Complexity in the benefits system

It must be exceedingly frustrating for ministers and civil servants that every attempt that the Government makes to simplify the UK’s benefits system results in increasing complexity. Take the example of Universal Credit: One of its aims is to ensure that payments will be permanently accurate because based on real-time information about wages being passed seamlessly from employers to Her Majesty’s Revenue and Customs and then on to the Department for Work and Pensions, thus alleviating claimants of the need to declare changes in earnings. Some unfortunate facts are getting in the way of this plan: that individuals have short-lived and/or multiple employments; that households are far from simple or stable ( – this is important because the household is the claimant unit for Universal Credit, but the individual is paid wages and pays Income Tax); that computers cannot cope with complexity; and that the relationship between Universal Credit and other benefits is rather complicated, particularly in relation to the new localised Council Tax Support Scheme. A public domain National Audit Office report catalogues a long list of problems:

The Department does not yet know to what extent its new IT systems will support national roll-out. … It is unlikely that Universal Credit will be as simple or cheap to administer as originally intended. Delays to roll-out will reduce the expected benefits of reform … Throughout the programme the Department has lacked a detailed view of how Universal Credit is meant to work. The Department was warned repeatedly about the lack of a detailed ‘blueprint’, ‘architecture’ or ‘target operating model’ for Universal Credit. Over the course of 2011 and the first half of 2012, the Department made some progress but did not address these concerns as expected. By mid-2012, this meant that the Department could not agree what security it needed to protect claimant transactions and was unclear about how Universal Credit would integrate with other programmes. These concerns culminated, in October 2012, in the Cabinet Office rejecting the Department’s proposed IT hardware and networks. 1

A leaked DWP document reported in The Guardian shows that there might be options for rescuing Universal Credit, but that only

25,000 people – just 0.2% of all benefit recipients – will be transferred on to the programme by the next general election, whichever route is taken. … Duncan Smith has repeatedly maintained that [U]niversal [C]redit will be delivered on time and on budget but, according to sources close to the project, senior civil servants have raised concerns in the past few weeks that the 2017 deadline for getting millions of people on to the programme is now unrealistic because IT systems are not working as expected and design flaws are too numerous. 2

An unintended consequence of attempting to simplify means-tested benefits would appear to be an increase complexity.

As research by the Institute for Public Policy Research for the Joseph Rowntree Foundation has found, a particularly important unintended consequence of Universal Credit is that

an enormous number of workless partners (the DWP estimates around 900,000) will find they lose money if they move into work, because of the speed at which the benefits they are claiming under Universal Credit will be withdrawn. 3

The IPPR suggests that

the government should introduce a second earner disregard alongside Universal Credit, which would allow workless partners to keep some of their extra income from work, up to a specified amount. 4

But surely this would add yet another complexity to an already complex system. Means-tested benefits are inherently complicated, and to add new disregards can only make the situation worse, unless of course earnings disregards are 100%: that is, however much an individual or a household earns benefits will not be withdrawn. To apply such a provision only to current means-tested benefit claimants would of course be exceedingly unjust, because they would continue to receive their benefits at the same time as their taxed earnings, and those who had not been receiving benefits would receive only their taxed earnings. The only fair solution to the dilemma would be a nonwithdrawable payment to every individual: a Citizen’s Income. Provided a genuine Citizen’s Income were to be paid, complexity would be impossible, and ministers and civil servants would find their lives to be a great deal easier.

  1. www.nao.org.uk/report/universal-credit-early-progress/ pp 7-8
  2. ‘Work and pensions secretary Iain Duncan Smith is understood to prefer the plan to improve the existing universal credit system’, The Guardian, Thursday 31st October 2013
  3. www.ippr.org/articles/56/11507/to-tackle-in-work-poverty-start-with-second-earners
  4. www.ippr.org/articles/56/11507/to-tackle-in-work-poverty-start-with-second-earners

Footnotes