The Department for Work and Pensions (DWP)’s IT system plans for Universal Credit benefits are far too optimistic given the tight timelines and Whitehall’s chequered technology history, the Public Accounts Committee has warned.

Universal Credits will rely on a powerful IT system to be quickly implemented and to link with other systems that are also still in development, the committee warned.

The government expects 80 percent of benefits claims to be filed online, when only 17 percent are currently completed in this way, a prediction that drew the astonishment of the committee, which branded it “over-optimistic”.

The Universal Credit will merge benefits such as jobseeker's allowance, income support, housing benefit, child tax credit, and working tax credit. The comments around the system come in a report by the committee into the DWP's attempts to cut £2.7 billion from costs in three years, which said it would be a “considerable challenge” at a time of making huge system changes.

The Universal Credit IT system will require real-time data on the earnings of every adult, from a new Pay As You Earn (PAYE) system being developed with HM Revenue & Customs.

The DWP wants the Universal Credit system to be built by April 2013, followed by six months of testing before going live.

“The DWP and HMRC will have to get a lot of ducks in a row if they are to make this work,” said Richard Bacon, an MP on the committee who is an expert on public sector IT. “The timetable for implementing the Universal Credit is very tight but both departments must avoid shortening the time available for software testing, a perennial Whitehall slip-up.”

The DWP is going for an Agile development approach in order to improve its systems incrementally, instead of launching quickly. The committee said it was “wise to make incremental improvements to technology it already uses, rather than attempting a ‘big bang’ with expensive new software”.

In questioning for the report, Robert Devereaux, permanent secretary for the DWP, claimed the DWP had “a long and, in my view, reasonably distinguished track record of delivering change”.

While he recognised the scale and challenging nature of the Universal Credit project, he said the development technique would make the project a success.

“If I characterise what we are doing – this thing that you refer to as Agile – in the old world, we would have spent about a year trying to work out what we want, spent about a year running a competition to find somebody and, about two years in, somebody would start to do something. In essence, the Agile process is to try to shortcut that by starting with bits you can bite off and do something with and test and see.”

He added that “it would be foolish to say it is without risk" but that "I am giving myself a platform that admits more possibilities than the simple binary pass/fail that you are used to in big national public sector procurements ... I am not allowing, as it were, ministers simply to make policy choices over here, only to find later on it is difficult to code”.

Now read Universal Credit: welfare systems to stay, new interfaces on Agile principles