IDS dismisses benefit reform fears

Iain Duncan Smith has dismissed fears over the future of the Government's flagship Universal Credit scheme after the public spending watchdog condemned its chaotic management and flawed IT.

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The Universal Credit project championed by Iain Duncan Smith had been beset by weak management, the spending watchdog said

The Work and Pensions Secretary insisted problems highlighted in a damning report by the National Audit Office (NAO) were "historic" and he had already intervened to sort them out.

In fiery Commons exchanges, Mr Duncan Smith also branded Labour counterpart Liam Byrne "pathetic" for suggesting he should apologise for the state of the project.

Universal Credit is due to replace a bundle of means-tested benefits by 2017, with the department estimating it will save £38 billion in administration, fraud and error costs by 2023.

It is also designed to encourage people to take up work by ensuring they will always be better off having a job.

But pilots have been scaled back and delayed, and a former Olympics executive was drafted in earlier this year to "reset" the programme.

The NAO criticised "weak management, ineffective control and poor governance" of the scheme, saying that of £303 million spent on IT up to April, £34 million had been written off and the systems still had "limited functionality".

It found the IT system could not identify potentially fraudulent claims, meaning manual checks were needed on claims and payments. "Such checks will not be feasible or adequate once the system is running nationally," they added.

"Delays to the roll-out will reduce the expected benefits of reform and - if the department maintains a 2017 completion date - increase risks by requiring the rapid migration of a large volume of claimants."

Mr Duncan Smith strongly defended the project he has championed, touring television and radio studios before facing questions from MPs.

"In the summer of 2012, or rather before that, in early 2012, I instigated an independent review because I was concerned that the leadership of the programme was not focusing in the way that it needed to in delivering the programme as it was originally set out," he said.

"This internal report showed me quite categorically that my concerns were right, that the leadership was struggling and that there was a culture of good news prevailing and that intervention was required."

Mr Duncan Smith said that, as a result, he changed the leadership team on the project and brought in the "brilliant" Philip Langsdale, who was responsible for Heathrow's Terminal 2.

He said the scheme needed to be reset but Mr Langsdale died and was replaced by David Pitchford, from the Major Projects Authority. Former Olympics executive Howard Shiplee has now taken over.

"Every NAO recommendation that they made in the report has already been made," Mr Duncan Smith said.

"And the key lesson that I take from this is simply this - that, unlike the previous government who went and crashed one IT programme after another, no government ever intervened to change them early so they delivered on time. We are not doing that. I have taken action on this particular programme. This programme will deliver on time and in budget."

Mr Byrne told him: "To hit your deadline at the end of 2017, you must now move over 200,000 people a month on to the new system. That is a city the size of Derby.

"The PAC (Public Accounts Committee) will no doubt consider the changed timetable, the IT shambles and the write-offs, the lack of counter fraud measures, the shambolic financial control and the lack of financial oversight.

"But what I want to say to you is this - you have let this House form a view of universal credit which the nation's auditor says is wrong. The most charitable explanation of this is that you have lost control of the programme and you have lost control of the department.

"You must apologise to the House and you must now convene cross-party talks to get this project back on track. The quiet man must not become the cover-up man."

A clearly angry Mr Duncan Smith accused Mr Bryne of being "pathetic".

"When I got concerned about the delivery schedule I made changes and I intervened. I have brought the right people in to do this and I stand by that. I will not take lessons from you and your party," he said.

Speaking outside the chamber, PAC chairwoman Margaret Hodge said: "The DWP has made such a mess of setting up Universal Credit that the Major Projects Authority had to step in to rescue the programme.

"DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4 billion, with little idea as to how it was actually going to work.

"Confusion and poor management at the highest levels have already resulted in delays and at least £34 million wasted on developing IT.

"If the department doesn't get its act together, we could be on course for yet another catastrophic government IT failure.

"This damning indictment from the NAO gives me no confidence that we will see the £38 billion of predicted benefits between 2010/11 and 2022/23. Vulnerable benefit claimants need a secure system they can rely on."

The Prime Minister's official spokesman said he had full confidence that the Universal Credit would be introduced on time and in budget.

Asked if Mr Duncan Smith was right to blame civil servants for the problems, he told reporters at a regular Westminster briefing: "I think the point the Secretary of State was making was that challenges had been identified. As part of that, the right decision has been to bring in new leadership.

"That has been absolutely the right thing to do."

Public and Commercial Services union general secretary Mark Serwotka said: "Universal credit is not a disaster of a policy because of the civil service, it is failing because it is built on Iain Duncan Smith's ideology and the myth that people are better off on benefits.

"Civil servants were placed in an impossible position by Duncan Smith, who insisted on a wildly ambitious timetable for such a massive change to our social security system, and who now continues to refuse to acknowledge the programme is in trouble.

"Staff have also been let down by so-called IT experts and consultants from outside the civil service who promised a state-of-the-art system, then abjectly failed to deliver it."

The FDA union, which represents senior civil servants, said that by pinning responsibility for the failings on officials Mr Duncan Smith was part of a "growing blame culture".

Assistant general secretary Rob O'Neill said: "Iain Duncan Smith's comments go to the very heart of the ongoing debate about the accountability of ministers and civil servants.

"They represent a growing blame culture in Government where ministers blame civil servants but fail to take any responsibility when things go wrong or overrun.

"Ministers can do this because they know that civil servants are unable to publicly answer back.

"The public will not be aware of the policy advice that Ministers have received from civil servants and whether, for example, they been warned about the feasibility of implementing complex policies or projects in relation to scope, resourcing and timescale.

"Ministers telling the media that civil servants are to blame as soon as anything doesn't go to plan is unhelpful and regrettable.

"It impacts on the morale and motivation of civil servants and does nothing to attract those with the skills and capability needed to deliver efficient Government."