By Richard Johnstone | 10 December 2013
The Department for Work and Pensions has written off more than £40m of computing systems following problems in the implementation of the Universal Credit benefit reform, the auditor general has announced today.
Amyas Morse said the department must improve the commissioning and management of the information technology needed to implement the flagship reform, which will merge six benefits into one payment.
In his examination of the department’s 2012/13 annual accounts, Morse said he wanted to draw Parliament's attention to the implications for public money of decisions being made as a result of the scheme.
By the end of the 2012/13 financial year, the department invested £196.1m in IT systems and software to deliver the Universal Credit.
However, in its accounts, the department has written off £40.1m of this spending as, following problems with the development of the scheme, these assets will never be used. It also expects to write a further £91.0m to zero by March 2018, owing to the considerable reduction in their expected useful life.
The report follows a NAO report in September, which found the scheme had been over ambitious and suffered from weak management. The implementation of the reform was also criticised by the Public Accounts Committee of MPs last month, and last week the department said implementation of the scheme would likely miss the 2017 completion date due to problems with the computing system.
‘I judged in September that, at this early stage of the Universal Credit programme, the department had not achieved value for money,’ Morse said. ‘The underlying issue, highlighted in today’s report, is that the department has written off £40.1m on assets it will now never use and spent a further £91m on assets that will support only a limited service for five years, with clear consequences for public value.’
Responding to the comments, a DWP spokesman said: ‘It is not unexpected that IT requirements evolve on a long-term programme of reform and that some rework was required. But we are not complacent about this loss and are working to ensure that this project continues to rollout within the budget we have been set.
‘This should be seen in the context of the £38bn economic benefit that Universal Credit will ultimately bring.’
Separately, Morse qualified the department’s accounts as the level of fraud and error in spending on benefits remained ‘unacceptably high’. The department’s accounts – and those of predecessor departments administering welfare expenditure – have received similar qualified audit opinions since 1988/89.
The DWP estimated that overpayment due to fraud and error in 2012/13 was £3.5bn, up from £3.2bn in the previous year. This equates to 2.1% of total benefit expenditure.
However, the qualified opinion does not apply to the state pension, where the level of fraud and error is lower.
Morse said he remained concerned about the ‘continuing high level of fraud and error in benefits expenditure’.
He added: ‘Issuing an audit qualification is a serious matter, and the fact that similar qualifications have followed one another over so many years does not lessen that seriousness.
‘However, I note the department’s new approach to reducing fraud and error. Only by developing an evidence-based framework will the department be able to show that its systems are good enough to lessen the gap between what it should and does achieve.’
