Cyber security biggest challenge for universal credit

Cyberfraud and identity theft pose the most serious threat to the implementation of the government's welfare reforms, a government minister said as he outlined potential problems facing the project during the final months of development.

Lord Freud, parliamentary under-secretary of state for welfare reform, said online security was a risk to the introduction of the universal credit. The department was focusing on identity and potential cyberfraud to make sure the system was "utterly robust". Security systems developed by banks were being adopted, and the government was in talks with Amazon to learn from its online security measures, he said.

Lord Freud and the work and pensions secretary, Iain Duncan Smith, faced critical questioning during a select committee hearing on Monday about potential hiccups in the development of universal credit, which will replace six benefits, including jobseeker's allowance and housing benefit, with one streamlined benefit.

During a two-and-a-half-hour session, MPs on the work and pensions select committee went through the growing list of concerns about the system, which will be piloted from next April and rolled out in October 2013.

It emerged during questioning that programmers building the £2bn IT system have yet to test the vital "bridge" that will link data from HMRC with information from the Department of Work and Pensions.

But Lord Freud was adamant the system would be ready on time. "We're testing that bridge, the mechanics of the bridge with dummy data, and we will be getting live feeds for our trial in April," he said. Asked if he had a Plan B in case of the bridge not working, Lord Freud said: "Our Plan B? It looks as if the system is very robust. We have a comfort level on this."

He said employers required to supply monthly payroll updates to the HMRC would not find this difficult. "You do the payroll and you press one extra button to HMRC. It's literally one extra button you have to press," he said.

Questioning revealed there were still key areas of policy that remained undecided, such as how free school meal payments and council tax benefit payments would be integrated into the universal credit payments. This is vital to ensure claimants don't lose out when they begin work.

Ministers said they were continuing to process feedback from charities and thinktanks that have published reports over the past few months, detailing a range of serious concerns.

"This is a huge endeavour, rebuilding the benefits system," Lord Freud said. "We do not have a monopoly on getting this right. We must have feedback from people."

The committee's chair, Dame Anne Begg, asked how the changes would affect disabled people and their families, highlighting unease about the ending of the disability premium. Lord Freud argued that universal credit would be "liberating" for disabled people because they would no longer be "stuck on benefits".

"I think you've got a rather naive view of how disabled people live their lives. These are people with quite high needs. There are families who will lose out with the removal of disability premiums," Begg said.

Ministers also offered asurances that the benefits cap, which will begin with the introduction of universal credit, would not make some families homeless.

"How can you guarantee that no one will be made homeless?" Labour MP Glenda Jackson asked.

"I see no reason why they will be made homeless," said Duncan Smith, citing the £190m fund for discretionary payments to prevent this.

Committee members outlined scepticism over the government's drive to get claimants to file claims online. Duncan Smith was asked whether a target of 50% claims made online when the benefit is launched was realistic, given that less than 20% of jobseeker's online claims were made online.

He said it was realistic and stressed there would be more computers installed in jobcentres so those without internet access at home would be able to make claims online by coming into the office. He argued it was a positive opportunity to get people "back into the 21st century, online" to improve their digital skills, which would ultimately make them more employable.

Lord Freud revealed his futuristic vision of how people could soon claim benefits, suggesting ultimately claimants might take advantage of the development of internet eye-glasses by Google – which allows users to surf the internet on the lens of a pair of glasses, using eye movement to navigate the web and make benefits claims.

He said the system by which online claims were made would be developed over the four years the new system would take to be introduced. "Eventually it could be on a phone," he said, adding that in the light of Google's work, he saw this as a "system that can be developed into the future".