MPs dig hard for truth on Universal Credit IT

By Tony Collins

“Just answer the question … please!”

Rarely has any chair of the Public Accounts Committee pleaded so frequently with a permanent secretary not go round the houses when answering questions.

Margaret Hodge’s irritation was obvious on Tuesday [9 September] at a hearing of the Committee into a National Audit Office report on the Universal Credit IT-based programme: Universal Credit: early progress.

Before the Committee was Robert Devereux, the top civil servant at the Department for Work and Pensions. Beside him was UC’s latest project director Howard Shiplee who successfully led and managed construction contracts, budgets and timelines for all permanent and temporary venues for the Olympics. He has a CBE for services to construction.

It’s unclear how much experience Shiplee has had with IT-based projects and dealing with IT suppliers, though given his success as a big projects leader and construction expert,  IT leadership experience may be unnecessary.

There were signs from the hearing that Universal Credit project is following the events that have typically preceded IT-related disasters in government, especially in the way facts were interpreted in opposing and irreconcilable ways by the project’s defenders on one side and the “independents” on the other.

The “independents”, whose criticisms of the project have been withering, include a director at the National Audit Office Max Tse who led the NAO’s inquiry into the UC programme, and Dr Norma Wood, who has held several relevant positions in recent months, first as review team leader for a UC review in February, then as Transformation Director for the UC programme “re-set” in May 2013 and then as Interim Director General for the Cabinet Office’s Major Projects Authority. She is a consultant, not a civil servant. She appeared before the PAC on Wednesday.

Another “independent” is the auditor and consultancy PWC which reported to the government on financial mismanagement on the UC project. The NAO revealed the existence of the PWC report, which Hodge said was even more damming the NAO’s. [see separate blog post.]

A possible outcome of deeply conflicting views on the success or otherwise of a big and controversial project is that truth remains beyond anyone’s grasp within the life of the project and emerges only within the scheme’s post mortem audit report.

At Tuesday’s PAC hearing, the evidence given by Devereux and Shiplee on one hand, and Wood on the other was at times conflicting.

Wood’s evidence

Wood said that one of the lessons from the Universal Credit programme so far was that it was not conceived as a business transformation but was “very IT driven”. Of the £303m that has been spent on IT so far a sizeable part will need to be written off, beyond the £34m write-off so far.

Conservative MP Richard Bacon asked her how much could eventually be written off on the IT spend. “I think it will be substantial. I could not give you a figure,” she said.

When Bacon asked if it could be more than £140m she replied: “It will be at least that I would think.”

Her answer implied that the DWP will need to write off a large part of the £162m it currently estimates its IT assets are worth, after the £303m IT spend. Hodge said the write-off could be in excess of £200m – but this was later denied by Devereux, who also denied the write-off would be at least £140m.

Wood revealed that the figure for the write-off so far was derived from information given by suppliers, after the DWP asked them to judge how much of their equipment and software would be of use.

Conservative MP Stephen Barclay asked Wood whether suppliers were assessing the usability of their own work.

“Yes they were,” replied Wood.

Barclay: “So they were marking their own homework?”

“Yes they were.”

“Does that not carry a conflict of interest?”

“Yes it does.”

“Does it concern you?”

“It did,” replied Wood. “Therefore in the review we recommended an independent investigation.”

Barclay: “Building on Mr Bacon’s point, it is highly likely that with the initial write-off, if they have been marking their homework, comes a risk that the eventual figure is going to be bigger?”

“That’s true.”

Barclay’s questioning will indicate to some that the DWP and its IT suppliers were so close it could have been difficult for the department’s officials to be objective about what they were being told.

Steady-state solution

Wood spoke of how DWP and the Major Projects Authority had designed a “steady-state solution” which was a simplified version of UC , from which a more comprehensive system could be developed.

Said Wood: “There is a steady-state solution … with business requirements, that was handed over to the SRO [senior responsible owner] on 17 May, so there is a complete design and there is a multidisciplinary team working that design through to the next level.”

She said the steady-state solution is twin-tracked. “There is a piece that designs the interactive activity with the user and with the agents, and there is a part that uses existing systems, such as the payment system and the customer information system, but there are some 32 legacy systems in between, the utility of which we did not know at the time we completed the reset on 17 May.”

The interactive part is managed by a multi-disciplinary team that involves the GDS [Government Digital Service] and used agile, with waterfall for legacy systems.

“So yes, there is a design, and it is a very good design.”

On the use of agile she said the important thing is to apply rigour and discipline as you go through those methodologies. “It is not an issue of methodology; it is an issue of the rigour and discipline that is applied to those approaches.”

Pathfinder

Instead of a national roll-out starting in October, which was the original plan, the DWP is running “pathfinder” projects which accept only simplified claims and use limited IT without full anti-fraud measures.

Wood said: “It [the pathfinder scheme] is not hopeless. As it was currently configured there was a limit to the volume of payments it could handle because of the manual interfaces required – the manual support it required. So there is a very limited number of cases it could handle …”

Bacon asked if she would describe the pathfinder as so substantially de-scoped it was not fit for purpose.

“At the time we did the review [earlier this year] that was our conclusion.”

“ Is it correct that the pathfinder technology platform will not support UC in the future – that it is not scalable?” asked Bacon

“Unless it can handle all the functionality we have just described I fail to see how it can be scalable,” replied Wood.

Lessons

Liberal Democrat MP Ian Swales said: “We have exactly the same names of suppliers failing to deliver on government contracts time after time. Poor specifications, very vague penalties involved, and a sense that they have a vested interest, almost, in failure and we are again sat around this table discussing the same sort of thing. What can be learned?

Wood replied that there are some important lessons. “One is that this is not just a procurement exercise; this is actually a contract management exercise. It is really important that one understands what the business needs to deliver. That is why I stress that this was constituted not as a business transformation programme, but as an IT programme. It is important that the business drives the IT requirements and manages the contracts accordingly.”

Is 2017 feasible?

Wood: “It is feasible to deliver the whole thing by 2017.”

Bacon pointed out that there is no approval for further spending on UC until November 2013 and only then if criteria is met. He asked Wood on what basis approval for more spending would be given. Wood said it will be based on whether the project is affordable, value for money, deliverable within timescales, and has the appropriate management place.

DWP’s evidence

Hodge complained repeatedly that the civil servants before her were not answering questions directly – perhaps a sign of how hard it can be to establish the truth when an IT-based project goes awry.

“I would be really grateful if you would answer the question,” asked Hodge when questioning Devereux about whether Universal Credit had a proper business plan, a strategy.

At another point Devereux said: “Let me try and answer these questions which have been bandied around.”

Hodge: “You do go round the houses. Just answer them directly.”

Later in the hearing:

Hodge: “What you are so good at is giving us a whole load of stuff that is completely irrelevant to what we are trying to get at. Just answer the question.”

And another occasion…

Hodge: “No just answer the question … please.”

And again …

Hodge: “What would be utterly delightful is if you simply answered the questions. Just answer the questions.”

Again …

Hodge: “I just don’t get where this is going. I am honestly trying to be fair to you today. Ask the question again Meg [Meg Hillier MP] and then see if we can get an answer.” [Hillier’s question was about why the DWP has treated Universal Credit as an IT project instead of what it actually is, a business transformation programme which changes the way people work and act rather than introduces new technology. Devereux gave no clear answer.]

An exchange about the UC’s pathfinder projects characterised the relationship between Hodge and Devereux. Critics of the pathfinders say they are pointless because the claimants are atypical, much of the claims process relies on manual work, the technology is largely without any agreed anti-fraud measures, and it cannot yet handle everyday circumstances.

Supporters of the pathfinders, particularly Devereux, say they are a useful step in assessing the behaviour of people when making claims and testing the interfaces between new technology and the DWP’s legacy systems.

Hodge: “You are not answering any of the questions Mr Devereux. I don’t mind a little bit of history and a little bit of what you want to say but answer the questions. Do you think the pilot was fit for purpose – yes or no?”

Devereux: “The pathfinder is testing useful things that we have fixed.”

Hodge: “Was it fit for purpose?”

Devereux: “It has been useful.”

“Was it fit for purpose?”

“What purpose did you have in mind?”

“No – you.”

“Ok well, for my purpose it has worked fine thank you. “

“To do what?”

“To make sure I can construct some brand new software to connect it to a –“

“On which you spent £300m …”

“To connect it to a very complicated legacy estate and then demonstrate all of those things – let me give you one example; we will not get anywhere otherwise. I have sat in front of this Committee and we have talked about the Work Programme. You have grilled me on the—

“Please don’t talk about the Work programme.”

“In that conversation—

“Please talk about the pathfinder…”

And subsequently …

“Can I really plead with you, if you can answer questions without going off on a sideline it would be really really helpful – really really helpful.”

MPs kept uninformed

Stephen Barclay put it to Devereux and Shiplee that the DWP was aware of serious UC problems in July 2013 but the public, media and Parliament were being given the impression all was well. Said Barclay: “In July you realised there were problems. In September [2013] your Department’s press office was telling Computer Weekly:

‘The IT is mostly built. It is on time and within budget.’

Barclay said in July 2013 Shiplee was asked by the chair of work and pensions select committee[Dame Anne Begg]: “So rumours that there is a large chunk of the IT that simply do not work and has been dumped are not true?”

“No,” replied Shiplee.

Barclay told Devereux and Shiplee: “Parliament seems to be getting told two different things.” He referred to the DWP’s “culture of denial”.

IT supplier reassurances

Shiplee said he has spent 12 of the 16 weeks since he started reviewing the UC project in great detail with IT suppliers.

“That is something that hasn’t been done to this level before. I have spent with experts from within DWP and with external experts and we have reviewed in detail what has been produced, what works, where it has got to. There are a number of points to make –

Barclay: “Could you clarify you wrote to the chair of the DWP committee to clarify that answer if you have done further work …”

Shiplee: “I have not concluded the work. I believe that from that work already, it is my view, supported by reports, that there is substantial utility in what has been produced… The use of agile is by itself very iterative and therefore to a certain extent it is potentially high risk.

“I wanted to look at how we could de-risk this, this utilisation of agile, and one of the ways to do that is to look at what we have already spent a great deal of money on, and whether it was usable and would actually serve to de-risk the programme…

“What I have discovered is that the Pathfinder does not represent the amount of development work that has been undertaken by suppliers. It [Pathfinder] has been heavily de-tuned from where they have actually got to.”

Why?

“Mainly around security, said Shiplee. “This is a unique piece of work. It [the DWP] is the only bank anywhere – effectively a bank – in which customers do not put money it. They simply take money out. It is therefore attractive from all sort of fraud point of view and therefore security is very important. The key element of security is personal identification. Nobody has yet found a way to do that effectively and totally online.”

Hodge: “Are you telling us that the technology developed so far is capable of being scaled up for a national roll-out?”

Shiplee: “On the basis of what I have been told and what I have seen so far, I believe it has been demonstrated that the suppliers have got the capability to scale this up. They have, for example, dealt with couples [Pathfinder system deals now only with single people.]

“The suppliers have explained where they have got to. It is very interesting. Some of the challenges we are facing now the suppliers have already faced in the past and have resolved those issues. I am trying to make sure that we use all of this to the best good and we don’t have to relearn every lesson again.”

Replaced project leaders

Devereux told of how he had replaced project leaders who , he suggested, were not solving problems but pushing ahead regardless, and were not good listeners.

“People I put in place here had experience and confidence. The challenge they had was very large and there came a point in my judgment they were no longer on top of it. There were cumulative issues to be resolved.

“When the cumulative bow wave of things that had not been resolved was being called out as not resolvable by just pushing on through, that is the point at which we decided to change, because it was also then that the point the Chair made about a good news culture within the programme was crystallising. Those two things cannot work.

“I need people who will drive things through. Howard is very good at driving things through, but the person that drives things through and does not listen to anyone at all is not going to help me at all.”

Comment

Last week James Naughtie on BBC’s R4 Today programme, R2’s Jeremy Vine, journalists at the BBC World Service and at other news services asked me whether Universal Credit was another government IT disaster. I said in essence that it was a good idea badly executed. The IT project has been dogged by an over-ambitious timetable, poor control and validation of supplier payments and a good news culture that to some extent still exists.

In past government IT disasters such as the NPfIT, C-NOMIS and the Rural Payments Agency’s Single Payment Scheme, ministers were not given bad news until it could be hidden no longer. Senior officials gave ministers only good news because that’s what they wanted to hear.

Deniability

Civil servants, perhaps, wanted to give ministers credible “deniability”. The less ministers knew of serious problems the more credibly they could deny in public the existence of them.

Thank goodness, then, for the scrutiny of the National Audit Office and the Public Accounts Committee on Universal Credit. Some important truths have now come to the surface. With the NAO and the Cabinet Office’s Major Projects Authority rightly breathing down its neck, the DWP is doing all it can to put the project back on track. But the DWP is still marred by a good news culture. Even after the NAO and PWC reports the DWP’s press office is still talking of the Universal Credit project as a success.

A DWP spokesperson told the Guardian this week:

“The IT for universal credit is up and running well in the early rollout of the new benefit.”

And Iain Duncan Smith and his senior officials appear to be dismissing the NAO’s report as historic – which it is to some extent – but much of it is also forward-looking.

Duncan Smith, Devereux and Shiplee are all very positive about the future of the project. But would it be better if they were genuinely sceptical, as would be a private sector board that was confronting a big and challenging IT-enabled change project?

Politics and IT don’t go well together and never have. There is every chance Universal Credit will follow what has happened with the last huge benefit computerisation project, Operational Strategy in the 1980s. It eventually worked but in a much more fragmented way than expected. It was several years late, cost several times the original estimate, and did not make the savings predicted. The likely fate of Universal Credit IT?

Learn from failure: the key lesson that Universal Credit should take from agile [Institute for Government]