Universal Credit 'has wasted £140m'


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The Government's flagship benefit reform has been savaged by MPs for "shocking" failures that have already wasted at least £140 million.

The Universal Credit scheme has been blighted by "alarmingly weak" management, with secretaries allowed to authorise purchase orders worth more than £20 million. In some cases it is unclear what suppliers have been paid for.

The cross-party Public Accounts Committee (PAC) also voiced doubts about whether the project can still be fully delivered by 2017 - branding a pilot "inadequate" and open to fraud.

Universal Credit is due to replace a bundle of means-tested benefits in four years' time, with Work and Pensions Secretary Iain Duncan Smith insisting it can ensure people are always better off in jobs and save £38 billion by 2023.

However, a former Olympics executive had to be drafted in earlier this year to "reset" the programme amid concerns over delays and IT issues.

The PAC report said the Department for Work and Pensions had "neglected to implement basic procedures for monitoring and authorising expenditure".

"We saw evidence that purchase orders with a total value of £8.7 million were approved by a personal assistant to the Programme Director," the MPs said.

"In another case, two purchase orders, one for £22.6 million and one for £1.1 million, were approved by a personal assistant to the Programme Director whose delegated financial authority at the time of approvals was only £10 million.

"When the Department made individual payments to suppliers these could not be linked to particular pieces of work that had been delivered.

"Some of the IT assets that have been delivered cannot be used in the programme and so must be written off; whilst initial estimates suggest the write-offs could amount to at least £140 million, we heard evidence that the precise extent is as yet unknown because the Department's impairment review is not yet complete, relying so far on supplier self-assessment."

PAC chair Margaret Hodge said the implementation of Universal Credit so far had been "extraordinarily poor".

"The failure to develop a comprehensive plan has led to extensive delay and the waste of a yet to be determined amount of public money," she said.

"£425 million has been spent so far on the programme. It is likely that much of this, including at least £140 million worth of IT assets, will now have to be written off.

"The management of the programme has been alarmingly weak.

"From the outset, the Department has failed to grasp the nature and enormity of the task; failed to monitor and challenge progress regularly; and, when problems arose, failed to intervene promptly.

"Lack of day-to-day control meant early warning signs were missed, with senior managers becoming aware of problems only through ad hoc reviews."

Mrs Hodge criticised the "fortress culture" at DWP which meant "only good news was reported and problems were denied".

"We believe strongly that meeting any specific timetable from now on is less important than delivering the programme successfully," she said.

"The pilot programme is not a proper pilot. Its scope is limited to only the simplest new claims of people who are single, have no dependants and would otherwise be seeking Jobseeker's Allowance.

"It lacks the security components needed to prevent fraudulent claims and protect individuals' personal information.

"It does not deal with the key issues that Universal Credit must address: the volume of claims; their complexity; change in claimants' circumstances; and the need for claimants to meet conditions for continuing entitlement to benefit.

"The Department needs a revised pilot that is capable of properly informing the full roll-out of Universal Credit."

The MPs said the project would not hit its current target of enrolling 184,000 claimants by April 2014.

As a result the later stages would have to be speeded up to meet the 2017 completion date - but that would "pose new risks".

Committee member Richard Bacon said: "Despite an embarrassingly large choice of IT catastrophes in recent years - such as the Rural Payments Agency, Tax Credits, the Child Support Agency, the NHS IT Patient Records disaster, and many others, which have cost billions of pounds - government is plainly incapable of learning from its mistakes.

"In developing IT projects, government departments can no longer be allowed to mark their own homework. They require a strong and permanent regime of scrutiny from the Cabinet Office's Major Projects Authority, which has done good work in drawing out the problems in Universal Credit and which needs to be given greater powers."

A DWP spokeswoman said: "Universal Credit is a vital reform that rewards work instead of trapping people on benefits. It will ultimately bring a £38bn economic benefit to society.

"This report doesn't take into account our new leadership team, or our progress on delivery. We have already taken comprehensive action including strengthening governance, supplier management and financial controls.

"Since we have last spoken to the PAC, we have also launched Universal Credit in Hammersmith, which will expand to further areas later this month and the Claimant Commitment is rolling out to Jobcentres across the country.

"We don't recognise the write-off figure quoted by the committee and expect this to be substantially less. The head of Universal Credit, Howard Shiplee, has been clear that there is real potential to use much of the existing IT. We will announce our plans for the next phase of UC delivery shortly."

Jonathan Isaby, TaxPayers' Alliance political director, said: "While the principle of simplifying the benefits system which is behind Universal Credit is right, it is clear that its implementation has been deeply flawed. A horrendous amount of taxpayers' money has already been wasted and those responsible for that must be held to account.

"Such a fundamental reform of the welfare system was always going to be a challenge, but the approach of many officials in the Department for Work and Pensions has been little short of shambolic."