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Universal Credit: Writing off £663m in IT represents 'value for money' (apparently)

Derek du Preez Profile picture for user ddpreez December 11, 2014

Just £34m of the £697m spent on IT assets will be used for the final system
A digital system is being developed in-house that will replace the current development
The current 'twin-track' approach gives the government a Plan B, according to the Treasury
Universal Credit has been given an amber/red rating by the MPA

money down the drain
The British government's plans to overhaul the country's benefits systems, under a programme called Universal Credit, represent good 'value for money' – despite the fact that when the final system is being used, some £663 million worth of IT assets could have been written off.

For regular diginomica readers, you will know that Universal Credit is a £2.4 billion project that 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.

The project has backing from across the political spectrum, but unfortunately it has been hit by a number of high-profile development problems. So far tens of millions of pounds worth of IT assets have been written off and now the Department for Work & Pensions (DWP) is toying between the original system that is being developed by the likes of HP, IBM, Accenture and BT, and a new digital end-state solution that is being developed by a dedicated team in-house.

DWP has been testing the original system built by the suppliers in a number of pilot areas across the country (with varying degrees of success), but it is generally thought that the digital solution being developed in-house will be the final solution used. This 'twin-track' approach is proving to be controversial, given that if the digital solution is rolled out, hundreds of millions of pounds worth of IT assets that have been developed for the original system will ultimately be thrown out.

This week, ComputerworldUK did a write-up of a Public Accounts Committee hearing, where it emerged that the final amount that may be written off is as much as £663 million, out of £697 million spent on IT assets. This is more than three times what the National Audit Office recently predicted.

However, what's astounding, is that Sharon White, director general of public spending at HM Treasury, insisted during the hearing that although the hundreds of millions of pounds worth of IT assets for the original system will not be used, this still represents “value for money”.

Margaret Hodge
Margaret Hodge, Chair of the PAC

Apparently White, the Treasury and DWP believe that the 'twin-track' approach and the development of two systems provides a “plan-B” in case the digital solution doesn't pan out and it means the government can avoid putting “all its eggs in one basket”. I would fundamentally disagree, but more on that later.

Chair of the Committee carrying out the questioning, Margaret Hodge, also seemed to find the claim a bit incredulous. She said:

That is a heck of a lot of money to have invested, simply to get to a strategic business case that could, down the road, get gloomier and gloomier.

It also emerged during the hearing that the Major Projects Authority, a watchdog for big projects in government, has now rated Universal Credit as amber/red – after a controversial report in May did not give it a rating, claiming that the project had been 'reset'.

According to the MPA, a red/amber rating means:

Successful delivery of the project is in doubt, with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed, and whether resolution is feasible.

My take

This is laughable. To suggest that over £600m worth of written off IT assets is 'value for money' is an insult to not only taxpayers, but people with half a braincell.

The only reason that there is a 'twin-track' approach, is because a digital solution was needed to help rescue the current system being developed – which was found to be unworkable in a number of areas. Are we now saying that this original system may have to save the day?! Come on, seriously?

I'd be willing to put money on the fact that the only reason that the government is willing to progress with the original system is not because it saves it putting all of its eggs in one basket, but because it saves itself a lawsuit. As we have seen in a number of other cases, the government struggles to go up against suppliers when it needs to get out of contracts, and I'm pretty sure this is no different.

The government can't say to the suppliers it contracted to stop building the original system – it would likely be sued – so we just keep building and tell everyone it's a good idea...

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