Commenting on the publication of the latest Universal Credit progress report, Chair of the Public Accounts Committee (PAC) Margaret Hodge said:
“The Department for Work and Pensions has spent £700 million on Universal Credit since the programme began in 2010.
“However, very little progress has been achieved on the front line. Fewer than 18,000 people were claiming Universal Credit by October 2014, out of around seven million expected in the longer term – just 0.3% of the eligible population.
“We hope the Department’s expectation that this number will rise significantly by February 2016 proves to be accurate.
“As the Department has justified this spending on the promise of benefits in the future – such as from higher employment – rather than on the actual delivery of benefits to date, we simply cannot judge the value for money of this expenditure at this stage.
“The IT infrastructure for Universal Credit continues to be of particular concern. The Department has spent £344 million with suppliers developing its ‘live’ service systems for claimants who have straightforward initial claims which do not involve all 6 benefits, yet it expects to re-use just £34 million worth of this IT in the longer term.
“The live systems are technically limited and expensive to operate because they require manual intervention. The Department is developing and testing a new digital service, which it intends will deliver Universal Credit to all types of claimant in the long term.
“In the meantime it has adopted a ‘twin-track approach’ – running the two separate systems in parallel. This is complicated and expensive. The Department believes this will bring forward the anticipated benefits of the programme but it must ensure it does not allow the mixed, two-track approach to continue for longer than is required.
“Both the Department and HM Treasury now regard the live service as the programme’s de facto contingency, even though the Major Projects Authority told us last year that it doubted those systems were capable of handling the full range of claimants.
“The Department ‘reset’ the programme in early 2013 following a Major Projects Authority review which expressed serious concerns about the programme lacking detailed plans, and it has now put Universal Credit on a sounder footing. Since the reset, however, the Department has already fallen a further six months behind schedule for developing the digital service.
“The Office for Budget Responsibility already assumes a further six month delay to the digital service in its independent estimates, and the Major Projects Authority recently gave the programme an amber-red rating.
“The Department must set out clearly what it has really gained from its spending so far, including from the piloting of the programme, and from the investment in live service IT systems.
“Spending on the programme so far has been approved by the Treasury through a series of funding requests for specific activities. Over a year after the re-set, the Treasury has now signed off the ‘strategic business case’, the first of three stages in developing a full business case for the programme. The Treasury must ensure that the Department continues to identify and critically assess a range of realistic options for delivering Universal Credit.
“We were disappointed that the Department chose to fight a protracted legal battle to prevent the publication of its programme milestones schedules against which it could be held to account publicly, although it appears to have become more open and improved its governance of the programme recently.
“The Department should set out publicly its current milestones for what it expects to achieve at different points in the programme, and clearly explain any future changes to the scope, cost and timings of these.”
Rachel Reeves MP, Labour’s Shadow Work and Pensions Secretary, said:
“It is astonishing that David Cameron’s government has spent £700 million on Universal Credit yet fewer than 30,000 people are claiming it.
“The huge waste and delays to this failing programme means so far it has cost a staggering £26,000 for each person on Universal Credit.
“Labour wants Universal Credit to work and we’ll call in the National Audit Office to do an immediate review of this failing programme to get a grip of the spiralling waste and delays.”