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26.06.15

Universal credit and HS2 delivery ‘in doubt’ – Major Projects Authority

The successful delivery of universal credit and HS2 are in doubt as the government’s Major Projects Authority (MPA) rates the schemes as amber/red in its latest assessment.

The annual report from the MPA for 2014-15 detailed the costs and progress of all major government projects and rated them using a traffic light scheme. It found that 112 major projects in 2014 were in danger of failing and only 76 were considered likely to succeed.

According to the MPA the total lifetime cost of the Universal Credit welfare reform programme has increased by nearly £3bn in the past three years to £15.8bn.

The last time the Department for Work and Pensions (DWP) calculated an official cost estimate for the whole project was in 2012 when it came out to £12.85bn. The latest annual report from the MPA shows that, as of September 2014 when the report was compiled, the cost is now expected to be more than 20% higher.

Universal credit has been a troubled programme from the start and since the last cost assessment the DWP has been forced to write off millions of pounds in scrapped IT development and revise the timetable for roll-out.

Under the MPA’s traffic light system, Universal Credit was rated amber/red in 2014, which the rating system defines as: “Successful delivery of the project/programme is in doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed, and whether resolution is feasible.”

A DWP spokeswoman claimed that the apparent increase in costs was due to an accounting device.

“There is no increase to the budget for universal credit – this is just an accounting measure which includes the cost of running universal credit over more years. In fact we’ve reduced the investment costs for universal credit by 25%. When fully rolled out UC will bring economic benefit of £7bn a year,” she said.

HS2 was also rated as amber/red for 2014. Additionally, the government has published reports from the MPA from 2011 and 2012 that are critical of HS2 after losing an FOI request battle to prevent their publication.

Both reports also rate the project as amber/red and the 2012 report listed ‘significant risks’ including a “coordinated campaign by concerned stakeholders that prevents access for essential survey activities” that could delay the Hybrid Bill or cause information gaps which would delay passage of the Royal Assent.

The MPA was also concerned about establishing an “appropriate understanding of the resolution of the affordability challenge” between the Department of Transport and the Treasury, and taking the project to deliver phase with effective governance.

Commenting on the governance arrangements, the review team said: “There is a risk that insufficient delegations to HS2 Ltd may lead to micromanagement, additional costs and delay. In addition, lack of clarity of reserved matters for DfT risk unsatisfactory outcomes for the Client.”

The 2011 report expressed concerns over the readiness of the project to move into the development phase and the timetable through to Royal Assent in 2015, describing it as “extremely challenging”.

It stated: “The Review Team has significant concerns over the readiness of the project to move into the development phase, subject to a positive decision, in particular the immaturity of the governance and management arrangements necessary for the development phase.”

The latest MPA report said its forecast lifetime costs remained steady at around £42.6bn in 2014.

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