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Universal Credit will cost billions more than the existing benefits system over the next five years, the government’s official spending watchdog has said.
In its response to the Autumn Budget, the Office for Budget Responsibility (OBR) changed its March 2018 prediction that the government’s flagship welfare overhaul will save public money.
Instead, the body now forecasts that Universal Credit will end up costing the taxpayer £7.1bn more than the current system between 2019/20 and 2023/24.
That includes new funding for the programme announced by chancellor Philip Hammond on Monday in response to concerns about the impact Universal Credit is having on claimants.
But the OBR said that even without these measures, which include an extra £1bn for transition support and a £1.7bn-a-year plan to raise the work allowance threshold for some claimants, Universal Credit would come with a net cost of £1.9bn over the next five years.
In its Economic and Fiscal Outlook based on the Autumn Budget, the OBR said: “Our pre-measures forecast revisions were sufficiently large to push our estimate of the effect of [Universal Credit] on welfare spending from a net saving to a net cost in most years – the first time that it has been shown as a net cost on average since our March 2015 forecast.”
“Once Budget measures are factored in, the marginal cost moves significantly higher.”
The OBR believes that, not counting the new funding, Universal Credit will cost the Treasury £900m more as a yearly average up to 2022/23 than previously thought.
In June, the National Audit Office also warned that Universal Credit was not delivering value for money and could cost more to administer than the existing benefits system.
The Treasury and the Department for Work and Pensions have been approached for comment.
All our Autumn Budget 2018 coverage in one place:
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