UK's universal credit will only deliver £1bn in savings: OBR
The government's universal credit welfare payment system is expected to deliver only £1bn in savings despite claimants enduring large cuts to their benefits, the Office for Budget Responsibility (OBR) said on Thursday.
In its welfare trends report, the OBR said the savings would be hard to achieve if policies were reversed because they were unpopular and affected certaing groups, such as the disabled, or self-employed.
"A welfare reform of this scale and nature is also a huge forecasting challenge and a source of significant risk to the Treasury in terms of public spending control," the OBR said.
Universal credit is behind schedule and has come in for major criticisms over the way some claimants have been left with no cash while transferring to the new benefit. The OBR said it will cost £62.2bn when rollout is complete in 2022/23 compared with £63.2bn under the existing system.
"Many of the features of universal credit that lead to these costs and savings are highly uncertain in their impact," the OBR said.
"This arises from the uncertain outlook for the economy and labour market, the complexity of modelling the new system with limited information and sometimes poorly integrated models, and the difficulty of predicting how people’s behaviour will respond to altered financial incentives and the wider imposition of conditions on claimants."
“The move to universal credit has been – and remains – an enormous design and delivery challenge for the government, notably the Department for Work and Pensions (DWP). The rollout has already been delayed repeatedly. And universal credit is now designed to save money, relative to the legacy system it replaces, rather than to cost more, as in the original vision.”