Universal Credit branded £425m omnishambles

Updated: 

Iain Duncan Smith

The National Audit Office has blasted the Department for Work and Pensions, for spending £425 million on a poorly planned, overly ambitious, ill-conceived, and risky roll-out of Universal Credit.

Hundreds of millions of pounds have been spent on an IT system that is currently in disarray and may ultimately fail altogether.

Omnishambles

The NAO was asked to look into whether the public is getting value for money on the project, and has concluded that as a result of multiple failings, it is falling spectacularly short.

It was doomed from the start, by the fact that planners bit off more than they could chew - and were forced to deliver it on an impossibly ambitious timescale. The NAO said: "It was unable to explain how it originally decided on its ambitious plans or evaluated their feasibility."

In response to the report, Margaret Hodge, Chair of the Public Accounts Committee said the department had embarked on a £2.4 billion project "with little idea as to how it was actually going to work"

To make matters worse it opted for a new type of project management, which had never been used on a project of this scale before. And as a final nail in the coffin, it didn't have any adequate measures of progress, so it couldn't even keep tabs on the experimental approach to an impossible task.

Amyas Morse, head of the National Audit Office, said: "The Department's plans for Universal Credit were driven by an ambitious timescale, and this led to the adoption of a systems development approach new to the Department. The relatively high risk trajectory was not, however, matched by an appropriate management approach. Instead, the programme suffered from weak management, ineffective control and poor governance."

Hodge was even more blunt, saying: "If the Department doesn't get its act together, we could be on course for yet another catastrophic government IT failure. "

Already scaled back

Earlier this year it was forced to stop, and take stock as to what was deliverable. Hodge explains: "The Department for Work and Pensions has made such a mess of setting up Universal Credit that the Major Projects Authority had to step in to rescue the programme." The result was a pause between February and May this year while those involved assessed progress.

The picture was already dismal. Over 70% of the £425 million spent so far has been on the IT. Already £34 million of it has been written off as a disaster, and nobody knows whether the rest is up to the task of rolling Universal Credit out nationally. The report said it was unclear how much the government would try to build on the IT already produced, and how much would need to be started again from scratch.

The report said: "The existing systems offer limited functionality. For instance, the current IT system lacks a component to identify potentially fraudulent claims so that the Department has to rely on multiple manual checks on claims and payments. Such checks will not be feasible or adequate once the system is running nationally."

Given that the system was designed to help crack down on benefit fraud, this is laughable.

When the department took stock it scaled back the initial roll out significantly - and instead of bringing in all new claimants, it will just add the very easiest cases from six sites from next month as a trial.

The report warned: "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."

It reads like the plot of a very black comedy. The report says: "The source of many problems has been the absence of a detailed view of how Universal Credit is meant to work. In addition, poor control and decision-making undermined confidence in the programme and contributed to a lack of progress. The Department has particularly lacked IT expertise and senior leadership, with frequent changes in senior management."

How will it end?

Morse sounded a note of optimism, saying: "Universal Credit could well go on to achieve considerable benefits if the Department learns from these early setbacks and puts realistic plans and strong discipline in place for its future roll-out."

It's something that the director in charge of the roll out, Howard Shiplee, was promising earlier this week - in what now looks like an effort to head the criticism off at the pass.

He has taken some significant steps since starting to work on the project three months ago. He is said to have drastically revisited the IT and taken a third of his 600 staff off the project. This is likely to produce some shocking figures over the next few weeks as to how much more money is being written off - but ultimately it may improve the project's chances of eventually getting off the ground.

At the very least, the timing of the roll out looks significantly compromised. In the best case scenario, the government can achieve what it set out to do - but will take far longer doing it and spend far more than it needed too because of failures of management. The delay in the process is likely to mean that £350 million of welfare savings will have been lost.

In the worst case scenario, it will simply fail. Nothing workable will be produced before the next election, and the next government will let it sink without a trace - so we wasted hundreds of millions of pounds on what can only be described as an omnishambles.

Hodge is less than positive, adding: "This damning indictment from the NAO gives me no confidence that we will see the £38 billion of predicted benefits between 2010-11 and 2022-23."

For all those facing huge cuts in their benefits and pensions, and watching the most vulnerable in society lose vital life-changing public services, the sight of the government flushing hundreds of millions of pounds down the drain takes this from a very dark comedy into the realms of tragedy.