While UK government minister Iain Duncan Smith continues to resist the idea that Universal Credit is in crisis, the National Audit Office (NAO) has warned (again!) that the scheme has failed to deliver "value for money" and that there are "considerable weaknesses" in the department's control over the project.
A total of £40 million spent on IT for Universal Credit has already been written off, while a further £91 million has been spent on software that will be obsolete within the next five years.
This is being amoritised over that period in what the NAO calls:
a major change in accounting treatment. The Department’s original intention was to use these assets for at least 15 years and to amortise them over that period. As a result of the decision to migrate to a new digital solution by 2017, the Department now intends to use these assets for only five years and to amortise them over this much shorter period.
The NAO accepts the DWP’s assessment of asset value of £151.9 million as being “free from material misstatement” but warns that this figure (which dates from the end of March) may be subject to radical revision.
The overall cost of developing assets to support Universal Credit is subject to considerable uncertainty.
The Department acknowledges…that there is uncertainty over the useful economic life of the existing Universal Credit software pending the development of the alternative digital solution and uncertainty over whether Universal Credit claimants will be able to migrate from the current IT infrastructure to the new digital solution by December 2017.
The digital push carries its own price tag of course. The NAO notes that:
In approving the development of a digital solution for the delivery of Universal Credit, the Ministerial Oversight Group noted that the investment and recurrent costs of this solution are between £25 and £32 million up to November 2014.
The Department’s intention is to build a core digital service that will deliver to 100 people by then, after which it will assess the results of that work and consider whether to extend the service to increasing numbers.
The NAO makes no comment on the strategic intention, but lists a series of unanswered questions that need to be addressed:
- How it will work?
- When it will be ready?
- How much it will cost?
- Who will do the work to develop and build it?
The NAO observes:
As the Department develops the digital solution, so it will start to recognise some of the costs incurred as assets. Without clear and effective management, in the future the Department may also find it needs to impair some of these new digital assets.
Auditor General Amyas Morse said that DWP needs to "properly commission and manage IT development, exercise "effective financial control" over the programme and set itself "realistic expectations" of the timetable within which it can be delivered.
"I judged in September that, at this early stage of the Universal Credit programme, the Department had not achieved value for money. The underlying issue… is that the Department has written off £40.1 million on assets it will now never use and spent a further £91 million on assets that will support only a limited service for five years, with clear consequences for public value."
Morse wants some action taken as to extend beyond the trail 100 claimant households will bump up costs considerably while still spending up to £58 million more on the existing development work. He states:
“These are considerable sums that the Department is proposing to invest, in a programme where there are significant levels of technical, cost and timetable uncertainty.
“I reiterate both the conclusion and recommendations from my report in September. The Department has to date not achieved value for the money it has incurred in the development of Universal Credit, and to do so in future it will need to learn the lessons of past failures.”
Morse lays out three things that need to happen. The DWP must:
- Properly commission and manage IT development.
- Exercise effective financial control over the Universal Credit programme.
- Set realistic expectations for the timescale for delivery.
All of which you’d think they might have done in the first place of course, but there ya go...
Still, could be worse. As Duncan Smith reminds us: this is most definitely NOT a debacle.
Which raises the thought: they did this on purpose?
You see, it’s not just me!