Catastrophic Commons report dismantles IDS’ universal credit scheme
Iain Duncan Smith's universal credit scheme has been so badly managed it is about to to write-off up to £425 million, according to a devastating Commons report.
In a humiliating moment for the work and pensions secretary, the public accounts committee criticised almost every aspect of the project, from its management to the limitations of the pilot scheme.
"Its implementation has been extraordinarily poor," chair Margaret Hodge said.
"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.
"£425 million has been spent so far on the programme. It is likely that much of this, including at least £140 million 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."
The damning report could not come at a worse time for Duncan Smith, who has recently lost a legal appeal on his back-to-work programme and been accused of misusing statistics to paper over the cracks in his policy agenda.
It comes just weeks after a speech by John Major warned of the dangers of the project.
"It is enormously complicated and unless he is very lucky, which he may not be, or a genius, which the last time I looked was unproven, he may get some of it wrong," the former prime minister warned.
Universal credit is intended to consolidate six means-tested working-age benefits into a single system with the aim of encouraging claimants to start work or earn more.
The department estimated it would spend £2.4 billion on the project up to April 2023, but by April 2013 it had already spent £425 million, mostly on IT development which is now expected to be written off.
In February 2013 it reset the programme following a Major Projects Authority review which expressed serious concerns about the lack of detailed plans.
Today's report raised multiple concerns, including:
Failures of management
Those charged with oversight failed to understand the nature and enormity of the task, according to MPs.
They were also accused of failing to monitor processes and intervene when problems arose.
The report found that the lack of oversight caused the universal credit team to become "isolated and defensive", developing a siege mentality in which only good news was allowed to be communicated and all problems were simply denied.
"Pressure to deliver a programme of this magnitude within such an ambitious timescale created a fortress culture where only good news was reported and problems were denied," Hodge said.
"Because they had no overall view of what was going on and no system to monitor progress, the department's universal credit team became isolated and defensive."
The report even suggests that official accounts of when problems became evident held up.
MPs on the committee were particularly concerned about whether a critical report last year really was the first moment officials became aware of how badly wrong the project was going.
"There are real doubts over when officials became aware of these problems and it is difficult to conceive, based on the evidence we were presented with, that officials within the department did not know of them before July 2012," the report found.
Lack of control over finances
MPs found evidence of purchase orders worth £8.7 million being made by a personal assistant to the programme director.
In another case, a purchase order for £22.6 million was made by the personal assistant of the programme director, whose delegated financial authority was only £10 million.
Some of the payments to suppliers could not be linked to particular pieces of work.
Some of the IT assets which were delivered cannot be used in the programme and must be written-off.
Initial estimates put the cost of the write-off at at least £140 million, but there are signs that the precise extent is not yet fully understood because the department has not completed an impairment review.
Failed pilot programme
MPs found the pilot project for the programme did not deal with the key challenges facing universal credit.
The pilot is restricted to only the simplest new claims of people who are single, have no dependants and would otherwise be seeking Jobseeker’s Allowance.
It does not address issues such as: the volume of claims, their complexity, change in claimants' circumstances, the need for claimants to meet conditions for continuing entitlement to benefit and the security of information to prevent fraud.
The Times piled even more pressure onto Duncan Smith this morning, with a report alleging that he or his allies put pressure on Tory members of the committee to pin the blame for the failings on Robert Devereux, the permanent secretary at the department.
"It was obvious there was some kind of coordinated effort going on," a source told the newspaper.
"Some of the Conservative members wanted us to be much tougher on the permanent secretary than the rest of us were comfortable with."
Peter Riddell, director of the Institute for Government, said: "This is a damning report by the public accounts committee and tells a sorry story about unclear management structures and responsibility for a major government project that affects the public in a very real way.
"Clearly the immediate responsibility for the oversight and management of universal credit lies squarely with the permanent secretary.
"However questions still need to be answered by both ministers and the civil service about how a project with such high risks was allowed to proceed without clarity of responsibility and accountability back in 2010."
Labour, which supports the universal credit programme, heaped the blame for the failings on David Cameron.
"Today's report from the public accounts committee is a shocking confirmation of David Cameron's failure and another nail in the coffin of his government's promise to deliver universal credit on time and on budget," shadow work and pensions secretary Rachel Reeves said.
A Department for Work and Pensions spokesperson said: "Universal credit is a vital reform that rewards work instead of trapping people on benefits. It will ultimately bring a £38 billion economic benefit to society."
"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."
"Since we have last spoken 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 job centres across the country."
"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."