Category Archives: HMRC

Has 2 decades of outsourcing cut costs at HMRC?

Posted on 12/08/2013 | 2 comments

By Tony Collins

If HMRC’s experience is anything to go by, outsourcing can, in the long-term, at least triple an organisation’s IT costs.

When Inland Revenue contracted out its 2,000-strong IT department to EDS, now HP, in 1994 it was the first major outsourcing deal in central government.

Costing a projected £1.03bn over 10 years the outsourcing was a success, according to the National Audit Office in a report in March 2000. The deal  enabled Inland Revenue to bring about changes in tax policy to a tight timetable, said the NAO’s Inland Revenue/EDS Strategic Partnership – Award of New Work.

But costs soared for vague reasons. Something called “post-contract verification” added £203m to the £1.03bn projected cost over 10 years. A further increase of £533m was because of “workload increases including new work”. Another increase of £248m was put down to inflation.

By now the deal with HP had risen from £1.03bn to about £2bn.

When the contract expired in 2004, HM Revenue and Customs and HP successfully transferred the IT staff to Capgemini. The new 10-year contract from 2004 to 2014 (which was later extended 2017) had a winning bid price of £2.83bn over 10 years.

So by 2004 the costs of outsourcing had risen from £1.03bn to £2.83bn.

The new contract in 2004 was called ASPIRE – Acquiring Strategic Partners for Inland Revenue. HMRC then added £900m to the ASPIRE contract for Fujitsu’s running of Customs & Excise systems. By now there were about 3,800 staff working on the contract.

The NAO said in its report in July 2006  – ASPIRE, the re-competition of outsourced IT services – that Gateway reviews had identified the need for a range of improvements in the management of the contract and projects.

Now costing £7.7bn over 10 years

The latest outsourcing costs have been obtained by Computing. It found that annual fees paid to Capgemini under ASPIRE were:

  • 2008/09:  £777.1m
  • 2009/10:  £728.9m
  • 2010/11:  £757.8m
  • 2011/12:  £735.5m
  • 2012/13:  £773.5m

So IT outsourcing costs have soared again. The original 10-year costs of outsourcing in 1994 were put at £1.03bn. Then the figure became about £2bn, then £2.83bn, then £3.7bn when Fujitsu’s contract was added to ASPIRE. Now annual IT outsourcing costs are running at about £770m a year – £7.7bn over 10 years.

So the original IT running costs of Inland Revenue and Customs & Excise have, under outsourcing contracts, more than tripled in about two decades.

Comment:

What happened to the prevailing notion that IT costs fall over the long-term, and that outsourcing brings down costs even further?

Shouldn’t HMRC’s IT costs be falling anyway because of reduced reliance on costly Fujitsu VME mainframes, reductions in data centres, modernisation of PAYE, and the clearance of time-consuming unreconciled items on more than 10 million tax files?

HMRC knows how much profit Capgemini makes under “open book” accounting. It’s a margin of about 10-15% says the NAO. Lower margins are for value-added service lines and higher margins for riskier projects. If the overall target profit margin of 12.3% is exceeded, HMRC can obtain an equal share of the extra profits.

There were 10 failures costing £3.25m in the first 15 months. Capgemini refunded £2.67m in service credits in the first year of the contract.

It’s also worth mentioning that Capgemini doesn’t get all the ASPIRE fees. It is the lead supplier in which there are around 300 subcontractors – including Fujitsu and BT.  Capgemini pays 65% of its fees to its subcontractors.

The outsourcing has helped to enable HMRC to bring in self-assessment online and other changes in tax policy. But HMRC’s quality of service generally (and not exclusively IT) is mixed, to put it politely.

The adjudicator for HMRC who intervenes in particularly difficult complaints identifies as particular problems the giving out of inaccurate information and recording information incorrectly.

She says in her 2013 annual report:

“I am disappointed at the number of complaints HMRC customers feel they need to refer to me in order to get resolution. My role should be to consider the difficult exceptions, not handle routine matters that are well within the capability of departmental staff to resolve successfully. At a time of austerity it is also important to note that the cost of dealing with customer dissatisfaction increases exponentially with every additional level of handling.”

RTI

There are complaints among payroll companies and specialists that real-time information  is not working as well as HMRC has claimed. There seems to be growing irritation with, for example, HMRC’s saying that companies owe much more than they do actually owe. And HMRC has been sending out thousands of tax codes that are wrong or change frequently – or both.

HMRC says it has made improvements but the helpline is appalling. It’s not unusual for callers to wait 30 minutes or more for an answer – or to hang on through multifarious automated messages only to be cut off.

That said there are signs HMRC is, in general, improving slowly. Chief executive of HMRC since 2012 Lin Homer is more down-to-earth and slightly more willing to own up to HMRC’s mistakes than her predecessors, and the fact that RTI and the modernisation of PAYE has got as far as it has is creditable.

But is HMRC a shining example of outsourcing at its best, of outsourcing that cuts costs in the long term? No. A decade of HP and a decade of Capgemini has shown that with outsourcing HMRC can cope, just about, with major changes in tax policy to demanding timetables. But the costs of the outsourcing contracts in the two decades since 1994 have more than tripled.

What about G-Cloud? We look forward to a change in direction from the incoming head of IT Mark Dearnley (if he has much say).

**

A Deloitte survey “The trend of bringing IT back in-house” dated February 2013, said that 48% of respondents in its Global Outsourcing and Insourcing survey 2012 reported that they had terminated an outsourcing agreement early, or for cause, or convenience. Those that took IT services back in-house mentioned cost reduction as a factor. Deloitte said factors included:

– the need for additional internal quality control due to poor quality from the outsourcer

– an increase in the price of service delivery through scope creep and excessive change orders.

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Posted in Accenture, BT, Campaign4Change, change management, CIO, Fujitsu, G-Cloud, Gateway reviews, Government IT, HMRC, IT projects, IT-related failures, managing outsourced services, operational issues, outsourcing, oversight, procurement, project management, public sector, public services, public-private partnerships, supplier relationships

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Is HMRC’s RTI project really a success?

Posted on 10/07/2013 | 1 comment

By Tony Collins

On  Eddie Mair’s “PM” programme on R4, I suggested that HMRC’s real-time information project was not the failure many had expected it to be.

“Even some hawk-eyed critics of government IT projects like journalist Tony Collins think that HMRC may have something of a success on its hands,” said BBC reporter Chris Vallance who produced the RTI item.

I was quoted as saying that many had expected RTI to become another government IT disaster. “But given that there are millions of PAYE employees who are on the system at the moment, if there were any major difficulties we’d expect to have seen them by now.”

Now an HMRC expert has questioned whether my comments were justified. He says parts of RTI are in chaos. He doesn’t want to be named. He writes:

“The RTI system was intended to report on a weekly or monthly basis the same information as had previously been reported by employers on an annual basis. Although details of pay and tax would be forwarded to HMRC far more frequently the same core logic applied. Details of the statutory deductions by the employer would have to be reconciled with payments made, and details of the income and tax paid recorded against the employee’s PAYE record.

“What appears to have happened is that HMRC has designed a system that takes details of employees’ earned or pension income, and statutory PAYE deductions, and then makes various illogical assumptions.

“For instance it would appear that where an employee receives no earnings in a particular pay period, the RTI system assumes that no information is “transmitted” for this employee, indicating that the employee has “left the employment”.

“Similarly where an employer undertakes a re-order of the pay identities (codes on the payroll system called Works Numbers that identify employees), the fact that payroll information is transmitted to HMRC with a Works Number different to that used previously triggers an assumption that the employee has two employments, with the same employer.

“This has the consequence of allowing the NPS (New PAYE Computer System – costing in excess of £400 million) to assume that the employee’s estimated income for the tax year has doubled. The NPS then looks to see if the employee has any part-time or other employment, and in many cases it changes the PAYE code number of these part-time employments from Basic Rate, which deducts tax at 20%, to Code D0, which deducts tax at 40%. All because of an incorrect and invalid assumption.

“Similarly, this failure to understand how PAYE and payroll interact has lead to the situation where an employee who leaves an employment that has attracted a PAYE coding deduction for Car Benefit in Kind and starts another Employment, has the PAYE Coding Deduction removed. The fact that the new employment may well involve a company car is completely ignored, with the result that the employee is more than likely to have a large underpayment of income tax at the year end, despite being on PAYE.

“This failure to understand the basic operation and logic of PAYE would appear to be due to that fact that HMRC has been influenced by those who have an understanding of data flows and cash transfers. The rush to modernise PAYE and move away from “a 1940’s system” has completely omitted the fact that basic operations for employments, tax and NI deductions and the accountability of these remains exactly the same, even if the calculations are undertaken electronically rather than with a quill pen and large ledger book.

“The old PAYE system had as part of its reporting system two components: the forms P14 detailing each individual’s pay, tax etc. and a summary of all employees information, the form P35. The P14 passed information to the NPS system and the P35 information was passed to the accounts computer systems. This allowed HMRC to determine the income of the employee and calculate if sufficient income tax etc had been paid. It also allowed HMRC to match the figure of tax / NIC due and payable on the P35 with the amount actually received from the employer. RTI has failed to comply with this basic logic and chaos is ensuing, to the extent that the National Audit Office recently commented

 ‘The financial and accounting systems supporting RTI are not yet fully accredited. Financial accreditation is a formal requirement of HMRC’s Change Programme and provides assurance that any new systems are acceptable for accounting and financial control purposes. The RTI systems went live on the basis that action would be taken to resolve identified financial design issues by 31 October 2013.

‘These issues do not affect an employer’s ability to submit data to HMRC but do weaken HMRC’s ability to produce and report financial information on PAYE. HMRC is currently undertaking work to understand the impact of these issues and how best to address them.’

“Why the RTI system was not designed in the same logical manner is of great concern.

“The system failures that are occurring are not due to computer components or programs not being fit for purpose. Indeed the processing of the PAYE data streamed to HMRC as a result of the RTI system could reasonably be compared to any other large commercial organisation, albeit that the NAO has concerns over the fall-back planning HMRC has in place should there be any hardware failures and commented

‘The resilience needed to maintain the RTI service if there is a major technical failure is not in place. Online and time-sensitive system implementations are usually developed with formal technical resilience and disaster recovery capability.

‘HMRC chose not to pay for full resilience because of the cost implications and because PAYE could be operated in an emergency without RTI. However, although RTI has the potential to be used by other government departments, the lack of full resilience may inhibit its use in areas of activity where a temporary disruption to service cannot be tolerated.

‘Data submissions can be held temporarily in a queue but this would not provide continuity of service in the event of a catastrophic failure. The RTI service failing at a critical processing time could increase the volume of customer communications and lead to more effort for employers.’

“The RTI system is a very clear example of basic failures to properly prepare a Business Analysis Requirement for a system which in essence does no more that increase the number of times payroll information is passed to HMRC. Claims for the reinvention of PAYE for the 21st Century are as invalid as the claim that the ability to write has been done away with due to email and electronic communication. There has been a flawed reliance on the thoughts and views of those who have little or no experience in PAYE or payroll.”

On the PM programme, Ruth Owen, Director General of PersonalTax at HMRC, accepted that all was not perfect. She said

“We have had over 1.4 million PAYE schemes come into Real-Time Information [each PAYE scheme may have many employees on it] and that exceeds our expectations at this point in the year. But there’s still more to do. We have got to get everybody on and there are still people who need our help to get on.”

She added: “We have had a small number of difficult issues… We have had issues where people have got the wrong tax codes.”

Owen said the links between RTI and Universal Credit were “going well” but conceded that there have been only a tiny number of UC claimants so far.

“We have had around 100 claimants who we have helped DWP identify income stream data for. So it’s going to plan at the moment.”

Chris Vallance concluded the item by saying that some of the largest employers have yet to be added to RTI. “It’s only when it works at scale that we will really know how good real-time information really is,” he said.

Update: Chartered accountant Baker Tilly says on its website  that thousands of people have been issued wrong tax codes as a result of RTI-related problems. 

Audio of PM programme item on RTI – 4 July 2013 (approx 5 mins)

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Posted in change management, Disaster recovery, Government IT, HMRC, IT projects, procurement, Real-Time Information, Universal Credit

Is Major Projects annual report truly ground-breaking?

Posted on 29/05/2013 | 3 comments

By Tony Collins

Francis Maude, the Cabinet Office minister, describes as “nothing short of groundbreaking” a report of the Major Projects Authority which gives the RAG (Rred/Amber/Green) status of more than 100 major projects.

That the report came out late on Friday afternoon as most journalists were preparing to go home, some of them for the whole bank holiday weekend, suggests that the document was a negotiated compromise: it would be published but in such a way as to get minimal publicity.

Indeed the report is a series of compromises. It has the RAG status of projects but not the original text that puts the status into context.

Another compromise: senior civil servants in departments have persuaded Maude to publish the RAG decisions when they are at least six months old.

This enables departmental officials to argue their case in the “narrative” section of the MPA annual report that a red or amber/red decision is out-of-date and that there has been significant improvement since. This is exactly the DWP’s justification for the amber/red status on Universal Credit.

The DWP says in the MPA report: “This rating [amber/red] dates back to September 2012, more than seven months ago. Since then, significant progress has been made in the delivery of Universal Credit. The Pathfinder was successfully launched and we are on course both to expand the Pathfinder in July 2013 and start the progressive national roll-out of Universal Credit in October.”

That the Pathfinder was launched successfully might have nothing to do with Universal Credit’s amber/red status which could be because of uncertainties over how the IT will perform at scale, given the complexities and interdependencies.  The MPA report says nothing about the uncertainties and risks of Universal Credit.

More compromises in the MPA annual report: the Cabinet Office appears to have allowed departments to hide their cost increases on projects such as HMRC’s Real-time Information [RTI] in the vague phrase “Total budgeted whole life costs (including non-government costs).”

The Cabinet Office has also allowed departments to write their own story to accompany the RAG status. So when HMRC writes its story on RTI it says that “costs have increased” but not by how much or why. We know from evidence that HMRC gave to the Public Accounts Committee that RTI costs have risen by “tens of millions of pounds”. There is nothing to indicate this in the MPA annual report.

Another compromise in the MPA annual report: there are no figures to compare the original forecast costs of a project with the projected costs now. There are only the 2012/13 figures compared with whole-life projected costs (including non-government projected spend).

And the MPA report is not comprehensive. It came out on the same day the BBC announced that it was scrapping its Digital Media Initiative which cost the public £98m. The MPA report does not mention the BBC.

The report is more helpful on the G-Cloud initiative, showing how cheap it is – about £500,000. But there is little information on the NHS National Programme for IT [NPfIT] or the Summary Care Record scheme. 

Yet the MPA annual report is ground-breaking. Since Peter Gershon, the then head of the Office of Government Commerce, introduced Gateway reviews of risky IT projects about 12 years ago with RAG decisions, they have remained unpublished, with few exceptions. The Cabinet Office is now publishing the RAG status of major departmental projects for the first time. Maude says

“A tradition of Whitehall secrecy is being overturned. And while previous Governments buried problems under the carpet, we are striving to be more open. By their very nature these works are high risk and innovative.

“They often break new ground and dwarf anything the private sector does in both scale and complexity. They will not always run to plan. Public scrutiny, however uncomfortable, will bring about improvement. Ending the lamentable record of failure to deliver these projects is our priority.”

Comment

The MPA annual report is a breath of fresh air.

Nearly every sentence, nearly every figure, represents compromise. The report reveals that the Universal Credit project was last year given an amber/red status – but it doesn’t say why. Yet the report has the DWP’s defence of the amber/red decision. So the MPA report has the departmental defences of the RAG decisions, without the prosecution evidence. That’s a civil service parody of openness and accountability: Sir Humphrey is allowed to defend himself in public without the case against him being heard.

But it’s still useful to know that Universal Credit is at amber/red.  It implies well into the project’s life that the uncertainties and risks are great. A major project at amber/red at this stage, a few months before go-live, is unlikely to turn green in the short term, if ever.

Congratulations

The Cabinet Office deserves congratulations for winning the fight for publication of the RAG status of each major project. Lord Browne, the government’s lead non-executive director and a member of the Cabinet Office’s Efficiency and Reform group, has said  that billions of pounds of taxpayers’ money is being frittered away because of “worryingly poor” management of government projects.

“Nobody ever stops or intervenes in a poor project soon enough. The temptation is always to ignore or underreport warning signs,” he says.

The management of some large projects – usually not the smaller ones – is so questionable that departments ignore advice to have one senior responsible owner per major project, says the MPA.

The MPA annual report will not stop the disasters. Its information is so limited that it will not even enable the public – armchair auditors – to hold departments to account. Senior civil servants have seen to that.

But the report’s publication is an important development: and it provides evidence of the struggle within Whitehall against openness. Francis Maude and Sir Bob Kerslake, head of the civil service, have had to fight to persuade departmental officials to allow the RAG status of projects to be published. The Guardian’s political editor Patrick Wintour says of the MPA annual report

“Publication led to fierce infighting in Whitehall as government departments disputed the listings and fought to prevent publication.”

Large-scale change

If Maude and Kerslake struggled to get this limited distance, and there is still so much left to reform, will large-scale change ever happen?

Maude and his officials have as comprehensive mandate for change from David Cameron as they could hope for. Yet still the Cabinet Office still seems to have little influence on departments. When it comes to the big decisions, Sir Humphrey and his senior officials hold onto real power. That’s largely because the departments are responsible to Parliament for their financial decisions – not the Cabinet Office.

Maude and his team have won an important battle in publishing the MPA annual report. But the war to bring about major change is still in its very early stages; and there’s a general election in 2015 that could halt Maude’s reform plans altogether.

The Major Projects Authority Annual Report.

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Posted in capacity building, change, change management, DWP, excessive secrecy, Gateway reviews, Government IT, HMRC, IT-related failures, Major Projects Authority, private sector lessons for the public sector, procurement, project management, public sector, public services, Universal Credit

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Why isn’t Universal Credit IT a disaster yet?

Posted on 30/04/2013 | 3 comments

By Tony Collins

voltaireVoltaire said those who walk well-trodden paths tend to throw stones at those who show a new road. 

Iain Duncan Smith has had nothing but criticism in the media for his extreme caution over the go-live yesterday of the innovative Universal Credit scheme. But he told Radio 4’s Today presenter Justin Webb he was learning from the NHS IT scheme and the implementation of tax credits.

[With the NPfIT the Department of Health threw caution to the wind and spent billions on IT work and contracts that were unnecessary. After working tax credits went live the Office of National Statistics estimated that, of the £13.5bn paid out in tax credits in 2004, £1.9bn was in overpayments; and IT-related problems led to delays in issuing payments, which caused hardship for those on low incomes.]

Iain_Duncan_Smith,_June_2007IDS said on R4 Today yesterday:

“What I have introduced here is a deliberate and slower process introduction because I learned from the chaos of tax credits where it collapsed and the chaos of the health department’s changes to their IT systems. I want to do this carefully to make sure we get it right.”

Justin Webb: But your critics say you are not testing the things that could go wrong – children and homeless people are not involved.  When are you going to involve them in a pilot?

IDS: They are all going to be involved as we roll out.

Webb: There will be a pilot that includes those more difficult groups?

IDS: These pilots are to test two things; first of all that the base process works and secondly that all the other issues …

Webb: No homeless people involved in that. The difficult people are not involved?

IDS: What we are doing is testing the basic process. As we roll out from October onwards we then complicate the process and we roll it out in such a way as we are able to bring those people in and ensure that we also test them as we are going through. It’s a perpetual process of rolling out and checking, rolling out and checking. That is the better way to do it. I have done this in the private sector and Lord Freud [work and pensions minister] did this in the banking sector. We have insisted on it because this is the right way to do it. Get it right. Not get it early.

Can IDS be too cautious?

Universal Credit is live on GOV.UK.  To claim it now you need to live in an OL6, OL7, M43 or SK16 postcode, have just become unemployed, fit for work, have no children, not be claiming disability benefits, not have any caring responsibilities, not be homeless or living in temporary accommodation, and have a valid bank account and national insurance number.

But still it’s a test of links between UC  and HMRC’s RTI systems. If the links are working properly the systems should verify that the new UC claimant has recently left PAYE employment. The pilot in Ashton is also a test of the UC payment system and whether the new scheme will encourage claimants to find a job and stay in work longer.

On Sunday, on BBC Radio 5’s Double Take, I praised the Department of Work and Pensions for an ultra-cautious approach in going live with UC.

But IT consultant Brian Wernham, author of Agile Project Management for Government, pointed out to BBC’s World This Weekend that thousands of people will need to claim UC every day from the official start of the scheme in October 2013 to the end of 2017 if the DWP is to complete its UC roll-out within the coalition’s promised schedule.

Yet the limited pilot in Ashton has restricted claimants to about 300 a month. At this rate the roll-out to more than eight million claimants will not be anywhere near complete by the end of 2017.

Comment

The Financial Times quotes Iain Duncan Smith as saying that one million claimants would be receiving universal credit by the end of April 2014.

This is now unlikely if not impossible. Even in October when the UC roll-out begins nationally, it will start with simple cases. By April 2014 it is hard to see that there will be 100,000 people claiming UC, let alone one million. Indeed the most complex cases may be handled outside of the main UC system, possibly manually or on a spreadsheet.

Why should the coalition care if the 2017 deadline is not met? A general election on 7 May 2015 means that UC will become the responsibility of a new government. IDS is then unlikely to be the DWP’s secretary of state. He could argue at that time that he should not be held responsible for any delays in the roll-out. Indeed the Tories could be out of government by then.

So what the coalition says now about UC’s future means little or nothing.

That said, the coalition seems to be learning lessons from past IT-related failures. It deserves praise for its extreme caution over the introduction of UC.

It is not doing everything right: the DWP is refusing to publish any of its expensive consultancy reports on the progress of the UC IT systems. Partly that is because of DWP culture and because shadow ministers are waiting to jump on any putative weakness in the UC scheme. Labour’s shadow work and pensions secretary Liam Byrne said on yesterday’s Today programme that universal credit was “a fine idea that builds on Labour’s tax credits revolution”.

liam byrneHe added: “The truth is the scheme is late, over budget, the IT system appears to be falling apart and even DWP [Department of Work and Pensions] ministers admit they haven’t got a clue what is going on.”

But when Byrne was in government he was an unswerving advocate of the disastrous NPfIT. So can his criticism of the UC project be trusted now?

Despite a generally negative media there are no signs yet that UC is a disaster in the making.  Indeed RTI is working so far, which was the biggest single risk.

Cabinet Office minister Francis Maude is said to remain concerned that UC could prove an electoral disaster, and his concern is good for the UC IT project. It means the coalition will continue to roll out UC with extreme caution.

Such a play-it-safe approach might never have occurred before on a major government IT project. So does it matter that UC  takes years to roll out?

Perhaps the roll-out may continue well beyond 2017 but it’s better to complete a simplification of the benefits system over an extended time than pay claimants the wrong amounts or leave the vulnerable without payment altogether.  

Teething troubles on day one of Universal Credit scheme – Guardian

Could HMRC have a major success on its hands? – RTIis working

The vultures circle over Universal Credit IT.

DWP hides the facts on UC IT progress.

Are civil servants misleading IDS over Universal Credit IT progress?

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Posted in Agile, change management, DWP, Government IT, HMRC, innovation, IT-related failures, Major Projects Authority, Universal Credit

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Could HMRC have a major IT success on its hands?

Posted on 17/04/2013 | 11 comments

By Tony Collins

It’s much too soon to say that Real-Time Information is a success – but it’s not looking  like another central government IT disaster.

A gradual implementation with months of piloting, and HMRC’s listening to comments from payroll professionals, software companies and employers, seems to have made a difference.

The Cabinet Office’s high-priority attempts to avoid IT disasters, through the Major Projects Authority, seems also to have helped, by making HMRC a little more humble, collegiate and community-minded than in past IT roll-outs. HMRC is also acutely sensitive to the ramifications of an RTI roll-out failure on the reputation of Universal Credit which starts officially in October.

On the GOV.UK website HMRC says that since RTI started on 6 April 2013 about 70,000 PAYE [pay-as-you-earn] returns have been filed by employers or their agents including software and payroll companies.

About 70,000 is a small number so far. HMRC says there are about 1.6 million PAYE schemes, every one of which will include PAYE returns for one or more employees. About 30 million people are on PAYE. Nearly all employers are expected to be on RTI by October 2013.

The good news

 Ruth Owen, HMRC’s Director General Personal Tax, says:

“RTI is the biggest change to PAYE in 70 years and it is great news that so many employers have started to report PAYE in real time. But we are under no illusions – we know that it will take time before every employer in the country is using RTI.

“We appreciate that some employers might be daunted by the change but …we are taking a pragmatic approach which includes no in-year late filing penalties for the first year.”

It hasn’t been a big-bang launch. HMRC has been piloting RTI for a year with thousands of employers. Under RTI, employers and their agents give HMRC real-time PAYE information every time the employee is paid, instead of yearly.

When bedded down the system is expected to cut administrative costs for businesses and make tax codes more accurate, though the transitional RTI costs for some businesses, including training, may be high and payroll firms have had extra costs for changes to their software.

RTI means that employers don’t have to complete annual PAYE returns or send in forms when new employees join or leave.

The bad news

The RTI systems were due to cost £108m but HMRC’s Ruth Owen told the Treasury sub-committee that costs have risen by tens of millions:

“… I can see that it [RTI] is going to cost £138m compared with £108m. I believe that is going to go up again in the scale of tens of millions.”

She said that in October 2012.

Success?

The Daily Telegraph suggested on Monday that RTI may be “ready to implode”.

But problems with RTI so far seem to be mainly procedural and rule-based – or are related to long waits getting queries answered via the helpline – rather than any major faults with the RTI systems.

In general members of the Chartered Institute of Payroll Professionals report successes with their RTI submissions, and some comment on response times being good after initial delays at around the launch date.

Payroll software supplier Sage says the filing of submissions has been successful. There was a shaky start, however, with HMRC’s RTI portal being under maintenance over the weekend.

Jonathan Cowan from the Sage Payroll Team said: “There was understandable confusion and frustration over the weekend with businesses unable to file due to HMRC site issues.”

Accountingweb’s readers have had many problems – it said RTI “stumbled into action –  but few of the difficulties are, it seems, serious. “Have I missed something, but RTI despite all the commotion doesn’t seem that bad,” says an accountant in a blog post on the site.

Payrollworld says RTI problems have been minor. “The launch of Real Time Information (RTI) has encountered a number of minor issues, though payroll suppliers broadly report initial filing success.”

Comment

It’s not everyday we report on a big government IT project that shows signs of succeeding. It’s too early to call RTI a success but it’s difficult to see how anything can go seriously wrong now unless HMRC’s helplines give way under heavy demand.

It’s worth remembering that RTI is aimed at PAYE professionals – not the general public as with Universal Credit. Payroll specialists are used to solving complex problems. That said, RTI’s success is critical to the success of Universal Credit. A barrier to that success has, for now, been overcome.

Perhaps HMRC’s RTI success so far shows what a central department can achieve when it listens and acts on concerns instead of having a mere consultation; and it has done what it could to avoid failure. They’re obvious precepts for the private sector – but have not always in the past been characteristics of central government IT schemes such as the NPfIT.

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Posted in Campaign4Change, change management, cost reduction, culture, DWP, Government IT, HMRC, IT projects, Major Projects Authority, managing change, npfit, public sector, public services, Real-Time Information, Universal Credit

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Universal Credit and Pitchford – good move or a potential conflict of interest?

Posted on 21/02/2013 | 1 comment

By Tony Collins

The Department for Work and Pensions has confirmed that the executive director of the Major Projects Authority, David Pitchford, is to take interim charge of the delivery of Universal Credit, starting this week, says Government Computing.

Pitchford will stay initially for a three-month stint until a permanent replacement is appointed. He joins DWP’s CIO Andy Nelson, who was previously at the Ministry of Justice,  in helping to oversee the Universal Credit project.

Pitchford and Nelson are jointly taking the place of Philip Langsdale, DWP’s highly respected CIO, who passed away just before Christmas last year.

The Daily Telegraph and Independent have portrayed Pitchford’s appointment as a sign that Universal Credit is in trouble. The Telegraph’s headline on Monday was

Welfare reforms in doubt as troubleshooter takes over

And the Independent reported that:

“Ministers have been forced to draft in one of the Government’s most experienced trouble-shooters to take charge of the troubled Universal Credit programme – amid fears the complex new system could backfire.”

But DWP officials say Pitchford’s appointment is not a sign Universal Credit is behind schedule.

A DWP spokesperson said, “David Pitchford will be temporarily leading Universal Credit following the death of Philip Langsdale at Christmas. This move will help ensure the continued smooth preparation for the early rollout of Universal Credit in Manchester and Cheshire in April. A recruitment exercise for a permanent replacement will be starting shortly.”

In Pitchford’s absence, the day-to-day running of the Major Projects Authority will be handled by Juliet Mountford and Stephen Mitchell, with oversight from government chief operating officer Stephen Kelly. Pitchford will retain overall responsibility for the MPA’s activities, says Government Computing.

Comment

On the face of it Pitchford’s appointment is a clever move: the Cabinet Office now has a senior insider at the DWP who can report back on the state of the Universal Credit project.

Francis Maude, who is the Cabinet Office minister in change of efficiency and is trying to distance the government from from Labour’s IT disasters, is almost openly worried about the smell that could come from a failure of the Universal Credit project.

DWP secretary of state Iain Duncan Smith keeps reassuring his ministerial colleagues that critics are ill-formed and all is well with the project. But it is not clear whether he has an overly positive interpretation of the facts or understands the complexities of the project and all that could go wrong.

Even officials at HMRC are having difficulty understanding some of the detailed technical lessons from the work so far on RTI – Real-time information. Although RTI does not need Universal Credit to succeed, Universal Credit is dependent on  RTI.

With  much conflicting information within government over the state of the Universal Credit project – which is compounded by DWP’s refusal under FOI to publish several consultancy reports it has commissioned on the scheme – it is useful for the Cabinet Office to have the highly experienced and much respected Australian David Pitchford run Universal Credit. 

Pitchford is a much-valued civil servant in part because he is straight-talking. He said in  2011 that government projects failed because of:

– Political pressure

– No business case

– No agreed budget
– 80% of projects launched before 1,2 & 3 have been resolved
– Sole solution approach (options not considered)
– Lack of Commercial capability  – (contract / administration)
– No plan
– No timescale
– No defined benefits

Since he made this speech, and it was reported, Pitchford has become a little more guarded about what he says in public. The longer he stays in the innately secretive UK civil service, the more guarded he seems to become but he is still one the best assets the Cabinet Office has. His main advantage is his independence from government departments.

Potential for a conflict of interest?

The Major Projects Authority exists to provide independent oversight of big projects that could otherwise fail. Regularly it is  in polite conflict with departments over the future direction of questionable projects and indeed whether they should come under the scrutiny of the MPA at all.

Pitchford’s taking over of Universal Credit, even on an interim basis, raises questions about whether he can ever  be seen in future as an independent scrutineer of the project. According to The Independent, Pitchford will report directly to Iain Duncan Smith – bypassing the DWP’s permanent secretary Robert Devereux.

Once his secondment to the DWP ends Pitchford may wish to criticise aspects of the project. Can he do so with the armour of independence having run the project? Would he have the authority to delay Universal Credit’s introduction?

Pitchford is now an integral part of Universal Credit. He is in the position of the local government ombudsman who is seconded to a local authority, or an auditor at the National Audit Office who sits on the board of a government department.  If a big project at the department goes wrong, the permanent secretary can say to the NAO:  “Well you had a representative on our board. Are you in a position to criticise us?”

The MPA does a good job largely because it is independent of departments. There are signs that it is intervening to stop failing projects or put them on a more secure footing. Can the MPA remain independent of departments if its head has been seconded to a department?

On the other hand Francis Maude is likely to receive an account of how Universal Credit is going. And the Universal Credit project will have the benefit of an external, independent scrutineer as its head.

But if the MPA and Universal Credit are inextricably linked how can the MPA do its job of being an independent regulator of big IT projects including Universal Credit?

Pitchford takes on Universal Credit role

Government brings in troubleshooter to get Universal Credit on track.

Welfare reforms in doubt after troubleshooter takes over

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Posted in Agile, Campaign4Change, change management, DWP, excessive secrecy, Freedom of Information, Government IT, HMRC, IT-related failures, Major Projects Authority, Real-Time Information, Universal Credit

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Big IT suppliers and their Whitehall “hostages”

Posted on 30/01/2013 | 6 comments

By Tony Collins

Mark Thompson is a senior lecturer in information systems at Cambridge Judge Business School, ICT futures advisor to the Cabinet Office and strategy director at consultancy Methods.

Last month he said in a Guardian comment that central government departments are “increasingly being held hostage by a handful of huge, often overseas, suppliers of customised all-or-nothing IT systems”.

Some senior officials are happy to be held captive.

“Unfortunately, hostage and hostage taker have become closely aligned in Stockholm-syndrome fashion.

“Many people in the public sector now design, procure, manage and evaluate these IT systems and ignore the exploitative nature of the relationship,” said Thompson.

The Stockholm syndrome is a psychological phenomenon in which hostages bond with their captors, sometimes to the point of defending them.

This month the Foreign and Commonwealth Office issued  a pre-tender notice for Oracle ERP systems. Worth between £250m and £750m, the framework will be open to all central government departments, arms length bodies and agencies and will replace the current “Prism” contract with Capgemini.  

It’s an old-style centralised framework that, says Chris Chant, former Executive Director at the Cabinet Office who was its head of G-Cloud, will have Oracle popping champagne corks. 

“This is a 1993 answer to a 2013 problem,” he told Computer Weekly.

In the same vein, Georgina O’Toole at Techmarketview says that central departments are staying with big Oracle ERP systems.   

She said the framework “appears to support departments continuing to run Oracle or, indeed, choosing to move to Oracle”. This is “surprising as when the Shared Services strategy was published in December, the Cabinet Office continued to highlight the cost of running Oracle ERP…”

She said the framework sends a  message that the Cabinet Office has had to accept that some departments and agencies are not going to move away from Oracle or SAP.

“The best the Cabinet Office can do is ensure they are getting the best deal. There’s no doubt there will be plenty of SIs looking to protect their existing relationships by getting a place on the FCO framework.”

G-Cloud and open standards?

Is the FCO framework another sign that the Cabinet Office, in trying to cut the high costs of central government IT, cannot break the bond – the willing hostage-captive relationship –  between big suppliers and central departments?

The framework appears to bypass G-Cloud in which departments are not tied to a particular company. It also appears to cock a snook at the idea of replacing  proprietary with open systems.

Mark Thompson said in his Guardian comment: 

– Administrative IT systems, which cost 1% of GDP, have become a byword for complexity, opacity, expense and poor delivery.

– Departments can break free from the straitjackets of their existing systems and begin to procure technology in smaller, standardised building blocks, creating demand for standard components across government. This will provide opportunities for less expensive SMEs and stimulate the local economy.

– Open, interoperable platforms for government IT will help avoid the mass duplication of proprietary processes and systems across departments that currently waste billions.

–  A negative reaction to the government’s open standards policy from some monopolistic suppliers is not surprising.

Comment

It seems that Oracle and the FCO have convinced each other that the new framework represents change.  But, as Chris Chant says, it is more of the same.

If there is an exit door from captivity the big suppliers are ushering senior officials in departments towards it saying politely “you first” and the officials are equally deferential saying “no – you first”. In the end they agree to stay where they are.

Will Thompson’s comments make any difference?

Some top officials in central departments – highly respected individuals – will dismiss Thompson’s criticisms of government IT because they believe the civil service and its experienced suppliers are doing a good job: they are keeping systems of labyrinthine complexity running unnoticeably smoothly for the millions of people who rely on government IT.

Those officials don’t want to mess too much with existing systems and big IT contracts in case government systems start to become unreliable which, they argue, could badly affect millions of people.

These same officials will advocate reform of systems of lesser importance such as those involving government websites; and they will champion agile and IT-related reforms that don’t affect them or their big IT contracts.

In a sense they are right. But they ignore the fact that government IT costs much too much. They may also exaggerate the extent to which government IT works well. Indeed they are too quick to dismiss criticisms of government IT including those made by the National Audit Office.

In numerous reports the NAO has drawn attention to weaknesses such as the lack of reliable management information and unacceptable levels of fraud and internal error in the big departments. The NAO has qualified the accounts of the two biggest non-military IT spending departments, the DWP and HMRC.

Ostensible reformers are barriers to genuine change.  They need to be replaced with fresh-thinking civil servants who recognise the impossibility of living with mega IT contracts.

Mark Thompson’s Guardian article.

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Posted in Agile, Campaign4Change, Capgemini, change management, Cloud, Cloud Computing, cost avoidance, cost reduction, culture, DWP, G-Cloud, Government IT, HMRC, innovation, managing change, managing outsourced services, open source, open standards, operational issues, Oracle ERP, Politics, private sector lessons for the public sector, procurement, project management, reducing cost strategically, supplier relationships

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Are HMRC’s IT costs under firm control?

Posted on 20/11/2012 | 1 comment

By Tony Collins

 The costs of IT outsourcing at HMRC have soared despite a well-written contract that promised large savings. When, as Inland Revenue, the department first outsourced IT in 1994, annual IT costs were around £100m.  Now it has emerged that HMRC’s  annual IT spending was running at more than  £1bn between April 2011 and March 2012.  Only some of the 10-fold increase is explained by new work.

Are there lessons for Barnet, Cornwall and other public authorities as they ponder large-scale outsourcing, given that HMRC did almost everything right and still faces a costly contractual lock-in to major IT suppliers until 2017 – a 13-year outsourcing contract?

HMRC has made some extraordinary payments to its outsourcing suppliers since 2011  – more than mid-way through a 13-year contract.

HMRC figures collated by former Inland Revenue IT employee and now payroll specialist Matt Boyle of Research4paye show that HMRC paid its “Aspire” IT partners £964.2m in a single year, between April 2011 and March 2012.

HMRC paid a further £42.6m of invoices from Serco for one year of website development and support. These figures do not include all of HMRC’s IT costs between April 2011 and March 2012, such as invoices from Accenture for maintenance fees and for work relating to Customs.

IT costs soar

1994. £100 annual IT costs. Inland Revenue first outsources its 2,000-strong IT department to EDS. The annual cost of the 10-year contract is about £100m a year according to the National Audit Office.

2004.  £250m annual IT costs. The end of the EDS contract. HMRC’s annual IT costs have risen to about £250m a year (National Audit Office figure).

2004. £280m annual IT costs. Capgemini wins from EDS a new 10-year HMRC outsourcing deal called Aspire (Acquiring Strategic Partners for the Inland Revenue). Capgemini’s main subcontractors are Fujitsu and Accenture. Capgemini’s bid is for £2.8bn, an average of £280m a year.

2005. £539m annual IT cost.  Inland Revenue merges with Customs and Excise to form HMRC which takes on £1bn Fujitsu IT contract from Customs. The first year of the Aspire contract costs £539m, nearly double the expected amount. The NAO blames most of the increase on new work.

2007. In return for promised savings of £70m a year from 2010/11, HMRC extends Capgemini’s contract by three years to 2017. There’s an option to extend for a further five years.

2010. £700m annual IT costs. Under FOI, HMRC releases a statement saying that the Aspire annual contract costs are running at about £700m.

2011/12. £964.2m annual IT cost. HMRC’s list of invoices from its Aspire suppliers for one year between April 2011 and March 2012 add up to £964.2m. A further £42.6m is invoiced by Serco for website development and support.  This puts HMRC’s IT annual outsourcing costs at 10 times higher than they were when Inland Revenue let its first outsourcing deal in 1994. Some of today’s HMRC systems pre-date 1994 [BROCS/CODA].

Aspire – a good contract?

It appears that HMRC did everything right in its Aspire contract. Indeed the National Audit Office has found little to criticise. Aspire is committed to “open book”, so Capgemini, Fujitsu and Accenture must account for their costs and profit margins.

The contract has some innovations. The suppliers’ margin is retained by HMRC until trials are successfully passed. Even then 50% of the margin is retained until the final Post Implementation Trial about six months after implementation.

Charges under Aspire are split into two categories: “S” and “P”.  The former is mainly a commodity pricing arrangement with unit prices being charged for all service elements at a commodity level (e.g. per Workstation, volumes of printed output etc). The charge to HMRC will vary by volume of demand for each service line.

The ‘’P’’ series charge lines are charged on a man-day basis. Application development and delivery is charged mainly on what HMRC calls an “output basis utilising function points“.

Where IT spending goes

There are more than 800 invoices from Aspire covering the year from April 2011 to March 2012. Some of the invoices are, individually, for tens of millions of pounds and cover a single month’s work.

The invoices cover services such as data centre output, data centre operations, systems software maintenance, software coding changes, licences, IT hardware and data storage.

For some of the Aspire invoices HMRC gives a brief explanation such as £57.6m – “June monthly payment for development and support”. But some of the biggest invoices have little explanation:

May 2011:  invoice for £24.7m – IT Software. A further invoice of £61.7m – “data output prod”.

June 2011: invoice for £55.8m – “data output prod”. A further invoice £56.8m – “data output prod”.

On top of these payments HMRC paid about 24 invoices of management fees in the year. Typical monthly invoice amounts for Aspire management fees ranged from about £390,000 to £2.9m.

There are dozens of Aspire invoices in the year for IT software changes to support day-to-day HMRC’s business. Quite a few of those invoices for software changes are each for tens of thousands of pounds but more than 30 invoices for IT changes in the year 2011/12 each bill more than £100,000. The biggest single invoice in the same year for software changes to support day-to-day HMRC business is  £469, 964 in December 2011.

Transparency

Matt Boyle collated the figures on HMRC’s IT spending from spreadsheets published by HMRC . All credit to Francis Maude, the Cabinet Office minister, for making government departments publish details of their invoices over £25,000.

And credit is due to Matt Boyle for collating and totalling HMRC’s IT-related invoices. Boyle says he is surprised at the high costs of Aspire. He is also surprised that the contract excludes web development and support.

Comment:

HMRC appears to have done nearly everything right and still its IT outsourcing costs are soaring, apparently uncontrollably.

It is hard to avoid the conclusion that the department and taxpayers would have been much better off if Inland Revenue had not outsourced and instead spent the millions it pays annually on, say,  management fees, to building up an in-house IT force and expertise.

Central government seems now to shun big outsourcing deals but local authorities including Barnet and Cornwall are at the stage Inland Revenue was in 1994: they are considering saving money by outsourcing major IT and other services to one main supplier.

If they learn from HMRC’s experiences – and the sums it has had to pay to outsourcing partners – it may take a little of the sting out of HMRC’s enforced prodigality.

[It may also be worth mentioning that some including Boyle ask how it is possible to credibly justify a spend of £46m in one year on a website.]

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Posted in Campaign4Change, Fujitsu, governance, Government IT, HMRC, managing change, outsourcing, Real-Time Information, Universal Credit

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HMRC – you can change the people not the culture.

Posted on 17/09/2012 | Leave a comment

By Tony Collins

Years ago HMRC embraced openness by publishing minutes of its executive committee meetings.

Members of the monthly meetings of the HMRC “ExCom” [executive committee] include Lin Homer, the Chief Executive and Permanent Secretary, and CIO Phil Pavitt.  ExCom is the decision-making executive of HMRC.

The problem is that Excom minutes have been almost creatively uninformative. This is despite the cost to taxpayers of an ExCom meetings secretariat which provides support to the committee, co-ordinates papers and attends to take minutes.

Over the years the Excom members have changed of course, but the minutes from the start have parodied open government.

In its reporting what is said at Excom meetings, HMRC, it would appear, has rules based on a variation of BBC’s “Just a Minute”.  The title of the discussion can be mentioned as often as participants like but it’s against the rules to mention what HMRC does or decides.

In June Excom members discussed progress on RTI, HMRC’s highest-profile project, Real-Time Information, which is an essential part of Universal Credit.  This was recorded in the minutes under the heading RTI Overview … “The Committee went on to consider a range of elements…”  The minutes made no mention of any element.

This would be the ideal entry in HMRC Excom minutes:

6.2 Staff Survey

Excom members discussed the Staff Survey. The chairman and some members made remarks on the results. The discussion was wide-ranging and informative.  It included matters relating to risk and opportunities.  The results of the Staff Survey having been summarised, conclusions were reached, particularly on matters relating to HMRC, and proposals made for recommendations. A number of recommendations were agreed, some of which would be actioned shortly. Without any further discussion, and by a tacit mutual consent, members moved to the next item on the agenda.

Actual extracts from latest Excom minutes

Below are the first four items, taken from the latest Excomm minutes (the latest being 26 June 2012). I haven’t made these up.

If anyone reading these minutes is any the wiser about HMRC’s operations, and what recommendations have been agreed, please contact the department and let them know that a convention has been breached.

 Executive Committee summary minutes of meeting held on 26 June 2012

 Members:

Simon Bowles (Chair), Lin Homer, Dave Hartnett, Mike Falvey, Mike Eland, Stephen Banyard, Jim Harra, Phil Pavitt, Paul Gerrard (deputising for Craig Pemberton), Anthony Inglese.

 Attending:

Carol Bristow, Richard James, Stephen Hardwick, Will Cavendish (Cabinet Office Implementation Unit), Vicky Ranson (for item 2), Will Meehan (for item 3), Marie-Claire Uhart (for item 5), Janet Alexander (for item 6), John Atkinson (Secretariat).

Apologies: Craig Pemberton

1. Welcome

1.1 Simon Bowles opened the meeting and confirmed that Mike Falvey would be responsible for the meeting review and Stephen Hardwick would be responsible for drafting the key messages. He welcomed Paul Gerrard, who was deputising for Craig Pemberton. He also welcomed Will Cavendish, who was observing the meeting in the hub.

1.2 The minutes of the May 2012 meeting were agreed.

2. Risks to revenue raised

2.1 The Committee received a presentation on work aimed at increasing understanding of our 2011-12 performance and identifying the risks to the sustainability of this level of performance for the remainder of the SR period. They agreed to commission further work and to review the outcomes of this at their September 2012 meeting.

3. Performance hub

3.1 Following an overview of performance by the CFO, the relevant Directors General led a discussion around the hub visualisations on the following key aspects of current  performance – revenue raised, debt, tax credit error and fraud, contact centre performance, attendance management and employee engagement.

3.2 The Committee also discussed current causes for concern and risks related to departmental performance.

4. Causes for Celebration

4.1 The Committee reviewed the Causes for Celebration contained in the performance report.

My comment:

It’s a pity the Excom minutes are so defensive, even obfuscatory;  and it’s almost certainly because of HMRC’s culture and not the wish of members. Phil Pavitt is by any standard open and straightforward. He would probably change HMRC’s culture if he could. But could anybody?

Nothing astonishes men so much as common sense and plain dealing (Ralph Emerson). Clearly HMRC is in the business of astonishing nobody.

Self-congratulatory

There is something revealing in the minutes, however. Now and again detail infiltrates them – and it is self-congratulatory.

“The Committee reviewed the Causes for Celebration contained in the performance report.”

And on Real-Time Information …

“Stephen Banyard [An HMRC  Director General] opened the session by giving a summary of progress to date in this area and the positive feedback received from customers, rep bodies and trade press.”

So while HMRC is facing significant levels of fraud and error – the National Audit Office has qualified HMRC’s accounts for the last  12 years – the Excom board appears to be in search of every opportunity to slap itself on the back.

The Excom minutes at least have a dream-like quality to them.  Perhaps, like Christian in Bunyan’s Pilgrim’s Progress, the Excom Board members will overcome all the challenges and monsters and eventually reach the Celestial City. They may then wake up. Maybe.

Excom (and a link to its minutes).

Excom’s June 2012 minutes

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Posted in Campaign4Change, Government IT, HMRC, openness and transparency, operational issues, public sector, Universal Credit

Is Universal Credit really on track? The DWP hides the facts.

Posted on 11/09/2012 | 6 comments

By Tony Collins

The Department for Work and Pensions has told Campaign4Change that consultancy reports it commissioned on Universal Credit would, if disclosed under FOI, cause “inappropriate concern”.

Who’s to say the concern would be inappropriate?

At the weekend a spokesman for the Department for Work and Pensions told the BBC: “Liam Byrne (Shadow Work and Pensions Secretary) is quite simply wrong. Universal Credit is on track and on budget. To suggest anything else is incorrect.”

But the DWP has decided not to disclose reports by consultants IBM and McKinsey that could throw light on whether the department is telling the truth. Though the reports cost taxpayers nearly £400,000, the public has no right to see them.

The DWP told us: “Disclosure [under FOI] would … give the general public an unbalanced understanding of the [Universal Credit] Programme and potentially undermine policy outcomes, cause inappropriate concern (which in turn would need to be managed) and damage progress to the detriment of the Government’s key welfare reform and the wider UK economy.”

Comment

In refusing to publish the costly reports from IBM and McKinsey the Department for Work and Pensions makes the  assumption that the Universal Credit IT programme will be better off without disclosure. But does the  DWP know what is best for the Universal Credit project?  Is the DWP’s own record on project delivery exemplary? Some possible answers:

–  The DWP has a history of big IT project failures, some of which pre-date the “Operational Strategy” project in the 1980s to computerise benefit systems. MPs were told the Operational Strategy, as it was called, would cost about £70om; it cost at least £2.6bn.  Today, decades later, the DWP still has separate benefit systems and relies on “VME” mainframe software that dates back decades.

– NAO reports regularly criticise the DWP’s management of projects, programmes or  suppliers. One of the latest NAO reports on the DWP was about its poor management of a contract with Atos , which does fit-to-work medical assessments.

– The DWP hasn’t broken with tradition on the awarding of megadeals to the same familiar names. Though Universal Credit is said to be based, in part, on agile principles, Accenture and IBM are largely in control of the scheme and the department continues to award big contracts to a small number of large companies. HP, Accenture, IBM and Capgemini are safe in the DWP’s hands.

–  The NAO has qualified the accounts of the DWP for 23 years in a row because of “material” levels of fraud and error.

So is the DWP in an authoritative position to say that the taxpayer and the Universal Credit IT project are better off without disclosure of consultancy reports when the DWP has never done it differently; in other words it has never disclosed its consultancy reports?

Can we trust what DWP says?

Without those reports being put in the public domain can we trust what the DWP says on the success so far of the Universal Credit programme?

Unfortunately departments cannot always be trusted to tell the truth to the media, or Parliament, on the state of major projects.

In 2006 the then health minister Liam Byrne praised the progress of the NHS National Programme for IT, NPfIT. He told the House of Commons that the NPfIT had delivered new systems to thousands of locations in the NHS. “Progress is within budget, ahead of schedule in some areas and, in the context of a 10-year programme, broadly on track in others.”

That was incorrect. But it was what the Department of Health wanted to tell Parliament.

Now it is the DWP that is praising Universal Credit and it is Liam Byrne criticising the programme. This time Byrne may have a point. The problem is we don’t know; the DWP may or may not be telling the truth – even to its Work and Pensions Secretary Iain Duncan Smith.

It would not be the first time ministers were kept in the dark about the real state of big IT projects: ministers were among the last to know when the Rural Payment Agency’s Single Payment Scheme went awry.

And while the NPfIT was going disastrously wrong, progress on the programme was being praised by ministers who included Caroline Flint, Lord Hunt, Lord Warner, John Reid, Andy Burnham, Ivan Lewis and several others. Even a current minister, Simon Burns, gave Parliament a positive story on the NPfIT while the programme was dying.

So while DWP spokespeople and Iain Duncan Smith praise the Universal Credit IT programme can anyone trust what they say? Though Duncan Smith sits on an important DWP steering group on Universal Credit, does he know enough to know whether he is telling the truth when he says the programme is on track and on budget?

At arm’s length to ministers, officialdom owns and controls the facts on the state of all of the government’s biggest projects – and the facts on Universal Credit’s IT programme will continue to stay in locked cupboards unless the Information Commissioner rules otherwise, and even then the DWP will doubtless put up a fight against disclosure.

The IBM and McKinsey reports were so well hidden by the DWP that, for a time, it didn’t know it had them.

The DWP gave the reasons below for rejecting our appeal against the decision not to publish. The DWP’s arguments against publishing the reports on Universal Credit are the same ones that, hundreds of years ago, were used to ban the publication of Parliamentary proceedings: that reporting would affect the candour of what needed to be said. That proved to be nonsense.

By hiding the reports the DWP gives the impression it doesn’t want the truth about Universal Credit to come out – leaving the department and Iain Duncan Smith free to continue saying that the scheme is on track. Indeed Duncan Smith said yesterday that he “has nothing to hide here”. That is evidently not true.

The reports we’d requested were:

– Universal Credit end-to-end technical review” (IBM – cost £49240).
– Universal Credit delivery model assessment phases one and two. ( McKinsey and Partners – cost £350,000).

DWP’s letter to us:

7 September 2012
Dear Mr Collins,

…You asked for a copy of the Universal Credit Delivery Model Assessment Phase 1 and 2, and the Universal Credit End to End Technical Review.

I am writing to advise you that the Department has decided not to disclose the information you requested.

The department has conducted an internal review and the information you requested is being withheld as it falls under the exemptions at section 35(1)(a) and (formulation of Government policy) and Section 36 (2) (b) and (c) (prejudice to the effective conduct of public affairs) of the Freedom of Information Act. These exemptions require the public interest for and against disclosure to be balanced.

These reports from external consultants discuss the merits or drawbacks of the UC delivery model and an assessment of whether the IT architecture is fit for purpose. This must be candid otherwise; the Department and the taxpayer will not secure value for money. Such reports can therefore be negative by nature in their outlook.

The Department considers that premature disclosure of these reports could lead to future consultants’ reports being less frank. In addition, there is a risk that this may lead to an absence of a recorded audit trail of the more candid elements. This is not in the public interest. Similarly, key staff selected to be interviewed by consultants are likely to be inhibited if they think their candour is likely to be recorded and released.

It is vital that the Department’s ability effectively to identify, assess and manage its key risks to delivery is not compromised. The willingness of senior managers to fully engage in a timely manner and support consultants assessment and assurance of key IT projects in an unrestrained, frank and candid way is vital to the effectiveness of the process.

Disclosure would also give the general public an unbalanced understanding of the Programme and potentially undermine policy outcomes, cause inappropriate concern (which in turn would need to be managed) and damage progress to the detriment of the Government’s key welfare reform and the wider UK economy.

While we recognise that the publication of the information requested could provide an independent assessment of the key issues and risks, we have to balance this against the fact that these reports includes details of ongoing policy formulation and sensitive information the publication of which would be likely to prejudice the effective conduct of public affairs.

The Department periodically publishes information about the introduction of Universal Credit, and this can be found on the Departments website here http://www.dwp.gov.uk/policy/welfare-reform/universal-credit/

Yours sincerely
Ethna Harnett

We have appealed the DWP’s refusal so the matter is now before the Information Commissioner’s Office.

Universal  Credit programme on course for disaster – Frank Field

Has the DWP lost £400,000 of reports it commissioned on Universal Credit?

Millions of pounds of secret DWP reports

NAO criticises Atos benefits contract

DWP scraps £141m IT project three months after assurance to MPs

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Posted in Agile, Campaign4Change, change, change management, DWP, excessive secrecy, Freedom of Information, Government IT, HMRC, IBM, IT projects, managing outsourced services, npfit, outsourcing, Universal Credit

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