“Very little progress” on Universal Credit, despite having spent £700m so far...

Derek du Preez Profile picture for user ddpreez February 24, 2015
The Department for Work and Pensions claims that Universal Credit is on track and that by this time next year the system will be in every job centre in the country.

The Department for Work and Pensions (DWP) has been heavily criticised by a group of MPs on the Public Accounts Committee for making “very little progress” on its welfare reform project, Universal Credit, despite having spent approximately £700 million to date.

Universal Credit is one of the government's flagship IT projects, which aims to roll six of the main social security payments into one core payment, which flexes up and down in a seamless way when a claimant dips in and out of work.

Despite the system having strong cross-party political support, the £2.4 billion project has experienced significant development problems since its inception and could potentially see over £600 million worth of IT assets written off once completed.

This is largely because the original IT system that was developed by the likes of HP, IBM, Accenture and BT, has been found to be unworkable at scale and requires a significant amount of manual intervention. DWP is now working on a digital end-state solution alongside the original system, which is likely going to be the final solution used by all claimants.

However, this “twin-track” approach, although sensible given that the original system is thought to be unworkable, has meant that millions of pounds worth of IT assets will likely been thrown out in the long-term.

The Public Accounts Committee, headed up by the formidable Margaret Hodge MP, has released a report today stating that the value of the project is very difficult to determine, given that DWP's business case relies on future benefits, and that not much progress has been made to date.

The report found that fewer than 18,000 people were claiming Universal Credit by October 2014, out of a possible seven million expected in the longer term, which accounts for just 0.3% of the eligible population. Hodge also stated that the twin-track approach to development is complicated and expensive. She said:

As the Department has justified this spending on the promise of benefits in the future – such as from higher employment - rather than on the actual delivery of benefits to date, we simply cannot judge the value for money of this expenditure at this stage.

Margaret Hodge
Margaret Hodge, Chair of the PAC

The IT infrastructure for Universal Credit continues to be of particular concern. The Department has spent £344 million with suppliers developing its 'live' service systems for claimants who have straightforward initial claims which do not involve all 6 benefits, yet it expects to re-use just £34 million worth of this IT in the longer term.

The live systems are technically limited and expensive to operate because they require manual intervention. The Department is developing and testing a new digital service, which it intends will deliver Universal Credit to all types of claimant in the long term.

In the meantime it has adopted a 'twin-track approach' – running the two separate systems in parallel. This is complicated and expensive. The Department believes this will bring forward the anticipated benefits of the programme but it must ensure it does not allow the mixed, two-track approach to continue for longer than is required.

Both the Department and HM Treasury now regard the live service as the programme’s de facto contingency, even though the Major Projects Authority told us last year that it doubted those systems were capable of handling the full range of claimants.

Hodge's also highlighted that the digital service that is being developed faces a six month delay and that the Major Projects Authority recently gave the project an amber-red rating, meaning that it's future success is far from certain.

The Committee also said that it was “disappointed” that DWP has chosen to fight a protracted legal battle to prevent the publication of its programme milestones schedules against which it could be held to account publicly. DWP lawyers have argued that publishing the reports would have a “chilling effect”.

Interestingly, in an interview with the Financial Times, director of the Government Digital Service, Mike Bracken, has distanced himself from the Universal Credit project, whilst stating that newly appointed head of digital technology at DWP, Mayank Prakash has a big opportunity laid out in front of him.

Bracken said that GDS wasn't even formed with Universal Credit got underway, stating: “That horse had already bolted before we got here.”

In the FT interview, Bracken said:

All those big assumptions about how it was going to be built, they’d all been taken. Those big contracts had been let.”

I think there’s a lot hanging on [Mr Prakash] and his ability to work collaboratively and corporately, and again he’s a good example of someone who’s come in and sees the world not through a departmental silo but from [the perspective of] a technical and digital opportunity that they have in front of them.

The PAC's recommendations for DWP and Universal Credit going forward are:

  • The Department must set out clearly what it has really gained from its spending so far, including from the piloting of the programme, and from the investment in live service IT systems
  • The Department should set out publicly its current milestones for what it expects to achieve at different points in the programme, and clearly explain any future changes to the scope, cost and timings of these.
  • HM Treasury must ensure that the Department continues to identify and critically assess a range of realistic options for delivering Universal Credit, and implements those which it selects.
  • The Department must ensure it does not allow the mixed approach to continue for longer that is required.
  • The Department must establish more robust and costed contingency plans for how it would handle further delays in the digital service, including a thorough examination of whether it would be practical and affordable to use the current live service for this role.

My take

No longer shocked by the problems plaguing this project. Our only hope is that the newly created digital end-state solution is good enough and that it does the job in the long run. Our fingers are crossed.

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