Public accounts committee says that categorising the scheme as 'reset' may have been to prevent scrutiny and hide problems

Parliament's public spending watchdog has today accused ministers in the Department for Work and Pensions of hiding the failings of the coalition's troubled universal credit scheme.

The public accounts committee said the decision to devise a new category of "resetting" projects could have been a way of preventing scrutiny and obscuring problems.

Universal credit is the £2.4bn centrepiece of Iain Duncan Smith's reform programme and involves merging six different benefits, with the claimant receiving a single monthly household payment.

Ministers started implementing it three years ago, but have been criticised by successive watchdogs for failing to come clean about the problems the DWP has experienced with the technology.

The assessment comes in a report by MPs on the Major Projects Authority, the government watchdog responsible for assessing the scheme's implementation.

According to the report, the DWP, in consultation with the MPA, published their delivery confidence assessment of the universal credit project as "reset" in September 2013. It was a new term that appeared to have been devised specifically for the the new programme, committee members said.

"We are particularly concerned that the decision to award a 'reset' rating to the universal credit project was an attempt to keep information secret and prevent scrutiny," the report said.

"The 'reset' category was introduced for the 2013-14 report and was only applied to this one project. The MPA confirmed that the decision to give universal credit a reset rating was ultimately made by ministers," it added.

The decision to devise a new rating for the project meant that it was not given a rating by the MPA on its five-tier traffic light system, running from green to red, in this year's annual report and that there will be no assessment of its progress until after next May.

"This is a long time to wait for an update on a project as important as universal credit," the report conlcuded.

Margaret Hodge, the chair of the committee, said that the problems within universal credit could have been exposed if the MPA had published data showing how much money had been spent and on what as the process continued.

"The MPA should publish more information on each project, including the amount spent to date, even if this means reviewing the government's transparency policy. We are particularly concerned that the decision to award a 'reset' rating to the universal credit project may have been an attempt to keep information secret and prevent scrutiny," she said.

In evidence to the committee, John Manzoni, chief executive of the MPA was asked why the new category of "reset" had been invented for the purposes of assessing universal credit. He replied: "I would say we do not invent new categories lightly or willy-nilly. In fact, this one of course had significant ministerial discussion and in fact was ultimately a ministerial and a government agreement to say, 'That is what we are going to call it'."

The IT challenge of creating universal credit is considerable. It requires different payments to landlords, more online claims, and merges in-work and out-of-work benefits, requiring new definitions of benefit conditions for those in work. It also requires close co-operation between the DWP systems and tax officials at HM Revenue & Customs.

In the original business case for the project, the DWP estimated substantial savings – a net benefit of £38bn by 2023.

Asked last week whether the project had been signed off, Duncan Smith told the Guardian that Treasury officials were now assessing the project in incremental stages, and that this will process continue over many months. "They are signing it off, section by section … It is back on track," he said.

The report is also critical of the powers that the MPA has been given by the government, saying that it is not being allowed to protect the interests of taxpayers.

The MPs said the MPA's chief executive should have a formal mechanism available to set out his position if a project proceeds contrary to the authority's advice to cancel or change.

The committee said the Treasury should take responsibility for overseeing the £488 bn portfolio of major projects, including programmes such as HS2 and the new aircraft carriers, rather than treating them as individual schemes.

It also recommended the MPA should focus on departments such as health and defence, where there were a number of risky projects.

A DWP spokeswoman said that universal credit is being rolled out in a careful and controlled way. "It is already transforming people's lives and is available in a growing number of areas, including 39 Jobcentres, and we have started taking claims from couples too. By the end of this year, around 1 in 8 Jobcentres will offer universal credit," she said.