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Universal Credit: PAC raises alarm over risk of vulnerable claimants losing benefits

26 April 2024

  • DWP urged to support claimants transferring over from legacy benefits as PAC reiterates warnings over fraud and error

The Government is being urged to better support benefit claimants transferring from older ‘legacy’ benefits onto the Universal Credit (UC) system replacing them. In a report published today, the Public Accounts Committee (PAC) urges the Department for Work & Pensions (DWP) to better help claimants make the switch, while reiterating warnings over fraud and error rates and expressing scepticism on UC’s hoped-for economic benefits.

The DWP is in the process of moving 900,000 claimants of legacy benefits to UC. The DWP expects around 4% of claimants of its own legacy benefits would not switch to Universal Credit. DWP said it was not concerned that so far 21% of tax credits claimants had not transferred to Universal Credit when invited to do so, even though it has only limited assurance that people who did not switch over are not missing out on benefits they are entitled to. The report warns that even a small proportion of people not transferring to UC could translate into substantial numbers facing financial hardship. To address this, the DWP should explain how it will ensure it is providing the right level of support to claimants moving to Universal Credit, including face-to-face support and through the “Help to Claim” service – especially for vulnerable claimants – that it funds Citizens Advice to provide.

The PAC is not convinced that UC is achieving the scale of expected economic benefits. The Government predicts that UC will generate £10.4bn of benefits a year once fully rolled-out, with £6.1bn coming from increased employment. However, analysis of DWP’s evidence base that UC is benefiting the labour market found that the DWP cherry-picked positive facts and also made other assumptions not supported by empirical evidence.

UC was intended to generate significant benefits by reducing fraud and error, but changes during and since the pandemic, including in the easing of controls, mean the DWP no longer feels able to assess the impact of UC on fraud and error compared with legacy benefits. The proportion of UC overpaid was 12.8% (£5.5 billion) in 2022-23, down from 14.7% (£5.9 billion) in 2021-22 but still significantly above pre-pandemic levels. 

The PAC’s inquiry questioned whether, given high levels of fraud and error compared with the past, UC really is less prone to fraud and error compared with the legacy benefit systems. Rather than providing assurance about the actions it is taking, the DWP fell back again on its explanation of a societal increase in the propensity to commit fraud, but the PAC is not convinced why this must inevitably lead to growing losses to the taxpayer. The report encourages future Committees to keep a close eye on the issue and to continue to hold the DWP to account for its progress.

Chair's comment

Dame Meg Hillier MP, Chair of the Committee, said:

“Our Committee has scrutinised Universal Credit since its inception. We must not forget how massive a change it is to how benefits are delivered, impacting millions of people. This means if the transition from legacy benefits to UC fails even an apparently small proportion of people, it will lead to real world misery for thousands. The DWP must make sure that people are not cast into financial hardship due to a bureaucratic change, and that robust support is in place for those vulnerable claimants who need it most.”

Update - The Committee’s report references 2028 as when the transition of income-related ESA claimants to Universal Credit will commence. It has since been announced that migration notices will now be sent by the end of December 2025.

Further information

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