Government official auditors have found the programme's costs could climb by hundreds of millions of pounds due to its poor management and major IT problems.
Universal credit merges six different benefits with the person claiming receiving a single monthly household payment. It requires different payments to landlords, more online claims, whilst merging in-work and out-of-work benefits, requiring new definitions of benefit conditions for those in work. It also requires close co-operation between the Department for Work and Pensions systems and tax officials at HM Revenue & Customs. The DWP originally estimated saving of a net benefit of £38bn by 2023.
Initially the project was planned to be introduced nationally by October this year, but as pilot projects were delayed the project will now go ahead in four years. The National Audit Office said the £2.4bn project has been set back by “weak management, ineffective control and poor governance.” £34 million has already been wasted on a failed IT programme which is forcing the delay of its launch until after 2017.
The auditor's report has said that the government has not achieved “value for money” on its spending up to the end of April, mainly due to the IT programmes that still had “limited functionality.”
Some of the problems found were:
– Officials “unable to explain” reasoning behind timescales or their feasibility.
– No “adequate measures” of progress
– Computer systems lack the function to indetify potentially fraudulent claims and having to rely on manual checks
– DWP lacks IT expertise and senior leadership
– Delays will reduce the expected benefits of reform
Iain Duncan Smith told parliament in March 2013 that universal credit “is proceeding exactly in accordance with plans”. Yet the report highlights that the project was “reset” a month earlier following the involvement of the Major Project Authority, which has the power to intervene on behalf of taxpayers.
Margaret Hodge, the chair of the public accounts committee, said: “The DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4bn, with little idea as to how it was actually going to work.”
It was found that the IT system couldn't identify potentially fraudulent claims so manual checks were needed. “Such checks will not be feasible or adequate once the system is running nationally. Delays to the introduction will reduce the expected benefits and – if the department maintains a 2017 completion date – increase risks by requiring the rapid migration of a large volume of claimants.”
Civil servants were also accused of having weak control of the programme and were unable to assess the value of the systems it spent over £300 million to develop. “These problems represent a significant setback to universal credit and raise wider concerns about the department's ability to deal with weak programme management, over-optimistic timescales, and a lack of openness about progress.”
The DWP said that the department would continue with the planned reform and was committed to delivering it on time by 2017, within budget. “The report does not cover the significant developments we've made since April including the go-live in Greater Manchester, our progress on the IT challenge, the latest plans for expansion from October, or the fact that we brought in two of the country's leading project management experts to lead UC,” it said.
The Cabinet Office minister, Francis Maude said: “Universal credit is a brilliant policy designed to ensure that work always pays and that hardworking taxpayers see their money being spent judiciously.”