With live testing of Universal Credit due to start later this months, a Parliamentary Committee has expressed concern that anti fraud measures in the Universal Credit system have not yet been developed.

Universal Credit will simplify the benefits system, improve work incentives and reduce fraud and error. It will replace income-based Jobseeker’s Allowance; income-related Employment and Support Allowance; Income Support; Child Tax Credits; Working Tax Credits and Housing Benefit.

The Committee chairman, Labour MP Clive Betts, said: “We heard evidence that ICT systems for fraud detection within Universal Credit were still at an early stage in their development. This is extremely concerning given the advanced state of implementation.

“The government must act to provide assurance that the benefit system will not be left vulnerable to fraud either during or after the transition. And it must do so urgently.”

Ministers insisted strong IT systems were in place for the new benefit, which they say will cut benefit fraud. A Department for Work and Pensions spokesman said: “Universal Credit will cut benefit fraud by £200m a year and we are confident that our IT systems will be strong enough to protect us from the threat of fraud.”

Ross Parsell, Director of Cyber Security, Thales UK said: “MPs are absolutely right to warn that the Universal Credit system presents a serious fraud risk. Although the Public Sector Network (PSN) will provide a secure back-end communications infrastructure, a question mark still remains over whether the government will be able to verify, manage and protect the identity of claimants is still under question.

At the moment it’s possible to apply for a passport or renew a driving licence online, but in these cases citizens are making payments to the government. We are yet to have a government system which pays money in the other direction to the public which is where the risk lies. If a high percentage of transactions are fraudulent, the government could come under severe pressure. With 1.56 million people claiming Jobseeker’s Allowance at a minimum of £56.25 a week, just that element of welfare presents a £4.56 billion fraud risk over the course of a year.

Piggybacking on a bank’s identification system could be a low cost solution for the government in using two-factor authentication with chip & pin. In return, a bank could receive opportunities for marketing to claimants.”