Will Universal Credit ever work? – NAO report

By Tony Collins

Today’s National Audit Office report Universal Credit: early progress is one of most excoriating the NAO has published on a government IT-enabled project or programme.

Iain Duncan Smith, secretary of state for work and pensions, has already responded to the NAO report by implying it is out of date and that the problems are in the past. This is a standard government response to well researched and highly critical NAO reports.

But the authors of the NAO report have pointed to some UC problems that are so fundamental that it may be difficult for any independent observer to credibly regard the project’s problems as historic. Says the NAO:

“The Department [DWP] is unable to continue with its ambitious plans for national roll-out until it has agreed the future service design and IT architecture for Universal Credit.”

So can the UC project ever be a success if, years after its start, there is no agreed design or IT architecture? Says the NAO

“The Department may also decide to scale back the complexity and ambition of its plans.”

Although the DWP has spent more than £300m on UC IT, mostly with the usual large IT suppliers, complex claims cannot yet be handled without manual work and calculations.

In February 2013, the Cabinet Office’s Major Projects Authority reviewed Universal Credit and raised “serious concerns about the programme’s progress”, says the NAO report. “The review team was concerned that the pathfinder [pilot project] could not handle changes in circumstances and complex cases which had to be dealt with manually, and that this meant the pathfinder could not be rolled out to large volumes.”

The Independent says the DWP gave false assurances on the project’s progress. The Daily Mail says the scheme has got off to a “disastrous start”.

The NAO’s main findings:

 Is £303m spent on IT value for money?

 “At this early stage of the Universal Credit programme the Department has not achieved value for money. The Department has delayed rolling out Universal Credit to claimants, has had weak control of the programme, and has been unable to assess the value of the systems it spent over £300m to develop [up to the end of March 2013].

“These problems represent a significant setback to Universal Credit and raise wider concerns about the Department’s ability to deal with weak programme management, over-optimistic timescales, and a lack of openness about progress.”

A projected IT overspend of £233m?

The NAO puts the expected cost of implementing Universal Credit to 2023 at £2.4bn. The spend to April 2013 is £425m, including £303m on the IT. The planned IT investment in the current spending review period from the May 2011 business case was £396m, but the December 2012 business case puts the planned IT investment in the current review period at £637m – and increase of £233m, or 60%. The DWP wants to make changes elsewhere in its budgets to accommodate the extra IT spend.

Ministers and DWP spokespeople have said repeatedly that the project is within budget.

Some of the IT spend breakdown

– Core software applications including a payment management component  – £188m

– Interface with HMRC real time information – £10m

– Case management module – £6m

– Licences – £31m

– Supplier support – £26m

– Hardware, telephony and changes to old systems – £50m

– Departmental staff costs on the Business and IT Solution team – £29m.

– Staff contractors provided by suppliers to support departmental staff  – £26m.

Main IT suppliers – spend to end of 2012/13

– Accenture. Software design, development and testing including: interview system; evidence capture, assessment and verification; and staff contractors – £125m

– IBM. Software design, development and testing including: real time earnings; process orchestration and payment management; and staff contractors – £75m

– HP. Hardware and legacy system software, and staff contractors – £49m

– BT. Telephony. It also supplied specialist advice on agile development methods – £16m

A further £9m was spent on live system support costs provided by HP; bringing total spending with suppliers to £312m, says the NAO.

 Is the IT high quality or not?

The NAO report suggests there may be conflicting views between those in DWP who believe the IT is high quality and others who are not so sure.

“The Department believes that the majority of the built IT is high quality, but has not been fully developed and cannot support scaling up the programme as it stands. Some assessments have commented that systems are inflexible or over-elaborate.”

Will the IT support a national roll-out?

The NAO says it’s uncertain that the IT can support full national roll-out of Universal Credit without further work and investment.

“The Department does not yet know to what extent its new IT systems will support national roll-out. Universal Credit pathfinder systems have limited function and do not allow claimants to change details of their circumstances online as originally intended. The Department does not yet have an agreed plan for national roll-out and has been unclear about how far it will build on pathfinder systems or replace them.”

Will timetable and scope have to change further?

“The Department will have to scale back its original delivery ambition and is re-assessing what it must do to roll-out Universal Credit to claimants. The current programme team is developing new plans for Universal Credit. Our experience of major programmes supported by IT suggests that the Department will need to revise the programme’s timing and scope, particularly around online transactions and automation.”


“It is unlikely that Universal Credit will be as simple or cheap to administer as originally intended. Delays to roll-out will reduce the expected benefits of reform…”


“ The ambitious timetable created pressure on the Department to act quickly…”

Open to fraud?

“The Department’s current IT system lacks the ability to identify potentially fraudulent claims. Within the controlled pathfinder environment, the Department relies on multiple manual checks on claims and payments. Such checks will not be feasible or adequate once the system is running nationally.

“Without a system in place, the Department will be unable to make the savings it had planned, by reducing overpayments from fraud and error. In December 2012, it estimated these savings to be worth £1.2 billion per year in steady state.”

Separately the NAO states that there have been “unanticipated security problems from putting transactions online”. The DWP may now scale back all that was planned to be online.

In January 2013 the technical director of CESG and other reviewers said that the UC security solution was “over-complex” and could have conflicted with DWP plans to encourage people to claim online.

Delay in national roll-out

“The Department has delayed rolling out Universal Credit nationally. The Department will not introduce Universal Credit for all new out-of-work claims nationally from October 2013 as planned. Instead it will add a further six pathfinder sites from October 2013

 “Pause UC immediately”

In early 2013 the Cabinet Office’s Major Projects Review Group noted that the Department had not addressed issues with governance, management and programme design despite their having been raised in previous reports. The Authority “recommended that the Universal Credit programme be paused immediately”.

All  post-2015 plans under review

The original plans were for UC roll-out to finish by late 2017. All statements by officials and Iain Duncan Smith have confirmed this 2017 deadline. In fact, says the NAO, all milestones beyond the start of 2015 are “currently under review” including:

• National roll-out of all new claims

• Closedown of tax credits new claims

• Roll-out of Pension Credit Plus on Universal Credit platform

• Completion of claimant migration

The NAO says the DWP has considered completing the roll-out beyond 2017.

Complete rethink needed

 The Cabinet Office’s Major Projects Authority reviewed and reported on Universal Credit in February 2013. The Authority’s found that:

“Universal Credit Programme needs a complete rethink of the delivery approach together with streamlining potentially over-elaborate solutions.”

A separate review of the project by Capgemini in January 2013 and a “Reset IT stocktake” in April 2013 concluded that the UC “architecture is of limited extensibility”.

Pathfinders of limited value

“The pathfinder lacks a complete security solution. Claimants cannot make changes in circumstances online. This increases the need for manual work as changes must be made by telephone. The pathfinders also require more staff intervention than planned, because of reduced automation and links between systems.”

100 day planning period

 “In May 2013, the Department appointed the current senior responsible owner [Howard Shiplee] to lead the Universal Credit programme. The team is now conducting a ‘100-day planning period’, which will end at the end of September 2013. The Department will then submit a new business case to HM Treasury, and ask for ministerial sign-off for delivery plans in late 2013.”

Secrecy – even internally?

“The reset took place between February and May 2013. The reset team included departmental, Cabinet Office and Government Digital Services staff. The reset team developed an extensive set of materials as part of a ‘blueprint’ covering design and implementation, and 99 detailed recommendations. The reset team shared the blueprint with the Department’s Executive Team who approved it at each stage of its development. The Department shared the blueprint with a small number of people but did not initially share it widely.”

A £34m write-off – so far

“The Department has acknowledged that it needs to write off some of the value of its Universal Credit IT assets. By the end of 2012-13, the Department had spent £303m on its IT systems and created assets which it valued at £196m – a difference of £107m. But the DWP has decided to write-off £34m – 17% – though it may increase the size of the write-off later.

“The Department is conducting further impairment reviews of the value of its Universal Credit IT assets before finalising its 2012-13 accounts.” The £34m write-off was based on a “self-assessment which it asked its suppliers to conduct”.

Number of claimants well below planned level

“In its October 2011 business case, the Department expected the Universal Credit caseload to reach 1.1 million by April 2014, but reduced this to 184,000 in the December 2012 business case.”

Planned savings down by nearly £500m

“The cost to government of implementing Universal Credit will be partly offset by administrative savings. In December 2012, the Department estimated that a three-month delay in transferring cases from existing benefits to Universal Credit would reduce savings by £240m in the current spending review period and by £247m after April 2015.”

 Anyone know who decided on October 2013 for planned UC roll-out?

 “The Department was unable to explain to us why it originally decided to aim for national roll-out from October 2013. It is not clear whether the Department gave decision-makers an evaluation of the relative feasibility, risks and costs of this target date.”

 Agile … with a 1,000-strong team?

“In 2010, the Department was unfamiliar with the agile methodology and no government programme of this size had used it. The Department recognised that the agile approach would raise risks for an organisation that was unfamiliar with this approach. In particular, the Department

• was managing a programme which grew to over 1,000 people using an approach that is often used in small collaborative teams;

• had not defined how it would monitor progress or document decisions;

• needed to integrate Universal Credit with existing systems, which use a waterfall approach to managing changes; and

• was working within existing contract, governance and approval structures.

“To tackle concerns about programme management, the Department has repeatedly redefined its approach. The Department changed its approach to ‘Agile 2.0’ in January 2012. Agile 2.0 was an evolution of the former agile approach, designed to try to work better with existing waterfall approaches that the Department uses to make changes to old systems.

“After a review by suppliers raised concerns about the achievability of the October 2013 roll-out the Department then adopted a ‘phased approach’ and created separate lead director roles for the pathfinder (phase 1), October roll-out (phase 2) and subsequent migration (phase 3).

“The Cabinet Office does not consider that the Department has at any point prior to the reset appropriately adopted an agile approach to managing the Universal Credit programme.”

Anyone know how UC is meant to work?

The source of many problems has been the absence of a detailed view of how Universal Credit is meant to work. The Department has struggled to set out how the detailed design of systems and processes fit together and relate to the objectives of Universal Credit.

“This is despite this issue having been raised repeatedly in 2012 by internal audit, the Major Projects Authority and a supplier-led review. This lack of clarity creates problems tracking progress, and increases the risk that systems will not be fit for purpose or that proposed solutions are more elaborate or expensive than they need to be…

“The Department was warned repeatedly about the lack of a detailed ‘blueprint’, ‘architecture’ or ‘target operating model’ for Universal Credit. Over the course of 2011 and the first half of 2012, the Department made some progress but did not address these concerns as expected.

“By mid-2012, this meant that the Department could not agree what security it needed to protect claimant transactions and was unclear about how Universal Credit would integrate with other programmes. These concerns culminated, in October 2012, in the Cabinet Office rejecting the Department’s proposed IT hardware and networks.

“ Given the tight timetable, unfamiliar programme management approach and lack of a detailed operating model, it was critical that the Department should have good progress information and effective controls. In practice the Department did not have any adequate measures of progress.”

High turnover among IT leaders?

“Including the reset and the current director general for Universal Credit, the programme has had five different senior responsible owners since mid-2012.

“The Department has also had high turnover in important roles other than the senior responsible owner. The Department has had five Universal Credit programme directors since 2010.”

The NAO said that the director of Universal Credit IT was “removed from the programme in late 2012 and the Department has replaced the role with several roles with IT responsibilities”. During and since the ‘reset’ the Government Digital Service has helped to redesign the systems and processes supporting transformation.

Good news culture and a fortress mentality

“The culture within the programme has also been a problem…Both the Major Projects Authority and a supplier-led review in mid-2012 identified problems with staff culture; including a ‘fortress mentality’ within the programme. The latter also reported there was a culture of ‘good news’ reporting that limited open discussion of risks and stifled challenge.”

“Inadequate control of suppliers”

The Department had to manage multiple suppliers. Three main suppliers – Accenture, IBM and HP – developed components for Universal Credit. The Department commissioned IBM to act as an Applications Development Integrator from January 2012, providing some oversight and overall management of IT development, but creating risks of supplier self-management.

The NAO found that there were inappropriate contractual mechanisms; charges were on the basis of time and materials, leaving the majority of risks with the Department. The NAO said there were “inadequate controls over what would be supplied, when and at what cost because deliverables were not always defined before contracts were signed.”

There was “over-reliance on performance information that was provided by suppliers without Department validation”. And weak contractual relationships with suppliers meant that the DWP “did not enforce all the key terms and conditions of its standard contract management framework, inhibiting its ability to hold suppliers to account”

Said the NAO:

“Various reviews have criticised how the Department has managed suppliers. In June 2012, CESG reported the lack of an agreed, clearly defined and documented scope with each supplier setting out what they should provide. This hampered the Department’s ability to hold suppliers to account and caused confusion about the interactions between systems developed by different ones. In February 2013, the Major Projects Authority reported there was no evidence of the Department actively managing its supplier contracts and recommended that the Department needed to urgently get a grip of its supplier management.”

Suppliers paid without proper checks

“The Department has exercised poor financial control over the Universal Credit programme. The Department commissioned an external review in early 2013 of financial management in Universal Credit. The review found several weaknesses including poor information about the basis for supplier invoices, payments being made without adequate checks and inadequate governance and oversight over who approved spending. The review team checked a sample of invoices against the timesheets of suppliers and found no evidence of inappropriate charging, although timesheet information is not complete and cannot be linked to specific activity…”

The NAO went on to emphasise that there was “insufficient review of contractor performance before making payments. “On average six project leads were given three days to check 1,500 individual timesheets, with payments only stopped if a challenge was raised.”

The NAO added that inadequate internal challenge of purchase decisions meant that ministers had “insufficient information to assess the value for money of contracts before approving them”.

50 people on the UC programme board

“The programme board acts as the programme’s main oversight and decision-making body… The programme board has been too large and inconsistent to act as an effective, accountable group. Over the course of 2012, the programme board had 50 different people attending as core members…

“The board did not have adequate performance information to challenge the programme’s progress. In particular, while the board had access to activity measures for IT system development, it could not track the actual value of this activity against spending.

“In the absence of such measures of progress, the board relied on external reviews to assess progress. Such external reviews were not sufficiently frequent for the board to use them as a substitute for timely, adequate management information.”

Programme board disbanded

 “… during the reset [Feb-May 2013], [the DWP] suspended the programme board entirely.

Failure to act on recommendations

“From mid-2012, it became increasingly clear that the Department was failing to address recommendations from assurance reviews… the key areas of concern raised by the Major Projects Authority in February 2013 had appeared in previous reports.

“From mid-2012, the underlying concerns about how Universal Credit would work meant that the Department could not address recommendations from assurance reviews; it failed to fully implement two-thirds of the recommendations made by internal audit and the Major Projects Authority in 2012. Without adequate, timely management information, the Department relied on periodic external assurance reports to assess progress.”

Ceasing work for national roll-out

“By late 2012, the Department had largely stopped developing systems for national roll-out and concentrated its efforts on preparing short-term solutions for the pathfinder…”

Slippery Parliamentary answers

The NAO lists almost imperceptible changes in the language of Parliamentary answers on Universal Credit.

In 2011 the DWP said in a Parliamentary answer that “all new applications” for out-of-work financial help would be treated as a UC claim; and in November 2012 the DWP said in a Parliamentary reply that in October 2013 it would start to migrate claimants from the old system to the new. But by June 2013 the DWP’s line had changed. By then it was saying in a Parliamentary reply that Universal Credit will “progressively roll-out” from October 2013 with all those who are entitled to UC claiming the new benefit by 2017. In fact all new applications for out-of-work help are not being treated as a UC claim. The NAO says that new claimants in the pathfinder must be “single, without children, newly claiming a benefit, fit for work, not claiming disability benefits, not have caring responsibilities, not be homeless or in temporary accommodation, and have a valid bank account and National Insurance number”.

Will UC ever work?

“ …it is still entirely feasible that it [UC] goes on to achieve considerable benefits for society. But to do so the Department will need to learn from its early mistakes.

“As it revises its plans the Department must show it can: exercise effective control of the programme; develop sufficient in-house capability to commission and manage IT development; set clear and realistic expectations about the timescale and scope of Universal Credit; and, address wider issues about how it manages risks in major programmes.”


Margaret Hodge MP, Chair of the Public Accounts Committee, says of the NAO report:

“The Department for Work and Pensions has made such a mess of setting up Universal Credit that the Major Projects Authority had to step in to rescue the programme.

“DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4bn, with little idea as to how it was actually going to work.

“Confusion and poor management at the highest levels have already resulted in delays and at least £34m wasted on developing IT. If the Department doesn’t get its act together, we could be on course for yet another catastrophic government IT failure.

“This damning indictment from the NAO gives me no confidence that we will see the £38 billion of predicted benefits between 2010-11 and 2022-23. Vulnerable benefit claimants need a secure system they can rely on.”

NAO report – Universal Credit: early progress

8 responses to “Will Universal Credit ever work? – NAO report

  1. chris moffatt

    “Your point about over-reliance on suppliers” – especially ones already known to have little or no expertise or success record except in the area of client-billing. This audit report could have been written, probably was written (many times), forty or more years ago. It appears nothing has been learned since then.


    • It is quite remarkable how many lessons haven’t been learnt from decades ago. The Committee of Public Accounts in 1984 issued a report about the government’s history of computer project failures.


  2. Pingback: Does Agile work? | Steve Cayzer

  3. I think we were all hoping that Universal Credit would be different – finally a major government project run well – doing the right things right. Sadly not. More of the same, but at least they had the courage to ‘stop’ – always a very difficult decision.
    It’s going to be very interesting to see just how much resetting they need to do. Without a target operating model, I suspect a lot. More comment here:


    • Good post Tim, particularly the part about agile … “They [the DWP] appeared to be under the common misconception that agile means that you can go ahead and design and build bits of a system, without any real understanding of the whole. This is not the case. At the start of any design and development process you need a high level design – a clear high level view of what the future state is intended to look like. Using agile development techniques, you then incrementally and iteratively design and develop against this view; adapting it as necessary as you travel along the design lifecycle.

      “This was one of the most important criticisms made by the NAO – the lack of a detailed view of how Universal Credit is meant to work. It appears that DWP was warned repeatedly about the lack of a “detailed ‘blueprint’, ‘architecture’ or ‘target operating model’” for Universal Credit. Well done whoever was doing the warning. Pity that no one in charge took sufficient notice…”



  4. This project should be renamed Universal Discredit!

    The NAO report shows a litany of basic mistakes in programme management and IT development.

    IDS is already spinning against the civil servants in charge at the client end and I guess that the idea will be to project this wholly as a public sector failure.

    Surely the three “world class” IT Contractors should shoulder some sort of responsibility for running this massive IT programme with (staggeringly) no system design or architecture?

    I sadly predict that most of the software developed to date will need significant re-engineering or even throwing away. That will not happen with IDS at the helm; IDS should go in Cameron’s next reshuffle.

    Contractors like Accenture, IBM & HP will continue to have their snouts deep in the trough of public money, if the client side appears to treat IT as something to be procured like a “widget” and relies wholly on the contractor for requirements definition, design, development, software assurance & deployment.

    Eyes Passim.


  5. Reblogged this on kickingthecat.


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