IT constraints can shape policy design – but are no excuse for failing to act 

Ahead of the March 23 spring statement a wide range of commentators suggested that the chancellor should increase benefit payments by more than the standard uprating to help address the cost of living crisis.^[1] By default, most benefits (for both working age people and pensioners) were due to go up by 3.1% in April, in line with consumer price index inflation recorded in September 2021. But this was set to lag well behind the roughly 8% higher prices that forecasters were predicting households would face in 2022/23 compared to 2021/22. 

However, the chancellor did not adopt this approach. Instead, Rishi Sunak chose to raise the point at which people start to pay National Insurance contributions (NICs), a move which helped some lower (and higher) earners but did little to help many of those receiving benefits. 

There are constraints to what is possible 

Some media reports suggested that IT problems had stymied the chancellor’s ability to act. ^[2] These highlighted an important element of policymaking. What the government can do – and how quickly – is in part constrained by the mechanisms and data available to turn a policy idea into reality. 

The recently implemented Universal Credit, which provides means-tested support to around 5.6 million people, ^[3] is run on a modern computer system that can very quickly process changes to scheme rules or benefit rates. But longer standing benefits – such as Jobseeker’s Allowance and Employment and Support Allowance – rely on IT systems that are decades old and would require a few months’ notice to adjust the payments they send out, while the state pension is difficult to adjust more than once a year. ^[4] Around 2.6 million people are due to move eventually from legacy benefits to UC but have yet to do so and over 12 million are in receipt of the state pension.  

The difference between these systems helps explain why – when the Covid pandemic hit the UK – the government immediately raised UC payments by £20 a week but did not implement a similar benefit increase for recipients of the legacy benefits. 

Implementation is always an issue when designing policies 

These kinds of implementation issues are common in government. Understanding them, anticipating them and working out how to deliver within those constraints should be an important feature of the policymaking process, rather than a total block to action.  

Ahead of the spring statement, if the chancellor had asked for policy options for getting money to households in receipt of benefits and if the policymaking process had been working as it should, civil servants would have sent him a list of options. On uprating benefits, he would have been told the cost, who would benefit and how quickly it could be implemented. That advice would have made clear that it would have been possible to increase benefit payments this financial year, though there would likely be some delay – particularly for those not on UC – between the chancellor making the decision and the money getting to their bank accounts. Rishi Sunak would then have faced a choice about whether to go ahead or not. 

Sunak’s other choices show he is willing to push ahead even where implementation is tricky 

The spring statement also saw Sunak go ahead with a policy that could not be rolled out immediately: the increase in the threshold at which employees and the self-employed start to pay NICs. That will rise substantially this year but the increase will not kick in until July because time was needed for “employers and payroll software providers … to update and test their systems”. ^[5] 

Sunak’s package of support to help with energy costs, announced in February, also included a measure – the Council Tax rebate – that was difficult to implement. Councils did not have any existing way of paying money back to bill payers. Three months on from the announcement, many have still not sent the cheques out. ^[6] 

Political choice, not creaky IT systems, explain why benefits were not increased more 

The complexities and constraints imposed by the DWP IT system are real. Completing the roll out of UC will reduce the number of people reliant on the old systems. But it will not eliminate them entirely – contributory benefits and the state pension will continue to run on dated systems. If the DWP's systems are creaking then the government should consider spending time and effort to upgrade them – not only to improve day-to-day functioning but also to make benefits easier to adjust in future.  

But the IT barriers are not so severe as to have prevented the chancellor from doing anything to increase incomes for benefit recipients between now and next April. Sunak ultimately chose not to top up their incomes because that was his preferred option – not just because no other was available. With household energy costs expected to go up again in October, Sunak has indicated he may do more to help with the cost of living crisis this year. ^[7] Given the time needed to implement some potential policies, he needs to work up the Treasury’s options now. 

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1. https://www.resolutionfoundation.org/publications/softening-the-blow/ 
2. https://www.thetimes.co.uk/article/it-failures-stop-benefits-keeping-up-with-inflation-05ncjg9t2
3. https://www.gov.uk/government/statistics/universal-credit-statistics-29-april-2013-to-10-march-2022 
4. https://committees.parliament.uk/oralevidence/10022/pdf/ 
5. https://hansard.parliament.uk/commons/2022-03-24/debates/94F3AB16-B637-4897-AE3B-8B983CD3D47F/NationalInsuranceContributions(IncreaseOfThresholds)Bil…;
6. https://www.bbc.co.uk/news/business-61270840 
7. https://www.dailymail.co.uk/news/article-10798413/Rishi-Sunak-vows-ease-cost-living-crisis-hints-support.html?msclkid=443e9ba3d05111eca5f99502f7dcaff…;