NAO reports on progress in implementing Universal Credit

The National Audit Office published a report on 27 February 2024 examining whether the Department for Work and Pensions is making good progress in replacing legacy benefits with Universal Credit in Great Britain¹. At December 2023, 6.3 million people were claiming Universal Credit across Great Britain, the NAO said¹. The DWP announced its plans to reform the welfare system by introducing Universal Credit in 2010¹.

The NAO concluded that the DWP has a clear plan and is on track in moving most legacy benefit claimants to Universal Credit, which it aims to do by the end of 2024¹. It said the department 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 support¹. The main issue arising to date relates to the proportion of Tax Credit claimants not applying for Universal Credit¹.

On cost and timing, the NAO said that since the 2018 business case the DWP has extended the completion date for implementing Universal Credit by at least six years in total and increased its estimate of implementation costs by over £900 million, a rise of 45%¹. Despite the cost increases, the NAO said the DWP's latest assessment in 2022 concluded that the value for money case for Universal Credit remained strong¹.

The report also covered the pandemic. The NAO said the early months of COVID-19 in 2020 tested Universal Credit in a way the DWP could not have foreseen, and that it proved capable of meeting a sudden, large increase in demand for support, albeit with increased fraud and error as the DWP relaxed some controls to cope with the volume of claims¹. On employment, the NAO said the DWP's evaluations indicate that Universal Credit is having a positive impact on the labour market for some claimants, at least in the short term, and that the department is confident the overall benefits are exceeding the costs¹. It added that the DWP does not have evidence to demonstrate that Universal Credit is achieving the scale of benefits projected in the business case¹.

Why it matters for households

The report concerns people still claiming legacy benefits, including Tax Credits, and the process of moving them across to Universal Credit. The NAO's finding that most claimants are due to be moved by the end of 2024 sets the timeframe in which remaining legacy claimants can expect to be contacted, while its warning about Tax Credit claimants not applying points to a group it says may be at risk of financial hardship¹. The NAO said the DWP needs more positive assurance that those claimants who do not transfer to Universal Credit are receiving the benefits they are entitled to¹. The report does not set out individual entitlement, payment levels or the treatment of specific groups such as mixed age couples or students; those details are not in the report. For context on how the benefit is structured, see the guide to benefits in the UK.

What happens next

The NAO said the DWP aims to move most legacy benefit claimants to Universal Credit by the end of 2024, and that it 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 Universal Credit is fully implemented¹. No further dates are given in the report.