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Coronavirus is giving Universal Credit its moment in the sun

In its early response to the Covid-19 crisis, Universal Credit has managed well

In its early response to the Covid-19 crisis, Universal Credit has managed well – and far better than its predecessor schemes would have, says Nicholas Timmins

This may be the moment when the country becomes grateful for Universal Credit (UC). Just maybe: it is too soon to tell for certain. The acid test will happen from the middle-to-end of April, when we will see whether the tidal wave of new claims to UC, prompted by the economic effects of the coronavirus pandemic, are paid out on time.

But what has already happened is remarkable. And a stark contrast to what would have happened in the days before UC.

Universal Credit has, so far, managed the drastic uptake in new claims

In the fortnight since Boris Johnson urged people to stay at home, and the chancellor, Rishi Sunak, announced that the basic allowance in UC was going up by £20 a week, some 950,000 people have applied for the scheme. On one day alone, more than 100,000 did so. That is ten times the normal uptake on any given day, and more than five times the peak of claims that followed the 2007/08 financial crisis.

The numbers are still rising. So far, however, the system has not fallen over.

That is not to downplay the howls of frustration on social media when the UC machine has slowed or backed up, nor the way telephony support, in particular, has struggled. Both should improve, assuming the numbers of new claimants do not keep climbing inexorably.

The fact remains that many hundreds of thousands of new claims are now being processed, with claimants given the option of an advance to see then through the standard five-week wait. Not all the claims are from people thrown out of work. Some will be from people furloughed but able to take advantage of the support that UC offers. Some will still be working but on reduced pay.

The new system is better suited to the crisis than its predecessors would have been

But compare what is happening now to what would have happened before Universal Credit. The scheme rolls six ‘legacy benefits’ into one, but the biggest pressure would have fallen on the unemployment benefit Jobseeker’s Allowance (JSA) and Housing Benefit. Jobcentres and council offices would have been overwhelmed by numbers on anything like the scale seen in the past few weeks – each facing, on average, around 1,000 new claims a week (although, obviously, the number would be far higher in some places).

Even on the lower end of that average, long queues would have formed, something that would be hard to square with the government guidance on ‘social distancing’ and that would have spread Covid-19 further.

There would have had to be two ports of call – Jobcentres for JSA, council offices for housing benefit. In the face of such demand, it is more than likely that offices would have had to shut. And we know what could have happened then from the botched introduction of the original housing benefit in 1983, when that largely manually driven system was overwhelmed. Staff literally pulled down the shutters and closed the doors – leading in places to mini riots and the police having to be called to quell people desperate for money.

Universal Credit’s online nature, though a source of frustration for some, has so far avoided these undesirable outcomes.

The early signs have been good – but Universal Credit is not out of the woods yet

The Department for Work and Pensions (DWP), which manages UC, may well not be able to hit the 87% of claims paid in full on time that it had been achieving before the coronavirus outbreak, or the 95% who receive at least a part payment on time. But with a lot of hard work and a touch of luck many more may well be paid promptly than the previous system could have hoped to achieve.

The proof of whether that is the case will come later, and it won’t all go smoothly. There is also likely to be a rise in fraud in a system that is under such strain while working hard to get money to those who so badly need it. But the shift that DWP has been able to make – switching, close to overnight, the roles of thousands of staff, and building, literally overnight, extra capacity into the IT system – is something that in the days before UC could not have been done so effectively, or so fast.

Universal Credit was not designed with a pandemic in mind. There are many things that still need to be done to make it work better – all of which will have to wait because it would be lunacy to fiddle with the core of the system when it is under such strain. But, depending on what happens over the next few weeks, many hundreds of thousands of claimants and the country at large may yet be grateful that it is there.

Institute for Government

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