National Audit Office reveals inflation and delays drive up costs

The National Audit Office (NAO) has disclosed that the full rollout of Universal Credit will cost at least £900 million more than previously estimated and will take six years longer to complete. The increase in costs is primarily attributed to inflation and the delayed implementation schedule.

Universal Credit, introduced by the Tories nearly 14 years ago, replaces six “legacy” benefits, including Child Tax Credits. Despite the lengthy implementation period, the government is still in the process of transferring claimants to the new system.

Initially forecasted to cost £2.85 billion in 2020, the implementation cost of Universal Credit has surged, with a recent estimate in December 2023 pegging it at £2.92 billion. This increase, amounting to £78 million, underscores the challenges and complexities of the rollout.

Auditors also highlight that one in five households on the old Tax Credits system had their payments stopped after failing to transition to Universal Credit. Of the 150,000 cases closed by the Department for Work and Pensions (DWP), approximately 31,000 resulted in benefit terminations. The NAO report indicates that the DWP “does not fully understand why some people on legacy benefits do not claim UC.”

Gareth Davies, Head of the NAO, emphasized the need for the DWP to ensure that individuals who have not switched to Universal Credit are receiving the benefits they are entitled to. He stated, “DWP is on track to move legacy benefit claimants to Universal Credit. But it needs to be sure people who have not switched to Universal Credit are receiving the benefits to which they are entitled.”

A DWP spokesman highlighted that the majority of Tax Credit claimants have successfully transitioned to Universal Credit, accessing crucial support as they work towards financial independence. Despite challenges, evidence suggests that Universal Credit has had a positive impact on the job market, with claimants more likely to be employed six months after making a claim. The DWP also offers various forms of support to aid the transition, including extensions for those requiring additional assistance.

As the Universal Credit rollout progresses, the DWP faces ongoing scrutiny to ensure the program delivers the intended benefits effectively and efficiently.