DWP and Treasury in standoff over £145 million Universal Credit fund

Millions of pounds of funding announced by the Department for Work and Pensions for the creation of budgeting accounts to help benefit claimants adapt to the new Universal Credit regime may not be available after all following intervention from the Treasury.

Last year the DWP announced a £145 million fund to encourage financial services companies to develop new basic banking facilities such as jam jar accounts.

However, no contract has yet been awarded by the DWP to any company to deliver such a product. Today, Graham Mowat from the DWP Universal Credit directorate said the reason for the delay was intervention by the Treasury.

Speaking at the National Housing Federation Finance Conference at the University of Warwick, Mr Mowat told delegates that the Treasury had two concerns.

Firstly, he said, the Treasury was yet to be convinced that subsidised budgeting accounts constituted best value for money.

Secondly, it questioned whether such a move by the DWP should be regarded as “interference” in the financial services market – a policy area the Treasury owns and is sensitive about.

Mr Mowat said the DWP and the Treasury were engaged in “active dialogue” about the situation and further talks between ministers were “imminent”.

Mr Mowat also confirmed that  separate funding due to be made available to help financial inclusion and money advice services had been “set aside” by the DWP in the Universal Credit business case but again had yet to be approved by the Treasury,

Meanwhile, when a delegate questioned Mr Mowat about whether the IT system behind Universal Credit was likely to be ready for October, Mr Mowat replied: “I’m not going to give you anything other than the official line. I’m not mental.”

Mr Mowat added that the intention had always been to build up IT capability over time. The dates will be met and IT functionality will be delivered, he said.