05/09/2013 03:35 BST | Updated 05/09/2013 07:51 BST

Universal Credit Criticised By National Audit Office, £34m Wasted So Far

The centrepiece of the government's welfare reforms has been branded a "titanic-sized IT disaster" after it was revealed that £34 million had already been written off.

The Universal Credit, which aims to combine different benefits into a single payment, is Iain Duncan Smith's flagship policy, aiming to ensure everyone is better off in a job.

But a devastating report from the public spending watchdog has said it has been beset by "weak management, ineffective control and poor governance".

Labour accused Duncan Smith, the work and pensions secretary, of "cover-up after cover-up" to try to hide the shambles.

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Cabinet minister Francis Maude defended the "brilliant" scheme, and insisted it was working.

But the National Audit Office said the government had embarked on the flagship project without knowing how it would work.


Universal Credit is due to replace a bundle of means-tested benefits by 2017, with the department estimating it will save £38 billion in administration, fraud and error costs by 2023.

But pilots have been scaled back and delayed, and a former Olympics executive was drafted in earlier this year to "reset" the programme.

The NAO said the Government had not achieved "value for money" on its spending up to the end of April.

Of the £303 million spent on IT, £34 million had been written off and the systems still had "limited functionality".

"Throughout the programme the Department has lacked a detailed view of how Universal Credit is meant to work," the report said.

"The Department was warned repeatedly about the lack of a detailed 'blueprint', 'architecture' or 'target operating model' for Universal Credit."

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The auditors found the IT system could not identify potentially fraudulent claims, meaning manual checks were needed on claims and payments. "Such checks will not be feasible or adequate once the system is running nationally," they


The report added: "Delays to the roll-out will reduce the expected benefits of reform and - if the Department maintains a 2017 completion date - increase risks by requiring the rapid migration of a large volume of claimants."

Public Accounts Committee chair Margaret Hodge said: "If the Department doesn't get its act together, we could be on course for yet another catastrophic government IT failure."

Shadow work and pensions secretary Liam Byrne said: "Universal Credit is a titanic-sized IT disaster which Iain Duncan Smith has tried to hide with cover-up after cover-up.

"Mr Duncan Smith swore blind this benefit shake-up was fine. Now we learn he has completely lost control of his department at a potential cost of hundreds of millions of pounds.

Speaking on the Today programme on Thursday morning, Duncan Smith insisted the project would be delivered on time and one budget, and said: "I could have written this report myself".

A DWP spokesman pointed out that the assessment did not cover the progress that had been made since April.

"Universal Credit is a major and complex reform that will transform the welfare state and we are committed to delivering it on time by 2017 and within budget," he said.

"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.

As well as the administration of the ambitious switch, fears have also been raised about the impact on vulnerable claimants.

Payments will be made monthly, rather than weekly, which has been criticised by charities.

Citizens Advice chief executive Gillian Guy said: "Even as Universal Credit is being rolled out, we still do not know what support will be put in place to help people to move on to the new system."