Exclusive The controversial Universal Credit online benefits system is so flawed that skilled IT staff working on a pilot scheme have been forced to enter data by hand, two high-ranking whistleblowers have told The Register.

The senior civil servants contacted us separately to warn that a trial of the new benefits system shows it is simply not working at the moment.

The Universal Credit is intended to replace the laborious and complex manual benefits system with one monthly payment which can be claimed by applying online using an automated system. But one of the moles said the project was "in total disarray, with the government trying to do something massive and unprecedented, yet without the culture or operational infrastructure to do so".

The system is currently being tested at a “Pathfinder” project in several locations around Greater Manchester. Our sources painted a woeful picture of mismanagement, bureaucratic bumbling and organisational chaos which could mean the system may never live up to the promises made by Iain Duncan Smith, the scheme's greatest champion.

Whitehall wants to start rolling out the Universal Credit in October, but our sources warned that the system was "not scalable”, meaning this deadline could be little more than a pipe dream.

They warned that unless there were drastic changes to this system, it would not work as advertised and would still require full time clerical staff to handle applications and "hold the hands" of dole claimants.

IT work 'paused' while staff plug holes

During the test period, our sources claimed, civil servants have had to do the sort of basic tasks that were originally intended to be done automatically, like data entry and the verification of basic information about a client such as date of birth, address or right to claim the dole - even though a small number of clients with relatively simple personal situations have been chosen to take part.

The current Pathfinder system is so flawed that IT work has been “paused”, so that staff can concentrate on plugging holes, our source claimed.

He also alleged that absolutely fundamental and basic facts had been left out of the infrastructure, such as the scheduled change to minimum wage, which will be nudged up 12p an hour to £6.31 for adults and up 5p to £5.03 for 18-to-20-year-olds by October. This change would impact on the payments given to claimants.

The whistleblower said: “The whole thing needs a lot of work to allow for national rollout. There are big IT changes which need to be made and if they are not, the whole service will have to rely on clerical data entry, rather than automated data gathering.

"There are big gaps in the system which are currently being plugged by manual processes. The whole thing needs a lot of work to allow for the proposed national roll out, because the current solution is not scaleable.”

Once in, never out

The Universal Credit relies on a “lobster pot” principle, which means that once a dole claimant has had their application processed, they cannot be switched back to the old system.

This has meant that even though the new Pathfinder infrastructure is inadequate, DWP staff are forced to find a way of making the applications work, often relying on distinctly low-tech techniques which take up so much time that IT work to make the Universal Credit system work has been sidelined.

Our source continued: “IT work on Universal Credit has been paused, because the focus is on making the Pathfinder work. The majority of design is being focused on the manual processes being used to prop up the IT system. The lobster pot principle means that even the most complex elements of policy the IT doesn’t deal with are being hand-cranked.

"Also, every claim is being reviewed by a micromanagement team who triple check everything on each claim for accuracy.”

Most claims made by participants on the Pathfinder scheme contain at least one mistake, he continued, requiring the sort of manual intervention the system was supposed to avoid.

Currently, there are understood to be some 600 civil servants working on the Universal Credit project, which includes shared pool staff who work across government departments or projects. Our source claimed this would be cut to between 350 and 400 staff.

Another well-placed DWP source confirmed the first source's allegations and added: “I’m not surprised they are moving staff onto another project. The political pressure is mounting because the costs have soared with very little to show.”

Our second source warned that the Universal Credit was in such poor shape that it could cost Secretary of State for Work and Pensions Iain Duncan Smith his job. "He is very exposed," the mole said. "What he is trying to do is quite admirable, yet the civil servants just aren't up to it. They wouldn't last a minute in the commercial world due to their poor work ethic, interpersonal skills and competency levels."

Our first source's main concerns were the security of the system, which he claimed might be vulnerable to fraud, and what this might mean for dole claimants who are used to weekly payments.

He said: "If the most needy people in society don't receive their monthly cheque, the impact is huge. Moving to a monthly payment is a big cultural shift. But look at the Pathfinder, which is dealing a tiny number of very simple cases, and you will see it still relies on manual processes.

"There will be a big fallout from this which will require more face-to-face interactions with clients, not less [as promised]. There is a pain barrier to go through and there will be a lot of hand-holding needed to make sure people get through it."

Insider: Gangsters shaking down the welfare system... it could happen

He added: "I am also concerned about criminal gangs finding creative ways to extract money from the system. What better place is there to do this than the Universal Credit System? There needs to be some sort of review of IP addresses* and the DWP needs to be at the forefront of next-generation cyber-security, which I don't believe they are anywhere near."

It is understood that there are high-level discussions due to take place in Whitehall soon to discuss the next stage of IT development. The Work and Pensions Select Committee is meeting this morning to discuss concerns about the scheme.

The Universal Credit scheme will replace benefits including working tax credits, child tax credits, housing benefit, income support, income-based jobseekers’ allowance and income-related employment and support allowances.

According to a government policy document (PDF), the Universal Credit system will “offer a simpler support, with one system replacing multiple systems, therefore reducing administration costs and the propensity for fraud and error”.

It has met with massed criticism, with an early day motion opposing it on the grounds that just 15 per cent of deprived people have ever accessed a government website.

MPs have previously warned that the Universal Credit scheme could lead to more fraud.

We put all the allegations to the DWP, who replied with the following statement:

The Universal Credit IT has been working well during the Pathfinder and we've been testing all aspects of the system to better understand what works and what can be improved. Our plans for a progressive national rollout of UC from October have not changed.

Do you know anything else about the development and testing of the Universal Credit system? Are you working on the Pathfinder project? Please get in touch and let The Register know. We guarantee your anonymity. ®