Now that I’ve had a bit of time to read and digest the Spending Review, and now that my headache has disappeared, I’ve a few thoughts on some of the specific impacts from Osborne’s decisions.
Now that the CSR is done, we can see that Osborne clearly won those battles and in doing so is wiping out any benefits to welfare reform that IDS may have been able to make.
Cutting another £7 billion from Welfare has seen protests on the streets already and obviously gained a lot of press coverage. What I w0nder about is just how IDS is going to allow the DWP make the huge changes to the pension and welfare systems he is touting when the department is going to lose more than a quarter of it’s core funding, and has been asked to cut corporate overheads through centralisation by 40 per cent, over the next 4 years. Admittedly, other departments are facing bigger core budget cuts, but oddly DWP is the only department in the CSR which has to cut corporate overheads too. On top of these cuts, the total departmental expenditure limit (DEL) is only going to increase from £7 billion in 2010-11 to £7.8 billion in 2014-2015.
From that DEL, Osborne has set aside £2 billion for Duncan Smith to implement a universal credit in place of all benefit and tax credits. The DWP’s forthcoming white paper is due to include further details on how this change will simplify the welfare system and cut fraud and errors.
Osborne reckons that the move to universal credit will save the DWP ‘up to £9 billion a year’ and ‘encourage people to work’. That all sounds very good until you remember that the department are planning to make 15,000 redundancies in the next couple of years. With a 15% cut in staff, just how will IDS’s manage to introduce and manage all these changes?
With that many staff going, the Government are obviously not relying on the experienced expert staff to carry out their schemes. Instead, they seem to be relying on technology to give the answers. The CSR suggests that increased use of digital services in processing benefits will create a 27% cost saving.
The flaw with this is that when you look at the CSR in detail, it clearly shows that switching to a digital system incurs no cost between 2011 and 2014 but shows the £300 million saving in 2014. Anybody who has been involved in any form of IT project development will quickly point out that they cost money. Quite a lot of money.
Just how many times over the last 15 years or so have we seen problems with the delivery of IT projects for the Government? Think Passport Service or NHS systems. And none of them had a zero costing. The chances of IT delivery failure is hugely increased by the cuts to budget and overheads at the DWP. Public sector IT delivery has had serious issues over the years trying to get technology and policy to work together, and the DWP was already told by the new Government to save millions from stopping or delaying IT projects and cutting outlay on IT consultants.
The policies and cuts for the DWP announced in the Review are going to cause big problems at the very time when more and more people are going to need the help of that department. This is just one of many anomalies found in the details of the Comprehensive Spending Review, and this one is going to cause major headaches for Iain Duncan Smith and major pain for people needing Welfare in the coming few years.