Government lost control of welfare reforms, says outgoing minister responsible

The Government lost control of its flagship welfare reforms to simplify the benefits system, according to the outgoing minister behind them.

Conservative frontbencher Lord Freud said a “fundamental mistake” across government in the 1990s and early 2000s to commission out IT services meant they were unable to initially implement what they wanted for Universal Credit (UC).

Then work and pensions secretary Iain Duncan Smith “reset” UC in 2013 with the original 2017 deadline pushed back.

Lord Freud, in his final frontbench contribution before his retirement from government at the end of the month, said while UC has been much harder and taken longer than he thought, he remains utterly convinced it is the right thing to do.

His reflections on UC and the lessons to be learned for the future came after Liberal Democrat peer Lord Kirkwood of Kirkhope said the scheme should be made more generous to help people hit hard by Brexit.

He suggested thresholds and taper rates used to calculate how much money claimants receive should be changed to reflect the “detrimental” impact of the UK’s divorce from the European Union as he also raised concerns about tough sanctions.

UC involves rolling six means-tested working age benefits into one payment.

Concluding the debate, Lord Freud noted he has previously made 3,331 spoken contributions in his time as minister.

He said of his UC work: “It has been much harder than I thought it would be… and it has taken longer.

“But I remain utterly convinced that it’s the right thing to do to have this machinery there.

“The purpose is simple – one wants to have a system where those in it can see the benefit of taking control of their own lives rather than being constrained from doing things by just the shape of the benefits system.”

On the 2013 reset, Lord Freud told peers: “What I now think is that the changes that government as a whole went through to commission out its IT, which happened in the 90s and early 2000s, was a fundamental mistake right across government.

“What it meant was that, and I had the one example of DWP, we lost control of our systems and because people were thinking about IT as a separate entity.

“It’s not a separate entity. It’s part of your operations – you lose control of that and understanding of that, you lose control of what you’re trying to do.

“And what we had to do is take that back in-house and the rebuild.

“It is quite dramatic, the changes, because we have an integrated team there with the people on operations, and the coders and the data architects and all – they’re one team, they have to be part of our team.

“I just give you one of the most dramatic facts, the first version of Universal Credit used to have a release once every half year – we’re now doing releases weekly, and that’s the difference.”

Lord Freud said he feels comfortable about leaving, telling peers: “I’m comfortable the basic system is there and rolling out, and the organisation is transformed and able to do it.”

Lord Kirkwood earlier said sanctions are “essential to the proper prosecution” of the policy but they have to be “appropriately” applied.

He said: “A gentle nudge is a work incentive, a sledgehammer sanction actually is counter-productive and it costs the public purse more in the long run.

“Finally, I think that I would have looked differently on the 2012 (Welfare Reform) Act if I knew that we were withdrawing from the European Union.

“That will be detrimental to the poor in this country and we have got to find the resources to make more generous the thresholds and the tapers in future.”

Chancellor Philip Hammond announced at the Autumn Statement a reduction in the Universal Credit (UC) taper rate from 65% to 63% which will allow workers to keep more of their benefits while they earn.

But the Bishop of St Albans said the Government needed to go further.

He said: “It seems successive cuts to the welfare budget have been prioritised as an easy way of balancing the Government’s finances.

“The Chancellor’s decision to lower the taper rate of Universal Credit in the Autumn Statement indicates a welcome change in the direction of travel.

“But that concession, I believe, does not go far enough.

“It is cuts to work allowances that have most seriously undermined universal credit as an effective incentive to increase working hours.

“Only a restoration of those work allowances will see the credibility of universal credit restored.”

Lord Macpherson of Earl’s Court, making his maiden speech, said the Treasury and Department for Work and Pensions could have worked better together in delivering UC.

The Crossbench peer, who was permanent secretary to the Treasury from 2005 until earlier this year, said: “It’s too early to tell whether Universal Credit will achieve its objectives.

“But I welcome the fact as a concept it has cross-party support and that digital technology, at least in principle, is making options possible which were previously unthinkable.”

He also said: “For my part, I would advocate spending a bit more on income-related benefits to working age people, perhaps at the expense of the very large amounts which are now going to pensioners.”

Lord Macpherson described the delivery of UC as a “long and expensive journey”, noting it is not over yet.

He went on: “When the dust has settled… I hope we can learn some of the lessons.

“I fear the original timetable was overly aggressive, the capacity – at least in the early years – was inadequate and with hindsight the department and the Treasury could have worked better together.

“In the meanwhile, the nation should be hugely grateful to Lord Freud, who has done a fantastic job. He’s devoted six years of his life to the cause and that is public service indeed.”

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