This time last week, there were confident predictions that the catastrophic development of universal credit was about to claim its biggest victim to date. Not Iain Duncan Smith, the secretary of state, but Robert Devereux, his permanent secretary. Devereux, whose experience of welfare reform goes back to the early days of new Labour, knows the department well, and he's also had the now-obligatory spell outside the department and outside Whitehall.

But the huge process of introducing a live system that folds six different in-work benefits into one that keeps up with a claimant's circumstances week by week has lurched from crisis to crisis. In September, the National Audit Office (again) raised serious concerns. The public accounts committee followed up with evidence sessions with the main players. Its report, it was anticipated, would lead to Devereux's swift departure.

But publication slipped amid rumours that allies of the secretary of state were leaning on Tory MPs to name and shame the official in order, it was implied, to save the politician's skin. When the report finally came out a week ago, although it was an excoriating summary of progress, and contained really devastating criticism of the project's "appallingly poor" management, names were not named. And it was almost equally critical of the department's political leadership, particularly of the "fortress mentality" that meant "only good news" was acceptable. Thus the department, whose management skills spell the difference between survival and disaster for millions of claimants, sails on with its senior officers unchanged.

Obviously there should be a better way to manage huge projects like this radical welfare reform.

The politicians v officials standoff wasn't invented in the 1980s by the writers of Yes Minister. It's unavoidable in a system where there is a permanent government of civil servants and a temporary one of elected politicians who rightly feel they have to do stuff. But while government gets ever bigger, more expensive and more complicated, the constitutional relationship would still be broadly recognisable to, say, Gladstone.

Insiders reckon universal credit was a disaster waiting to happen, and the first extraordinary thing is that such a huge project was, like those other political minefields of NHS and schools reform, entirely devolved by No 10 to departmental ministers.

Leaving aside, though, chairman Cameron's faith in his untested political team, consider the role of the permanent secretary and the difficulty of saying No, minister. Remember that Thatcher and Blair both often complained about how obstructive they found Whitehall. Remember, too, that the new government is elected for five years – for many permanent secretaries, that's the rest of their careers – and it seems unsurprising that there would be an institutional reluctance to tell a newly elected secretary of state that the great political project on which he intends to rest his reputation is a non-starter.

Now there is the worst of all possible worlds: a public standoff between permanent secretary and secretary of state. This is said to make it impossible to move the permanent secretary (Cameron tried the alternative of moving Duncan Smith last year, but failed), since it would be an acknowledgment that what does happen, discreetly, is the new rule – that top officials are becoming political appointees. Francis Maude, the minister in charge of civil service reform, has been looking to Australia, where the new government has just sacked the senior officials most closely identified with old policies. But he's said to be most attracted to the New Zealand system, where there is a contractual relationship between minister and executive. What matters, as they say, is what works. One thing the rickety advance on reforming welfare makes abundantly clear – it's not working now.