The government is criticised by the public spending watchdog for the way it has handled preparations for its new universal credit, with ministers unsure how it would work and £34m written off.
In a scathing report, the National Audit Office (NAO) says the government’s flagship welfare reforms have been beset by “weak management, ineffective control and poor governance”.
Universal credit is due to replace six means-tested benefits and tax credits by 2017, with the Department for Work and Pensions (DWP) estimating it will save £38bn by 2023.
The system is designed to encourage people to work, by ensuring that they will always be better off in a job than on benefits.
But the NAO says work carried out until the end of April did not achieve value for money, with £34m spent on IT that was written off.
The report says: “Throughout the programme, the department has lacked a detailed view of how universal credit is meant to work.”
Roll-out of the programme has been delayed, which “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”.
One problem was that the the new computer system could not identify potentially fraudulent claims, meaning manual checks were needed.
This is not an IT disaster. This will be delivered in time and on budget. Iain Duncan Smith
The NAO says there has not been a detailed view of how universal credit is meant to work. There has also been poor control and decision making, with the department lacking IT expertise.
Universal credit has already been introduced in some parts of Greater Manchester. It is due to cover another six areas in October, before being rolled out across Britain by 2017.
Margaret Hodge, Labour chair of the Commons public accounts committee, said: “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.
“If the department doesn’t get its act together, we could be on course for yet another catastrophic government IT failure.”
Liam Byrne, shadow work and pensions secretary, said: “The truth is finally out. Universal credit is a titanic-sized IT disaster which (Work and Pensions Secretary) Iain Duncan Smith has tried to hide with cover-up after cover-up.”
In response, Mr Duncan Smith told BBC Radio 4’s Today programme: “This is not an IT disaster. This will be delivered in time and on budget.”
A DWP spokesperson said: “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.”
The spokesperson said the report did not cover progress made since April in introducing schemes in Greater Manchester, strengthening IT and improving management.
“Under this new leadership we are making real progress and we have a plan in place that is achievable and safe. The NAO itself concludes that Universal credit can go on to achieve considerable benefits for society.”