Universal credit welfare pilot beset by IT failures

Real-time system required to match employers' payments to employees' bank accounts has 25% failure rate

The scale of the threat to the coalition's universal credit scheme (UC) has been revealed by figures showing that the IT system required to match employers and banks' records is failing 25% of the time.

Fears that the centrepiece of government welfare reform will not be ready have led to repeated negative Treasury briefings about the problems facing the Department for Work and Pensions.

Labour released the figures as a riposte to claims by the work and pensions secretary, Iain Duncan Smith, that Labour oversaw the creation of a tax credit system that allowed fraud and error to mushroom.

It was the latest salvo in a bitter political battle on welfare before this month's vote on whether benefits should rise by only 1% for the next three years. Labour has all but vowed to vote for a rise in line with inflation.

The shadow work and pensions secretary, Liam Byrne, and his deputy, Stephen Timms, have fought a campaign to prove that the complex technology necessary for UC is not ready, and that the system will not create the promised incentives to work. Duncan Smith has virtually staked his political reputation on delivering the system on time and on budget.

Labour's latest blast pointed to an admission by the Treasury secretary, David Gauke, that the system underpinning UC failed for over a quarter of pilot cases in November.

Labour said Gauke's answers to a parliamentary question showed that in half a million cases that month, the IT system could not match wage payment records correctly, and claimed that Revenue & Customs "will have to decide to make universal credit payments on the basis of incomplete, or plain wrong, information".

Timms said: "Universal credit is now in real danger of arriving in universal chaos. This scheme is supposed to launch this year, but the RTI [real-time information] system is getting more than a quarter of transactions wrong. This scheme is now in danger of an IT meltdown. If ministers don't urgently act to fix this soon millions of families' tax credits will be put at risk."

The RTI system was developed to enable universal credit payments to be made on a monthly basis taking into account actual income. When an employee receives their monthly wage, both the employer and the employee's bank must let HMRC know how much the employee has been paid. Both the employer and the bank use a hashtag that identifies the employee. But on the basis of figures supplied, this is not happening on a sufficiently regular basis.

Gauke, in an answer to a parliamentary question tabled by Timms, revealed that in 526,608 cases in November, the hash identifiers in RTI pilots did not match – more than a quarter of all cases. In June more payments were unmatched than matched.

Ruth Owen, HMRC's head of RTI, had recently told the Treasury select committee that the hash matches have 95% accuracy.

The requirement for real-time information is the biggest change to the pay-as-you-earn tax system since it was introduced in 1944 and will represent a significant payroll challenge to many employers. Already accountancy magazines are full of employers' complaints about the cost and complexity of the scheme.

Contributor

Patrick Wintour

The GuardianTramp

Related Content

Article image
Universal credit is trouble, but it's no welfare revolution | Nick Pearce
Nick Pearce: Iain Duncan Smith has made many grand claims that over-hype the impact of his reforms

Nick Pearce

30, Apr, 2013 @9:13 AM

Article image
Universal credit benefits system 'in meltdown', claims Labour

Labour claims work on universal credit system has been halted but DWP insists plans for April completion are still on course

Patrick Wintour, political editor

05, Mar, 2013 @8:28 PM

Article image
Stephen Crabb urged to overhaul 'salami-sliced' universal credit system
Shadow work and pensions secretary Owen Smith says the welfare policy will hit millions of low-paid workers in the pocket

Anushka Asthana Political editor

29, Mar, 2016 @5:00 AM

Article image
Why strands of universal credit don't knit together
As far as welfare reform policy goes, universal credit is sheer lunacy, and any creaks in the system could lead to anyone feeling the axe, intended or not

Tom Clark

05, Jun, 2012 @12:00 PM

Article image
Universal credit scheme will rot soul of low-paid, says Frank Field

Government's poverty tsar says welfare reform programme is 'practically unachievable' and heading for disaster

Nicholas Watt, chief political correspondent

10, Sep, 2012 @8:30 PM

Article image
David Cameron's £2.4bn universal credit project riddled with problems

£34m wasted on failed IT programmes and Labour says report proves cover up of issues that put welfare claimants at risk

Rajeev Syal and Shiv Malik

04, Sep, 2013 @11:03 PM

Article image
Tories will use budget to label Labour the party of welfare, not work
Iain Duncan Smith is already portraying the era of tax credits as a well-meaning aberration that turned into a bribe to get in-work poor to vote Labour

Patrick Wintour Political editor

07, Jul, 2015 @5:34 PM

Article image
Universal credit: what is it and what exactly is wrong with it?
Is the unpopular benefits scheme championed by Iain Duncan Smith too big to fail?

Patrick Butler Social policy editor

25, Jan, 2018 @4:35 PM

Article image
Labour attempts to build support to block universal credit cuts
Opposition claims George Osborne’s cost-saving measures will hit hardworking families by reducing incentives to work

Patrick Wintour Political editor

03, Nov, 2015 @11:35 AM

Article image
Universal credit: your stories about the government's benefit changes

As part of a series exploring the human impact of the government's benefits changes, this week we look at universal credit

Guardian readers and Claire Phipps

13, Feb, 2013 @12:43 PM