The origins of Universal Credit are a complex mix of socio-political idealism, the opportunities presented by new digital channels, and the financial reality of operating the welfare system. Understanding the tensions between these things is key to understanding Universal Credit today and how it has changed since launch.

The political origins of Universal Credit date from 2009/10. The Coalition Agreement of 2010 contained only a vague commitment to “investigate how to simplify the benefit system in order to improve incentives to work.” ¹ But, the policy was announced in detail at the Conservative Party conference in the following October, and by November DWP had published a white paper detailing how Universal Credit would function.

Those announcements detailed:^{2 3}

• a system of monthly payments to “encourage personal responsibility”
• adopting a “digital first” principle so that jobcentre advisors could spend more time delivering “valuable face-to-face back-to-work support”
• using the automated reporting of earnings to calculate payments
• making payments conditional on completing certain activities

The white paper drew heavily on a report from 2009 by the Centre for Social Justice entitled Dynamic Benefits: Towards welfare that works which highlighted the financial disincentives and complexity of the benefits system, and the opportunities presented by welfare payments that responded in real-time to changes in income. It also attempted to draw a link between family circumstances, worklessness and poverty. ⁴ The white paper, ministerial speeches and the work of the Centre for Social Justice presented this link through the lens of “responsibility“. They saw lack of employment, social housing, single parent families, and large families as causes of poverty. This is a narrative that remained part of Universal Credit during the initial rollout, with Iain Duncan Smith, Secretary of State for Work and Pensions, in 2015 stating that one aim of Universal Credit was “bringing home to parents the reality that children cost money”. ⁵

This narrative is the origin of the opinionated approach to family and financial life in the framework of Universal Credit - the monthly payments, claimants being responsible for paying social landlords, the emphasis on the monthly cycle that mirrors a particular understanding of what a “normal” working life looks like. It also explains the hyper-means-tested nature of Universal Credit - it is designed to allow fine-level tuning that rewards or punishes certain behaviours. In concept, Universal Credit is policy-maker centric rather than public-centric.

The business case and “digital-first”

Delays to the rollout of Universal Credit (covered in the next section) meant that a full business case justifying the approach was not submitted until 2018 (prior to that, a “strategic outline business case” had been submitted in 2014).⁶ The business case frames things slightly differently, as “an opportunity to sweep away the complex, inefficient system of the past”⁷ and lists the objectives of the programme as:⁸

• controlling welfare costs by preventing “fraud and error”
• increasing efficiency through automation
• increasing employment levels
• providing a financial safety net for the public

The difference in emphasis between the business case and the original political narrative shows that Universal Credit is at once a political project that attempts to reward or compel particular behaviours from the public and a more prosaic reform of the welfare system in the digital age. This duality means that Universal Credit needs be evaluated from two viewpoints - the (mostly) financial and efficiency objectives from the business case should be considered alongside and independently from the political narrative.

The “digital first” approach should also be seen through these two viewpoints. In the context of Universal Credit, digital is not just a way of communicating with the public more cheaply and automating expensive manual processes. It is also viewed as a way of promoting behaviours perceived to be positive by policymakers. For example, the explanatory notes that accompanied the 2013 Universal Credit regulations stated that:

Universal Credit has been designed so that claims will normally be made online, with an online account being the primary channel used to interact with the claimant ….. This approach is intended to be more responsive to changes in a claimant’s circumstances and promote behaviours that help the claimant prepare for work.

Similarly, the Equality Impact Assessment published in 2011 stated that Universal Credit represented:

“an opportunity to improve internet access for people who are currently digitally excluded”.⁹

Within Universal Credit, the digital first approach is seen both as a tool to save money and as a way to establish social norms.

Implementing a digital welfare system proved harder than DWP and ministers anticipated. The way in which the systems that underpin Universal Credit have developed, and the capability that DWP has built up around them, is the subject of the next section.