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Government Ready to Delay Welfare Reform

The government is prepared to delay its flagship welfare reform amid fears the complex changes may need to be more thoroughly tested before being extended to all benefit claimants, the Financial Times has learnt.

Steve Allen | Photodisc | Getty Images

Universal credit, under which six benefits will be incorporated into a single payment, lies at the heart of a drive by Iain Duncan Smith, work and pensions secretary, to ensure people are better off in work than on benefits.

But it has been dogged by fears that the IT required to implement it may not work and Treasury concerns over the cost.

There is growing confidence in Whitehall that the October 2013 deadline for the opening phase of moving new claimants on to the system will be met. However, senior government advisers believe it may be necessary to delay the start of the second phase due in April 2014.

Both Number 10 and the Treasury are desperate to avoid disaster in the run-up to the election and will step in if they feel the system is not robust enough for a full rollout.

A delay would be embarrassing for Mr Duncan Smith, who has resisted Treasury attempts to oust him in the Cabinet reshuffle. It could also undermine the government's scope to claim it had transformed the welfare system when voters go to the polls in 2015.

The Department for Work and Pensions insisted: "The timeline for bringing existing benefit claimants on to universal credit remains unchanged and we will roll out a pathfinder of the new benefit in April next year."

Mark Hoban, employment minister, recently told parliament that "the detailed rules" for determining when people would move to universal credit were "under development."

The prospective delay comes as ministers struggle to implement other aspects of their radical reform agenda while simultaneously delivering an historically steep deficit reduction.

Government insiders believe that while universal credit can work, it remains an intrinsically risky enterprise. Its success depends upon an ambitious IT project intended to ensure that Revenue & Customs can provide up-to-date information about the income of working claimants to DWP.

In a statement issued last year, Mr Duncan Smith gave detailed figures on the number of claimants who were to be moved on to universal credit in each of the three waves of the scheme, due for completion by the end of 2017.

But when answering an MP who asked how many claimants would be on universal credit by both January 2014 and January 2015, Mr Hoban said: "In subsequent years the number of people in receipt of universal credit will depend on the detailed rules for managing the build-up of the caseload. These rules are currently under development."

Liam Byrne, shadow work and pensions secretary, said: "[Mr Duncan Smith] promised the Commons everything was fine. Nine days later he can't even say how many families will be on the scheme by the election."

It has also emerged that a number of key people involved in the project are leaving their posts.

Malcolm Whitehouse is stepping down as program director for universal credit. Steve Dover, who runs the DWP's major IT programs is also being replaced as the project's "corporate director". Meanwhile, Terry Moran, the most senior civil servant overseeing the project, is now on sick leave.

The DWP said: "With the early roll out of universal credit starting in less than six months time, the program is moving from system design to delivery. As you would expect, there have been some staff changes to reflect this shift in focus on to implementation."

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