Research shows many benefit claimants will need extensive help to get online, open bank accounts and manage budgets
Iain Duncan Smith has called universal
credit a chance for claimants to .get back in to the 21st century'. Photograph:
Ian Nicholson/PA
Equipping benefit claimants
with the digital and financial skills to use the government's new universal
credit welfare system is likely
to cost hundreds of millions of pounds, unpublished research commissioned by the
Department for Work and Pensions (DWP) has found.
The study, carried out by
three London councils using DWP data
and a methodology agreed with Whitehall officials, found they would each need to
spend about £6m over a two-year period to support vulnerable claimants to get
online, help them open bank accounts and manage monthly budgets.
The research, seen by the Guardian, , reveals the extent to which socially excluded claimants will struggle with the huge cultural and behavioural changes demanded by universal credit, and warns that without help, those who fail to get to grips with the new welfare system will face debts, arrears and eviction, leading to a rise in homelessness.
It suggests councils, charities and private companies will be required to deliver millions of hours of specialist training and support face-to face and over the telephone to ensure claimants are confident and technically proficient enough to use the system.
Around one in 10 users of the system are likely to need intensive or ongoing support, it finds.
The scale and cost will
unnerve ministers, who are struggling to roll out the beleaguered £2.4bn
universal credit system, and have admitted that they have already
written off £34m on failed IT systems for the project, though departmental
estimates suggest the total figure for write-offs could reach at least £140m. Ministers are expected to decide by Christmas whether to write off universal
credit altogether and start again, or reduce it in size and complexity to make
it more manageable.
Those behind universal
credit see it as an opportunity to tackle digital and financial exclusion for up
to 8m households. Iain Duncan
Smith, the work and pensions secretary, has called it a chance for claimants
to "get
back in to the 21st century".
But while they anticipated that this would require some investment, they are understood to be taken aback by the potential size of the support bill - which could reach £100m for London alone - and have ordered departmental analysts to see if it can be reduced.
Under universal credit, six
existing benefits will be rolled
into a single monthly payment, out of which claimants will be expected to pay
rent, spread living costs over a four-week period, and provide regular online
updates marking changes in their income and job status. Unemployed claimants
will also have to search for jobs online.
The Centre for Social
Justice thinktank, which helped design universal credit, urged ministers to take
"great care" to ensure that vulnerable claimants are properly supported to use
the system. "Unnecessary and unmanageable debt would severely undermine the
important principle behind this welfare change," it said in
a report this week.
The study by Lambeth, Lewisham and Southwark councils found high numbers of claimants do not have the internet at home. Many do not have bank accounts and are used to a weekly income, so have no experience of managing monthly household budgets.
Local authorities will be expected to ensure that claimants can get basic explanatory advice and training on how to make and update claims, can regularly access the internet and are supported to in managing their finances.
Lib Peck, Lambeth's council leader, said universal credit would carry a "substantial cost"A spokesman for the DWP accepted the figures provided by the three councils, but said it would be wrong to extrapolate the figures more widely. The development and costing of universal credit support services was a "work in progress", and would learn from 13 pilot schemes around the country, he said.
Lambeth's cost analysis found that all of the 38,000 potential universal credit claimants in the borough, including those who are already internet-savvy and have a bank account, would need at least one hour of basic guidance from trained advisers to help them navigate the new system.
Nearly one in four claimants would require an intermediate level of assistance amounting to a few hours' support, while just over 4,000 claimants would need intensive help to manage their claims online, including ongoing help for those with a learning disability and language problems, the report found.
More than 40% of potential claimants in Lambeth do not have internet access and
nearly a third will need high levels of advice on budgeting, it found.
A pilot
exercise in Southwark earlier this year found one in 10 tenants who had
their housing benefit
paid directly to them rather than, as previously, to the landlord, quickly ran
up unmanageable arrears.
The DWP-commissioned research warns that without urgent and intensive help for claimants, universal credit will exacerbate debt and arrears problems that have grown since the introduction of the bedroom tax in April. The study says this "could lead to an increase in eviction, repossession and homelessness".
The study did not extrapolate the costs of universal credit outside of the three boroughs. Although the £6m may reflect the high support needs of a diverse, socially deprived inner-city authority, rural councils may also face high costs, particularly in ensuring online access where broadband internet is not available.
• This article was amended on 22 November 2013. The earlier version said ministers had admitted that they had already written off at least £140m on failed IT systems for the universal credit project.
Guardian
