MPs have heavily criticised the Department for Work and Pension (DWP) over it’s “clumsy and ill-judged attempt” to justify the roll-out of Universal Credit (UC) and its potential impact on employment.
The DWP claimed the IFS had reviewed its data which asserts that UC will help more than 250,000 people into employment, once the flagship welfare reform is fully implemented across the UK.
Responding to a letter from the Work and Pensions Select Committee, Tory minister for employment Alok Sharma said UC would support: 150,000 more people into work due to “increased financial incentives to work”, 50,000 more due to “increased conditionality”, and a further 60,000 due to “simplification of the benefit system”.
“The approach to our analysis underpinning these estimates was reviewed by the Institute for Fiscal Studies”, the department claimed.
However, the IFS has questioned the DWP’s version of events.
The IFS said: “Note that at no stage did we review their approach to estimating the impact of increased conditionality or simplification, to which they attribute 50,000 and 60,000 respectively of the overall 250,000 forecast effect on employment.”
They continue: “Neil Couling’s letter to Baroness Hollis on 16 November states that the 250,000 figure is based on the same methodology we reviewed in 2012. For the reasons given above, that can only be true of the element (150,000) which is a result of changes to financial incentives.
“And we are not in a position to confirm whether and to what extent DWP took on board our comments and implemented our recommended improvements before applying the methodology….”
“The employment impact of UC is highly uncertain. The move to UC involves a number of changes for which it is hard to find comparable precedents (especially UK precedents).
“It is not even possible to produce statistical margins of error for estimates of the employment impact, as the nature of the uncertainty is not conducive to standard statistical analysis…”
“Sadly, it will be difficult even after the event to produce convincing estimates of the overall employment impact of UC. The early impact estimates that DWP have published – cited in the Minister’s letter of 12 March – apply only to a small group of claimants who are not affected by UC in the same way as most other claimants.”
They conclude: “We emphasise that the overall employment impact of UC will conceal very different effects for different groups in the population, with employment rates likely to rise for some and fall for others.”
Frank Field MP, Chair of the Work and Pensions Select Committee, said: “The ongoing lack of evidence to back up the much-vaunted employment impact of Universal Credit was already extremely disappointing.
“But to have our specific queries about basis of this claim answered with airy, irrelevant and, it appears, plainly inaccurate assertions adds insult to injury.
“The IFS’ letter shows that Old Mother Hubbard hasn’t got much in the cupboard, despite the bragging of the Department.
“This clumsy and ill-judged attempt to piggyback on one of the most trusted, unimpugnable authorities on public policy and finance would be farcical if it was not so deeply worrying.”