In a highly critical report, the National Audit Office (NAO) says the single payment scheme may cost more than the benefits system it replaces.
It added that it might never be known if it will achieve its stated goal to increase employment.
Universal Credit is the government’s reform of the benefits system, consolidating benefits such as tax credits, unemployment and housing benefit into one monthly payment.
It is designed to simplify the benefits system and to provide added incentive for claimants to find employment.
The NAO report offers a withering critique of the scheme, echoing long-held criticism voiced by its opponents.
It found the roll-out of Universal Credit has been much slower than was intended.
It was due to be in place by October 2017, but after a number of problems only around 10% of the final expected caseload are currently claiming the benefit eight years later.
The NAO found that in 2017, around one quarter (113,000) of new claims were not paid in full on time. Late payments were delayed on average by four weeks.
From January to October last year, 40% of those affected by late payments waited around 11 weeks or more, and 20% waited nearly five months.
The report authors found the use of foodbanks increased more rapidly after Universal Credit was rolled out to an area.
However, they concluded that the scheme will continue because of the complexity that would be involved in returning to the previous system of benefits.
Amyas Morse, head of the NAO, said: “The Department has pushed ahead with Universal Credit in the face of a number of problems, but has shown a lack of regard in failing to understand the hardship faced by some claimants.
“The benefits that it set out to achieve through Universal Credit, such as increased employment and lower administration costs, are unlikely to be achieved. Yet the Department has little realistic alternative but to continue with the programme and hopefully learn from past mistakes.”
The NAO also found the Department of Work and Pensions (DWP) had not shown “sufficient sensitivity” towards some claimants and that it does not know how many are having problems with the programme or have suffered hardship.
Reacting to the report, Frank Field, the chair of the work and pensions select committee, said: “This report blows up the DWP’s constant assertion that everything is going well and that any criticism comes from those who wish to make trouble for Universal Credit.
“The points that individuals have raised with the select committee are now writ large as systemic faults within the system and the government is caught in a trap of its own making.
“The Universal Credit we have seen is a shambles, leaving a trail of destruction in its wake. Sadly, this report will make little difference if the senior officers running Universal Credit remain firmly entrenched in La La Land.”
In response to the report, a spokesperson for the DWP said: “Previous administrations poured billions into an outdated system with a complex myriad of benefits, which locked some people into cycles of welfare dependency.
“Whereas we are building a benefit system fit for the 21st century, providing flexible, person-centred support, with evidence showing Universal Credit claimants getting into work faster and staying in work longer.
“Universal Credit is good value for money and is forecast to realise a return on investment of £34bn over 10 years against a cost of £2bn, with 200,000 more people in work. Furthermore 83% of claimants are satisfied with the service and the majority agree that it ‘financially motivates’ them to work.
“As the NAO acknowledges, we have made significant improvements to Universal Credit as part of our ‘listen and learn’ approach to its roll-out, and it’s on track to be in all job centres nationally by the end of 2018.”