Benefits reform under threat after IT glitch

National roll-out of flagship policy delayed by at least a year as costs soar and key personnel quit

The Government's flagship reform of Britain's welfare system, which is being piloted by the Secretary of State for Work and Pensions, Iain Duncan Smith, has been placed on a Treasury list of projects in crisis, The Independent on Sunday has learned.

Despite assurances from the Department for Work and Pensions (DWP) that universal credit will be rolled out on time and on budget, its national launch – scheduled for October next year – will now be limited to small regional projects. Sources within the DWP have told The IoS that a realistic national roll-out – regardless of the department's public assurances – is already a year behind schedule amid fears that "technical issues over computer software" could push that back further.

Senior DWP staff working on the project are understood to have reported concerns to their Treasury counterparts. The issue was a factor in Mr Duncan Smith remaining at the DWP during the recent Cabinet reshuffle.

A government adviser on information technology said: "IDS, like other ministers before him, has been hypnotised by promises of what an online system can deliver. Warnings were given to him more than a year ago. They were ignored."

Universal credit has a development budget of £2bn. It is supposed to be a paperless online IT system for claimants that would bridge the DWP's data with the Treasury. Six separate benefits are to be combined into one payment.

However, the project, according to senior Whitehall sources, is already suffering a £100m overrun. There are also concerns that a further £300m is being hidden by rising costs reallocated to child support payments.

A reorganisation of the complex IT system, following the departure this month of key senior civil servants in charge of universal credit, could mean an overrun of £500m by next spring.

Universal credit potentially affects 19 million people in the UK. Failure to deliver the reforms because of expensive IT errors and design flaws will be deeply embarrassing for David Cameron.

The last Labour government was estimated to have wasted £26bn in botched IT projects, which included the national programme for the NHS and the fiasco over the national identity card scheme. Mr Cameron – when in opposition – promised a move away from big IT projects.

Mr Duncan Smith has claimed the current benefit system was broken, trapped people in welfare dependency, and was not fit for purpose. In its place, the former leader of the Conservative Party wanted a system that claimants will manage themselves through online accounts. Those without computers or internet skills would use high-street outlets or telephone services.

The programme's director, Malcolm Whitehouse, and the DWP's head of IT, Steve Dover, last week announced they would be leaving the department. The senior civil servant on the project was described as being "on extended sick leave". Other key personnel have also left.

Six pilot projects that are currently testing direct payment of benefits to tenants in housing associations have reported errors including the wrong amount of money being sent on the wrong date. The IoS has been told that one project involving just 400 claimants initially proved chaotic. When fully implemented, universal credit would need to deal with almost five million housing-benefit claimants a year.

The staff changes were played down by a DWP spokeswoman. She said: "The programme is moving from design to delivery and these personnel changes are quite normal." However she did not know if Mr Whitehouse or Mr Dover and others were hired knowing they would ask to leave in late 2012. "I have no idea what their contracts were," she said.

Fears that the project was over budget were also dismissed. "Universal credit is on time and on budget. It will be delivered in a controlled way, starting in April 2013 in Manchester and Cheshire, to ensure it is fully tested before being rolled out nationally from October 2013."

Labour's work and pensions spokesman, Liam Byrne, said yesterday: "Universal credit is in danger of descending into total chaos. Iain Duncan Smith's flagship scheme is late and over budget, top officials are heading for the hills and no one seems to believe the massive IT system is on track. Ministers must take urgent action before it becomes a multibillion-pound disaster."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: English Teacher

Negotiable: Tradewind Recruitment: My client is an excellent, large partially ...

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Tradewind Recruitment: Year 3 Primary Teacher

£100 - £150 per day: Tradewind Recruitment: Year 3 Teacher Birmingham Jan 2015...

Ashdown Group: Lead Web Developer (ASP.NET, C#) - City of London

£45000 - £50000 per annum + Excellent benefits: Ashdown Group: Lead Web Develo...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee