“Extraordinarily poor”: the government’s universal credit benefits system receives scathing criticism from the Public Accounts Committee, which said the DWP had wasted £140m on the scheme.
In a report by the committee, released on Thursday, the Department of Work and Pensions (DWP) was accused of “alarmingly weak” management of the new benefits system and a “shocking lack of control” over suppliers.
Universal credit will replace six means-tested, working-age benefits and tax credits by 2017, and the DWP has estimated it will save £38bn by 2023.
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. Margaret Hodge
The system is designed to encourage people to work, by ensuring that they will always be better off in a job than on benefits.
Around £425m has been invested in the scheme so far, £303m of which has been on IT development. It is “highly likely that a substantial part of the expenditure on IT development will have to be written off”, the Public Accounts Committee (PAC) said.
The Department for Work and Pensions rejected the findings, saying in a statement:
“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.”
It added: “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 universal credit delivery shortly.”
It is the latest criticism of the scheme, following a National Audit Office report in September which said the government’s flagship welfare scheme had been beset by “weak management, ineffective control and poor governance”.
Margaret Hodge, the chair of the committee, heavily criticised the programme.
“Universal credit is the DWP’s single biggest programme and enjoys cross-party support, yet its implementation has been extraordinarily poor,” she said as the report was released.
Oversight has been characterised by a failure to understand properly the nature and enormity of the task. Public Accounts Committee
“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. £425m has been spent so far on the programme. It is likely that much of this, including at least £140m 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.”
At the top of the list of conclusions is that the management of the universal credit programme has been “alarmingly weak”.
“Oversight has been characterised by a failure to understand properly the nature and enormity of the task, a failure to monitor and challenge progress regularly, and a failure to intervene promptly when problems arose,” the report says.
“Senior managers only became aware of problems through ad hoc reviews, mostly conducted by external reviewers, as inadequate management information and reporting arrangements had not alerted them that things were amiss.
“Given its huge importance to the department, the accounting officer and his team should have been more alert to identifying and acting on early warning signs that things were going wrong with the programme.”
Amongst the failings identified within the department’s leadership was a “culture prevalent in the department which promoted only the telling of ‘good news'”.
Officials in the department were aware of problems as early as July 2012, the report suggests, but the problems have not been addressed.
The report also highlights “a shocking absence of control over suppliers” and says the department has neglected to implement “basic procedures for monitoring and authorising expenditure.”
There has been a shocking absence of financial and other internal controls and we are not yet convinced that the department has robust plans to overcome the problems that have impeded progress. Public Accounts Committee
Amongst the complaints were that individual payments to suppliers could not be linked to pieces of work that had been delivered, and that personal assistants to the programme’s director were signing off multi-million pound purchase orders.
A universal credit pilot scheme, which was kicked off in Ashton-under-Lyne in April, was also said to be “inadequate” and failed to address the key issues for Universal Credit – including the volume of claims, their complexity, and changes in claimants’ circumstances.
The report recommended the DWP should implement a new pilot scheme.
However, the department said: “Since we last spoke 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.”
In February 2013, the universal credit scheme was “re-set”, following a review by the Major Projects Authority which also expressed concerns about the scheme.
However, the PAC says in the report that it is “not yet convinced that the department is ready to present revised plans” to the Cabinet Office and the Treasury.
The report says: “There has been a shocking absence of financial and other internal controls and we are not yet convinced that the department has robust plans to overcome the problems that have impeded progress.
“Our recommendations are designed to help get the programme back on track. In particular the department needs a robust plan on how to transform its business and what is required from the new IT systems it intends to use to support the transformation.”