Background to the report

Universal Credit (UC) is a benefit to help with living costs, paid to people who have a low income or are out of work. In 2010, the Department for Work & Pensions (DWP) announced its plans to reform the welfare system by introducing UC. At December 2023, there were 6.3 million people claiming UC across Great Britain.

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Scope of the report

This report examines whether DWP is making good progress in replacing legacy benefits with UC in Great Britain.

The report covers:

  • overall progress in implementing UC
  • progress in moving claimants from legacy benefits to UC under the managed migration process
  • the position on completing the move of all claimants from legacy benefits to UC

Conclusions

DWP has a clear plan and is on track in moving most legacy benefit claimants to UC, which it aims to do by the end of 2024. It has started with Tax Credit claimants  whose cases are expected to be relatively straightforward, and is likely to face greater challenges as it moves on to claimants of other legacy benefits who are potentially more vulnerable and in need of more support.

The main issue arising to date relates to the proportion of Tax Credit claimants not applying for UC. DWP needs more positive assurance that those claimants who do not transfer to UC, who may be at risk of financial hardship, are receiving the benefits they are entitled to.

The early months of the COVID-19 pandemic in 2020 tested UC in a way that DWP could not have foreseen. UC proved capable of meeting a sudden, large increase in demand for support, albeit with increased fraud and error as DWP relaxed some controls to cope with the volume of claims.

In terms of overall progress, since the 2018 business case, DWP has extended the completion date for implementing UC by at least six years in total and increased its estimate of implementation costs by over £900 million (45%). Despite the cost increases, DWP’s latest assessment in 2022 concluded that the value for money case for UC remained strong.

DWP’s evaluations indicate that UC is having positive impact on the labour market for some claimants at least in the short term. It is confident that in practice the overall benefits of UC are exceeding the costs. It does not, however, have evidence to demonstrate that UC is achieving the scale of benefits projected in the business case.

In taking UC forward, DWP should continue to develop its assessment of the impact, both to provide assurance on value for money and to learn lessons so it can secure maximum value when UC is fully implemented.

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Publication details

Press release

View press release (27 Feb 2024)

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