Department for Work and Pensions forced to spend £1m on extra staff after IT delay

More than 100 civil servants will have to be employed to manually verify whether people should be hit by the new benefit cap, because of delays to the Government’s IT system for its welfare reform programme.

The extra staff will process claims by hand at a cost of more than £1m, the Department for Work and Pensions admitted in response to a Labour Parliamentary Question. The staff will be in place until an IT system is properly developed.

The benefit cap, which is being introduced gradually around the country until it becomes universal at the end of September, will mean couples and single-parent families can get no more than £500 a week in welfare payments.

The revelation comes just a month after Iain Duncan Smith was forced to scale down the roll out of Universal Credit to just six new jobcentres across the country, following warnings from Whitehall of problems with the same IT system.

The shadow Work and Pensions minister, Stephen Timms MP, said: “DWP is undergoing the most serious IT crisis of any Government department in years. Universal Credit is already on its knees and now the benefit cap has been infected by Iain Duncan Smith’s inability to deliver. Even members of the cabinet are worried that his cap is so badly designed it could actually end up costing more than it saves.

He added: “Ministers admit they don’t have a clue how or when this problem will be solved, and once again the taxpayer is picking up the bill to clean up the mess.”

DWP minister Mark Hoban said in his written answer that up to 112 staff will be employed in this financial year to check data of households affected by the benefit cap manually, at a cost of £1.3m. He wrote: “This process will remain in place until such time that an automated solution is developed and introduced.”

The benefit cap will eventually come under the same automated data exchange system as the Universal Credit. The programme, known as the Automated Transfers to Local Authority Systems (or Atlas), has been criticised for being costly and not working as intended.

A DWP spokeswoman insisted that the IT for the benefit cap is already “in place and working well” – and instead tried to suggest that Atlas does not count as “IT”.

She added: “This is a necessary administrative cost to implement a reform that will save an estimated £300m over the next two years.”