Lord Freud – 2013 Speech on Universal Credit

Below is the text of the speech made by Lord Freud to the Local Government Association on 12th December 2013.

Good morning, it’s a pleasure to be here.

First of all I want to thank the LGA for their help to ensure that local support services will be a firm part of Universal Credit.

I hope you have all seen the latest update on the Local Support Service Framework (LSSF) that was published last week.

It is the product of very close working between DWP and local government and lays the groundwork for our future work in partnership.

I will touch on the LSSF in more detail later on in my speech, but first I want to take a moment to reflect on Universal Credit (UC).

Universal Credit is no less than a revolution in our benefits system. Where successive governments have applied patches and tweaks, we are bringing in an overhaul. And it is long overdue.

The benefits system we have today was designed to reflect society in the mid-20th century.

It pays little regard to the way that society has changed, from the changing roles of women in the workplace, and the increasing importance of part-time work, to the overall flexibility of the modern labour force.

The idea behind Universal credit – and I am delighted to say we are already seeing this idea bear fruit in the pathfinder areas – is to create a much simpler and more flexible system that makes work pay.

Universal Credit successfully started rolling out in April of this year – 6 months ahead of schedule – in the Greater Manchester area.

We now have live service in 7 areas across the country, and this will grow to 10 areas by spring 2014, giving Universal Credit a national footprint.

And last week we set out the next steps for Universal Credit which build on our firm commitment to expand this programme in a safe and controlled manner.

Too many government – and private sector – projects fail because of a big bang approach. Governments in the past and across the world have built systems, announced a launch, and watched as the wheels fell off.

We have been clear that Universal Credit will break that mould and progress safely and securely.

As I said, by spring, Universal Credit will have live service in 10 areas. From next summer we will progressively start to take claims for Universal Credit from couples and, in the autumn, from families.

Once safely tested in the 10 live Universal Credit areas, we will also expand the roll-out to cover more of the north-west of England.

These steps continue our progressive approach – test, learn, implement – as we deliver this programme.

Our current planning assumption is that the Universal Credit service will be fully available in each part of Great Britain during 2016, having closed down new claims to the benefits it replaced – including working age Housing Benefit; with the majority of the remaining legacy caseload moving to Universal Credit during 2016 and 2017.

I would like to reassure you again that we will maintain the level of funding required to administer housing benefit in 2014/15.

Clearly last week’s announcement of our rollout plans will mean we’ll need to take a close look, with LGA colleagues, at 2015/16 funding.

We’ll need to make sure we take account of the position for those who’ve gone live with Universal Credit, and those who are yet to do so

We will also use the progressive expansion of Universal Credit over the next few years to carefully test how Universal Credit works in practice.

There will be three aspects to this testing.

First: we will look at how staff and claimants interact with the Universal Credit policy and systems on the ground. We are already getting some of this learning in the pathfinder:

86% felt the advice and support they were offered by their adviser matched their personal needs and circumstances

92% said they were being encouraged to find work or to increase the amount they are working

2/3rds agreed it provided better financial incentives to work.

Second: we will look to do more rigorous econometric testing to show the effect that UC has on our key outcome measure – increasing employment levels.

 

And third: we will test how Universal Credit works for and interacts with the most vulnerable groups in our society, and how local support services can work effectively.

 

We already have some evidence to suggest that many claimants will adapt well to the new system.

 

Evaluation from the Pathfinder – which mainly involves more straight-forward jobseekers at present – shows:

 

90% of claims are online

78% of those getting monthly payments were confident they could budget over the month

But while we expect that many people should be able to handle the changes well – we must ensure that help is there for those who can’t, or need support at first.

 

And that is where the relationship between DWP and local authorities is so important.

 

One of the areas where we have worked incredibly closely with local authorities is on the Local Support Service Framework. We published the first version in February this year and just last week we published an updated document – the Local Support Service: update and trialling plan.

 

This sets out how we can work together over the course of the next year to test and trial the arrangements and processes needed to make local support service work.

We want to work closely with you to test different arrangements for partnership working, financial management and the effective delivery of front line services.

We will soon come forward with more details of how you can get involved in this testing and trialling work and I hope many of you will take up that opportunity.

But the trialling and testing doesn’t just begin with the publication of the LSSF. As many of you know there is already much good work going on.

Useful testing and trialling has begun with the benefit cap, where we are seeing how councils can link with Jobcentre Plus and partners to give the right support.

Some of the innovative approaches have really impressed me.

In Croydon, Jobcentre Plus staff have been working with council staff. Joint teams based in the council offices are helping residents together.

This working together means that claimants are no longer pushed from pillar to post – but receive the help they need in once place.

And take the Digital Deal: I visited one of our pilot sites last month, A2Dominion, a housing association in Queens Park. I was very pleased with their work to get residents not only online, but confident and comfortable in doing so.

It is this kind of co-operation – that puts the claimant at the centre of the experience – which I am keen to replicate across the whole Universal Credit landscape.

It is a far better use of resources – and it leads to far better results.

We have also seen interesting examples from the local authority led pilots.

For example: Birmingham City Council wanted to move to a digital by default service for rent management as well as address problems with a number of new tenants who were defaulting on their rent and subsequently losing their tenancy.

They have reviewed the tenant’s journey, introduced a new digital log book, and identified how to nudge and change people’s behaviour.

This has led to both a significant reduction in the level of arrears among new tenants – approximately a 17% reduction at 12 weeks – and administrative savings of £61,000 by publishing online rather than in print.

And I was pleased to hear that in North Dorset Council the job clubs they have set up as part of the local authority led pilots have been a success.

Unemployment in the area has fallen by 13% and they are convinced the job clubs have had a major impact in this.

So, we have seen some really interesting lessons from these pilots already, but there is more I am keen to learn as we work on the evaluations.

In particular I want to get a more concrete picture of what Local Authorities have found works well and – crucially – what they have found doesn’t work so well in providing people with support.

And we are also seeing interesting lessons from the Direct Payment Demonstration Projects.

The Direct Payment Demonstration Projects revealed that many landlords just don’t know their tenants as well as they could.

Direct payments have opened the door not just to help with managing rent – but also to wider social problems that were out of sight.

Housing associations and councils have also been clear about the need for extra tenant support and data sharing. These are areas we are looking at right now.

The Direct Payment Demonstration Projects are coming to an end very shortly, but I’m pleased to say that more than half of the organisations involved have decided to leave their tenants on direct payment, and at least one of the landlords has decided to move all of their working age tenants onto a direct payment arrangement.

Getting used to direct payments is crucial in preparing claimants for a seamless transition into work and will allow landlords an opportunity to increase their rent collection from this group of claimants in a phased and managed way.

It makes a lot of sense, therefore, for local authorities and social landlords to consider encouraging those who will not need support to move onto Housing Benefit direct payments ahead of Universal Credit.

Before I finish, I would like to touch on the announcement made in last week’s Autumn Statement about the move to a Single Fraud Investigation Service.

The Single Fraud Investigation Service will be introduced as a single organisation within the Fraud and Error Services Team in DWP with implementation taking place in a phased approach from October 2014 – March 2016.

This positive next step builds on the great work done by the local authority, DWP, and HMRC pilot sites and will deliver a nationally flexible fraud investigation service covering the totality of welfare benefit fraud, including Housing Benefit and Tax Credits.

We will also work closely with local government, as part of a joint working group, to ensure that we continue to maintain close relationships and share data where permissible, on cases of joint interest, for example Tenancy Fraud.

In addition DCLG and DWP have agreed a £16.6m funding package to support local authorities in England to help local government’s fight against fraud and protect taxpayers’ money.

The newly appointed minister at DCLG, Baroness Stowell, gave a speech on Tuesday setting out further details on this. Similar discussions have taken place between DWP and the devolved administrations

As we step into 2014, the hard work of the last year will continue.

I want you to know we are keen to maintain the strong relationship that we have with local authorities and all the organisations we’ve been working with, and for you to build and maintain partnerships in your communities.

If you want to be involved in testing and trialling to prepare for Universal Credit then don’t hesitate to start activities in your area, or to let us know that you want to take part.

This trialling and testing is absolutely vital to the delivery of welfare reform, and with your input we can make sure that we continue to roll out Universal Credit in a safe and controlled manner.