Osborne is warned of disaster over welfare reforms

The Daily Telegraph has learnt that Universal Credit — the Government’s answer to simplifying the benefits system — has been moved to the top of George Osborne’s warning list of projects that could fail and threaten the Coalition.

A team of senior Whitehall officials and industry experts has been assigned to investigate the development of the single payment, which is due to replace several different benefits in 2013.

Concerns centre on the ability of HM Revenue and Customs, which will have a central role in delivering Universal Credit, to meet its deadlines. HMRC chiefs are understood to have privately told ministers of their concerns about the timetable.

Universal Credit, the brainchild of Iain Duncan Smith, the Work and Pensions Secretary, is the centrepiece of the Government’s welfare reform agenda and is vital to David Cameron’s political and economic strategy. It will replace benefits including Income Support, Jobseeker’s Allowance, Employment and Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit.

Ministers say a simpler benefits system will help cut down on the £5 billion a year wrongly paid out through fraud and error. Universal Credit is also intended to encourage claimants to work, by allowing them to keep more of their benefits when they start to earn.

Mr Osborne, the Chancellor who is also head of Conservative election strategy, is said to have become concerned about the plans as part of efforts to identify policy that could go wrong and threaten his party’s prospects.
The fears within Whitehall echo alarm already expressed by independent observers. The National Audit Office has warned that the welfare reform programme faces major risks. The chairman of the Commons public accounts committee has called the plan “a train crash waiting to happen”.
As part of its work monitoring public spending, the Treasury maintains a “risk register” of Whitehall programmes, based on its assessment of the chance that they will overspend, be delayed or fail entirely.
For most of the Coalition’s time in office, the Treasury identified the management of major Ministry of Defence projects as the biggest financial risk.
But in a boost for Liam Fox, the Defence Secretary, the Treasury now believes his plans to overhaul the management structures of the MoD and the Armed Forces have reduced those risks. A senior Government source said that the MoD’s place at the top of the list had recently been taken by the Department of Work and Pensions and the Universal Credit plan. “There is a lot of concern about this in the Treasury,” said the source. “This is causing real worries at the top.”
Universal Credit is being assessed by the Major Projects Authority, a team of officials and commercial experts from the Treasury and Cabinet Office.
Much of the concern relates to information technology. Universal Credit will rely on up-to-date “real time” information tracking earnings, to be provided by a new HMRC computer system.
Ministers want the real-time system in place by April 2013, to allow six months of testing before Universal Credit begins. Whitehall is well-known for its poor management of IT projects and MPs and industry experts have said that the timetable is unrealistically optimistic.
A senior DWP source said the department was confident it could deliver its side of the Universal Credit system on time. The department is employing a new “agile” management system, and Mr Duncan Smith is taking a daily interest in the project, the source said.
A Cabinet Office spokesman said the internal review of Universal Credit was part of “the correct management of major Government projects”.
The DWP said suggestions that Universal Credit is in trouble are "completely untrue and utterly without foundation."
A DWP spokesman said: "Universal Credit is running to time and to budget. There has not been and is not any question about the DWP's ability to deliver the required programmes that will support Universal Credit when it starts in 2013."

By James Kirkup take from http://www.telegraph.co.uk/news/politics/labour/8788299/George-Osborne-is-warned-of-disaster-over-welfare-reforms.html