1 Programme management
1. On the basis of a Report by the Comptroller and
Auditor General, we took evidence from the Department for Work
and Pensions (the Department), the Cabinet Office's Major Projects
Authority and HM Treasury on the progress in delivering Universal
Credit and the problems there have been in implementing the programme.[1]
2. Universal Credit is the Department's biggest single
programme, through which it plans to simplify the welfare system
by consolidating six means-tested working-age benefits into a
single payment. In 2012-13 the six benefits accounted for spending
of £67 billion across 13 million claims. The government
intends that Universal Credit will provide better incentives to
get people back into employment, including allowing claimants
to keep more of their earnings when they start work, and tougher
job-search requirements managed through a 'claimant commitment'.
[2] The Department
has estimated that Universal Credit would deliver a net benefit
of £38 billion over 12 years to 2022-23, and then an
annual net benefit of £7 billion.[3]
3. The Department set out its plans for Universal
Credit in a White Paper in November 2010, and it began design
and build work in January 2011. The Department planned to have
moved all claims onto the new system by October 2017. The Department
expects to spend £2.4 billion up to April 2023 implementing
the programme. By April 2013 it had spent £425 million,
including £303 million with suppliers for IT development.[4]
4. The Department acknowledged that so far the programme
has been poor value for money.[5]
Universal Credit is a business transformation programme, which
aims to provide incentives and influence behaviours to get people
into work. However, the Department lacked an overarching business
transformation strategy, and focused its effort on the programme's
IT aspects.[6]
5. The Department initially adopted a piecemeal approach
to delivering the programme. In 2011 it identified over a hundred
different types of users for Universal Credit, and initially sought
to design IT solutions for each set of circumstances individually.
It was only in early 2012 that the Department decided to stand
back and try to establish a clearer picture of what the programme's
overall shape might look like.[7]
6. During the summer of 2012 the Department became
aware of the problems that Universal Credit faced. It was first
alerted by concerns raised in a supplier-led review, commissioned
by the Secretary of State, which reported in July.[8]
The Department subsequently established that the programme's progress
was stalling because there were a number of unresolved issues
which had become intractable, particularly relating to the level
of security needed for identity assurance and protection against
fraud and error and cyber-attack.[9]
7. The Department had been previously unaware of
the programme's difficulties because its internal lines of monitoring,
intervention and defence, intended to identify and mitigate such
problems, were not working properly. Governance arrangements
were not remotely adequate, and the Accounting Officer discussed
progress with the head of the Universal Credit programme only
every two or three weeks.[10]
The Department had inadequate performance information to scrutinise
and challenge the programme's reports of its progress, so internal
reporting arrangements did not flag up that things were amiss.[11]
The Department's corporate finance undertook insufficient work
to ensure there was an appropriate control environment in place,
and the Department's process for ministers to sign-off higher-value
contracts was weak.[12]
8. The Department's senior management had relied
on ad hoc reviews, mostly conducted by external reviewers, which
only provided an occasional snapshot of the programme, instead
of ensuring effective internal systems were in place to monitor
and challenge progress. However, during 2012 the problems surfaced
more clearly as the Universal Credit team became unable to respond
to recommendations made by such reviews.[13]
In February 2013 the Major Projects Authority identified five
key areas that needed urgent attention— developing a steady
state solution, resolving security problems, ensuring the programme
had the capabilities it needed, providing proper governance arrangements,
and controlling suppliers and expenditure. These were all areas
of on-going concern that both the Major Projects Authority and
Internal Audit had raised with the Department between November
2011 and September 2012, but which the Department had not adequately
addressed.[14]
9. The programme had also developed a flawed culture
of reporting good news and denying that problems had emerged.
This culture resulted from the desire of senior staff within
the programme to show publically that they were able to push the
programme forward, at the expense of ensuring that adequate controls
were in place or listening to concerns raised about its delivery.[15]
Although the Department has tried to tackle this culture, it gave
misleading interviews to the press regarding progress after it
became aware of difficulties with the programme, and as recently
as July 2013 the Department denied that there were problems with
the programme's IT when it gave evidence to the Work and Pensions
Committee.[16]
10. The Department told us that it had taken remedial
action. This included appointing a new senior responsible owner,
programme director and IT director for the programme in September
2012.[17] The Department
also said that the new senior responsible owner had begun to address
many of the issues that were wrong with the programme before he
died suddenly in December 2012. In February 2013 the Major Projects
Authority expressed serious concerns about the programme's progress
and its lack of a detailed 'blueprint' and transition plan, and
recommended that the programme should be 'reset'. The Department
told us that having lost two senior responsible owners in quick
succession, it had not been surprised by this recommendation.[18]
11. The Department recognises its supplier management
has been weak, risking value for money.[19]
Four main suppliers—Accenture, IBM, Hewlett Packard and
British Telecom—have provided IT systems for Universal Credit,
and by March 2013 the Department had paid them £265 million
out of the £303 million spent with suppliers on IT systems.
In February 2013 the Major Projects Authority found no evidence
of the Department actively managing its supplier contracts, resulting
in suppliers being out of control and financial controls not being
in place.[20] The Department
has yet to provide a comprehensive assessment of how much of this
expenditure has proved nugatory, although the Major Projects Authority
believes it will be a substantial figure running into hundreds
of millions of pounds.
12. PwC produced a report for the Department in 2013
which detailed a long list of problems with the Department's supplier
management.[21] For example,
when the Department made payments to suppliers it could not link
these to particular pieces of work that had been delivered.[22]
Furthermore, the Chair of the Strategic Design Authority delegated
a personal assistant to complete the approval process for 15 purchase
orders with a total value of £8.7 million—such delegation
should not have happened, and the Department has found insufficient
evidence to explain why it did.[23]
The PwC report also highlighted that 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 the approvals was only £10
million.[24]
1 C&AG's Report, Universal Credit: early progress,
HC 621 Session 2013-14, 5 September 2013 Back
2
C&AG's Report, paragraphs 4, 2.11 and Figure 9 Back
3
C&AG's Report, paragraph 3 Back
4
C&AG's Report, paragraphs 4, 2.11 and Figure 9 Back
5
Q166 Back
6
Qq5, 90, 147-149 Back
7
Q89 Back
8
Qq87, 89, 168, 173 Back
9
Q89 Back
10
Q92, 183-185, 194 Back
11
Q167; C&AG's report, paragraph 3.28 Back
12
Qq200-201 Back
13
Q110 and Ev 31; C&AG's Report, paragraph 3.34 Back
14
C&AG's Report, paragraph 3.35 and Figure 18 Back
15
Qq109, 132, 165, 202 Back
16
Q117.In September 2012 Computer Weekly reported that a
Department spokesman had recently told it: 'The IT is already
mostly built…It is being built and tested on time and on
budget' ('How agile is Universal Credit?', Computer Weekly,
25 September 2013).In July 2013 the programme's senior responsible
officer was asked by the Chair of the Work and Pensions Committee
'So the rumours that there is a large chunk of the IT that simply
did not work and has been dumped are not true?'; he answered 'No'
(Work and Pensions Committee, Universal Credit: Follow-up, Uncorrected
transcript of oral evidence to be published as HC 569-i, 10 July
2013, Q71) Back
17
Q89 Back
18
Q87; C&AG's Report, paragraphs 11, 3.38 Back
19
Q206 Back
20
Q36; C&AG's Report, paragraphs 1.17, 3.25 and Figure 6 Back
21
Q173; C&AG's Report, paragraph 3.26 and Figure 15 Back
22
Qq178, 182 Back
23
Qq175-177 and Ev 31 Back
24
PwC : Financial Management in Universal Credit [Not printed] Back
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