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Credit crunch: Technology problems must not be allowed to undermine sensible welfare reforms

The litany of failures is familiar from previous government IT disasters

It is not as if there is no precedent for government IT coming a cropper. Indeed, amid the catalogue of costly catastrophes – from NHS records to the farm subsidy system – smoothly successful technology programmes are few and far between. Yet still the lessons have not been learned.

This time, with Iain Duncan Smith’s welfare reforms, the stakes are higher than ever. Not only has the Work and Pensions Secretary staked his career on the plan to roll multiple benefits into a single universal credit payment. The scheme’s goal of “making work pay” is also the Government’s flagship social policy. Furthermore, if glitches either leave claimants out of pocket, or enable mass fraud, the Coalition – and the Tories in particular – will struggle to contain the political fallout.

Given that the pilots of universal credit were cut back earlier in the year, last week’s scathing National Audit Office report on the IT was no out-and-out surprise. What was shocking was the scale of the debacle. Despite nearly £300m spent so far, the computers cannot, for example, deal with changes in claimants’ circumstances. Some £32m has already been written off – a figure that could rise as high as £200m, one expert warned MPs yesterday.

The problem? “Weak management, ineffective control and poor governance”, says the NAO. Between the department’s “good news” culture and the “lack of a detailed plan”, the project ran out of control. Cue much finger-pointing. The Work and Pensions Secretary’s critics cry incompetence. Mr Duncan Smith himself blames his civil servants, for bad decisions and for hiding the problems from him. Permanent Secretary Robert Devereux tried to defend himself at the Public Accounts Committee yesterday, but his testy performance was far from convincing.

Squabble as the various parties might, the fact remains that the project has gone badly wrong. Such a fiasco would be bad enough were it a one-off. That the litany of failures – the poor supplier management, the incoherent requirements, the feeble oversight – is so familiar from previous government IT disasters only makes the situation all the more inexcusable.

But there is another risk here, too. Technology problems can torpedo perfectly sound policy – the electronic patient record is a case in point. It can only be hoped that universal credit does not become another. The welfare system is both over-complex and fraught with unintended consequences. The Work and Pensions Secretary’s plan may not be perfect but, as the Institute for Fiscal Studies confirmed yesterday, it will strengthen the incentives to work. That can only be a good thing.

Over the past week there has been much talk of timetables. While Mr Duncan Smith is adamant that the 2017 deadline is still feasible, the Prime Minister is more equivocal. He is right to be cautious. The lessons from the past are clear: better to get the execution right but miss the target than to rush on and lose everything.