Benefit reforms are hiding the true number of unemployed

Universal credit recipients don’t appear in jobless figures, linked to jobseeker’s allowance

The Government’s universal credit scheme is suffering from technical IT issues (Getty Images)

The introduction of the Government’s universal credit scheme has suffered from another embarrassing IT setback, after it emerged that claimants in a region piloting the new system had vanished from official statistics on unemployment.

Following disputes with auditors in recent months over computing problems that have cost taxpayers tens of millions of pounds, civil servants in the Department for Work and Pensions have realised that the new system is incompatible with current methods of counting the number of jobless people in the country.

Iain Duncan Smith, the Secretary of State for Work and Pensions, is trying to simplify the benefits system by merging jobseeker’s allowance with other payments, such as housing benefit and child tax credit, into a single payment called universal credit.

But statisticians currently measure the level of unemployment by recording how many people are receiving jobseeker’s allowance – and counting universal credit claimants within the numbers of those seeking work would inflate the figures, because the recipients include people in employment who are receiving what was previously income support or working tax credit.

Iain Duncan Smith is hoping to spread the introduction of universal credit across the North-west during 2014, and across the whole country by 2016. Unless the latest hitch is solved, it would mean that from 2016, there would be no way of telling how many people are in work.

Officials at the Department for Work and Pensions point out that only a tiny difference was made by the problem to January’s published unemployed total of 2.32 million. The most recent figures available are that there were 2,720 people on universal credit by the end of October.

The figure is small because universal credit has so far been introduced only as a pilot scheme in a few jobcentres in the North-west. But opponents of the Government were quick to highlight the potential for chaos in the system unless a solution is found quickly.

“This is another error by incompetent ministers in their botched roll-out of universal credit,” said Labour’s shadow Work and Pensions Secretary Rachel Reeves.

“How can we have any confidence in their ability to deliver this flagship project?”

A DWP spokeswoman emphasised that the department had not tried to cover up the problem, and that the missing figures would not alter the general picture that unemployment is falling.

“We have been fully transparent in publishing the number of people claiming universal credit. To ensure consistency the Department released these figures alongside the employment statistics,” she said.

Universal credit is the centrepiece of the Government’s reforms, which are intended to give claimants a financial incentive to take up paid work, though it has several technical problems, which have forced Mr Duncan Smith to abandon his original plan to apply universal credit to every new claimant from April this year.

The charity Gingerbread has written to the Chancellor George Osborne alleging that the rules covering universal credit discriminate against single parents.

Under new rules, parents earning £10,000 a year or more will be able to reclaim 85 per cent of the cost of childcare, while those below the threshold will be entitled to only 70 per cent.

“Extra childcare support for families is very welcome – but government plans will leave the lowest earners behind,” Gingerbread’s chief executive Fiona Weir warned.

A DWP spokesman said: “The reality is that under universal credit parents with low incomes will face much more generous childcare support, with people working fewer than 16 hours becoming eligible for this help for the first time.”