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26.11.14

Universal Credit may not prove value for money – NAO

The Department for Work and Pensions (DWP) twin-track approach to rolling out its ‘live service’ while simultaneously developing its new ‘digital service’, means Universal Credit may not be value for money regardless of how it is implemented and the cost of doing so. 

This was the conclusion of the National Audit Office (NAO) in its new ‘Universal Credit: progress update’, which stated that the DWP has reset Universal Credit on a sounder basis but at significant cost, by extending the time for implementation and choosing a more expensive approach. 

It was also noted that ministers risk racking up a multi-billion pound bill if IT systems to run the flagship benefits reforms are not introduced on time. 

The auditors stated that there are currently no contingency plans to deal with any delays in the digital service being created to deliver universal credit. And the programme is already six months behind schedule. 

“The Department expects significant savings from its digital service, but does not yet have a contingency plan, should the digital service be delayed,” said the report. “If the digital service is delayed by six months the net present value of the programme reduces by £2.3bn due to lost societal benefits.” 

The Universal Credit system merges income-based jobseeker's allowance, income-related employment and support allowance, income support, child tax credit, working tax credit and housing benefit into a single payment in a far-reaching change designed to encourage work and reduce fraud. 

Initially it was available only to single people and couples – but it is being extended, with parents able to claim it for the first time. 

Work and pensions secretary Iain Duncan Smith told the BBC: “Universal Credit will generate up to an additional 300,000 people in work once fully rolled out. 

“Three million households are set to gain by £177 on average and 500,000 working families will receive more help with childcare - 100,000 of those in part-time jobs benefiting for the first time. By spring next year one in three Jobcentres will be offering the new benefit.” 

But Margaret Hodge MP, chair of the Public Accounts Committee, stated that DWP is still not getting it right on Universal Credit. 

“In November 2013, it moved to an expensive ‘twin track’ approach after the programme was put back to square one by the Major Projects Authority, despite this costing hundreds of millions more than if the Department had simply waited for its digital IT service to be ready,” she said. 

“Now the digital service is already delayed by six months and the Department has just 18 months to get it up and running as planned. A further delay in rolling out the new system of just six months could lose us £2.3bn in societal benefits, and the Department has no contingency plan in place.” 

Hodge added that the Department’s “unacceptably poor management” of this programme has wasted time and taxpayers’ money – with £600m spent in four years to get to the first stage of business case sign-off. 

The transfer of all claimants on to Universal Credit will not now be completed until after the end of 2019 – it had originally been 2017. 

The NAO said that it found that the DWP has continued to struggle to stabilise senior leadership roles and responsibilities. However, it has taken a more active approach to managing suppliers and establishing financial control within the programme. 

Among the recommendations from the auditors is that the Department ensures it has a clear basis for making decisions across the strands of the programme. 

“The Department for Work & Pensions has reset Universal Credit on a sounder basis but at significant cost, by extending the time for implementation and choosing a more expensive approach,” said Amyas Morse, head of the NAO. “It is now vital that the Department quickly establish clear goals for delivering the programme, in terms of cost, time and functionality, against which it can be held to account.” 

Rachel Reeves MP, Labour’s shadow work and pensions secretary, stated the report has cast “grave doubts” over the future of Universal Credit. 

“This shocking report says the benefits of Universal Credit have fallen by £1.7bn and that value for money, ‘can’t be determined’. It also confirms the roll-out of the new benefit won’t be complete even by 2019 as Iain Duncan Smith has repeatedly promised,” she added. 

(Image: c. Rui Vieira/ PA Wire)

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