£700m spent on Universal Credit yet to deliver value for money, say MPs

The Department for Work and Pensions (DWP) has spent £700m on the controversial Universal Credit programme so far, but has yet to convince MPs that it is delivering value for money.

A report into the welfare reform scheme by the Public Accounts Committee (PAC) also revealed that while £344m has been spent with suppliers to develop the existing IT systems, DWP only expects to use £34m of that work once the final digital system being developed goes live. 

However, the committee found that the "twin-track" approach to rolling out Universal Credit is complicated “but is probably the correct course of action”.

“The department has justified spending large amounts of money on Universal Credit on the promise of benefits in the future, such as from higher employment, rather than on the actual delivery of benefits to date. However, we cannot at this stage judge the value for money of this expenditure,” said the PAC report.

“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.”

In 2013, it was decided part of the existing spending on Universal Credit would be written off, and a twin-track approach adopted whereby a portion of the current system will be used alongside the future digital service to support the nationwide rollout of the fully digital Universal Credit system.

But although waiting for digital services to be developed before rolling out would be cheaper, the report highlighted DWP’s decision to develop the digital system alongside the current rollout, which DWP said means the public will benefit from the new welfare scheme sooner.  

“The department must ensure it does not allow the mixed approach to continue for longer than is required.” the report said.

The committee stated there is not a clear sense of justification for what DWP has already spent on the project. In 2013 £40.1m of the Universal Credit IT spend was be written off, along with a further £91m which is being scrapped over a five-year period. The £700m spent on Universal Credit so far is predicted to reach £1.7bn by 2022.

The report highlighted the difference between the predicted and current usage of the Universal Credit system, with just 17,850 claimants at the end of last year, far below the original aim of one million people by April 2014. DWP expects seven million people will be claiming Universal Credit by the end of 2019.

In previous reports, PAC has criticised DWP for a "culture of secrecy" around the programme, and the latest report suggested that better publicity of current milestones for the Universal Credit project would help with continued governance.

DWP and HM Treasury faced further criticism from the committee for claiming its current system will be used if the digital system falls behind schedule, despite DWP failing to investigate whether the current service will support its expansion plans.

“The department must establish more robust and costed contingency plans for how it would handle further delays in the digital service, including a thorough examination of whether it would be practical and affordable to use the current live service for this role.” the report said.

Iain Duncan Smith, the secretary of state for work and pensions, has already admitted the Universal Credit benefit scheme will miss its original 2017 deadline, as approximately 700,000 people currently claiming Employment Support Allowance may not be able to use the system.

The most recent phase of the IT rollout began this month, with the intention of the current live system being available in all job centres across the country by February next year. Testing for the new digital service, which will eventually replace the current system, began in December 2014 in Sutton in South London.