MPs slam DWP's “shocking absence of control” over Universal Credit suppliers

MPs on the Public Accounts Committee have heavily criticised the Department for Work & Pensions' (DWP) handling of suppliers working on the multi-billion pound Universal Credit welfare reform project.

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MPs on the Public Accounts Committee (PAC) have heavily criticised the Department for Work & Pensions' (DWP) handling of suppliers working on the multi-billion pound Universal Credit welfare reform project.

Chair of the committee, Margaret Hodge, said that the department demonstrated a “shocking absence of control”, which has resulted in huge investments in IT having to be written off.

The main contractors supporting the Universal Credit programme are IBM, HP, Accenture and BT.

For example, the MPs received evidence of purchase orders worth nearly £30 million which were approved by a personal assistant to the programme director. Also, when DWP made individual payments to suppliers these could not be linked to particular pieces of work that had to be delivered.

The committee has urged the department to implement suitable payment controls and demonstrate that it is getting value for money through future negotiations with suppliers.

Universal Credit is the government's flagship welfare reform project, which aims to simplify the benefits system by consolidating six means-tested, working-age benefits into a single system intended to encourage claimants to start work or earn more.

The DWP expects to spend £2.4 billion up to April 2023 on implementing Universal Credit, and by April 2013 it had spent £425 million, mostly on IT development (£303 million). However, £34 million worth of IT assets have already been scrapped, with at least £140 million more hanging in the balance.

The committee said that it is likely that a “substantial part” of the expenditure on IT development will be written off.

In February 2013 the DWP ‘reset’ the programme following a Major Projects Authority review, which expressed serious concerns about the programme lacking detailed plans. However, DWP has yet to submit revised plans for approval by ministers, HM Treasury and the Cabinet Office.

“Universal Credit is the DWP’s single biggest programme and enjoys cross-party support, yet its implementation has been extraordinarily poor,” said Hodge.

“The management of the programme has been alarmingly weak. From the outset, the department has failed to grasp the nature and enormity of the task; failed to monitor and challenge progress regularly; and, when problems arose, failed to intervene promptly. Lack of day-to-day control meant early warning signs were missed, with senior managers becoming aware of problems only through ad hoc reviews.”

She added: “There has been a shocking absence of control over suppliers, with the department failing to implement the most basic procedures for monitoring and authorising expenditure."

Poor management led to a fortress culture

The committee noted that DWP will not hit its current target of enrolling 184,000 claimants by April 2014 and will have to speed up the later stages of the programme if it is to meet the 2017 completion date, which will bring new risks. It said that the department needs to now focus on the “long-term successful implementation of Universal Credit” and not throw good money after bad by introducing a short-term fix that does not stand the test of time.

Up until now, the committee found the management of Universal Credit to be “extraordinarily poor”, with the lack of oversight allowing the project team to become “isolated and defensive”. The ambitious timescales and protected resources created a “fortress culture”, the MPs found, where the department only reported good news and denied that problems had emerged.

The committee believes that there is a risk that this 'blinkered culture' could remain within the department and recommends that progress must be monitored at the most senior levels, whilst allowing staff to feel able to raise concerns at an early stage if they identify any issues.

Pointless pilots

DWP has been rolling out Universal Credit to a small number of 'pathfinder' areas, which were intended to allow the department to test the new system's functionality on claimants. It frequently publicly stated that the pilot areas were being used as testbeds to ensure that the technology could effectively be scaled up.

However, Hodge and the committee found that the pathfinder programme was “inadequate” and limited in its scope, only processing the simplest type of claims. 

“The pilot programme is not a proper pilot. Its scope is limited to only the simplest new claims of people who are single, have no dependants and would otherwise be seeking Jobseeker’s Allowance. It lacks the security components needed to prevent fraudulent claims and protect individuals’ personal information,” said Hodge.

“The department needs a revised pilot that is capable of properly informing the full roll-out of Universal Credit.”

It also found that the pilots use limited IT functionality, with staff having to enter some information manually – something Computerworld UK revealed earlier this year. The scheme also lacks the identity assurance and anti-fraud components that the full system will need.

The committee has urged DWP to evaluate what it can derive from the existing pilots and introduce a revised programme to help prepare for the full implementation.

Scepticism remains

Finally, the committee said that it is still not convinced that DWP is in a position to present its revised plans for approval by ministers.

The PAC expects the new plan to present: 

- A range of deliverable options detailing the services, processes and systems for Universal Credit.

- A clear strategy for IT development, demonstrating the best way forward for the programme and an accurate review of current investment which will not be needed in the long-term.

- Realistic ambitions on timescales and the amount that can be delivered online, and the impact of these on the costs and benefits of the new system. DWP should set out the milestones against which it can be held to account, such as: when each affected benefit will be replaced by Universal Credit; the migration of claimants onto the new system; and the availability of key services online.

- The budget for the remainder of the programme and the net benefits it expects will be delivered, explaining how these have changed compared to previous plans.