Universal Credit: early progress - Public Accounts Committee Contents

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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© Parliamentary copyright 2013
Prepared 7 November 2013