Universal Credit will impact on the Work Programme

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How will Universal Credit impact on the Work Programme?

Universal Credit will undoubtedly impact on the Work Programme business model.  This article explains how this is likely to manifest and what Work Programme providers, in particular Prime Contractors, need to consider well in advance of October 2013.

Perhaps the main risk for Providers is that their clients and the general public conflate Universal Credit with Work Programme, with the risk that challenges in the introduction of Universal Credit reflect poorly on providers.  However providers have only limited control on the implementation of UC, the article and the slide below outlines a range of impacts that Universal Credit can be expected to impact on providers Caseloads, Payments and Responsibilities.

Before getting onto that, it is worth noting what the Department for Work and Pensions say about the impact of Universal Credit on providers:

Currently, the Department does not anticipate the need to make significant changes to the Programme and will make any changes necessary over the next 12 to 18 months in time for the implementation of Universal Credit.

NAO, The introduction of the Work Programme, para 3.22

The DWP expect to open up discussions with providers in Autumn 2012, and providers need to have done their homework before then – either independently or through one of the organisations that represent them.  Subcontractors on the Work Programme should be asking their Primes to take a lead.

Caseloads

The successful implementation of Universal Credit will remove one of the main barriers to work – the benefit system itself and claimants will be more willing to look for and move into work.

  • On-flows:
    Improved incentives to work from Universal Credit, and reforms to the support role of Jobcentre Plus could lead to more claimants finding work before being referred onto the Work Programme.
  • Off-flows:
    Similarly, the Work Programme client group may be more motivated to find and stay in work because they will be better off.
  • The role of JCP and WP:
    Universal Credit should reduce the need for Jobcentre advisors to administer benefits, allowing greater focus on employment support.  This would further blur the lines between Jobcentre Plus and the Work Programme, with an uncertain impact on caseloads.

Payments

  • Job outcome definition:
    Under Universal Credit, employment outcomes will be better measured by the earnings of the claimant, the simple ‘off benefit’ metric is less likely to apply, or be sufficient on its own.
  • Job outcome payments:
    Outcome payments under Universal Credit could be directly linked to the taxpayer saving, which in turn could be directly linked to the earnings of the claimant in work.  I have modelled the revised payment levels using the Universal Credit Calculator and a multiplier based on the claimant category, and will publish soon after road testing it with people in the industry – feel free to contact me if you want to know more.
  • Revised payments and client categories:
    The Universal Credit is a game changer.  The department could use its introduction to revise payment terms and client categories if it felt that this would help the Work Programme as a whole run more effectively, with a knock on impact on revenues and cashflows.
  • Partial job outcomes:
    The taxpayer saving will be minimal for low hours / low wage employment because of the higher disregards under Universal Credit.  However, there will clearly be a social benefit from the claimant moving into work.  It will be interesting from a social value perspective to see how this is priced by the government.

Responsibilities

  • In-work conditionality:
    Universal Credit will for the first time introduce conditionality for households in low earnings employment, (est. £98/wk part time and £212/wk full time).  Work Programme providers can be expected to provide in-work support to at least this minimal level of earnings, and possibly beyond if it links to outcome payments.
  • Management information requirements:
    The points made above indicate that providers will need to take an active interest in not only whether their service users are in work, but what they are earning as well.  The DWP will want to monitor earnings through information from HMRC, but providers will want their own checks and balances as well.
  • Training and tools:
    Universal Credit will only be fully effective if the improved incentives and the easier transition into work are clearly explained to claimants.  Work Programme advisors will need access to training and tools so that they can explain to claimants how Universal Credit works and reassure them that they will be better off in work.  These tools will be available through Policy in Practice, please contact me for early access to a ‘beta’ version.

Conclusion

The introduction of Universal Credit will have a significant impact on the Work Programme business model through its impact on caseloads and pricing structures, and on the responsibilities of Work Programme providers as advisors are likely to have to provide in-work support and explain the new benefit system to the most disadvantage jobseekers.

It isn’t clear to me that providers have thought particularly hard about this, but then I doubt whether the DWP have either.  There is still time for both providers and department to work on this together with a view to making the Work Programme stronger, and more effective for claimants, providers and taxpayers.  However, if the discussions are left too late then there is a risk that decisions will be rushed.

Providers interested in learning more about the impact of Universal Credit can contact me.  I have developed revised pricing models and tools for advisors that I would be glad to share, possibly at the Welfare to Work conference later this year.

Universal Credit and Work Programme
Universal Credit and the Work Programe

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