The government may have to write off £663 million on Universal Credit IT, a senior official has warned.
Just £34 million of the £697 million spent on IT assets will be used for the final permanent system, it emerged during a Public Accounts Committee hearing yesterday.
The amount written off is three times as much as what the National Audit Office (NAO) recently predicted, although PAC chair Margaret Hodge did claim in October that the next government would have to scrap over £500 million worth of Universal Credit IT.
The losses are a result of the ‘twin track’ development model, whereby existing systems for national implementation are being developed alongside a new digital solution. The government plans to eventually switch from current systems to the digital solution for all claimants.
Sharon White, director general of public spending at HM Treasury (pictured), insisted that although the existing systems will not be used, they represent “value for money”.
She said the development of two systems provided a “plan B” in case the digital solution proved unworkable and meant the government would avoid putting “all its eggs in one basket”.
However PAC chair Margaret Hodge said: “That is a heck of a lot of money to have invested, simply to get to a strategic business case that could, down the road, get gloomier and gloomier.”
A pilot of the digital solution launched in Sutton two weeks ago and has since processed 17 Universal Credit claims, new Universal Credit chief Neil Couling told the committee. The new digital system is only being tested among single people who have never claimed benefits before in the town, which has a population just over 40,000.
The DWP will review the trial in six months and will start preparing it for large-scale deployment and expanding it to other areas, he said.
Business case not signed off
White admitted the final business case for Universal Credit may not be signed off by HM Treasury until as late as January 2017.
The business case for Whitehall projects progresses through three phases: strategic, outline and final, White explained. The strategic case for Universal Credit was agreed between HM Treasury and the Department for Work and Pensions (DWP) in September.
White said she expected the outline business case will be signed off “next summer” with the final business case normally agreed “about a year or eighteen months” after the outline case.
MPA doubts delivery
It also emerged during the hearing that Whitehall projects watchdog the Major Projects Authority (MPA) currently has Universal Credit rated as amber/red.
That means the MPA judges “successful delivery of the project is in doubt, with major risks or issues apparent in a number of key areas”.
The MPA did not give Universal Credit a rating in its annual report in May, saying the project had been ‘reset’ and so was effectively being treated as a new initiative.
Universal Credit is currently available for claims from individuals, couples and families in 91 jobcentres in the north west- about 10 percent of the UK total.
The DWP has said it will be available to single new claimants in one in three jobcentres across the country by next spring.
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