Conclusions and recommendations
1. The Department
has stated that Universal Credit will 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 Department 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). In February 2013 the Department 'reset'
the programme following a Major Projects Authority review which
expressed serious concerns about the programme lacking detailed
plans. It is highly likely that a substantial part of the expenditure
on IT development will have to be written off. Since then the
Department has been working to address these concerns, but has
yet to submit revised plans for approval by ministers, HM Treasury
and the Cabinet Office.
2. Management of the Universal Credit programme
has been extraordinarily poor. Oversight
has been characterised by a failure to understand properly the
nature and enormity of the task, a failure to monitor and challenge
progress regularly, and a failure to intervene promptly when problems
arose. Senior managers only became aware of problems through
ad hoc reviews, mostly conducted by external reviewers, as inadequate
management information and reporting arrangements had not alerted
them that things were amiss. Given its huge importance to the
Department, the Accounting Officer and his team should have been
more alert to identifying and acting on early warning signs that
things were going wrong with the programme.
Recommendation: The Department should ensure
that new governance arrangements provide robust oversight of progress
and that these arrangements are agreed by the Major Projects Authority.
Responsibilities for programme management and different levels
of assurance should be set out clearly, with appropriate engagement
of officials at the most senior level within the Department for
Work & Pensions and the Cabinet Office.
3. The lack of oversight allowed the Department's
Universal Credit team to become isolated and defensive, undermining
its ability to recognise the size of the problems the programme
faced and to be candid when reporting progress.
The programme's ambitious timescale and protected resources created
the inevitable risk of a fortress culture developing. This risk
should have been mitigated by robust management information and
stronger monitoring by senior staff within the department which
might have given clear and early insights into progress. Risk
was not well managed and the divergence between planned and actual
progress could and should have been spotted and acted upon earlier.
The Department only reported good news and denied the problems
that had emerged. The risk of a similarly blinkered culture remains
as the Department will be working to tight timescales to get the
programme back on track.
Recommendation: The Department must ensure
it has comprehensive, relevant and clear information to assess
progress. Progress must be monitored at the most senior levels
within the department and it is essential that staff feel able
to raise concerns at an early stage if they identify difficulties.
4. It is extremely disappointing that the
litany of problems in the Universal Credit Programme were often
hidden by a culture prevalent in the Department which promoted
only the telling of "good news".
For example, officials were aware that a critical report highlighting
many of these issues had been discussed internally for months.
Indeed, there are real doubts over when officials became aware
of these problems and it is difficult to conceive, based on the
evidence we were presented with, that officials within the Department
did not know of them before July 2012. This is a hugely important
project which requires strong, consistent and unified leadership
and management. This is essential to drive uncontroversial policy
to successful implementation.
5. There has been a shocking absence of control
over suppliers with the Department neglecting to implement basic
procedures for monitoring and authorising expenditure.
We saw evidence that purchase orders with a total value of £8.7
million were approved by a personal assistant to the Programme
Director. In another case, two purchase orders, one for £22.6
million and one for £1.1 million, were approved by a personal
assistant to the Programme Director whose delegated financial
authority at the time of approvals was only £10 million.
When the Department made individual payments to suppliers these
could not be linked to particular pieces of work that had been
delivered. Some of the IT assets that have been delivered cannot
be used in the programme and so must be written-off; whilst initial
estimates suggest the write-offs could amount to at least £140
million, we heard evidence that the precise extent is as yet unknown
because the Department's impairment review is not yet complete,
relying so far on supplier self-assessment.
Recommendation: The Department must: complete
its own impairment review as a matter of urgency; implement suitable
payment controls; and demonstrate that it is getting value for
money through future negotiations with suppliers.
6. The pilot programme is inadequate as it
does not deal with the key issues that Universal Credit must address:
the volume of claims; their complexity; change in claimants' circumstances;
the need for claimants to meet conditions for continuing entitlement
to benefit; and the security of information to prevent fraud.
The scope of Pathfinder is much narrower than originally planned.
It is now restricted to only the simplest new claims of people
who are single, have no dependants and would otherwise be seeking
Jobseeker's Allowance. The Pathfinder does not deal with most
claimants' circumstances or examine how the behaviour of different
types of claimant might change with the introduction of Universal
Credit. Pathfinder also includes limited IT functionality, with
staff having to enter some information manually, and it lacks
the identity assurance and anti-fraud components that the full
system will need. While Pathfinder will provide some useful information,
we are sceptical that it will adequately inform the full roll-out
of Universal Credit.
Recommendation: The Department should evaluate
what benefit it can derive from the existing Pathfinder programme
and ensure it introduces a revised pilot programme to help prepare
for the full implementation of the policy.
7. We are not yet convinced that the Department
is in a position to present revised plans for approval by ministers,
the Cabinet Office and HM Treasury that resolve the problems of
developing a secure system that can accommodate large numbers
of claimants who have complex and changing circumstances and who
will be expected to fulfil certain conditions.
When the Department presents its revised plans to these decision
makers, it must clearly set out how it will: protect Universal
Credit against fraud risks; establish the scope of secure online
operations; determine how to confirm claimant identity; monitor
whether the claimant fulfils the conditions of entitlement, and
handle all the complexities and changes in circumstances for claimants.
Universal Credit will not meet its current target of enrolling
184,000 claimants by April 2014, and the Department will need
to accelerate the later stages of the programme if it still plans
to meet a 2017 completion date which creates yet further risks.
We believe that meeting any specific timetable is less important
than delivering the programme successfully. There is still the
potential for Universal Credit to deliver significant benefits,
but there is no clarity yet on the amount of savings it will achieve.
Recommendation: The Department's revised plans
should set out:
· A range of deliverable options to
present to ministers, the Cabinet Office and HM Treasury 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. While we recognise
that timetables might need to be flexible, the Department 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.
8. It is important that HM Treasury and the
Major Projects Authority have clear criteria against which to
examine the Department's revised plans.
Both the Treasury and Major Projects Authority described to us
the general principles they would expect the revised plans to
address—such as affordability and the delivery of value
for money—which could apply to any project. Given the scale
of Universal Credit and the difficulties so far, we would expect
Treasury and the Major Projects Authority to 'raise the bar' in
order to give confidence that the programme can be brought back
on track.
Recommendation: HM Treasury and the Cabinet
Office should outline the specific criteria they expect the Department
to address in its revised plans for Universal Credit. In the light
of the failures experienced by this programme, we recommend that
the Major Projects Authority is given stronger powers to monitor
and intervene.
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