Universal Credit: Government missed out on £200 million savings

The government has missed out on savings of £200 million as a result of mistakes made with the implementation of Universal Credit, according to the National Audit Office.

The Department for Work and Pensions failed to make hundreds of millions of pounds worth of savings expected by March 2015, as a result of a slowdown in the pace of rollout, the report said.

This is despite its increased use of data matching to flush out errors, taking HMRC’s earnings data stream ‘Real Time Information’ and comparing it against legacy benefits.

The failure is just one of many identified by the auditor, which warned there is an “unacceptably high level of fraud and error in benefit expenditure” in its latest review of the DWP's 2014-15 accounts.

The department overpays £3.2 billion in benefits every year due to fraud and its own mistakes, the report found.

DWP staff at two Universal Credit centres in Bolton and Glasgow started a two-day strike today. The employees, represented by Public and Commercial Services (PCS) union, blamed inadequate IT systems and what they describe as an “increasingly oppressive working environment”.

Universal Credit was originally due to launch nationally in October 2013. However there currently just 75,427 people claiming the new benefit, which aims to roll six benefits into one monthly payment, out of an expected total of 5.4 million. That means just 1.4 percent of the expected total are claiming Universal Credit.

The slowdown in Universal Credit’s timetable was mainly caused by problems with IT systems, which rely heavily on manual intervention and can only handle a small number of claims, according to an NAO report in November.

The department may have to write off at least £663 million on IT for the project, top HM Treasury official Sharon White told MPs on a select committee last December. HP, IBM, BT and Accenture were the lead suppliers.

The DWP has since changed tack: it is now following a ‘twin track’ approach of developing existing error-prone systems, but with a view to replacing them with a new digital solution, currently being trialled on first-time single claimants in Sutton and Croydon.

However even that is already six months behind schedule, just two years after it started being developed. The department still has not published plans for the development of the digital solution or a timetable for when it expects it to replace the existing systems.

Copyright © 2015 IDG Communications, Inc.

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