More Universal Credit delays could cost billions, says NAO

A further six month delay in the roll-out of Universal Credit could cost the Department for Work & Pensions (DWP) £2.3bn in lost societal benefits, according to the National Audit Office (NAO).

By Samera Owusu Tutu

26 Nov 2014

The NAO Universal Credit: Progress Update report published today laid doubts on the Department’s ability to roll out the digital service in 18 months’ time, as its testing process relies on the successful development of the Government Digital Service’s new identity assurance service.

The project was already ‘reset’ by Major Projects Authority the in February 2013, in response to concerns about it falling six months behind schedule. According to the NAO report, the project stalled because of low staffing levels.

The identity assurance service is key to reducing the civil service resources required to enter the data for new claims – and thus to making a fast roll-out viable: “The new digital service at this stage depends heavily on manual intervention and will only handle a small number of claims,” says the NAO.

The department adopted a “twin-track” approach in November 2013 using the live IT systems established for Universal Credit and the yet-to-launch digital service in a bid to get the project back on schedule.

DWP has explained that the accelerated roll out means that “by Spring 2015 one in three of the country’s jobcentres will be taking claims for the new benefit”.

Should the digital service fail to hit its 18-month deadline, the department may be forced to rely solely on the live service. The NAO estimates that this would cost an additional £2.8bn in staff costs.

While highlighting the cross-party support for Universal Credit, Public Accounts Committee chair Margaret Hodge MP pointed to the mounting cost of completing the project: “The department’s unacceptably poor management of this programme has wasted time and taxpayers’ money, with a staggering £600m spent in 4 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.”

DWP has stressed: “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 £7bn each year and is set to make 3 million families better off on average £177 a month.”

To reduce problems after the roll out, the department has extended the time allotted to transfer the first million tax credit claimants on to Universal Credit. The task was originally scheduled to be completed by April 2016, but will now continue to 2019.

The DWP start testing for the digital service this week.

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