£837m wasted on Universal Credit IT?

By Tony Collins

Is Universal Credit an IT disaster or a qualified success for the government’s biggest agile programme?

A less obvious part of today’s National Audit Office report “Rolling out Universal Credit” raises a question of whether taxpayers have paid £837m on a computer system that wasn’t essential.

The so-called “live service” system has been built in part by the DWP’s major IT suppliers Accenture, IBM, HP and BT. It will be decommissioned in July next year. Instead the DWP will continue to use an internally-supplied agile “full service” system to support Universal Credit claims.

Amyas Morse, head of the National Audit Office, questions in today’s report whether Universal Credit is any better or more efficient than the decades-old benefit system it is supposed to replace. He says,

“Universal Credit has taken significantly longer to roll-out than intended, may cost more than the benefits system it replaces, and the Department for Work and Pensions will never be able to measure whether it has achieved its stated goal of increasing employment…

“Universal Credit has not delivered value for money and it is uncertain that it ever will.”

Whitehall officials and ministers including the then work and pensions secretary Iain Duncan Smith expected the roll out of Universal Credit to have finished by October last year. In fact only around 10% of the final expected caseload are currently claiming Universal Credit, says the report.

There are no plans to re-use most of the hardware or software that taxpayers paid for as part of the £837m “live service” system.

The “live service” was built on a foundation of existing DWP IT hardware and software. The new agile system which is called the “full service” is built largely from scratch. It’s the government’s largest ever agile development programme.

Simplify?

Universal Credit is supposed to simplify an overly complex benefits system. It  rolls six working-age benefits into one system but its current running costs are £699 per Universal Credit claim. Officials had expected it to cost £173 per claim by 2024-25.

The Department for Work and Pensions has spent a total of £1.9bn on administering the programme so far -and it’s at least five years from completion.

It looks likely that Universal Credit will take much longer than the 10 years it took originally to computerise the benefits system in the 1980s. That original benefits system, called “Operational Strategy” was supposed to cost £713m. It ended up costing £2.6bn.

In reply to its critics, the Department for Work and Pensions says the estimated savings of Universal Credit are much greater than the costs. But the National Audit Office has learned that the DWP keeps re-calculating its savings estimates upwards, sometimes for no sound reason.

Indeed the report finds that DWP officials are already overstating savings by “approximately £462 million each year”.

Other findings in the report suggest that:

• The full business case was a piece of creative writing. The full business case is supposed to be a final check on whether the Treasury releases funds for a roll-out. But the Treasury had approved funds anyway, before the business case was signed off last month (May 2018). The report says the full business case was “produced at a time when the government was already committed to rolling out the programme using an agile approach”.
• Officials have yet to fully understand the risks of fraudulent claims. DWP managers do not have the means to “enable them to identify potential fraud”. The report says DWP officials must “understand the causes of Universal Credit fraud and error identified to date and respond to these promptly”.
• Officials are making up savings estimates as they go along. Savings estimates of introducing Universal Credit are put at £8bn a year but, says the report, “these benefits remain theoretical. We have significant doubt about the main benefits …”
• The DWP has a cultural resistance to accepting criticism or bad news. It regards its critics as ill-informed. The DWP’s response to criticism is to say that “anecdote is stronger than management information”. The National Audit Office says that officials “often dismiss evidence of claimants’ difficulties and hardship instead of working with these bodies to establish an evidence base for what is actually happening”. The result, says the report, “has been a dialogue of claim and counter-claim and gives the unhelpful impression of a Department that is unsympathetic to claimants”.
• A good news culture prevails. Says the National Audit Office, “The Department’s view of the success of Universal Credit contrasts sharply with those of the external organisations we spoke to.”
• The roll-out is already six years behind its original schedule and is not due to complete until 2023 at the earliest. The report hints that the DWP ought to slow down even more. It says the DWP hshould “ensure the programme does not expand before business-as-usual operations can cope with higher claimant volumes”.
• Five years into the roll-out the DWP has “enough functionality to run a basic system, but many processes are still manual and inefficient”.
• The DWP “significantly overestimated the number of claimants that would be able to confirm their identity online”. Only 38% compared with its expected 90% succeeded in using Verify, the government’s online identity verification tool.

Comment

The National Audit Office has produced a superb, thoroughly-researched report.

It would be easy to conclude from its findings that Universal Credit IT has been a disaster.  In fact it’s a qualified success for the government’s biggest agile programme. A parallel “waterfall” project that was developed in case the agile system didn’t work is being decommissioned next year. The waterfall “live service” has cost £837m so far which appears to have been wasted.

Had the DWP and ministers not rushed Universal Credit in the early stages – which is what happened with the NHS National Programme for IT NPfIT – officials could have fully understood what they were doing and not needed to develop two completely separate systems in parallel.

The private sector would love the luxury of developing two completely different computers at the same time and adopting only the one it preferred. But having access to public funds, the DWP could afford to be profligate. And it has been – with impunity. In the public sector there is collective responsibility. No individual will be held responsible for spending £837m unnecessarily.

Indeed the DWP will tell MPs on the Public Accounts Committee that both systems were needed. The “Live Service” that will be decommissioned has enabled the DWP to obtain the benefits of Universal Credit earlier than would have been the case had it waited for an agile system to be rolled out.

But what benefits? The National Audit Office report questions the DWP’s benefit claims. Indeed the DWP’s poor record on accurate forecasting  of the costs and savings on IT programmes and the frequency with which its officials revise costs and savings figures on Universal Credit, are enough to cast doubt on the credibility of the DWP’s every public assertion or announcement.

Universal Credit IT is by no means a disaster story but with £837m of wasted spending and the numerous problems and risks the programme still faces, it can hardly be categorised as a success – unless you believe the DWP’s announcements, press releases and statements.

National Audit Office report – Rolling out Universal Credit