Iain Duncan Smith Is Utterly Out of Touch With Reality on Universal Credit

05/09/2013 08:27 BST | Updated 04/11/2013 10:12 GMT

The government's flagship Universal Credit programme is in deep trouble. Iain Duncan-Smith has repeatedly claimed that the project is "on track". He is utterly out of touch with reality, and that's why things are going wrong. He would have done far better to come clean about the problems.

Now the National Audit Office has published a devastating critique. Almost every one of its 40 pages contains a bombshell. Far from being on track, "the department has delayed rolling out Universal Credit nationally". "The department will not roll-out Universal Credit nationally from October 2013 as it had planned."

Worse than the long delay is what the report says about the management of the programme. It refers to "weak programme management, over-optimistic timetables and a lack of openness about progress." Ludicrous over optimism started at the outset. We pointed out at the time that it was absurd for the original Green Paper, in July 2010, to claim that Universal Credit: "would not constitute a major IT project." The NAO reveals there were numerous warnings, but "the department did not take decisive action." "The department has not achieved value for money". It has invested over £300million, and now values the IT created at about half that. No wonder he is failing to bring the social security bill under control.

The NAO is scathing about the project culture, referring to a "'fortress mentality'" and "a culture of 'good news' reporting that limited open discussion of risks and stifled challenge." There is no doubt that culture stemmed from the top. In an exchange in the House of Commons on 5 March, I put it to the secretary of state that "roll-out has already been drastically delayed and fundamental questions are now being asked about the deliverability of the IT". He responded that, on the contrary, Universal Credit was "proceeding exactly in accordance with plans"!

Thanks to the National Audit Office, we now know that - when he said that - the project was in fact not proceeding at all. It was in the middle of a 12 week "pause" for a "re-set", because the treasury was so worried about lack of progress.

Labour supports the principle of Universal Credit. It has potential to simplify the system, and to make it clearer to people that they will be better off in work. But Labour has been pointing out for three years that it is not the panacea that Ministers claim, and that implementing it is going to be far harder than Ministers thought.

As the National Audit Office says, "The source of many problems has been the absence of a detailed view of how Universal Credit is meant to work". After three years, ministers can't agree key parts of the policy. For example, which recipients of Universal Credit will be entitled to free school meals? In early 2011, Iain Duncan-Smith said he would have an answer by summer 2011. But he still doesn't - and in July he told the DWP Select Committee it was a matter for the Education Secretary. The answer will determine whether Universal Credit succeeds, or whether instead it creates huge new work disincentives.

Ministers continue to say all existing benefits and credits will be replaced by Universal Credit by 2017, but this deadline is now in serious doubt. Unrealistic timescales have plagued the project from the start. I wrote to Iain Duncan-Smith in November 2010 to warn of this, and again in April 2011, arguing that "the department should recognise that the timescale will slip".

My warnings were dismissed.

They claimed that a million people would be receiving Universal Credit by April 2014; in fact it will be just a few thousand. As recently as May last year, a ministerial press release claimed that "new claims to the current benefits and credits will be entirely phased out" by April 2014. Only in summer 2012 did the penny start to drop: this was cloud cuckoo land. Ministers now refuse to name any date by which new claims to existing benefits will end. The National Audit Office says: "Universal Credit will not be able to take all new claims and provide the full planned service until at least December 2014."

But Universal Credit is the government's big idea for welfare reform. If it's not going to happen, or if its going to be years late, they surely can't just give up? We were promised a welfare revolution, but this government is utterly failing to deliver.

There are other problems too. The Chartered Institute of Taxation has been warning since 2011 that Universal Credit will make life much harder for self employed people. Second earners in a couple will have much worse work incentives than in the present system. Warnings from Citizens Advice about a host of practical problems have fallen on deaf ears. And parts of HMRC's PAYE Real Time Information System, on which Universal Credit will depend, have, to nobody's surprise, been delayed.

The principle of Universal Credit remains a good one, but the next government will have to rescue the project. That is why Liam Byrne called last month for all party talks to allow the problems to be aired fully and explored honestly, and for solutions to be identified and a realistic timetable drawn up. The offer was tersely rejected by Iain Duncan-Smith. But if you are in a hole, you should stop digging.