Lifetime costs of Universal Credit up by almost £3bn

Iain Duncan Smith
Iain Duncan Smith

The total lifetime cost of the Universal Credit welfare reform programme has increased by nearly £3bn in the past three years to £15.8bn, according to new figures from the UK government.

Computer Weekly reported that previous official cost estimates for the entire project by the Department for Work and Pensions (DWP) were calculated at £12.85bn in 2012. But the latest annual report from the Major Projects Authority (MPA) shows that, as of September 2014 when the report was compiled, the cost is now expected to be more than 20 per cent higher.

Since the 2012 estimate, DWP has been forced to tear up its original plans for the troubled programme, writing off millions of pounds in scrapped IT development and revising the timetable for roll-out. That process, labelled as a “reset” in 2014’s MPA report, allowed the revised lifetime costs to remain under wraps until now.

The MPA gave Universal Credit a “red-amber” rating for its confidence in the delivery of the project, a status that is defined as: “Successful delivery of the project is in doubt, with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed, and whether resolution is feasible.”

However, the DWP insisted that the change in the lifetime cost is simply due to a change in the way the figures are accounted for, by assessing the running costs of Universal Credit (UC) over more years, up to 2023/24 instead of 2021/22.

“There is no increase to the budget for Universal Credit, this is just an accounting measure which includes the cost of running Universal Credit over more years. In fact we’ve reduced the investment costs for Universal Credit by 25 per cent. When fully rolled out UC will bring economic benefit of £7bn a year,” said a DWP spokesman.

The MPA review said that delivery of Universal Credit remains on track against plans announced in September 2014, when Her Majesty’s Treasury (HM Treasury) agreed the business case for the programme.

The DWP comment on the costs included in the MPA report said: “The budgeted whole life costs reflect the Strategic Outline Business Case approved by HM Treasury. This figure excludes the impact of further savings expected.”

Work and pensions secretary Iain Duncan Smith has previously insisted that the financial benefits of Universal Credit far outweigh its costs.

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