Ian Duncan Smith gives go-ahead for real-time IT system for DWP

System will be used to implement the Universal Credit proposed at the Tory conference

Ian Duncan Smith gives backing to DWP IT system

Conservative work and pensions secretary Iain Duncan Smith has signalled his commitment to a real-time benefits system to be set up within the DWP.

The system will reduce the over-generous payouts and crippling repayment demands associated with the current annualised tax credit system.

It will also be used to implement a new Universal Credit which he announced at the party's Birmingham conference with representatives cheering a supposed crackdown on welfare cheats.

Universal Credit is expected in the longer term to replace Job Seeker's Allowance and a host of other benefits as well as tax credits, and was announced in a keynote speech at the conference.

IDS, as he has become known to Tory insiders, wants a system that will react and recalculate entitlements as soon as new information is available from claimants. The object will be the widest possible online claim filing and a requirement for immediate change-of-circumstance reporting.

He said: "I am delighted to announce the introduction of the Universal Credit, which will, I believe, restore fairness and simplicity to a complex, outdated and wildly expensive benefits system, a real-time system which will also help cut the cost of fraud and error."

Duncan Smith is understood to have come to an arrangement with chancellor George Osborne to phase in changes over the next five years to enable high upfront costs to be offset by savings in what he told representatives will be " the biggest reform of the welfare system in a generation". He wants the system to start in 2013.

Proposals for "real-time" income tax calculation were revealed in the Commons a month ago by exchequer secretary David Gauke following the row over a flood of demands for extra tax payments as well as refunds that were the result of the delayed implementation of the introduction of a new HMRC computer system co-ordinating and reconciling individual taxpayer records.