Posted by: Colin Wiles30/05/2012
Sixteen months from now, the first claimants will start receiving Universal Credit.
A brand new office in Warrington will efficiently handle 5,000 claims every day and a state of the art computer system will provide a real-time link up between HMRC and DWP, allowing claimants to manage their claims on line and see exactly where they stand. Households will receive their universal credit monthly in arrears and will manage their income just like you and me, paying their bills and their housing costs and leaving a little over for luxuries and savings. Job Centres and Housing Benfit offices will disappear, or take on new roles. By 2017 the Universal Credit system will apply to all claimants.
Well, that is the theory. But what happens in reality will largely depend upon the government’s fabled new IT system being up and running by October next year. The prospects are not looking great.
The DWP says that every applicant for Universal Credit will have an online account “through which they will be able to access information about their claim and Universal Credit payments, much like the options that online banking services currently offer. The financial rewards from work will also be made clearer, with recipients able to view online the positive effect of increased earnings on their household income.”
The new IT system depends upon a “Real-Time” link-up with HMRC allowing employers to update tax and national insurance contributions monthly, rather than at the end of the tax year, so that the DWP can then work out entitlement to Universal Credit. The £1 billion contract for the IT systems were awarded to Accenture and IBM last December, but they have already sub-contracted some of the work to India, despite government promises that major IT contracts would stay in the UK.
We all know that government has a poor track record on big IT deals. Failures in the National Health Service, Fire Control Centres, ID cards, the Child Support Agency and the UK Border Agency all led to billions of pounds of public money being wasted. Will Universal Credit be any different?
Last year the government was lambasted by the Public Administration Committee over its approach to big IT projects. The report stated that the relationship between government and its main suppliers amounted to an oligopoly or even a cartel, with 80 percent of government IT work being carried out by just 18 suppliers. The committee recommended that future contracts should be set at a cap of £100 million to encourage competition. The Committee also found that many government departments were spending £3,500 on simple desktop PCs that could be bought in the High Street for less than £500.
Systems thinker Professor John Seddon thinks that Universal Credit is doomed to fail and that the government has confused reductions in transaction costs delivered by integrated IT systems with the actual number of steps that it takes to get a service. He says the new system will generate huge amounts of failure demand - i.e failure to get things right first time leading to higher demand. Even if the Warrington centre failed to deal with 100 of its 5,000 cases every day it is not hard to imagine that a serious backlog would soon develop.
Meanwhile, down on the ground, do tenants really know what the new system involves? The government expects that 80 percent of all claims will be dealt with on-line once universal credit is up and running. Do housing providers know how many of their tenants have access to the internet and, more importantly, how many of them could handle the equivalent of an online bank account? If not, I think we need to find out pretty quickly! I know the underlying aim of welfare reform is to change behaviour and end dependency, but the target of 80 percent seems overly ambitious to me.
Meanwhile, it will be interesting to see how the local authority-led pilot projects proceed. I think there is still a long way to go before we see Universal Credit in place.
From Inside out
An independent look at the housing sector and beyond from Colin Wiles