Universal Credit: Challenges, Changes and Digital Communication

Guest article by Dr Gerald Power of Trapeze Transformation

For access to the full paper please go to Universal Credit: Challenges, Changes and Digital Communication

 

Universal Credit:

Challenges, Changes and Digital Communication

 

‘The revolution will not be televised, digital change needs digital communication’

 

A paper by Dr Gerald Power of Trapeze Transformation

November 2012 

©Copyright.  2012. Dr Gerald Power.  It may be used free of charge. Selling without prior written consent prohibited. Obtain permission before redistributing. Permission is granted to reproduce without prior consent for personal and educational use only. In all cases this notice must remain intact. 

 

Summary

Universal Credit is arriving soon and many of the changes to welfare entitlements that accompany it are already starting to bite in communities throughout the UK.  It’s the most far reaching and ambitious set of changes to the welfare system in a generation or more and sets out to change the lives of a significant proportion of the UK population.  It seeks to encourage people into work and to reduce the cost of housing related benefits to the public purse.  Universal Credit aims to achieve profound changes, but is a blunt tool being applied from the centre of government.  It will undoubtedly result in unintended as well as intended consequences which every Local Authority and Social Landlord in the country will need to respond to.

Thus far the digital technology associated with Universal Credit as a ‘self-service’ benefit has been identified as the major problems of implementation and overcoming digital exclusion does represent a major challenge.  But, I believe there are even more significant challenges that are not so obvious and are associated with guiding large numbers of people through changes in benefits entitlements which will affect the way they live and work in major ways.  It is my firm belief that digital technology and digital communication as well as being part of the problem are also going to be an essential part of the solution at the national and particularly at the local level.

Universal Credit is also likely to be the game changer that is going to push the UK public sector past the tipping point into a new paradigm of digital public service delivery.  But, the clock is already ticking, changes have already started to bite and there is an urgent need for organisations to pro-actively engage with this agenda now rather than simply hoping that they will be able to cope when the wave of demand eventually hits them.

 

“Successive governments have ignored the need for fundamental welfare reform, not because they didn’t think that reform was needed but because they thought it too difficult to achieve”

Secretary of State for Work and Pensions Iain Duncan Smith

Forward to the Universal Credit White Paper, November 2010

 

Universal Credit – Revolution not Evolution

Thomas Edison is most commonly associated with the invention of the electric light bulb and the transition from the age of gas light into the age of electricity.  The introduction of Universal Credit is perhaps not going to be quite as significant a change, but it is going to change in a profound way how we, as a society, interact with government.  Although the principles behind the light bulb were well known before Edison offered it as a viable alternative to gas light, its introduction took the public by surprise. Similarly the ideas behind Universal Credit are simple and have been well known for some time, but its introduction heralds a revolution.

In the case of the light bulb, it reportedly took over one thousand prototypes before Edison arrived at a light bulb that worked as a practical source of light.  It took many more years before he got the electricity needed to power the light bulb to run from new power stations into public buildings, factories and people’s homes.[1]  It’s impossible to say at this stage quite how smooth or bumpy the road to Universal Credit will be, quite how long it will actually take or how much of the original plan will survive contact with reality.  What is certain is that Universal Credit – or something very much like it – will be implemented because the benefits of digital delivery are so great that we cannot afford not to do it.  That being said I am inclined to think the final product we end up with is likely to be very different from what was laid out in the original White Paper[2], even if it delivers the same end objectives.

 

The Case for Universal Credit – Digital by Default

The current benefits system often involves an individual or family dealing with several government agencies (DWP, HMRC and Local Authorities) at the same time.  It also typically involves several separate but linked claims being made through systems still based around paper forms, face to face contact and telephony.  This is clearly not efficient and its complexity may discourage claimants from taking work, as any change of circumstance can require the claimant to re-start the claim process and potentially spend weeks without money as the claim is re-assessed.

The idea behind Universal Credit predates the current government and seeks to deliver two clear improvements on the current situation:

  1. Ensuring that benefit claimants will always be financially better off in work than out of work by re-structuring and linking up the overall benefits package; and
  2. Reducing the net cost of delivering benefits to claimants and time taken to reach decisions by making better use of digital delivery technologies.

These are essentially ‘apolitical’ objectives and appear to be broadly supported by all political parties.  They are also supported by major charities such as Shelter[3] and Citizens Advice (CAB)[4] as they fully recognise the problems created by the complexity of the current system.   The potential of digital self-service to reduce costs and improve services is also well established and was the subject of an earlier paper. [5]  Making use of the best technology available and using ‘self-service’ where possible is an argument that’s been won already.

 

The High Level Delivery Plan – Full Speed Ahead, But Mind the Icebergs 

Legislation in the form of the Welfare Reform Act 2010-12 has been implemented to create the basis for the new benefit.  It brings together existing benefits including Income Support (IS), Job Seekers Allowance (JSA), Employment & Support Allowance (ESA), Tax Credits and Housing Benefit (HB) into one benefit.  Similarly, the shift to ‘online self-service’ (i.e.  claimants accessing benefit directly online) is a key part of cutting costs and is to be delivered through the Government Digital Service.

This digital element is also a critical component in implementing the ‘Universal’ benefit as it allows all relevant information to be brought together when awarding or updating a benefit.  The Government’s commitment to digital deliver was reiterated very recently in its digital strategy[6] which added very little to previous policy statements, but did underline the on-going commitment to digital services.

However, although the intent and principles are simple, the implementation will inevitably be complex due to the technical complexity of HMRC and DWP back office systems and the linkage to company payroll systems.  Added to that is the complexity of people’s lives and circumstances, the number of local stakeholders involved in delivering benefits, and claimants’ potential lack of digital skills and access to digital channels.

At the time of writing, a House of Commons Select Committee[7] has just published its findings and evidence regarding the potential impact of Universal Credit on vulnerable groups.  This report is very much worth reading, although it has I believe missed its target slightly by focussing heavily on digital exclusion, but failing to fully recognise the number of people who will be affected by entitlement changes. However, one key thing it does do is recognise the big risks associated with this scale and scope of change.

 

Changing Who’s Responsible for Delivering Benefits

– The Best Service is “Self Service”[8]

One of the first big challenges will be in managing changes of responsibility for the delivery of benefits locally.  Currently that responsibility is split between HMRC, DWP and Local Authorities, with HMRC and DWP ‘owning’ the processes and Local Authorities acting as agents for administering the housing related benefits locally.  With Universal Credit the role of Local Authorities will change or end as claimants will access the benefit directly from DWP online and not through their local council[9].  These changes are an essential part of the new system but create two major risks:

i)            Local Authorities will need to ensure they reduce their service provision as they give up ownership and stop being paid to do this work.  However – cut back too soon and the system could go into crisis; cut back too late and the Local Authority will have to bear the cost.

ii)          New ‘Providers’ of contact and support for groups that can’t fully self-serve will need to be in place to take on the new work without interrupting payments.   Similarly, if these providers scale up too early they waste money, whilst if they start too late they may be unable to meet demand.

Both of these risks are made more difficult to manage by DWP’s delay in giving firm commitment on roles, funding and timetables until after it has completed its pilot studies in 2013.

 

Changes in Benefit Entitlement – Some Serious Social Engineering

In policy-making circles there is an old adage that says ‘don’t try and hang too many baubles on the Christmas tree’.  It means don’t get carried away with policy making and legislation and attempt to do too many things at one.  While more change may always seem better in the cappuccino-fuelled euphoria of a policy drafting session, the messy reality at the delivery end is typically quite different.  For if you try to hang too many baubles on the tree, first it looks ugly and confused, then eventually it collapses under its own weight.

With that in mind it should be noted that the change in legislation and process associate with Universal Credit is being used to implement a raft of wide ranging and highly significant changes to benefit entitlements.  These are aimed at delivering on the commitment to ensure individuals and families are better off in work than on benefits as well as fulfilling some more political objectives which include:

  • Removing Council Tax benefit and replacing it with a local benefit administered and set by Local Authorities;
  • Introducing Personal Independence Payments to replace the current Disability Living Allowance;
  • Restricting Housing Benefit entitlement for social housing tenants whose accommodation is larger than they need;
  • Up-rating Local Housing Allowance rates in line with the Consumer Price Index;
  • Amending the forthcoming statutory Child Maintenance Scheme;
  • Limiting the payment of contributory Employment and Support Allowance to a 12-month period; and
  • Capping the total amount of benefit that can be claimed.

Even professional providers of advice may have to work hard to establish how the new system stacks up for each individual claimant or family and what they can do if their new net income doesn’t quite pay the rent or the monthly bills.

While I am attempting to stay ‘apolitical’ in this paper it is obvious that this raft of changes amounts to the biggest social engineering project in a generation or more.  It attempts to apply pressure to families and individuals to get them off benefits and into work. It also attempts to apply economic pressure to the housing market by capping benefit rates and entitlements to drive down the cost to the public purse.

In London there are over 800,000[10] Housing Benefits claimants and they represent a significant proportion of the approximately 3.2 million households in London[11] which highlights the scale of the changes being implemented.  Whether the market or these individuals and families will behave as intended only time will tell, but history would imply it won’t be as simple as the Government hopes.  Whatever happens it will surely be organisations at the local level that will bear the brunt of the impact on local residents and communities.   Socially and economically the UK is a complex landscape and it would be surprising if Universal Credit were implemented without causing some major problems at the local level.    

 

The ‘Biting’ Point – Is Now

Among some there is a feeling that Universal Credit is tomorrow’s problem, and rumours that DWP is slipping Universal Credit by a year in its implementation timetable for the self-service element help fuel that belief.  Also the commitment from the Government to maintain claimants at their current levels of benefit at the point of transfer to the new system helps maintain a degree of complacency.

However, benefits entitlements have already changed and will be changing further in the near future.  In many regards the issue of when we wrap the new Universal Credit brand around the entitlements and move to the new technology is not as relevant to those who are on the benefits as the bottom line entitlement.  These people are already seeing the amount that’s ending up in their families’ weekly budget change right now and are already having to cope.  That’s because if the system failed to ‘bite’ relatively quickly in this way it could never achieve its social and economic objectives and it has been reported by the BBC that in time around 1.7 million UK households will have lower entitlements under the new system.

These entitlement changes will have a profound effect on individuals and organisations at the local level.  Most obviously there are families and individuals living in accommodation that has now become, or will soon, become unaffordable[12].  There are also families that may need to adapt their working and childcare or other care arrangements to the new benefit structure.  In many cases they will have an urgent need to find part time employment or increase their part time hours to avoid benefits caps.

Local Authorities, Housing Associations and Social Landlords have a large vested interest in ensuring that current and new claimants are supported in accessing the benefits they are entitled to and understand the new entitlements and how to adapt to them.  In the case of Landlords it will be very much in their interests to ensure wherever possible their tenants do piece things together and do not get into difficulties.

 

Managing the Risk – Understanding the Customers and the Task 

The obvious risk to Local Authorities, local Charities and Social Landlords is that claimants are unable to access Universal Credit using the online self-service system (i.e. resulting in ‘digital exclusion’).   However, in reality this may prove much less of an issue than that of claimants failing to adapt to the new benefits entitlement levels and rules.  Those in real need can be assisted relatively easily through an online form just as they were probably guided through the old paper form.  Understanding the implications of the new entitlements and adapting to them is by a whole order of magnitude more difficult.

Anecdotal evidence already implies that many individuals and families are failing to adapt, and are either running up rent arrears or incurring unsustainable debt to make ends meet.  This latter problem of failing to adapt is, I believe, a much more insidious one, as it is likely to remain largely invisible until the situation reaches crisis point and the individual or family present to their Local Authority, CAB or Social Landlord in a desperate situation.  Although this cannot be controlled, it can in principle be mitigated and proactively managed through the following approaches:

i)      Identifying Customers – if Local Authorities and Social Landlords understand who they are dealing with now it makes planning for the future much easier.  However, many Councils and Landlords will currently hold very little information about their residents/tenants or the information they do hold is in a form they cannot use.   The customer presents, the organisation takes action, then it pretty much forgets about the customers, it’s a purely reactive system.

ii)     Understanding and Planning to Mitigate the Impact – understanding the impact should be simple if you know who your customers are and the nature of their current situation.  But many organisations will not have sought this information or will not hold it in a suitable form.  That’s simply not the way most delivery processes work: you just deal with immediate need, you fail to be proactive or build a relationship.

 

iii)    Demand Management and Influencing -this implies identifying people who are likely to be affected adversely and entering into a dialogue with them before they hit crisis point.  Again in principle this is straight forward, but only if you have a way of contacting people with tailored messages and can build relationships with them.  The idea of building and managing such relationships is quite new to many areas of the public sector which tend to take a reactive rather than proactive approach.  That’s largely because the latter was simply not possible before the evolution of digital technology and communications.

 

Digital Opportunities, Digital Communication and Demand Management

Once Universal Credit is implemented – whatever the difficulties and setbacks encountered along the way – we will have passed the tipping point in terms of digital government services.  One of the aspects of Universal Credit that has been neglected is its potential to act as a catalyst for Local Authorities and other organisations to promote their own digital services and to develop their digital service propositions.  In addition the potential for digital communication to support these changes has, I believe, been neglected.  In particular I am certain that proactive digital communication may be the only effective way of coping with the scope and scale of the changes anticipated.  Although face to face contact will be an essential part of the response strategy, without a way of managing and directing people to this limited resource the demand is likely to be overwhelming.

As an absolute minimum Local Authorities and Social Landlords need to be making contact with customers and gathering basic information on their circumstances now, to allow them to use targeted SMS messaging as a communication channel in the near future.  Many of the most at-risk people depend on SMS and mobile phones and largely ignore print media or other channels[13].  This then opens the possibility of more sophisticated ‘opt-in’ systems where customers agree to share more details regarding their circumstances in return for tailored SMS or e-mail information updates, as well as potentially on-going support through the implementation of Universal Credit.   Taking this further, it should be possible to start building relationships with customers and partner organisations and create a social media presence that reaches customers directly or through intermediaries.  This last step then opens the door to dialogue and gathering of real time intelligence regarding what is happening within communities, and managing it proactively.

 

The Brave New World of Digital Delivery

The challenge is stark as entitlements are already changing for millions of people across the UK and thousands of households in each Local Authority area.  The changes are complex, many of the people affected are hard to reach and no one set of advice will be appropriate for all those affected.  In this context the concepts of two way digital communications, using customer databases, social media, customer profiling, active dialogue and even co-creation of services, may seem far-fetched.  These solutions may feel too similar to the problems.  They may also seem rather like ‘pie in the sky’ ideas promoted by the same cappuccino-drinking Whitehall policy advisors that dreamt up Universal Credit.   However, although I understand those views and may once have held them, my thinking has changed and I would now challenge those who don’t see automated digital communication as highly relevant with three questions:

i)                    In dealing with the huge changes associated with Universal Credit is there a viable alternative to targeted digital communication that can be used to manage contact demand of this complexity and volume?

 

ii)                  Even if you had a much larger budget could you actually achieve the same kind of reach and targeting of messages directly to potentially hard to reach people using conventional media or are those communication tools simply too blunt?

 

iii)                If DWP and all core government services are moving to digital self-service does your organisation really have any option but to ride this wave of change and develop your digital proposition alongside Universal Credit?

 

As a final addendum I would also ask you to consider this – if you decide to ‘wait and see’ and don’t invest time and resources in proactive digital communication now, will you have the capacity to cope when the wave hits?  Will you be able to catch up?  Will you have the ability to manage the demand in ways that make it possible to cope or will you risk having your front line teams overwhelmed by un-manageable demand?

 

Dr Gerald Power- Co-Founder, Trapeze Transformation

Trapeze helps organisations deliver benefits from technology and change.

http://trapeze-transformation.com


[1]In the end a Edison’s idea of electric light won the day over gas, but Edison’s power system was not used as it was fatally flawed, his bitter rival Nikola Tesla solved the problem of power transmission and we still use Tesla’s alternating current system today.

[2] Universal Credit: Welfare that Works. DWP White Paper, November 2010.

[3] Shelter.  Policy Briefing -Universal Credit and housing, June 2012.

[4] Citizens Advice Bureau (CAB).  Universal Credit: an exploration and key questions, January 2011. Universal Credit and related regulations – Citizens Advice response to the Social Security Advisory Committee’s consultation, July 2012.

[5]  Channel Shift: Realising the benefits. Dr Gerald Power.  April 2012.  http://direct.govdelivery.com/channelshift-wp

[6] Government Digital Strategy November 2012, Cabinet Office.   http://publications.cabinetoffice.gov.uk/digital/strategy/

[7]House of Commons Work and Pensions Committee. Universal Credit implementation: meeting the needs of vulnerable claimants, Third Report of Session 2012/13, 22nd Nov 2012 HC 576.

[8] Apologies to David Jaffe author of ‘The Best Service is no Service’ and Peter Massey of Budd Consulting who introduced me to this excellent book and to Dave.

[9] One element that is likely to remain a local responsibility is fraud investigation, but DWP has not set out who will be responsible for assisted digital access and other organisations may be asked to bid fill this role.

[10] DWP Housing Benefits claims, January 2011, London by parliamentary constituencies.

[11] ONS London Housing tenure statistics 2011.

[12] The two most obvious changes in effect or shortly to come into effect are the ‘bedroom tax’ which means that a family with a vacant bedroom will lose a significant part of their entitlement, and the raising of the age at which individuals are entitled to a bedsit rather than a room in a shared house from 25 to 35 years old.

[13] If you don’t believe this, ask your own personnel and use Experian Mosaic or a similar tool to do a profiling exercise of your customers who are most likely to be on benefits and their channel preferences – it will be enlightening.

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