Universal Credit crunch: Iain Duncan Smith’s welfare reform wastes £34m – so far

Department for Work and Pensions beset by ‘weak management and poor governance’ according to the Government's own auditors, while benefits programme attacked as ‘titanic IT disaster’ by opposition

The wide-ranging reforms to Britain’s benefits system have been beset by “weak management, poor governance” and a “fortress mentality” that has so far wasted £34 million of taxpayers’ money, the Government’s own auditors conclude today.

In a damning report, the National Audit Office (NAO) said the Department for Work and Pensions has never had a “detailed view” of how its flagship universal credit programme was meant to work – and suggested it might never result in the billions of pounds of savings claimed by ministers.

Iain Duncan Smith, who has staked his personal reputation on the success of the scheme, is expected to be forced to make a statement on the failures identified to MPs today. Senior government sources suggested the blame should fall on Robert Devereux – the most senior civil servant in the department – whom they accused of providing false reassurances on the scheme’s progress.

They suggested that Mr Devereux might be forced to step down from his post as permanent secretary after little more than two years in the job, due to his failures to deliver the scheme as promised.

“He has not been on solid ground for a while,” they said. “He has got some very serious questions to answer.”

Labour squarely blamed Mr Duncan Smith for the failures, while the NAO suggested the national roll-out of the scheme should now be delayed to prevent further problems from occurring.  “Universal credit is a titanic IT disaster which Iain Duncan Smith has tried to hide with cover-up after cover-up,” said Liam Byrne, Labour’s shadow Work and Pension Secretary. Mr Duncan Smith has completely lost control of his department at a potential cost of hundreds of millions of pounds. Incredibly, three years on, ministers still don’t know how things are supposed to work.”

Universal credit is due to replace a bundle of means-tested benefits with a single payment by 2017, with the department estimating it will save £38bn in administration, fraud and error costs by 2023. The system is also designed to encourage people to take up work by ensuring that they will always be better off having a job.

However, the NAO reports that the programme has been beset with problems including IT failures, frequent staff turnover and lack of a detailed plan about what it is trying to achieve.It found that:

* The Department for Work and Pensions (DWP) has been unable to assess the value of the computer systems it spent more than £300m developing and has already written off £34m in IT costs. At present, the IT system cannot identify potentially fraudulent claims, so the department has to rely on multiple manual checks.

* The universal credit team was ring-fenced from the rest of the department and allowed to work with a large degree of independence. But it developed a “fortress” mentality and a culture that only reported “good news”.

* There were inadequate financial controls over supplier spending which was poorly managed and documented. The department also failed to review the performance of contractors before making payments.

The NAO said the problems represented a “significant setback to universal credit” and raised wider concerns about the DWP’s “ability to deal with weak programme management, over-optimistic time scales, and a lack of openness about progress”.

Amyas Morse, head of the NAO, said: “The department’s plans for universal credit were driven by an ambitious time scale … but suffered from weak management, ineffective control and poor governance. Universal credit could well go on to achieve considerable benefits if the department learns from these early setbacks and puts realistic plans and strong discipline in place for its future roll-out.”

Margaret Hodge, chair of the Public Accounts Committee, who is due to question Mr Devereux on his role next week, added: “Iain Duncan Smith is responsible for trying to implement this hugely complicated project too fast. But the department is responsible for not telling him to hold. As a result, the department seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4bn, with little idea as to how it was actually going to work.”

The Govern-ment insisted the changes to the scheme had put it back on track and it was confident it could be rolled out within the 2017 deadline.

Howard Shiplee, a former Olympics executive, has now been drafted in and he said earlier this week that, while he had found “examples of poor project management in the past” and “a lack of transparency”, the department had now “put that right”. “Through new processes and people, we have strengthened all the basics of sound project management – governance, leadership and financial management,” he said.

In a statement, the Department for Work and Pensions said: “We are making real progress and we have a plan in place that is achievable and safe.”

Planes, trains and welfare: Other expensive blunders

* In October last year, the Government was forced to scrap its decision to award a £5bn franchise to run the West Coast Main Line to FirstGroup.

The move, expected to cost the taxpayer £50m, was made after the Department for Transport discovered flaws in the way in which the bids were assessed – with FirstGroup being favoured over rivals Virgin Trains.

* The Coalition’s “welfare-to-work” scheme has also come in for criticism from the National Audit Office.

The programme – which pays contractors for people they get into work – was accused of being less effective than claimed by ministers.

The NAO also revealed that £63m was spent by the DWP terminating existing contracts for welfare-to-work schemes, 10 of which were with providers who were then given contracts with the work programme.

* A plan to build two new aircraft carriers by the end of the decade has spiralled in cost. When the carrier project was approved in 2007, it was assumed the projected price would be £3.65bn.

The assumption is that the two carriers will now cost more than £5bn to build.

Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Life and Style
tech
Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
tech
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

Ashdown Group: Helpdesk Analyst

£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Recruitment Genius: Business Development Executive - Nationwide - OTE £65,000

£30000 - £65000 per annum: Recruitment Genius: This small technology business ...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum