Universal Credit Scheme Hit By £34m Blunders

The coalition's flagship welfare policy is overambitious, badly managed and has wasted £34m of taxpayers' money, according to a damning report.

The National Audit Office (NAO) said the move to universal credit had been beset by "weak management, ineffective control and poor governance".

The policy combines six key means-tested benefits into a single payment and is aimed at ensuring people are always better off in work than on the dole.

Currently being piloted before a national roll-out, it should be in place by 2017 and officials estimate it will save £38bn in administration, fraud and error costs by 2023.

Work and Pensions Secretary Iain Duncan Smith is driving through the overhaul as part of his radical welfare reforms and insists it will be delivered "on time and on budget".

But the NAO's report suggested the Government embarked on the policy without considering how it would work, which meant it had not achieved "value for money" up to April this year.

Of the £303m spent on IT, £34m has been written off and the systems still had "limited functionality", it found.

They could not identify potentially fraudulent claims, prompting manual checks which will be impossible when the policy is rolled out.

'A titanic-sized IT disaster': Liam Bryne

"Throughout the programme, the department has lacked a detailed view of how universal credit is meant to work," the report said.

"The department was warned repeatedly about the lack of a detailed 'blueprint', 'architecture' or 'target operating model' for universal credit."

It also raised doubts about the 2017 deadline, warning delays had made this much harder to achieve and that it would involve shifting large numbers onto the new system quickly with little time for error.

NAO head Amyas Morse 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."

Public Accounts Committee chair Margaret Hodge warned: "If the department doesn't get its act together, we could be on course for yet another catastrophic government IT failure.

"This damning indictment from the NAO gives me no confidence that we will see the £38bn of predicted benefits between 2010-11 and 2022-23."

And shadow work and pensions secretary Liam Byrne said: "Universal Credit is a titanic-sized IT disaster which Iain Duncan Smith has tried to hide with cover-up after cover-up.

"Mr Duncan Smith swore blind this benefit shake-up was fine. Now we learn he has completely lost control of his department at a potential cost of hundreds of millions of pounds."

The Work and Pensions Secretary admitted the NAO's criticism was right but argued it referred to problems in 2011 and 2012, which he had stepped in to sort out.

He told Sky News: "In the past, under the last government, there were huge failures like the IT programme for the health department and in my own department the changes to the child support agency.

"The key point I am making here is never before have ministers intervened to change what is going on. I have done that, we have reset this.

"It is still being developed, it is still being ready for roll out and will be rolled out in time and in budget."

Howard Shiplee, who oversaw construction of the London Olympic facilities, was brought in to lead the project in May and also insisted the challenges are now being "handled".

"It's clear to me there were examples of poor project management in the past, a lack of transparency where the focus was too much on what was going well and not enough on what wasn't and with suppliers not managed as they should have been," he told the Daily Telegraph.

The NAO said the policy could still "achieve considerable benefits" as long as lessons are learned and realistic plans for a national roll-out are now put in place.

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