MPs fear ‘train crash’ DWP cuts will fail

A group of MPs charged with scrutinising cuts to the Department of Work and Pensions (DWP) has said it is still concerned the project is too ambitious.

The DWP must cut running costs by £2.7bn by 2015, at the same time as overhauling the benefits and pension systems to create universal credit and the new flat rate state pension.

Despite assurances from senior civil servants about the project, the Public Accounts Committee (PAC) has published its concerns in a report, Reducing Costs in the DWP.

PAC chair Margaret Hodge MP previously described the project as a "train crash".

Launching the report, she said: "The department does not yet have a clear plan for delivering these savings and we are concerned about its ability to do so effectively."

Hodge said moving to universal credit will depend on Her Majesty's Revenue and Customs revamping its IT system within a short timescale.

HMRC has come under heavy criticism in recent years over its numerous IT blunders.

"This committee's experience is such projects are rarely delivered to time, budget and specification," said Hodge.

"We are also concerned by the extent to which running cost reductions depend on the department's optimistic assumption that, in future, 80% of Jobcentre Plus customers will deal with their claims online, even though at the moment only 17% do so."

The report says the DWP must plan more holistically and develop contingency plans for when things go wrong.

For example, the PAC accused the DWP of closing the Future Jobs Fund to save money, without considering how this would lead to increased spending on jobseekers' allowance among young people.

The committee already grilled DWP permanent secretary Robert Devereaux in an evidence session in June.

At the time, Hodge described the DWP's cost cutting plan, coupled with the overhaul of the pensions and benefits systems, as "a train crash waiting to happen".

Devereaux told the committee: "Around 40% of the savings measures have already been legislated for and the rest are in the Welfare Reform Bill. This is a strategic approach, not a crash.