Benefit reform no 'debacle' - IDS

Andover Advertiser: Iain Duncan Smith insists his welfare reforms are still on track. Iain Duncan Smith insists his welfare reforms are still on track.

Work and Pensions Secretary Iain Duncan Smith has denied his flagship welfare reform programme is a "debacle" despite admitting that more than £40 million spent on IT for the project had been written off.

Accounts for the troubled Universal Credit scheme will show £40.1 million of the computer software assets for the project have been written off, the Commons Work and Pensions Select Committee heard.

But the committee heard a further £91 million of software code would be written down in value over the next five years as Universal Credit moves to a digital system.

Under questioning from MPs on the committee Mr Duncan Smith defended the scheme, saying "there's no debacle on Universal Credit".

Figures due to be published tomorrow and shared with the committee will show a £40.1 million write-off, but Mr Duncan Smith insisted that the scheme's assets were worth more than £150 million.

Asked if further write-offs could be expected the Cabinet minister said: "If anything goes wrong going further forward that might be different. ."

But he added: " We have had to sit for some time while a lot of bogus nonsense has been talked about huge levels of additional write-offs. This note in front of you absolutely finishes that and ends it.

"The reality is what our estimate was earlier on when we first put in to the National Audit Office and this total figure are very close together.

"This has been one of the most complex and detailed assessments that has taken place either in the public or private sector. It is now signed off and tomorrow will be published."

He added: "I think it's quite important to recognise that it's not just about the write-offs, it's that we own an asset which will deliver Universal Credit, something which has not been reported on."

Mike Driver, the Department for Work and Pensions' finance director general said: " What we have is an intangible asset of £152 million. That's £125 million of software code and £27 million of licences."

He said a "very detailed" review showed that " £34 million of that code will be fully used in any ongoing digital solution" and £91 million "will be used in the solution that we have until digital is implemented".

He added: "We have recognised that as we move forward and we implement the new digital solution the assets that we had in place will be amortized or devalued in a shorter period than we originally anticipated."

Mr Driver told the MPs: "We will write it down over a five-year period as opposed to a longer period."

Mr Duncan Smith disclosed last week that his 2017 target for the full introduction of Universal Credit is set to be missed - with around 700,000 claimants facing a longer wait.

Labour said official figures from the Office for Budget Responsibility (OBR) showed only a tiny fraction of the numbers due to be using the new system by the time of the next general election would be transferred on time.

Shadow work and pensions secretary Rachel Reeves said a "handful" of the promised 1.7 million would be switched by 2014/15 and only 400,000 by the following year - less than 10% of the original target.

Mr Duncan Smith said "all IT programmes always carry an element of risk, all change programmes carry an element of risk" but the scheme was on course for its 2017 target.

He insisted that "in essence it will be delivered by 2017" but "instead of loading those numbers up front, we want to ensure by testing, evaluation and then implementing, that the systems work for complex groups before we are going to start rolling it out".

That was "common sense", Mr Duncan Smith said.

The committee heard that up to the end of March this year £425 million had been spent on the Universal Credit project.

Ms Reeves said the scheme was in chaos and urged Mr Duncan Smith to hold cross-party talks to rescue it.

Prime Minister David Cameron's official spokesman told a regular Westminster media briefing: "The Secretary of State is leading this very important programme of welfare reform which is so important to the economy and is the right thing to do on the grounds of fairness as well.

"The roll-out of Universal Credit was designed to be a gradual process, which enables the project to take on board findings from pilots. That's absolutely the right thing to be doing."

Explaining the amortisation process in a statement following the hearing, Mr Driver said: "This is not a write off.

"This is £91 million of IT asset which we will use until the enhanced IT is delivered. As with any asset, this will depreciate over time - much like a car.

"We've agreed with the NAO that this will be over a five year period. During this period we will use this asset and it will deliver value well in excess of it's cost - we use it, and claimants use it everyday."

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