Small-scale Universal Credit pilot dodges crucial tests

If Betsy Duncan Smith had been in a humorous mood when the Work and Pensions Secretary arrived home on Monday night, she could have screened the movie Ghostbusters.

Day one of Universal Credit reminded me of that scene where the office has opened, the staff are primed – and then they wait and wait for the phone to ring.

So far no one has come forward to actually claim Universal Credit, the cornerstone of the coalition’s welfare reform policy.

This isn’t surprising, or a sign of failure. Eligibility for the pilot has been deliberately restricted and only one Job Centre is administering claims for the first three months.

Suitable households will take a while to trickle through to the new system, and officials expect just 7,000 Universal Credit claimants by the time of the “national launch” in October – which will still be more of a whimper than a bang.

There are valid reasons for starting small, although the last minute decision to scale the pilot back from four to just one Job Centre area does suggest even Ministers have been taken aback by the challenges.

Universal Credit is a high risk exercise, dependant on untested IT systems; a link-up with a barely-tested HMRC tax reporting system; and requiring behavioural change by some households not used to monthly budgeting or digital claims.

For some households, Universal Credit will be their entire income, so if the system breaks down the consequences will be serious. The advantage of such a small pilot is it will allow staff to forensically check each claim by hand. This should ensure that any problems in the IT system are spotted and fixed before incorrect payments are made.

Such a labour-intensive approach is only possible with a very small scheme, and it will be crucial that the IT is shown to work before Universal Credit can expand.

The question is one of scalability. Ministers would be unwise to stress test Universal Credit on the simplest households only and then assume the system will continue to function as factors such as children or fluctuating earnings are added into the mix.

But it’s not just the IT that is under scrutiny: the policy itself needs to be tested too, and details may need rewriting. Drawing out any unintended consequences and providing detailed evidence will require much larger numbers of people to switch to Universal Credit.

Shelter supports Universal Credit in principle, including the emphasis on simplification. But the DWP’s interpretation of simple has been one-size-fits-all, rather than the more preferable combination of back office flexibility and customer-facing functionality.

We’re concerned that some of the more useful ‘complexities’ of the current housing benefit system have been stripped out in the transfer to Universal Credit. These include specific protection for new claimants who would otherwise face losing their home shortly after losing their job, and support for young unemployed people living with their parents who can’t afford to pay rent.

Our hope is that Ministers will look at some of these issues, but we know the case for any reform will require strong evidence of unintended consequences – and this tiny pilot won’t provide that.

The risk is that Universal Credit is rolled out before the system is ready or the evidence of its impact is there.