Category Archives: Freedom of Information

DWP fraud and mistakes cost an estimated £3.2bn – despite new HMRC data links

By Tony Collins

The Department for Work and Pensions’ auditors have qualified the department’s latest accounts for the 26th year in a row because of “unacceptably high” fraud and mistakes.

The high level of fraud and error is despite the DWP’s now being able to check every claimant’s benefit entitlements – particularly inconsistencies in earnings – through HMRC’s real-time information [RTI] tax system.

In 2014-15, the DWP carried out a bulk exercise to match RTI data against the DWP’s benefits information. The DWP uses RTI data to provide information on earnings as part of the calculation of claimants’ Universal Credit entitlement.

The National Audit Office, in today’s report on the DWP’s 2014-15 accounts, says that misreporting and incorrect processing of income and are responsible for estimated losses in 2014-15 of £1.12bn

A further £340m is lost through undisclosed and incorrect processing of data on living arrangements.

The DWP is the same department that’s pouring money into a protracted FOI legal battle to stop four reports on Universal Credit being published on the basis that their disclosure could affect the DWP’s “effective management of public affairs”.

The DWP publishes none of the reports on the progress or otherwise of its major projects and programmes.

One question is, in the light of the DWP’s repeatedly qualified accounts, whether the department’s officials are better or worse off running their affairs in an atmosphere of great secrecy.

Would the DWP’s senior management be able to manage the business better – and particularly the Universal Credit IT programme – if they had to publish their commissioned reports on major projects?

The added external scrutiny of business partners – including local authorities – plus MPs, journalists and the public could give extra force to attempts within the department to manage affairs more professionally.

Such is the DWP’s detachment from external scrutiny that its managers are legitimately able to decide to avoid measuring the Personal Independence Payment for fraud and error until 2016-17.

Some may wonder how any major organisation can delay measuring a major part of its business for fraud and error.

Says Amyas Morse, head of the NAO:

“We believe that the absence of up-to-date information on error rates in such a large benefit stream creates a risk that the Department is making decisions based on out-of-date measurements.”

He adds:

“Furthermore, some smaller value benefits have never undergone a (fraud and error) measurement exercise.”

Morse says the accounts DWP’s have been qualified because of the “unacceptably high level of fraud and error in benefit expenditure, other than State Pension where the level of fraud and error is lower”.

He says the accounts of the DWP and those of predecessor departments administering welfare spending, have been similarly qualified each year since 1988-89.

The DWP estimates total overpayments due to fraud and error in 2014-15 to be £3.2bn, which is 1.9%  of the total forecast benefit spending of £168.1bn.

The Department estimates the total underpayments in 2014-15 to be £1.4bn.

Morse says the DWP is not on track to achieve its target to reduce fraud and internal mistakes.

“Furthermore, the Department has reduced the pace of the roll out of Universal Credit. As a result, Universal Credit has not yet realized the £200m annual fraud and error savings originally expected by March 2015…”

This failure to meet savings targets on Universal Credit highlights the speculative nature of central government’s business case estimates of programme and project savings.

Morse said: “Issuing an audit qualification is a serious matter, and the fact that similar qualifications have been in place for such a long period of time does not lessen that seriousness.”

Fraud and error is defined as

– Official error, which arises when a benefit is paid incorrectly due to inaction, delay or a mistaken assessment by the Department, a local authority or HM Revenue and Customs;

– Claimant error, which occurs when claimants make inadvertent mistakes with no fraudulent intent; and

– Fraud, which arises when claimants deliberately seek to mislead the DWP or local authorities which administer benefits on the department’s behalf to claim money to which they are not entitled.

The DWP’s managers say the largest proportion of error enters the benefits system due to changes in claimants’ circumstances after a correct initial award.

 

FOI hearing today on DWP’s refusal to publish Universal Credit reports

By Tony Collins

External lawyers acting for the Department for Work and Pensions are due to appear before an FOI Upper Tribunal judge in London today to argue why four reports on Universal Credit should not be published.

It’s the latest step in a costly legal battle that has lasted two years so far.

A first-tier FOI tribunal judge in 2014 ordered the four reports to be published. The DWP asked for permission to appeal that decision and lost its case.  The DWP then asked an Upper Tribunal for permission to appeal and lost that case as well.

Then it asked a different Upper Tribunal judge for permission to appeal .  As a result, a 1 day hearing is taking place today.

The case takes in evidence from the DWP, the Information Commissioner, John Slater who requested 3 of the reports in question and me. Slater requested in 2012 a Universal Credit risks register, milestone schedule and issues register (which set out problems that had materialised with the Universal Credit programme).  I requested a project assessment review carried out in 2011 on the Universal Credit programme by the Cabinet Office’s Major Projects Authority.

The DWP has refused to publish the four reports – and millions of pounds worth of other similar reports.

Today the DWP will argue that the judge in an earlier Upper FOI Tribunal did not fully consider the “chilling effect” that disclosure of the reports would have on the behaviours of civil servants or consultants who helped to write the reports in question.

In essence the DWP’s lawyers are asking the judge to accept the arguments put forward against disclosure by Sarah Cox, the DWP’s main witness in the case. Cox is a former programme assurance director for Universal Credit.

Cox submitted 49 pages of evidence – plus secret evidence during a closed hearing – on why the UC reports should not be published.  She said that civil servants must be able to think the unthinkable and record the outcome of these thoughts without hesitation or fear of disclosure.

If contributors feared the reports would be routinely disclosed the documents could become “bland records” prepared with half an eye to how they would be received in the public domain.

She said the danger of damage to the public interest cannot be overstated.

Disclosure could adversely affect management of the Universal Credit programme – and “failure of proper programme management may be catastrophic”.

Emphasising the importance of effective management of risk, she referred to the banking system prior to the credit crunch and the stability of the Bank of England in that period.

“Inappropriate or premature disclosure of the information in the risk registers or the issues registers could lead to those failures occurring in government risk management with broader parallels for other project management tools.”

She then referred to “disaster myopia” – a phenomenon she said was well established in cognitive psychology.  It referred to “an underestimation of the likelihood of low frequency but high risk damage risks”.

She added: “This can result in a lack of appropriate mitigating actions, increasing the likelihood of the risk becoming an issue. In this case fear of disclosure and misinterpretation can exacerbate this myopia, leading to the toning down of the direct and forceful language used to describe risks, or worse, risks not being identified at all”.

If civil servants or consultants writing reports on projects were to downplay the risks because of a fear of disclosure, problems may be overlooked, solutions not found, or not found promptly. “Such an outcome would be seriously detrimental to the delivery of major projects.”

Cox’s evidence could appear to some to suggest the DWP was preoccupied with its image, and the image of the Universal Credit programme, in the media, and among MPs and the public. She said routine disclosure of such reports as those in question “will distract civil servants from their tasks at a crucial point in the process of programme management.

“Instead of concentrating on implementing the changes, they will be required to address stakeholder, press or wider public concerns which have been provoked by the premature disclosure of material.”

It would be unhelpful if “attention is focused on clarifying positions with stakeholders and addressing the concerns of media, opposition and interest groups in order to correct the often misleading impression created by premature disclosure”.

This issue is “magnified in a programme with as many delivery partners as Universal Credit, covering both central and local government, with implications for all territories in the UK”.

That is because of the “implications of issues for different partners are often slightly different, so that each partner may need to be given a slightly different, and tailored, response”.

This concern should not be understated, she said.

“From my experience of high profile matters which emerge with little warning, I can say that ministers and senior officials are likely to be forced to clear their diaries, cancelling planned meetings, events and other important engagements, to attend rapidly-convened meetings to discuss the handling of the premature disclosure.

“Officials in the relevant policy areas (and lawyers as appropriate) would need to set aside other essential and pressing work to prepare briefings on the likely impact of disclosure and options for next steps. ‘Lines to take’ and a stakeholder and media-handling strategy would need to be discussed, agreed and signed off by ministers.

“Ministers could also be called to respond to urgent questions tabled in Parliament, especially where the disclosure  is made in respect of a high-profile policy area. The media might press for interviews with ministers and/or senior officials, which require careful preparation…”

But, as the Information Commissioner has pointed out, disclosure of the documents under FOI is not the same as a leak to the media.

And the reports in question are now four years old and so massive media interest is unlikely. Any media interest could be managed by DWP press officers without distracting project managers.

Cox said disclosure could harm rather than assist public debate.

“Material that requires civil servants to think the unthinkable, or to consider unusual or highly unlikely events, using intentionally vivid and forceful language, at a single point in time, potentially pre-dating attempts to mitigate the position could easily distort the public perception of the real or likely situation and encourage sensationalist rather than responsible and balanced reporting.”

She said that officials may have to release further information to counteract any misunderstandings (from a misreading of the disclosed reports). But the “world of media” may ignore this further information.

Lawyers for the Information Commissioner, in their submission to today’s hearing, will argue that an earlier tribunal had not found any existence of a “chilling effect” in this case. The tribunal had not been persuaded by what the DWP had said.

The earlier tribunal had not dismissed all of the DWP’s concerns as entirely without merit. It accepted that disclosure of the documents in question “may not be a painless process for the DWP” and that there “may be some prejudice to the conduct of government of one or more of the kinds asserted by the DWP”. The tribunal was simply unpersuaded by the extent of those prejudices.

The Commissioner’s lawyers will say the earlier tribunal gave due weight to the evidence of Ms Cox but it was not obliged to agree with her.

There was no observable chilling effect from disclosures in the past where a chilling effect had been envisaged. The DWP had not provided any evidence that a chilling effect existed.

Indeed a Starting Gate Review on the Universal Credit project had been published (by Campaign4Change) after the DWP refused to release the document under FOI. The DWP had refused to publish the Starting Gate Review because of the chilling effect it would have on the contributors to such reports.

But there was no chilling effect in consequence of publication of the Starting Gate review, say the Information Commissioner’s lawyers.

The incident “illustrates that it is perfectly within the bounds of reason to be sceptical about the DWP’s assertions about the chilling effect and the like,” says the Information Commissioner’s submission to today’s hearing.

On Ms Cox’s point that disclosure of the reports in question would change behaviours of civil servants and consultants compiling the documents, the earlier tribunal had concluded that the public was entitled to expect from senior officials – and no doubt generally gets – a large measure of courage, frankness and independence in their assessments of risk and provision of advice.

The Information  Commissioner’s lawyers will today ask the judge to dismiss the DWP’s appeal.

Comment

The DWP’s evidence suggests that the reports in question today are critical to the effective delivery of Universal Credit. The reality is that excessive secrecy can make bureaucracies complacent and, in the the DWP’s case, somewhat chaotic.

When Campaign4Change asked the DWP under FOI for two Universal Credit reports – an end to end technical review carried out by IBM at a cost of £49,240 and a “delivery model assessment phases one and two” carried by McKinsey and Partners at a cost of £350,000 – the DWP mistakenly denied that the reports existed.

When we provided evidence the reports did exist the DWP said eventually that it had found them.  The DWP said in essence that the documents had been held so securely nobody knew until searching for them that they existed.

So much for the DWP’s argument that such reports are critical to the effective management of major projects.

And when Campaign4Change asked the DWP, under FOI, to supply a project assessment review report on the Universal Credit programme, officials mistakenly supplied an incorrect version of the report (a draft) to an FOI tribunal.  Officials later apologised for their mistake.

National Audit Office reports on Universal Credit do little to portray the DWP as a professional, competent and well-managed organisation.

Which all suggests that excessive secrecy within the DWP has made officials complacent and disorganised.

Continued excessive secrecy within the department could reinforce a suspicion, justified or not, that the department may not be in a strong position to run a programme as large and complex as Universal Credit.

 

 

Universal Credit at “amber/red” says latest DWP report

By Tony Collins

The Major Projects Authority, which is part of the Cabinet Office’s Efficiency and Reform Group, has today published its annual report on 188 projects including Universal Credit, about which it makes only positive comments.

But the authority’s annual report is, it appears, economical with the actualité. At the same time as the MPA published the report, the Department for Work and Pensions published a spreadsheet with statistics and its own narrative on the state of its major projects including the Universal Credit programme.

The spreadsheet said that the UC programme had an “amber/red” rating – but neither the MPA nor the Department for Work and Pensions has given the MPA’s reasons for the rating.

At the request of permanent secretaries the MPA has agreed not to publish its comments on the traffic light status of certain projects, including Universal Credit. The MPA and the Cabinet Office have agreed to allow officials in each departmental to give their own narrative to explain the traffic light status of their projects.

So the DWP, on its website, gives a summary of the state of its major projects, but its narrative on Universal Credit says nothing about the programme’s problems. Neither is there any of the MPA’s recommendations which related to the “amber/red” rating.

In a further shrinking from openness, the MPA and Cabinet Office have agreed with permanent secretaries that the traffic light status of major projects will be published only when they are out of date. So the “amber/red” rating on Universal Credit, although published today, is dated September 2014.

Comment

It is odd in a modern democracy that a large central government department – the DWP – can spend £330m on the IT for a major project and get away with publishing such obviously contradictory information on the scheme.

On the one hand the MPA, the Cabinet Office and the DWP publish only positive comments about progress on the Universal Credit programme.

These are some of the MPA’s comments on Universal Credit:

“Delivery remains on track against plans announced in September 2014. Additionally the Programme has brought forward testing of initiatives from which the programme can learn including the:

• Continued trialling of Universal Support in partnership areas to ensure the right integrated local foundations are in place to support UC expansion.

• Extending In work progression trials to help households increase their earnings once they have found work. • Extending the role of UC Work Coaches to engage with households at their work search interview to assess financial capability.”

Similarly the DWP’s comments in its spreadsheet on the status of its major projects reads like a government press release. Why was one of the government’s major projects – the whole life project costs of UC are estimated at £15.8bn – given an amber/red status?

We don’t know. Except we know that the MPA gives an amber/red rating when it regards a programme as not on track – a programme that needs an assurance and action plan to improve confidence in delivery. Why is the programme not on track? What does the assurance and action plan say? What is the rating today?

So much for open government. Indeed the DWP’s external lawyers are going to an FOI tribunal in London next month as part of a long legal battle to stop four old reports on Universal Credit being published.

Any ministerial announcements about open government in future should, perhaps, take this unedifying FOI episode into account.

Major Projects Authority annual report 2014/2015

DWP gives out “selective” information on welfare reform even to its auditors

By Tony Collins

If the National Audit Office cannot obtain reliable and comprehensive information from the DWP, who can?

The NAO is the department’s auditor. Its head Amyas Morse signs off (or rather qualifies) the DWP’s accounts. His staff also produce regular “value for money” reports on the DWP’s projects and performance.

But an NAO report published today on welfare reform gives more than a hint of the problems its auditors face when trying to verify the information the DWP gives them.

The report “Welfare reform – lessons learned says the DWP failed twice to answer the NAO’s questions. Then, when the NAO gave the department its draft report, the DWP provided some information – which the NAO describes as “selective”. It is worth quoting the NAO’s comment in full:

“We have relied largely on our past audit reports to understand the implementation of welfare reform. Past work provides a sufficiently strong and comparable evidence base to identify different approaches and what works well and less well.

“We requested audit evidence from the Department for Work & Pensions (the Department) in August and November 2014.

“This would have allowed us to validate or comment on the Department’s performance more broadly and how they have subsequently addressed issues identified in previous reports. However, the Department failed to send the evidence despite requests.

“Following receipt of a draft report in April 2015, the Department provided some evidence on how it has tried to address issues identified in previous reports and how other welfare reforms have considered these themes.

“In the Department’s view it has made progress across programmes since the time of our initial reports. This includes addressing concerns about programme management on Universal Credit and reducing the time taken to process Personal Independence Payment claims.

“Given the selective nature of the evidence provided and the limited time to review a wide range of programmes, we were unable to audit the evidence or consider the additional information in detail…”

Separately, the DWP is in a protracted legal case to prevent the publication under FOI of four old – 2012 – reports on the Universal Credit programme.  A one-day hearing will be held in London on 15 July 2015.

Comment

The DWP is astonishingly thin-skinned. Its officials are probably not hiding anything – they just don’t want anybody knowing how well, or how badly, they are managing projects and programmes such as Universal Credit.

Since Universal Credit went live press officers have been allowed to give out only selective information on Universal Credit. It has  been difficult to establish from them that the programme has had 6 programme directors and 6 senior responsible owners since 2010.

The NAO’s latest report says the DWP needs to “recognise openly” when it has not met expectations. It needs greater internal challenge, says the NAO.

But the DWP seems unable to change its culture of defensiveness and the selective release of information to Parliament, the public and even its own auditors.

Why is it spending so much public money on trying to stop the release of the four UC reports?

Better than anyone else the late Lord Chief Justice Lord Bingham has summed up the need for openness:

“… Modern democratic government means government of the people by the people for the people. But there can be no government by the people if they are ignorant of the issues to be resolved, the arguments for and against different solutions and the facts underlying those arguments.

“The business of government is not an activity about which only those professionally engaged are entitled to receive information and express opinions.

“It is, or should be, a participatory process. But there can be no assurance that government is carried out for the people unless the facts are made known, the issues publicly ventilated.

“Sometimes, inevitably, those involved in the conduct of government, as in any other walk of life, are guilty of error, incompetence, misbehaviour, dereliction of duty, even dishonesty and malpractice.

“Those concerned may very strongly wish that the facts relating to such matters are not made public. Publicity may reflect discredit on them or their predecessors. It may embarrass the authorities. It may impede the process of administration. Experience however shows, in this country and elsewhere, that publicity is a powerful disinfectant.

“Where abuses are exposed, they can be remedied. Even where abuses have already been remedied, the public may be entitled to know that they occurred.” R v Shayler(2002) UKHL 11, (2003)1 AC 247.

Thank you to John Slater for providing Lord Bingham’s quote.

Welfare reform – lessons learned

DWP wastes money on another Universal Credit FOI appeal

DWP will fight to stop publication of Universal Credit reports whoever wins in May

By Tony Collins

dwpOn 7 July 2004 the Work and Pensions Committee called on the DWP to be “significantly more open about its IT projects”.

Today – 11 years later – the DWP is fighting to stop publication of four reports that would throw light on early problems with the IT work on Universal Credit.

And the DWP has continued to keep secret millions of pounds worth of reports on the progress or otherwise of its big projects, including those that have a major IT element,  Universal Credit in particular.

The Department is preparing for a new one-day hearing as part of its legal efforts – which have lasted two years so far – to stop the four reports on Universal Credit being published under the FOI Act.

A first-tier tribunal judge in March 2014 ordered the DWP to publish the reports. The following month the same judge refused the DWP leave to appeal, but the DWP’s external lawyers appealed to an upper tribunal for leave to appeal.

Now a judge has ordered a new one-day hearing in London, at a date yet to be set.

While the appeals continue the DWP does not have to publish the reports. In the light of this, DWP officials plan to continue their legal fight to stop publication of the reports, irrespective of who wins the election next month.

Indeed the case could go on for years. That legal costs for taxpayers are mounting seems no deterrent to the Department’s officials.

The four reports are already dated – they go back to 2012. The reports are the risks register, issues register, milestone schedule and project assessment review. All are about the Universal Credit programme.

John Slater, a programme and project management professional, requested three of the reports under FOI. I requested the project assessment review. 

Lamentable

Little has changed – the DWP has remained defensive and secretive – since 2004 when the Work and Pensions Committee said in its weighty report “Department for Work and Pensions Management of Information Technology Projects: Making IT deliver for DWP Customers”:

“The record on IT by DWP and its predecessor the Department of Social Security, has been lamentable …”

The report referred to the DWP’s habit of setting “unrealistic deadlines” on big projects, a problem that years later hit Universal Credit.

The Committee in 2004 added that the DWP was keeping reports secret to avoid embarrassment:

“We felt that on occasions the secretive approach adopted by the Department and the Government … had little to do with commercial confidentiality and more to do with departments using it as an excuse to withhold information that rightly belonged in the public domain, but which might embarrass the Department if released publicly.

“In our view the lack of Parliamentary accountability is part of the reason for the relatively high number of defective IT projects.”

The secrecy is not the fault of the DWP’s major suppliers -who include IBM, HP, Accenture, BT and Fujitsu. The Work and Pensions Committee said:

“During our enquiry, we were struck by how open IT suppliers seemed prepared to be in contrast with the tendency of officials to invoke commercial confidentiality.”

universal creditIn an echo of the Work and Pensions Committee’s 2004 report, the Public Accounts Committee said in February 2015, in its report: Universal Credit: progress update:

“… a lack of openness remains within the Department, as does an unwillingness to face up to past failings.

“The Department refused to accept the extent of previous failings, despite the overwhelming evidence we heard last year that the programme’s management had been extraordinarily poor prior to the reset, and the small numbers claiming Universal Credit.

“Furthermore, since early 2012, the Department has been fighting a protracted legal case to prevent the publication of documents relating to the management of Universal Credit…”

Ministers powerless?

Ministers have so far been unable to persuade civil servants to publish contemporaneous reports on the government’s big IT-enabled projects and programmes.

Francis Maude came to power in 2010 expecting to publish “Gateway” reviews on IT schemes but senior civil servants refused, arguing in part that publication would have a “chilling effect” on those writing and researching the reports.

Maude gave up on trying to get the reports published but gained reluctant agreement from permanent secretaries to publishing the traffic light status of large projects – but only after these assessments have lost their topicality in the form of a six-month time lag.

FOI campaigners say there are several reasons senior civil servants do not want reports on big IT-based projects, including Universal Credit, published.

The main reason, they say, is tradition: departments have always kept secret their internal independent reports on the progress or otherwise of major schemes.

Another reason is that officials do not always implement the reports’ recommendations. If nobody outside a department’s inner circle knows what a report’s recommendations or findings are, will it matter if they go unimplemented?

A further reason is that disclosure of the reports may cause embarrassment by confirming that a department’s ministers and officials have been economical with the truth – giving Parliament and the media the wrong impression about a project’s successful progress.

Lucrative

Another reason for keeping the reports secret may be that it enables civil servants and consultants who write the reports to be kind – perhaps even deferential – to their Whitehall colleagues by producing positive reports on projects that may later go awry.

Writing and researching the reports can be lucrative work. They are sometimes worth £1,000 a day to some consultants. A positive report with comfortable conclusions is more likely to bring further commissions than a generally negative one.

Indeed an upper tribunal judge Edward Jacobs, in a ruling on the case of the four reports, hinted that they were so positive even a hostile press would be pressed to find things to criticise.

Jacobs said that if he grants a rehearing of the case it is possible that the new tribunal “will need to consider that some of the contents (of the four reports) could hardly be presented badly even in the most hostile media coverage”.

Why disclosure is important

Officials working on Universal Credit have repeated mistakes of the past: setting unrealistic deadlines, underestimating complexity and not being open about project problems – even internally: their minister, Iain Duncan Smith, to get the unvarnished truth, had to set up his own “red team” reviews to bypass civil servants who had been giving him information.

As John Slater has pointed out, the late Lord Chief Justice Lord Bingham made an important statement on the need for openness:

“… Modern democratic government means government of the people by the people for the people. But there can be no government by the people if they are ignorant of the issues to be resolved, the arguments for and against different solutions and the facts underlying those arguments.

“The business of government is not an activity about which only those professionally engaged are entitled to receive information and express opinions. It is, or should be, a participatory process. But there can be no assurance that government is carried out for the people unless the facts are made known, the issues publicly ventilated.

“Sometimes, inevitably, those involved in the conduct of government, as in any other walk of life, are guilty of error, incompetence, misbehaviour, dereliction of duty, even dishonesty and malpractice. Those concerned may very strongly wish that the facts relating to such matters are not made public.

Publicity may reflect discredit on them or their predecessors. It may embarrass the authorities. It may impede the process of administration. Experience however shows, in this country and elsewhere, that publicity is a powerful disinfectant. Where abuses are exposed, they can be remedied. Even where abuses have already been remedied, the public may be entitled to know that they occurred.

Comment

The DWP’s culture of secrecy seems to overwhelm all new ministers who go along with it because they cannot run such a huge and complex department without the full support of their officials.

That’s perhaps why officials, on the matter of openness on IT projects, need never take seriously criticisms by the Information Commissioner, the Public Accounts Committee or the Work and Pensions Committee.

If officials have taken little notice of MPs for more than a decade, why should they start behaving differently under a new government?

The taxpayer suffers in the end. The DWP’s lamentable record on running major IT-based projects will probably continue, with huge financial losses and without accountability, while money continues to be poured into fighting pointless FOI legal battles.

It seems unlikely – and indeed would set a precedent – but perhaps a new set of ministers at the DWP will dare to try and change the culture.

 

 

MPs criticise DWP’s refusal to publish Universal Credit reports

By Tony Collins

As the Department for Work and Pensions continues its long and costly legal battle to stop four Universal Credit reports being published, the all-party Public Accounts Committee says a lack of openness “remains within the Department”.

The PAC says in a report published today “Universal Credit: progress update

“… a lack of openness remains within the Department, as does an unwillingness to face up to past failings.

“The Department refused to accept the extent of previous failings, despite the overwhelming evidence we heard last year that the programme’s management had been extraordinarily poor prior to the reset, and the small numbers claiming Universal Credit.

“Furthermore, since early 2012, the Department has been fighting a protracted legal case to prevent the publication of documents relating to the management of Universal Credit…”

The DWP is refusing to release  four Universal Credit reports requested under FOI.

Three of the reports from 2012 – the risks register, issues register and milestone schedule – were requested by programme and project management professional John Slater. I requested a project assessment review of the Universal Credit programme, as carried out by the Cabinet Office’s Major Projects Authority.

When questioned by Margaret Hodge, chair of the PAC, Robert Devereux, the DWP’s Permanent Secretary, suggested that his officials did not publish the reports because similar reports in other departments were also unpublished.

Meanwhile the DWP is pouring public money into various legal appeals related to its refusal to publish the reports. The DWP’s lawyers argue that publishing the four reports would have a “chilling effect”. They say officials need continued confidentiality to be candid about risks and problems.

A counter argument – though not yet one made in any of the legal hearings so far – is that civil servants and consultants writing the reports are writing them for other civil servants and consultants and are more deferential in their findings than they would be if the reports were open to public and Parliamentary scrutiny.

The PAC’s latest report on Universal Credit highlights the many uncertainties that surround the programme’s delivery.

After a total spend of about £700m on the Universal Credit programme so far the Committee questions what has really been gained. It says:

“The Department must set out clearly what it has really gained from its spending so far, including from the piloting of the programme, and from the investment in live service IT systems.”

Fewer than one per cent of the potential claimants are currently claiming Universal Credit although the programme has been in live operation since April 2013.

The DWP says it is going slowly and cautiously but the PAC’s report raises questions about whether the programme, as it is being delivered by the DWP’s major suppliers, will ever be affordable or technically feasible given the amount of manual intervention required.

A separate, far cheaper “digital” solution, which is being built on agile principles,  is being trialled in Sutton, South London. It may offer more hope of successful, affordable delivery than the existing “live service” currently being rolled out. The live service from the DWP’s major suppliers mixes new coding, legacy systems and manual calculations. It has cost £344m so far. The digital solution has cost less than £5m so far.

Comment

Who has the final say on whether the four Universal Credit reports are published – the Department for Work and Pensions or the all-party Public Accounts Committee? Clearly it’s the DWP’s civil servants.

MPs are powerless to force publication of the reports.

What does this say about the ability of MPs to make the most senior civil servants more open than they want to be?

Universal Credit: progress update report

Very little progress on Universal Credit say MPs

DWP wastes money on another Universal Credit FOI appeal

A great speech in praise of the Public Accounts Committee

By Tony Collins

Margaret Hodge spoke incisively this week about her five years as chairman of the 160 year-old Public Accounts Committee.

It’s assumed that civil servants answer to ministers who are then accountable to Parliament when things go wrong. Hodge mentioned failed IT projects several times.

But she painted a picture of senior officialdom as a force independent and sometimes opposed to Parliament. She said some senior officials had a “fundamental lack of respect for Parliament”. She had come up against an opposition that was “akin to a freemasonry”.

She said:

“With accountability comes responsibility. I can’t think how often we ask whether those responsible for dreadfully poor implementation are held to account for their failures.

“It rarely happens. People rarely lose their job. Those responsible for monumental failures all too often show up again in another lucrative job paid for by the taxpayer…”

Some excerpts from Hodge’s “Speaker’s Lecture” are worth quoting at length …

“… I have been truly shocked by the extent of the waste we have encountered. This is not a party political point. It’s not that this Conservative- Lib-Dem Coalition is worse or better than the previous Labour Government.

“It’s not that the private sector is more efficient than the public sector.

“It’s not about questioning the dedication of hundreds of thousands of public sector workers wanting to do their best… for me personally, sitting on the left of the political spectrum, I passionately believe in the power of public spending and public services to transform and equalise life chances.

“Yet if I am to ask other people to give up their money so that we can use it to secure greater equality, then I must earn their trust that I will use that money well.

“From £700m which I believe is likely to be written off with the botched attempt to introduce a politically uncontroversial benefit change with Universal Credit, to £1.6bn extra cost incurred by the previous Government in signing the contract for the Aircraft Carriers without any money in the Defence budget and then delaying its implementation; from the failure of successive Governments to tackle the many billions lost through fraud and error or IT investment, to the inability of successive Governments to deport foreign nationals who have committed crimes and ended up in our prisons, the failures are too many, they occur too often and they occur with persistent and unbroken regularity.”

Media shuns “good news” stories

“Of course we do things well. I think of recent positive reports on the Troubled Families programme, the Prison buildings programme or the implementation of the Crossrail contract. And trying to get proper recognition of these successes is well-nigh impossible. …

“I remember being rung up by a researcher on the Today programme who wanted me to go on to speak about education for 16-18 year olds. She asked what I would be minded to say and I told her that it was a good report and I would be complimentary. ‘I thought you would be critical’ she responded. No it’s a positive report I replied. Well, she said, I’d better go away and read it, She  rang me half an hour later to tell me they had dropped the item from the programme.

“But despite acknowledging the good things that are done, I remain frustrated and angry at so much wasted expenditure and poor value for money.”

Grandstanding

“… If we do want to ensure public attention is drawn to something, it may involve the occasional bit of grandstanding. I don’t apologise for that, for I have very few tools available which I can use to get purchase and have an impact.

“If a bit of grandstanding is the only way to stop something happening again and again, we will use it – with big corporations, top civil servants and any establishment figure whom we believe has a case to answer…”

PAC versus a civil service freemasonry?

“I received a letter from the departing Cabinet Secretary which was widely circulated around Whitehall and to officials of the House accusing the Committee of treating officials unfairly and reminding me that civil servants are bound by duties of honesty and integrity and therefore should only be asked to give evidence on oath as ‘an extremely unusual step’.

“Then a researcher from the Institute of Government came to see me, armed with a report of interviews she had undertaken with senior civil servants. She was just the messenger, but her message from senior civil servants was blunt. I quote:

‘The NAO/PAC are modeled on the red guards – not a convincing grown up model of Government… the chair is an abysmal failure… the worst chair I have ever seen….. MH is informed by friends in the media… PAC profile is seen to be bashing senior officials and determined to get media soundbites.’ ‘It is under appreciated how important dull committees are.’

And then the final shot…  ‘Should the PAC be broken up?’

“Basically, the explicit threat relayed to me was that if we did not change how we held civil servants to account, we would be closed down. Shut up or we’ll shut you down.

“The story sounds like something from Yes Minister, but more seriously demonstrates a fundamental lack of respect for Parliament that I find deeply worrying.

‘How dare you MPs touch us’ was what they were saying. It felt like we were up against something akin to a freemasonry.

“Now that was January 2012 and things have moved on… but have they?

Civil servants unaccountable?

“The sad truth is that in that struggle between civil servants and politicians, the civil servants are most likely to win, because whereas we are here today and gone tomorrow, they are there for the long term.

“There remains a deep reluctance among too many senior civil servants to be accountable to Parliament and through us, to the public. The senior civil servants hide behind the traditional convention that civil servants are accountable to ministers who in turn are accountable to Parliament.

“That principle worked when it was first invented by Haldane after the First World War and the Home Secretary worked with just 28 civil servants in the Home Office. Today there are over 26,000.

“It worked when the public did not demand transparency. Today they do.

“It worked when public spending was primarily funneled through large departments running large contracts. In today’s world with a plethora of autonomous health trusts and academy schools, in a world where  private providers are providing public services in a range of fragmented contracts, delivering everything from welfare to work, healthcare and now probation services, in today’s world the old accountability framework with the minister being responsible for everything is plainly a nonsense.

“And whilst we, of course, want to maintain an impartial civil service, that is not inconsistent with the need to modernize accountability to Parliament and the public.

“There is a fundamental problem at the heart of the traditional accountability system. How can civil servants be accountable to ministers if the ministers do not have the power to hire and fire them?

“It is the accountability framework that is broke and in need of reform – not the Public Accounts Committee…

Need for reform

“The promise to reform the Civil Service has produced a few welcome changes, like a Major Projects Academy to train people to manage big projects, but the change has been too little, too piecemeal and too marginal, not fundamental.

“We just need to build different skills and do it, not talk about it.

“We may need to pay more so that working in and staying in the public sector becomes a more attractive proposition for more talented people. Trumpeting success in keeping public sector salaries down is not sensible if you end up wasting money or hiring in expensive consultants to clear up the mess or do the work for you.

“We need to transform the way people get promoted. At the moment, you’re a success if you leave your post after two years in the job and move on.

“When I was Children’s Minister, after two years I had a better institutional memory than any of the civil servants with whom I was working.

“And when the PAC reviewed the Fire Control Programme, which aimed at reducing costs by rationalising how 999 calls were dealt with, but ended up costing nearly £1/2 bn when it was written off as a failure; we found that there had been 10 different responsible officers in charge of the project over a five year period.

“I know some projects take longer than the Second World War, but continuity of responsibility is critical to securing better value.

Centre of government “not fit for purpose”

“It is also clear to me that the way the centre of Government works is not fit for purpose. We have three departments Treasury, Cabinet Office and Number 10 all competing for power, rather than working together.

“And all of them seem to be completely unable to use their power to drive better value.  Treasury carves up the money and then does little to ensure it is spent wisely.

“They only worry whether the departments keep within their totals. This is not a proper modern finance function at the heart of Government that you would see in any other complex organisation.

“So, for instance we all know that early action saves money, be it in health, education, welfare spending or the criminal justice system. Treasury knows this too, but they are doing nothing to force a change in the way money is spent.”

Lessons unlearnt

“There is little learning across Government. The mistakes in the early PFI contracts are being repeated in the energy contracts negotiated by DECC [Department of Energy and Climate Change]…

“Nobody at the centre seems to think through the impact of decisions in one area on another. So of course cuts in local authority spending, where nearly 40% of their money goes on community care services, will impact on hospitals and bed blocking.”

“Too much thinking is short-term.  PFI, to which the current Government is as wedded as past governments, is building up a huge bill for future generations; assets worth £30bn today will cost £151bn over time. And using PFI locks us into ways of delivering services which quickly become outdated – like large district hospitals when we now want to care for people outside hospitals in the community.”

Price of fish 

“None of this is rocket science. So why doesn’t change happen? Why is there such resistance? Radically transforming the culture must be at the heart of securing better value.

“If the machinery of Government is so resistant, we need to take that challenge outside party politics. Only by working together across parties and over time will we be able to secure the culture, capability and organisation that we all need to deliver on our different political priorities.

“When I first took this job I read the IPPR study which said that whilst officials dreaded their appearance before the Public Accounts Committee, they were confident that it would never ‘change the price of fish’.

“I am determined to change the price of fish.

That is why we have instituted new ways. We now have regular recall sessions, calling back people to tell us why they haven’t accepted our recommendations, or why they haven’t implemented them. We bring back people after they have moved jobs to hold them to account for what they did in post.

“That caused a minor revolution when we first did it. I wanted Helen Gosch, who had moved from DEFRA to the Home Office to come back and account for the mess she had made administering the rural payments agency, paying farmers late, paying them the wrong amounts and having to send money back to Brussels because of the errors. She refused our invitation and only caved in when I ordered her to appear.”

More protection for whistleblowers please

“We try to use our analysis of past expenditure to improve spending in the future; understanding problems with past rail investment can help improve the delivery of future projects. We take regular evidence on the big change programmes, like Universal Credit or the Probation service.

“And I take seriously the material I get from whistleblowers. My time on the PAC has strengthened my respect for whistleblowers. Without them, we would have been less effective on tax avoidance and on the performance of private companies receiving taxpayer’s money to deliver public services.

“A major regret for me is that I was unable to prevent the treatment meted out to Osita Mba by HMRC. He was the official who sent us the documents on the Goldman Sachs affair. The department used the Regulation of Investigatory Powers Act, designed to get terrorists, to get into not just his emails and phone calls, but into his wife’s phone records. In the end he couldn’t stand it any more and quit HMRC. We clearly need to do more to protect whistleblowers.”

Investigative journalism

“I am also probably one of very few MPs who has a good word to say about journalists. From  eye Eye to the Times and from the Guardian to Reuters, their fantastic investigative work (when they do it properly) has helped us uncover abuse, malpractice and waste in a way we just couldn’t have done without them.

“For despite the excellent work produced by the National Audit Office, they are constitutionally separate from and different to the Parliamentary Committee. So we need our independent sources of help.”

My goal

“Unlike our American counterparts, who have 120 staff working to their committee, 80 working for the majority party and 40 for the minority party, we have a small committee staff who focus purely on process.

“If select committees are to increase their effectiveness they need to be better resourced. It’s partly about people, although I would hate to mirror our American colleagues because their system is very much more partisan.

“But it is also absurd that when we wanted to hold an international conference on tax avoidance we were told we had no money. It is just plain wrong that when we wanted to test whether a parliamentary committee should have access to company tax files to hold HMRC properly to account, we were unable to fund legal advice to support our case that HMRC should be accountable to us.

“Both the NAO and HMRC paid for expensive legal advice to oppose us. We had no money to secure our own advice.

“Select committees should have clear statutory powers to call for all papers and people to help them hold the Executive to account. We still don’t know whether Vodafone should have paid £6bn or £2bn with an interest free staging of the payments when they settled their tax bill with the Revenue. We should know and you should too…

“Reflecting on what I have said may leave you thinking everything is wrong. I know that there are many brilliant public sector workers and many stunning public services.

“Inevitably our work focuses on the problems and the challenges. But I come at it with a determination to seek and secure improvements. Because I care about public service and because I passionately believe in the power of public services to transform people’s life chances and to create greater equality in our society. That is my goal.”

Comment

One of the striking things about the PAC is the way it leaves crude tribal party politics at the door. That’s one of the reasons it’s quietly disliked by some senior officials: they cannot condemn the committee’s partisanship. It produces 60 unanimous reports a year. But do they make any difference?

One irony is that senior officials cite the PAC as a key Parliamentary device holding them to account. They lasso and rope in the PAC for their own purpose.

The work of the PAC in holding the civil service to account is cited by lawyers for the Department for Work and Pensions in repeatedly refusing to release four old Universal Credit documents.

In reality the PAC does not make much difference to the way Whitehall departments are run. But waste would probably be much greater if it didn’t exist.

What’s not in doubt is that Hodge is a great chairman of the PAC. If anyone can change the price of fish she will.

Governup

Reasons for councils to avoid large-scale outsourcing? – lessons learnt report

By Tony Collins

Somerset County Council’s Audit Committee has just published “Update on Lessons Learnt from the Experience of the South West One Contract”. The lessons could be read by some as a warning against any all-encompassing outsourcing deal between a council and a supplier, in this case IBM.

The carefully-worded report is written by Kevin Nacey, the county council’s Director of Finance and Performance. It updates a “lessons learnt” report the council published in February 2014.

The latest report concludes:

“… All parties have been working very hard to keep good relationships and to fix service issues as they arise. The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind.”

All local authority large-scale outsourcing deals are complex and difficult to manage. So are councils that sign big outsourcing deals courting trouble? Should councils avoid such contracts whatever the supplier incentives?

Somerset County Council was a top performing council when it created a joint venture owned by IBM in 2007. The aim was to take the council “beyond excellence” in the words of the then Somerset chief executive Alan Jones. His councillors hoped that the new company, Southwest One, would attract much new business and so cut costs for each of the partners.

But even without attracting new business, IBM had difficulties managing the sometimes conflicting expectations and services for each of the initial three clients: the county council, Taunton Deane Borough Council and Avon and Somerset Police.

Former Somerset County Council IT specialist Dave Orr has written a well-informed series of articles on the Southwest One contract.

What’s interesting now is that Somerset County Council, under pressure from Orr and others, has investigated what has gone wrong and why, and is disseminating the lessons, after giving them much thought.

Originally Somerset was proud of its deal with two councils and a police force. Its auditors in 2007 praised the deal’s innovative approach. Now we learn from the latest Somerset report that the contract was “incredibly complicated”. The report says:

“One of the most significant lessons learnt related to the sheer size, breadth and complexity of the contract. Both the provider [IBM] and the Council would agree that the contract is incredibly complicated.

“A contract with over 3,000 pages was drawn up back in 2007 which was considered necessary at the time given the range of services and the partnership and contractual arrangements created.”

[But all big outsourcing contracts run to thousands of pages and are unlikely to be anything but incredibly complicated.]

More from the council’s latest lessons learnt report:

“What has become clear over time is that any such partnership depends upon having similar incentives …”

[Does any big outsourcing deal have similar incentives for supplier and client? Only, perhaps, in the press releases. In reality suppliers exist to make money and, in times of austerity, councils want to spend less.]

“Dissatisfaction can occur”

The county council’s report: “The well-documented financial difficulties faced by the provider [IBM] early into the contract life also affected its ability to meet client expectations. The net effect is that at times the provider and partner aims in service delivery do not always match and discord and dissatisfaction can occur.”

Client function too small

“The Client function monitoring a major contract needs to be adequately resourced. At the outset the size of the client unit was deemed commensurate with the tasks ahead … However, as performance issues became evident and legal and other contractual disputes escalated, the team had to cope with increasing workloads and increasing pressure from service managers and Council Members to address these issues. This is a difficult balancing act.

“You do not want to assemble a large client function that in part duplicates the management of the services being provided nor overstaff to the extent that there is insufficient work if contract performance is such that no issues are created.

“With hindsight, the initial team was too small to manage the contract when SAP and other performance issues were not resolved quickly enough. Sizing the function is tricky but we do now have an extremely knowledgeable and experienced client team.”

3,000-page contract of little use?

“Performance indicators need to be meaningful rather than simply what can be measured. Agreement between the provider and the SCC client of all the appropriate performance measures was a long and difficult exercise at the beginning of the contract.

“Early on in the first year of the contract, there were a large number of meetings held to agree how to record performance and what steps would be necessary should performance slip below targets. Internal audit advice was taken (and has been at least twice since under further reviews) on the quality and value of the performance indicator regime.

“It is regrettable and again with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and SCC was positive. Perhaps the regime was too onerous for both sides to administer.”

[A 3,000 page contract proved of little value in holding the supplier to account on performance. So was there much value in the contract apart from making a lot of money for lawyers? Too tight a contract and it’s “too onerous for both sides to administer”. Too loose and there’s no point in the contract. Another reason for councils to avoid entering a big outsourcing deal?]

“Too ambitious for all parties”

The report says:

“Contract periods need to be different for different services as the pace of change is different. The range of services provided under the initial few years of the contract were quite extensive. On another related point the provider also had to manage different services for different clients. This level of complexity was perhaps too ambitious for all parties.

“Although there were many successful parts to the contract, it is inevitable that most will remember those that did not work so well. The contract period of 10 years is a long time for 9 different services to change at the same pace…”

Drawback of seconding staff

“The secondment model introduced as part of the contract arrangements had been used elsewhere in the country. Nevertheless, it was the first time that 3 separate organisations had seconded staff into one provider.

“In many ways the model worked as staff felt both loyalty to their “home” employer, keeping the public service ethos we all felt to be important, and to Southwest One as they merged staff into a centre of excellence model.

“The disadvantage was that Southwest One was hampered by the terms and conditions staff kept as they tried to find savings for their business model and to provide savings to the Council in recent years given the changing financial conditions we now operate under.”

Different clients on one main contract – a nightmare?

“Another aspect of this contract in terms of complexity is the nature of the partnering arrangement. It is not easy for all partners to have exactly the same view or stance on an issue. Southwest One had to manage competing priorities from its clients and the partners also had varying opinions on the level of performance provided.

“Remedy for such circumstances differed depending upon initial views of the scale of the performance issue and what each client required for its service.”

Quick audit work “stifled”

“It has been particularly challenging to achieve effective audit of the contract, both by internal and external auditors. Access for auditors has been a prime issue with clearance of those auditors often being slow as process involved all clients being satisfied that audit scope, coverage and findings were appropriate.

“The contract allowed for transparent audit access and there is no suggestion here that SWO did not welcome audit.

“Indeed, for the first few years of the contract there was a team within business controls in SWO that enabled and carried out their own audit work on behalf of IBM. It again proved to be the controls required by all partners and the complexity of access that stifled quick audit work to be performed.

“Increasingly, there was debate about capacity to support audit work within SWO and therefore, SWAP [South West Audit Partnership] suffered in terms of their ability to conduct audit work in good time. In addition,

“Police levels of security needed to be far higher than SCC and this complicated access for auditors.”

Arguments over confidentiality – FOI requests “incredibly difficult to answer”

“The most recent SWAP [South West Audit Partnership] audit of the contract client function found that there has been effective monitoring of SWO performance.

“The problem is that reporting of that performance has been hampered by arguments over commercial confidentiality and sensitivities about the validity of reporting.

“It is fair to say that the three clients do not always agree on the quality of service provided, which of course gives rise to SWO management challenging SCC’s robust approach if other clients do not agree when in our view service is deficient.

“The transparency surrounding contract performance has been a contentious issue given these difficulties, and especially at times of dispute and with court proceedings pending. Future contracts must make these issues clearer and give the authority the ability to follow the national agenda for transparency more explicitly and without fear of upsetting either partners or the provider.

“The Freedom of Information legislation is there to serve the transparency agenda but such requests have been incredibly difficult to answer because of need to ensure all parties are sighted on information made public.”

Confused data ownership

“A further issue is that of data ownership and responsibility. SCC must make available data if indeed it has that data. On a number of occasions SCC did not and SWO held data that contained references to other authorities.

“The shared service platform and the nature of service delivery occasionally made it costly to segregate data to respond to FoI and other requests. Secondees were also often torn between their allegiance to their ‘home’ employing authority and their commitment to SWO, which did cause some confusion regarding information ownership.

“In all contracts SCC must strive to ensure transparency is foremost in our thoughts and that clearance of data release is not subject to other parties’ views.”

ICT, SAP and splitting a one-vendor database – a host of issues

“Another lesson learnt from this contract relates to the use of ICT systems to be delivered and managed by the provider in any contract… Firstly, the introduction of SAP so early in the contract life and the system issues experienced meant that SWO performance became synonymous with SAP performance.

“There were many other benefits provided by SWO in the first few years of the contract related to other improvements in the network and associated applications but this was overshadowed by the SAP technology issue.

“Over time SAP has worked for SCC albeit there are still outstanding issues with its configuration and its flexibility to adjust to the Council’s changing needs.

“The creation of one vendor database in support of the shared service agenda is now with hindsight going to be a bigger issue for all clients as we approach the end of the contract.

“There is still insufficient knowledge transfer to secondees and this will leave a legacy issue for our authorities. Future contracts must clarify asset ownership, system maintenance and replacement infrastructure issues.”

Comment

Somerset County Council’s Audit Committee deserves recognition for the work it has put into the lessons learnt report.

It has produced the report under the pressure of years of intense outside scrutiny, by Dave Orr, and others.

Without such scrutiny Somerset could have ended up concealing contractual problems even from itself. We’ve seen in other parts of the country, where councils have failing outsourcing contracts, that the most enthusiastic councillors convince themselves that all is well.

They assume that negative local newspaper reports of problems on their major outsourcing contract are prompted by the profoundly disaffected, just as some councillors and officials in parts of the UK wrongly blamed the lifestyles of complainants when they alleged child abuse.

Mutual incentives?

The Somerset report says each side in an outsourcing relationship needs to be motivated by similar incentives. But can that ever happen? Councils exist to provide good public services as cheaply as possible. Suppliers exist to make as much money as possible.

There can only be similar incentives if a council is so inefficient that there’s enough spare cash to cover council savings and the supplier’s profits.

If there isn’t the spare cash, the council, in its enthusiasm to do something different by outsourcing, can simply fictionalise the figures for benefits and potential savings.

This creative (and legal) exercise is perfectly possible given the depth of the conjecture needed to project costs and savings over 6 years or more.

Part-time councillors who are considering a big outsourcing contract have the time only to glance at summary documents or the preferred supplier’s Powerpoint slides. They are unlikely to spot the assumptions that pervade the formalised legal language.

During such a pre-contract exercise, the most sceptical councillors are often excluded from internal scrutiny, and the disinterested ones who are admitted into the inner chamber can find their heads swimming in a supplier-inspired language that either swathes uncertainty in the business jargon of near certainty or obscures reality in opaque legalese.

How are these lay councillors to get at the truth? Do they have the time?

Big outsourcing deals between councils and suppliers are inherently flawed, as this Somerset report indicates. Too many such deals have ended badly for council taxpayers as Dexter Whitfield’s investigations have shown.

But still some councils sign huge outsourcing deals. Their leading officials and councillors say they took lessons from failed contracts around the country into account. But what does that mean? If a deal is inherently flawed, perhaps because of diverging incentives, it is inherently flawed.

The disaster that is Southwest One could be a priceless jewel in the public sector’s display case if it serves to deter councillors and officials signing further large-scale council outsourcing deals.

Thanks to Dave Orr for alerting me to the lessons learnt report.

Somerset report “Update on Lessons Learnt from the Experience of the South West One Contract”.

UK outsourcing expands despite high failure rates.

 

Jailed and bankrupt because of “unfit” Post Office IT? What now?

By Tony Collins

post office logoThe BBC’s “PM” programme returned to the topic last week of subpostmasters who were stripped of their post office contracts and bankrupted because of theft, fraud and false accounting. Some went to jail.

“Is it possible they were innocent and that a computer system was to blame instead?” asked Eddie Mair, the programme’s presenter.

The BBC has seen a leaked copy of an independent report the Post Office commissioned into its “Horizon” branch office accounting system. An interim version of the report by consultancy Second Sight was released last year.

The leaked report says the system was unfit for purpose in some branches, says to the BBC. When Post Office investigators checked out shortfalls they did not look for the root cause of the errors – and instead accused the sub-postmasters of theft or false accounting, says the BBC, quoting from the report.

£1bn Horizon system

More than 11,000 post offices use Fujitsu’s £1bn Horizon system for branch accounting and rarely have problems. At the close of each day, the system balances money coming in from customers and money going out, to banks, energy companies, for tax disc sales and for lottery tickets.

If the system showed there was a shortfall, subpostmasters had few options: make up the deficit themselves, sign off the accounts as correct, or refuse to sign off – which might have meant closing the post office (and upsetting customers) while a financial audit took place.

The BBC PM programme last week re-broadcast its interview in June 2012 with a gently-spoken Welshman, Noel Thomas, who worked for the Post Office for 42 years before he had problems with the Horizon branch accounting system at Gaerwen. When he went to balance the accounts the system kept telling him there was a deficit – a shortfall in the daily takings.

post-office-signPrison

After speaking to the Post Office helpline several times he believed the matter would be sorted out in time. He signed off the accounts – and the Post Office took him to court for false accounting. He pleaded guilty and went to prison; and he went bankrupt.

In his interview with Eddie Mair, Thomas came across as a man of guileless integrity.

“I had a very busy post office,” said Thomas. “I am not ashamed to tell you I had a very good income of between £20,000 and £30,000 a year. I worked very hard for it: I looked after my customers.”

Mair: What was the first sign of trouble?

“I did have trouble over about 12 months actually. The last six months it went worse. You just couldn’t balance. It was going in the end (into deficit) at the rate of £2,000-£3,000 a week.”

Mair: This wasn’t your own personal books – you weren’t filling in a ledger – this was the computer system?

“This was the computer system. In the end I was convicted on the basis that I false accounted for over £50,000.”

Mair: They thought you’d stolen it?

“Yes. But when it came to the court case they dropped the theft [charge] very very quickly and just went for false accounting.”

Mair: You went to jail?

“Yes… I was lucky. I only had eight days. Time went very very quickly.”

Mair: But I am guessing for you that was not really the problem, the passing of time. You’d been branded a criminal?

“Yes. That’s what got me you see.”

Mair: The Post Office still says it is confident about this computer system. It is still happy with it.

“It would say [that], wouldn’t it?”

Mair: As for you, are you confident you didn’t make a lot of mistakes?

“Yes. I can say I didn’t make mistakes. I can say with my hand on my heart I didn’t take the money.”

Mair: What effect has this had on you?

“A big effect, because I was declared bankrupt. The Post Office are paying my pension but they took my private pensions away.”

Mair: What would you like to happen?

“Not for me myself but for (other subpostmasters and mistresses). It has ruined their lives hasn’t it? If you pilfer off the Royal Mail you need to be punished –”

Mair: But Noel if you are correct – and obviously the Post Office has a different view of this – if you are right then you have been made bankrupt, you have lost almost everything –

“Yes.”

You have been to jail –

“Yes.”

Over a computer mistake –

“Yes.”

Mair: What do you want from them?

“That we can get justice for everybody.”

post officeCriminals or faulty systems?

Thomas had given up trying to prove his innocence when he received a phone call from retired senior probation officer Roch Garrard who said the same thing had happened to his local postmistress in Hampshire.

In time Thomas found that dozens of middle-aged, middle-class subpostmasters and mistresses who had never put a foot wrong were being branded criminals.

“It didn’t make sense to me so I started to contact some of them and said to them ‘this is what happened to our postmistress, what happened to you’ and the stories were all so similar that I thought there must be something wrong,” he said.

Now, more than 150 sub-postmasters say they were wrongly prosecuted, or made to repay money, because of the system. The Post Office remains defensive. Its public statements express little sympathy. It is, though, in secret talks with the subpostmasters over possible compensation. But can money ever put right injustices that have ruined lives?

New Second Sight report

BBC reporter Dan Johnson said the latest report explains exactly was going on with the Post Office computer system. “The thrust of this report is that it was faults in that computer system as well as communication problems, and issues around training that led to these mistakes. It wasn’t dishonesty,” said Johnson.

The report said training was not good enough for those without IT skills and power failures and communication issues made things worse. Helpline staff gave conflicting advice or said problems would sort themselves out.

Second Sight found in its research on Horizon that bugs were  not unknown. It said in its interim report that “some combinations of events can trigger situations where problems occur”.

A tearful Sarah Burgess Boyd, from Newcastle-upon-Tyne told the BBC she lost her life savings in repaying an incorrect shortfall. She said of the Post Office, “I just don’t know of another business that would conduct themselves in such a callous and inhumane manner.”

The Post Office said the leaking of the report was “unhelpful”. In a statement, the Post Office told the BBC:

“Although we will not comment on the contents of any confidential documents, after two years of investigation it remains the case that there is absolutely no evidence of any systemic issues with the computer system which is used by over 78,000 people across our 11,500 branches and which successfully processes over six million transactions every day.”

The Post Office is in mediation with some of the affected subpostmasters, in part because of campaigning for justice by MPs, particularly North East Hampshire MP James Arbuthnot.

Also leading the campaign is the Justice for Subpostmasters Alliance, which was set up to “raise awareness of the problems around the Post Office Horizon system which for many years Post Office Limited has denied exist”.

Despite the mediation, the relationship between the accused subpostmasters and the Post Office remains strained. Alan Bates, a former subpostmaster in Wales who founded the Justice for Subpostmasters Alliance, continues to submit FOI requests to the Post Office, the latest being August 2014. The Post Office tends to refuse his requests or gives him unsympathetic replies.

In one of his FOI appeals, Bates tells the Post Office that the concern is not about the millions of successful weekly and monthly financial reconciliations that take place but the “numerous unsuccessful reconciliations that take place that Post Office refuses to even consider may occur”. Post Office management “seems blind to such possibilities”.

He told BBC Wales in 2012:

“One of the big problems with Horizon is the inability to fully examine all the data you have put in the system. You were not allowed to interrogate it. They restricted the access. I refused to be held liable for a system that I and my staff were unable to access to check.”

Under the FOI Act, Bates asked the Post Office last month for the total amount in value and number of all “transaction correction” invoices and credit notes issued to post offices in the latest accounts period; and he asked in April 2014

“Has Post Office ever been made aware of faults within the software of their Horizon System that would have impacted in any way on the accuracy of the accounts of any post office?”

The Post Office did not say. Its reply was that the question was not specific enough.

Ministers have been unsympathetic to the accused subpostmasters –  although the campaign to clear the names of the accused has come mostly from Conservative MPs. Minister Jo Swinson told the House of Commons last year that the number of subpostmasters who’d complained about the Horizon system was “tiny, tiny”.

The National Federation of SubPostmasters has also been unsympathetic and has backed the Post Office. The Federation said: “We continue to have complete confidence in the Horizon system, which carries out hundreds of millions of transactions every week at 11,500 Post Office outlets across the country.

“The NFSP has seen no evidence to suggest that Horizon has been at fault and we believe it to be robust.”

Contract Law

Bhavisha Parekh, a case handler at Contact Law, was approached in 2009 by a sub-postmaster whose accounts had been audited that morning – and they’d found a loss of £7,000.

Parekh writes on the Contract Law website:

“The client had found this loss when doing her daily accounts a week earlier and asked the Post Office auditors to assist her and investigate the matter to locate the loss and rectify the accounts.

“Post Office accounts consist of cash, stamps, and postal orders as well as anything else they trade in; everything is given a financial value. The client’s loss was not of cash and all her transactions were showing to be completed correctly.

“However, upon the auditor’s confirmation of the loss she was charged with theft from the Post Office and given notice of being given a statutory demand for the £7,000.

“The client was in tears over the phone as she felt she had been wrongly charged; the client had run the Post Office for many years without fault and had become a pillar of the community.

“She felt victimised, as when trying to resolve this problem with the Post Office she had asked them to audit her branch and now she was being charged with theft.

“That day I gave the client details of a firm local to her (solicitors) to assist her with this matter. A few weeks later when calling the client to get feedback on the outcome of her case, she explained that she had had been investigated by the Post Office but they had not found anything to show she had taken the money.

“When auditing her branch the final accounts showed a loss; however, the auditors were unable to trace where this loss occurred. After further investigation and having a forensic accountant look into the matter, there were still no answers as to where this loss had occurred.

“This seemed pretty strange; the client in the meantime was told she could not work in the Post Office or even enter the building so she was left without an income and fear of being criminally prosecuted.

“However, after a month or so the Post Office wrote to her to state they had dropped the charges. She would however not be able to commence work as a sub-postmaster, and no explanation of the matter was given.

“Since speaking to this client I was approached by two more former sub-postmasters with the same case. However, they have not been as ‘lucky’ as my initial client – one was dismissed as a sub-postmaster and asked to repay this ‘lost’ amount, and the other was charged with theft and imprisoned for 18 months as well as ordered to pay a sum of £75,000.

“In all three cases the Post Office and their trained auditors have been unable to locate what this loss is; further they have not been able to trace any money into the postmasters’ accounts. Apart from there actually being a loss, there has been no evidence of any theft ever taking place.

“I have only spoken to three sub-postmasters; however this is happening at an increasing scale all over England. Computer experts are now stating that the ‘Horizon’ software the Postmasters use is flawed and so showing these losses.

“Potentially, due to this computer error, many sub-postmasters have lost their jobs, been imprisoned, and left traumatised by the Post Office’s actions.”

Comment

The Post Office deserves credit for investigating some of the complaints (after years of pressure from MPs) and it is said to have settled some of the less serious cases. But five years since the accumulation of problems came to light the convictions against subpostmasters remain. Computer Weekly highlighted the plight of subpostmasters in 2009.

Second Sight’s latest report will add to concern that lives were ruined because unexplained deficits on the Post Office’s Horizon system were not thoroughly investigated – and the root cause established – before the Post Office ticked the legal box to prosecute.

There is scope for systems to go wrong when there are multiple interfaces, occasional power failures and faults in networks and communications equipment. The Post Office’s Horizon system has multiple interfaces; and in any case no IT system is perfect. That Horizon works well for tens of thousands of subpostmasters is no guarantee it will work well for all.

Telling the family of someone struck by lightning that millions of people are not struck by lightning every year is extraordinarily insensitive. What’s the point of the Post Office’s continuing to insist that most subpostmasters have no problem with Horizon? Clearly there are no system-wide issues but nobody is saying there are – and why would those sent to prison, made bankrupt or deprived of their livelihoods care if IT issues were systemic or not? They say it happened to them.

Nobody in the general population would believe that 150 or more subpostmasters were dishonest.

Who would put the integrity of a computer system above the integrity of 150 subpostmasters?

The Post Office, as the prosecuting authority, could argue it is only doing its job in protecting its money and the investments of taxpayers. But in doing their jobs Post Office managers seem to be behaving more like machines than humans. They prosecuted for false accounting because they could.

They could, because sub-postmasters, when confronted by a deficit they didn’t understand, signed off accounts after being told by the IT helpdesk that the problems would probably clear in time. Strictly speaking, signing off accounts as correct when they are  known to be incorrect is false accounting. But was it something the Post Office should have prosecuted, given the mounting complaints about the accuracy of the system’s deficit figures?

Still the Post Office is refusing to answer subpostmaster’s questions. Its managers know they have the legal and contractual upper hand; and as owners of the system they possess the facts. What they do not have is the moral upper ground: they lost any claim to neutrality when they took subpostmasters to be dishonest before properly investigating the potential for shortcomings of the system.

It will be damaging to justice and the reputations of the subpostmasters if the Post Office continues to conform to the stereotype of a large organisation that, once it has denied liability for anything, refuses repeatedly to alter its position, whatever the facts.

As individuals, Post Office managers are probably understanding. As an institution the Post Office appears hostile to those whose lives have been ruined. It seems content to allow the cry for justice to stretch out for years, while it remains defensive and unsympathetic.

Shadow business minister Ian Murray asked in the House of Commons last year:

What processes will be put in place to compensate sub-postmasters and former sub-postmasters who have been disadvantaged, fined, lost their businesses, homes or even jailed, as a result of the problems with the Horizon system?

Wronged subpostmasters deserve far more in compensation than the sums originally in dispute. Is the Post Office institutionally capable of righting egregious wrongs?

Are disaffected subpostmasters having to sign gagging orders?

Second Sight interim report

Subpostmasters tell their story

Justice for Subpostmasters Alliance

 

DWP tries again to stop release of Universal Credit reports

By Tony Collins

The Department for Work and Pensions has requested another legal hearing in its attempt to stop four ageing reports on the Universal Credit programme being published.

The DWP’s formal application to the Upper Tribunal (below) shows that Whitehall officials and work and pensions  ministers, Iain Duncan Smith and Lord Freud,  are prepared to sink more public money into fighting a judge’s ruling in March 2014 that the DWP publish the four reports

It appears the DWP does not want the reports published on a point of principle: the department does not publish any reports on any of its major IT-based change programmes.

Another reason officials and ministers have for keeping the reports confidential is that they would establish what officials knew of Universal Credit programme’s serious problems in 2012 when departmental press releases were saying the scheme was on time and within budget.

The reports could show, without ambiguity, that the DWP misled Parliament in 2012 and 2013 by saying the UC programme was progressing successfully when officials knew this was not the case.

So far the the DWP’s lawyers have lost every stage of their appeals to stop disclosure of the reports. One judge noted the apparent contradiction between what’s in the hidden reports and optimistic press releases issued by the department about the UC programme.

The reports in question date back to 2011 and 2012. They are:

–  A Project Assessment Review of Universal Credit by the Cabinet Office’s Major Projects Authority. The Review gave a high-level strategic view of the state of UC, its problems, risks and how well or badly it was being managed.

–  A Risk Register of Universal Credit. It included a description of the risk, the possible impact should it occur, the probability of its occurring, a risk score, a traffic light [Red/Green Amber] status, a summary of the planned response if a risk materialises, and a summary of the risk mitigation.

– An Issues Register for Universal Credit. It contained a short list of problems, the dates when they were identified, the mitigating steps required and the dates for review and resolution.

– A High Level Milestone Schedule for Universal Credit. It is described in the tribunal’s ruling as a “graphic record of progress, measured in milestones, some completed, some missed and others targeted in the future”.

John Slater, who has 25 years experience in IT and programme and project management, requested three of the reports in 2012 under the FOI Act. Separately I requested the Project Assessment Review, also in 2012. The Information Commissioner ruled that the DWP release three of the four reports. He said the Risk Register could stay confidential.

The DWP appealed the ruling and the case came before the first-tier information tribunal earlier this year.  The DWP sent an external legal team to Leicester for the hearing – which the DWP lost.

The tribunal ruled that the DWP publish all four reports. Lawyers for the DWP had claimed that disclosure of the four reports would inhibit the candour and boldness of civil servants who contributed to them – the so-called chilling effect.

The DWP’s lawyers sought the first-tier tribunal’s leave to appeal the ruling, describing it as “perverse”. The  lawyers said the tribunal had wholly misunderstood what was meant by a “chilling effect”, how it was manifested and how its existence could be proved.

They claimed that the first-tier tribunal’s misunderstanding of the chilling effect and its perverse decision were “errors of law”. For the first-tier tribunal’s finding to go to appeal to the “upper tribunal”, the DWP would have needed to prove “errors in law” in the findings of the first-tier tribunal.

The judge in that case, David Farrer QC, found that there were no errors in law in his ruling and he refused the DWP leave to appeal. The DWP then asked the upper tribunal to overrule Farrer’s decision – and the DWP lost again.

The judge in the upper tribunal refused permission for the DWP to appeal.

Rather than simply publish the reports – and avoid further legal costs – the DWP has now asked its lawyers to submit another request for an appeal. This time the DWP has asked for an “oral hearing” so that its lawyers can argue for permission to appeal to the upper tribunal in person, rather than on paper.

The upper tribunal has yet to decide on the DWP’s request for an oral hearing.

As long as the DWP sustains its series of appeals it does not have to publish the four reports, although legal costs from the public purse continue to rise.

The DWP’s latest letter to the upper tribunal:

8 July 2014

Dear Sirs

Department For Work And Pensions v ICO

Application to the Upper Tribunal for permission to appeal

We write further to your letter dated 25 June 2014 enclosing Upper Tribunal Judge Wikeley’s refusal of the Secretary of State’s application for permission to appeal and above three appeals.

We apply in accordance with rules 22(4) and (5) of the Tribunal Procedure (Upper Tribunal) Rules 2008 for the Department for Work and Pensions’ application for permission to appeal against the First-Tier Tribunal’s decision of 19 March 2014 (notified on 24 March 2014) in the above cases to be reconsidered at an oral hearing.

The Department for Work and Pensions contends that each of the three proposed grounds of appeal is arguable in law for the reasons set out in the grounds of appeal accompanying its application for permission to appeal, and applies for reconsideration before a judge at an oral hearing on that basis.

Yours faithfully …

Comment

The DWP is facing Parliamentary and NAO criticism over the poor state of several of its major programmes. So it is odd that its officials have the time, and can spare the public funds, to fight a long campaign to stop four old UC programme reports being published.

It shows that the DWP cares more about how it is perceived by the outside world than it cares for minimising the public money it spends on this FOI case.

It’s likely that publication of the four reports would slightly embarrass the department but that would soon be forgotten.  Once incurred the legal costs cannot be reclaimed.

The DWP’s claims of a “chilling effect” should the reports be disclosed are entirely understandable. No publicly funded body wants be scrutinised. Officials would rather keep all their internal affairs secret.  But that’s not the way it works in a democracy.

Upper Tribunal ruling Universal Credit appeal

My submission to FOI tribunal on universal credit

Judge [first-tier tribunal] refuses DWP leave to appeal ruling on Universal Credit reports – April 2014