Finance News

Universal Credit Scheme Criticised by National Audit Office

Em Morley - September 6, 2013

Welfare changes have been badly managed and are plagued by significant IT problems, as costs could rise by hundreds of millions of pounds, says a report by the Government’s official auditors.

The National Audit Office (NAO) said “weak management, ineffective control and poor governance” had affected the project.1 The Universal Credit scheme, a £2.4 billion plan, was designed to combine six welfare payments into one.

Ministers have already cut their losses after £34m was wasted on faulty IT programmes for the scheme. The Department for Work and Pensions (DWP) are running the project, and may have to postpone the national launch beyond the expected 2017 introduction, says the NAO.1

Labour grasped the report as evidence against Iain Duncan Smith, the work and pensions secretary, who they believe has supressed important problems that could put welfare claimants at risk. The shadow work and pensions secretary, Liam Byrne, called Universal Credit a “Titanic-sized IT disaster.”1

Byrne requested cross-party conferences to make sure that a welfare programme is agreed. He says: “The Conservatives welfare revolution has now finally collapsed. It is now mission-critical that David Cameron and Iain Duncan Smith swallow their pride and agree to the talks we proposed in the summer.”

Universal Credit joins six different benefits so that the claimant receives one single monthly household payment. It entails different payments to landlords, more online claims, and fuses in-work and out-of-work benefits, meaning that for those in work, there are new descriptions to benefit conditions. Universal Credit will also need close cooperation between the DWP and HM Revenue & Customs (HMRC).

Universal Credit Scheme Criticised by National Audit Office

Universal Credit Scheme Criticised by National Audit Office

The DWP predicted significant savings from the scheme, with a net benefit of £38 billion by 2023.1

From 2023, the expected annual benefit was £7 billion.1 Originally, the project was to be introduced nationally by October this year, however, pilot schemes were behind and are currently underway in four areas.

The audit office’s report said that the Government have not reached “value for money”1 on spending to the end of April, the majority of which was spent on making IT programmes to handle data for 184,000 claimants. Out of the £303m spent on IT, £34m has been written off and the programmes still have “limited functionality.”1

Duncan Smith told parliament in March 2013 that Universal Credit “is proceeding exactly in accordance with plans.”1 However, the report explains that the scheme was “reset”a month earlier, after the Major Projects Authority intervened on behalf of taxpayers.

The chair of the public accounts committee, Margaret Hodge, says: “The DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4 billion, with little idea as to how it was actually going to work.”1

The NAO discovered that the IT programmes could not recognise possible fraudulent claims, and therefore manual checks are needed.

Hodge continues: “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.”1

Civil servants have been blamed of having weak control of the programmes. Hodge adds: “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.”1

The DWP have claimed that they will continue with the planned improvement and is dedicated to providing the service on time by 2017, and within budget.

The DWP says: “The report does not cover the significant developments we’ve made since April included 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 [Universal Credit].”1

Francis Maude, Cabinet Office minister, states: “Universal Credit is a brilliant policy designed to ensure that work always pays and that hardworking taxpayers see their money being spent judiciously.”1

1 http://www.theguardian.com/politics/2013/sep/05/david-cameron-24bn-universal-credit-problems