together by strings and sealing wax of manual calculation. Without a new IT system, it cannot be rolled out further, and without fresh plans for building the system, the Treasury will not allow UC to be rolled out. DWP has promised new plans before Christmas…
The lack of a viable IT System is holding back roll-out. Although 90% of claimants tried to make their claims online, 27% could not do so at their first attempt due to the website crashing, or because the instructions were confusing, they were being asked for more information than they had at hand or because it was simply taking too long.
The limitations of the statistics are not explained in the report.
Firstly, the kid glove handling Pathfinder claimants may have biased the statistics that show that 65% of claimants find the new system clearer. Staff at Pathfinder Job Centres were hand-picked and highly motivated. They were carefully trained, and calculations are double-checked by hand to eradicate errors. 94% of claimants felt that Jobcentre Plus advisers explained the conditions of claiming UC either “Very Well” or “Quite Well”. This is certainly an excellent score – but is it representative for the everyday service by Job Centre staff elsewhere for processing existing benefit claimants?
Secondly, the paper ignores the Hawthorne effect. The mere fact that people are going through a new high-profile process may have improved perceptions.
Thirdly, some of the report’s statistics are from all JSA claimants nationwide, not just those ‘plain vanilla’ claimants admitted onto the UC Pathfinder. (See end of this blog for the extensive exclusion criteria!).
Finally, the researchers failed to contact 60% of the 2,231 ‘Wave 1’ UC Claimants and 80% of the 4,590 JSA comparison group. DWP must be careful about drawing conclusions when many disgruntled claimants could have turned down approaches from the researchers.
Here are those ‘plain vanilla’ eligibility criteria:
I have updated this list and moved it to here:
Source: “Universal Credit pathfinder evaluation: interim results from the Universal Credit claimant survey, wave 1”, DWP, November 29, 2013 http://bit.ly/uc-report-pdf-page