Warning over IT for benefit reforms
Billions of pounds are at risk if the Government fails to stick to its "challenging" timetable for introducing new IT systems to run its flagship benefits reforms, a public spending watchdog has warned.
Ministers have failed to put contingency plans in place to cope with any setbacks in the digital service being created to deliver Universal Credit (UC), according to the National Audit Office (NAO).
The programme is already six months behind schedule and a further six month delay could mean a £2.3 billion loss in the societal benefits expected from people being moved into work and off benefits, it warned.
If the Government had to rely on its existing IT systems to roll out UC nationwide rather than switching to the planned new digital service, it would face an estimated £2.8 billion bill to cover staffing costs, according to the NAO's report.
Labour's Margaret Hodge, who chairs the Public Accounts Committee, said the Department for Work and Pensions was "still not getting it right" on the UC and warned that it was "throwing good money after bad".
The NAO last year published a damning report that found UC was beset by ''weak management, ineffective control and poor governance'' and £34 million had been written off on failed IT programmes.
Work and Pensions Secretary Iain Duncan Smith "reset" the programme and the original 2017 deadline was put back by two years.
He also introduced a "twin-track" system aimed at reducing risks that means the new online digital service is being developed while the "live" IT system is operating.
Running two systems is costing £300 million more than rolling out the programme more slowly and it is "too early" to tell if the plans will be value for money, the NAO said.
Mrs Hodge said: "The Department for Work and Pensions is still not getting it right on Universal Credit, its single biggest programme which all parties support and want to see work.
"In November 2013, it moved to an expensive twin-track approach after the programme was put back to square one by the Major Projects Authority, despite this costing hundreds of millions more than if the department had simply waited for its digital IT service to be ready.
"Now the digital service is already delayed by six months and the department has just 18 months to get it up and running as planned. A further delay in rolling out the new system of just six months could lose us £2.3 billion in societal benefits, and the department has no contingency plan in place.
"The department's unacceptably poor management of this programme has wasted time and taxpayers' money, with a staggering £600m spent in four years just to get to the first stage of business case sign-off.
"Now the department is throwing good money after bad by introducing a short-term fix with no adequate plan for delivery, insufficient skills and unclear milestones to measure progress against. The transfer of all claimants on to Universal Credit will not now be completed until after the end of 2019.
"Given its track record, the department needs to get its act together quickly if it is to deliver a system that vulnerable benefit claimants can rely on."
Mr Duncan Smith has admitted making mistakes in the early roll out plans for the flagship benefit reforms and said the original 2017 deadline had been "artificial".
All claimants in the north west of England will be on UC by the end of the year and the national roll-out will begin next year.
Amyas Morse, head of the National Audit Office, said: "The Department for Work & Pensions has reset Universal Credit on a sounder basis - but at significant cost, by extending the time for implementation and choosing a more expensive approach.
"It is now vital that the department quickly establish clear goals for delivering the programme, in terms of cost, time and functionality, against which it can be held to account."
PCS general secretary Mark Serwotka said: "Universal credit has been marred by controversy, delays and high costs because ministers have tried to rely on it as a central plank of their ideological cuts to social security.
"It's clear that the DWP is still a long way off being able to prove this scheme can be a success and that it will have the right staffing and resources to provide a proper service to people who are looking for work or need support."
The DWP pointed to findings in the report that stated there was "strengthened leadership of the programme" as well as "clarified governance and oversight arrangements and improved supplier management and financial control".
A spokesman said: "The investment in IT has a value that hugely outweighs the costs as it's being used, day in and day out, and will continue to be used even as we start to test an enhanced digital solution from this week.
"The NAO report recognises that we are reducing risks and making progress. In terms of value for money, when fully in place the economy will benefit by £7 billion each year and is set to make three million families better off on average £177 a month."