Tag Archives: Francis Maude

Central buying of IT and other services is a bit of a shambles – just what Sir Humphrey wants?

By Tony Collins

Cabinet Office entrance

Cabinet Office entrance

Like the Government Digital Service, the Crown Commercial Service was set up as a laudable attempt to cut the huge costs of running central government.

The Cabinet Office under Francis Maude set up the Crown Commercial Service [CCS] in 2014 to cut the costs of buying common products and services for Whitehall and the wider public sector including the NHS and police.

It has a mandate to buy commodity IT, other products and services and whatever can be bought in bulk. It has had some success – for example with negotiating lower prices for software licences needed across Whitehall. The skills and knowledge of its civil servants are well regarded.

But, like the Government Digital Service, CCS has had limited support from permanent secretaries and other senior officials who’d prefer to protect their autonomy.

It has also been hindered by unachievable promises of billions of pounds in savings. Even CCS’s own managers at the time regarded the Cabinet Office’s plans for huge savings as over-optimistic.

Yesterday [13 December 2016] the National Audit Office published a report that questioned whether CCS has paid its way, let alone cut public sector costs beyond what civil and public servants could have achieved without it.

CCS employed 790 full-time equivalent staff in 2015/16 and had operating costs in one year alone of £66.3m

This was the National Audit Office’s conclusion:

“CCS has not achieved value for money. The Cabinet Office underestimated the difficulty of implementing joint buying for government. With no business case or implementation plan CCS ran into difficulties. Net benefits have not been tracked so it cannot be shown that CCS has achieved more than the former Government Procurement Service would have.

“However, the strategic argument for joint buying remains strong and CCS is making significant changes to improve future services.”

Some of the NAO’s detailed findings:

  • The public sector spends £2.5bn directly with CCS – £8bn less than originally forecast.
  • Seven departments buy directly through CCS – 10 fewer than originally forecast
  • The forecast of £3.3bn net benefits from the creation of CCS over the four years to 2017-18 are  unlikely to materialise.
  • The National Audit Office says the actual net benefits of CCS to date are “unknown”.
  • The Cabinet Office did not track the overall benefits of creating CCS.
  • Most of the planned transfers of procurement staff from central departments and the wider public sector to CCS haven’t happened.
  • Where some of the workforce has transferred, some departments have rehired staff to replace those who transferred.
  • Departments continue to manage their own procurement teams, although they use CCS’s frameworks.
  • CCS was set up with the power to force central departments to use its bulk buying services. But that power wasn’t enforced.
  • The National Audit Office says it is “no longer clear whether CCS has a clear mandate that requires all departments to use it for direct buying… it no longer has a clear timetable or expectation that further departments will transfer staff or buying functions to CCS”.

It’s all a far cry from the expectations set by a Cabinet Office announcement in 2013 which said that CCS will “ensure maximum value for the taxpayer is extracted from every commercial relationship”.

The then Cabinet Office minister Francis Maude said at the time,

“The new Crown Commercial Service will ensure a step change in our commercial capability, giving government a much tighter grip on all aspects of its commercial performance, from market engagement through to contract management.”

Comment

Why CCS has failed so far to make much difference to Whitehall’s costs is not clear. It seems to have been hit by a combination of poor management at the outset, a high turnover of senior officials and ludicrously high expectations, combined with a civil service reluctance in central departments and the wider public sector to cede control over procurement to CCS –  even when it comes to common products and services.

The NAO report is a reminder of a fundamental flaw in the way government works: central departments can’t in practice be forced to do anything. They are a power unto themselves. The Cabinet Office has powers to mandate a change of practice and behaviour in central departments – to which Sir Humphrey can shrug his shoulders and change nothing

Even the Prime Minister is, in practice, powerless to force departments to do something they don’t want to do (except in the case of the miscarriage of justice that involved two Chinook pilots who were eventually cleared of gross negligence because the then defence secretary Liam Fox, through a series of manoeuvres, forced the MoD to set the finding aside).

The CCS may be doomed to failure unless the Cabinet Office rigorously enforces its mandate to make government departments use its buying services.

If the Cabinet Office does not enforce its power, Sir Humphrey will always protect his turf by arguing that the products and services his officials buy – including IT in general – are specific and are usually tailored to the department’s unique and complex needs.

Much to the relief of Sir Humphrey, Francis Maude, the battle-hardened enforcer at the Cabinet Office, has left the House of Commons. He has no comparable replacement.

Are all central initiatives aimed at making  a real dent in the costs of running Whitehall now doomed to failure?

Sir Humphrey knows the answer to that; and he’s wearing a knowing grin.

Crown Commercial Service – National Audit Office report

 

Barnet Council claims £31m savings with Capita – and not an auditor in sight.

By Tony Collins

capita

It’s commendable that Barnet Council has published much material on its three-year review of a £322m 10-year outsourcing contract with Capita.

More than a dozen council reports and appendices cover every aspect of the contract.

The quantity of material seems, on the face of it, to answer critics of the outsourcing deal, among them local bloggers, who have pointed to the lack of reliable evidence of the savings achieved. The suspicion is that costs have increased and council services including ICT have deteriorated since Capita took over in 2013.

Now the council has ostensibly proved that the opposite is the case. Barnet’s press release says,

Barnet Council and Capita contract delivers £31m savings

“A review of a contract between Barnet Council and Capita has demonstrated it is delivering significant benefits to the borough with overall savings of £31 million achieved alongside increased resident satisfaction…

“In terms of satisfaction with services provided, the review, showed 76 per cent of residents were satisfied with the outward-facing customer services, up from 52 per cent before the contract was established.

“This increase was even more significant in respect of face to face services, as 96 per cent of residents who engaged with the council in this way said they were satisfied compared with a previous 35 per cent.

“The review also showed that the cost of delivering the bundle of services provided in the contract is now £6m a year less than before the contract was signed and that 90 per cent of the contract’s key performance indicators being met or exceeded.”

The press release quotes two leaders of the council saying how pleased they were with the contract. Capita calls it a “positive review”.

The review has various mentions of items of additional spending including £9m on ICT and it’s not clear whether the extra sums are taken into account in the savings figures.

Among the review’s suggestions is that the council pay Capita’s annual management fee of £25m up front – a year in advance – instead of every quarter in return for extra savings.

The review also raises the possibility of extending the contract beyond the 10 years in return for additional savings. Capita is “keen” to explore this suggestion (though it could tie the hands of a future council administration).

The review reports were compiled by council officers who reported to a working group of Tory and Labour councillors, under a much-respected Tory chairman. By a small margin, Conservatives run the council.

Lack of independent challenge?

It’s unclear why the council did not commission its audit committee, or auditors, to review the contract. In the past the audit committee has been critical of some aspects of the contract.

For this reason the reports are unlikely to silence critics of Barnet’s outsourcing deal. Council officers compiled the review’s findings, not auditors.

As a result, despite the volume of published written material, there is no evidence that the figures for savings have been independently verified as accurate.

Neither is there independent verification of the methods used by officers for obtaining the figures.

Further, some observers may question the positive tone of the review findings. The “good news” tone may be said to be at odds with the factual neutrality of, say, reports of the National Audit Office.

There are also questions about whether the council is providing enough effective challenge to Capita’s decisions and figures.

At a council committee meeting in November 2016 to discuss the review reports, the most informed challenges to the findings appear to have come not from Barnet councillors but two local bloggers, Mrs Angry and Mr Reasonable, who questioned whether the claimed savings could be more than wiped out by additional spending – including an extra £9m on ICT. They appear to have received no clear answers.

Concerns of some officials

The body of the review reports outline some of the concerns of staff and directors. Mrs Angry quotes some of the concerns from the review reports:

“Transparency of costs, additional charges and project spend were raised as key concerns. It was felt that CSG [Barnet’s Customer and Support Group, for which Capita is responsible] are often reluctant to go above and beyond the requirements of the contract without additional charges.

“Directors reported that the council needs to be more confident that solutions suggested by CSG, particularly for projects and capital spend are best value.

“Concerns were raised that CSG has a disproportionate focus on the delivery of process and KPIs over outcomes, creating a more contractual rather than partnership relationship between CSG and the council. Directors noted that many KPIs are not relevant and their reporting does not reflect actual service performance.”

The Capita contract began in September 2013, under which it provides finance, ICT, HR, Customer Services, Revenues and Benefits, Procurement, Estates and Corporate Programmes.

Comment

On the face of it, Barnet Council’s review of the Capita contract looks comprehensive and impressively detailed.

Looked at closely it’s disappointing – a wasted opportunity.

Had the council wanted the review’s findings to be widely believed, it would have made it uncompromisingly independent, in line with reports by the National Audit Office.

As it is, the review was carried out by council officers who reported to a working group of councillors. The working group comprised Labour as well as Tory councillors but the facts and figures were compiled by officers.

Nearly every page of every Barnet review report has a “good news” feel. There’s an impression that negative findings are played down.

Example:

“It should be noted that the failure to meet the target for KPI 30 related to one quarter only [my italics] and discussions are continuing regarding the application of the above service credit.”

Some negative findings are immediately countered by positive statements:

“CIPFA benchmarking data shows that the cost of the ICT service is slightly above the median, but below upper quartile in terms of the cost of the service as a percentage of organisational running costs.”

Another example of a negative finding immediately countered by a positive one, which may be said to be one hallmark of a non-independent report:

“One key area of concern in terms of overall performance is internal customer satisfaction… Survey results in respect of the financial year 2015/16 were universally poor, with all services failing to meet the target of upper quartile customer satisfaction. As a result, service credits to a total value of £116k have been applied in respect of these KPIs.

“To some extent, a degree of dissatisfaction amongst internal service users is to be expected, given the fact that cost reductions have been achieved to a large extent through increased self-service for both managers and staff, along with more restrictive processes and controls over things like the payment of invoices and the appointment of staff.

“Despite the survey outcomes indicating a low level of satisfaction, the interviews conducted with staff and managers as part of this Review suggest that services are generally considered to be improving.”

Integra ERP financial system a “success” – ?

The review report describes Capita’s introduction of the Integra financial system as “successful”. Elsewhere, however, it says,

“Many users raised issues with the Integra finance system, describing it as clunky and not user-friendly or intuitive.”

Double counting?

There’s no evidence that savings figures have been checked for possible inadvertent double counting on overlapping services. Double counting of savings is regularly found in National Audit Office reports.

“There are no standardised way for departments to evidence the reductions in ongoing expenditure,” said the National Audit Office in a report on Cabinet Office savings in July 2014. “Departments provided poor evidence, and double counting was highly likely as projects reduced staff or estates requirements.”

In a separate report on claimed savings in central government, the National Audit Office quoted the findings of an internal audit …

“A number of errors (instances where the evidence did not support the assertion) were found during our review and total adjusted accordingly … In addition, a number of savings were double counted with other savings categories and these have now been removed…

“We assessed some £200m of other savings as Red because they were double counted due to the same savings having been claimed by different units or, for example, because savings on staff were also claimed through reductions in average case costs.”

Omitted costs?

The omission of relevant costs could skew savings figures. It’s unclear from Barnet’s review reports whether extra spending of millions of pounds on, for example, ICT have been taken into account. Barnet blogger Mr Reasonable, who has a business background, raises the question of whether £65m of additional spending has been taken into account in the savings figures.

Reverse Sir Humphrey phenomenon?

The biggest single flaw in the review reports is that they appear worded to please the councillors who made the decision to outsource – the reverse of the “Sir Humphrey” caricature. The positive tone of Barnet’s reports implies that officers are – naturally – deferring to their political leaders.

In a BBC Radio 4 documentary on Whitehall, former minister Peter Lilley talked about how some officials spend part of their working lives trying to please their political leaders.

“Officials are trying to work out how to interpret and apply policy in line with what the minister’s views on the policy is …. They can only take their minister’s written or spoken word for it and that has a ripple effect on the department far greater than you imagine… Making speeches is the official policy of the department and that creates action.”

Another former minister Francis Maude told the BBC he found that too few officials were willing to say anything the minister did not want to hear.

“The way it should work is for civil servants give very candid well informed advice to ministers about what it is ministers want to do – the risks and difficulties,” said Maude. “My experience this time round in government, 20 years on from when I was previously government, is that the civil service was much less ready to do that.

“There were brilliant civil servants who were perfectly ready to tell you things that they thought you might not want to hear but there were too few of them.”

Barnet’s reviewing officers might have been dispassionately independent in reporting their findings and double checking the supplied figures – but who can tell without any expert independent assessment of the review?

The US Sabanes-Oxley Act, which the Bush administration introduced after a series of financial scandals, defines what is meant by an “independent” audit. The Act prohibits auditing by anyone who has been involved in a management function or provided expert services for the organisation being audited.

That would disqualify every Barnet officer from being involved in an independent audit of their own council’s contract with Capita.

The Act also says that the auditor must not have been an employee of the organisation being audited. Again that would disqualify every Barnet officer from an independent audit of their own council’s contract.

Review a waste of time and money?

It would be wrong to imply that the review is a pointless exercise. It identifies what works well and what doesn’t. It will help officers negotiate changes to the contract and to key performance indicators. For example it’s of little value having a KPI to answer phone calls within 60 seconds if the operator is unable to help the caller.

What the review does not provide is proof of the claimed savings. Barnet’s press release announcing savings of £31m is just that – a press release. It does not pretend to be politically neutral.

But without independent evidence of the claimed savings, it’s impossible for the disinterested observer to say that the Capita contract so far has been a success. Neither does evidence exist it has failed.

Capita share price at 10-year low

What is clear is that fixing some of the more serious problems identified in the report, such as obsolescent IT, will not be easy given the conflict between the continuing need for savings and Capita’s pressing need to improve the value of its business for shareholders, against a backdrop of difficulties on a number of its major contracts [Transport for London, Co-op Bank, NHS] and a share price that was yesterday [30 November 2016] at a ten-year low.

The review also raises a wider question: are most of a council’s busy councillors who come to council meetings in their free time equipped to read through and digest a succession of detailed reports on the three-year interim results of a complex outsourcing contract?

If they do glance through them, will they have enough of a close interest in the subject, and a good understanding of it,  to provide effective challenge to council officers and their political leaders?

If nothing else, the Barnet review shows that councillors in general cannot provide proper accountability on an outsourcing contract as complex as Capita’s deal with Barnet.

Either council tax payers have to put their faith in officers, irrespective of the obvious pressure for officialdom to tell its political leaders what they want to hear, or council taxpayers can put their faith in an independent audit.

Barnet Council has not given its residents any choice.

It’s a pity that when it comes to claimed savings of £31m there’s not an auditor in sight.

Barnet declares its contract a success – Barnet and Whetstone Press

Mr Reasonable – important questions on the Capita review

Mrs Angry – who writes compellingly on the council meeting where the review reports were discussed.

Long may Government Digital Service bring about “creative tension” in Whitehall

By Tony Collins

In a report published yesterday (25 October 2016) the National Audit Office said it will shortly be undertaking a review of the Government Digital Service.

It will study GDS’s “achievements and the  challenges it faces, looking in particular at whether the centre of government is  supporting better use of technology and business transformation in government”.

It mentioned its review of GDS in a report on Progress on the Common Agricultural Policy Delivery Programme. Among other things the report looked at the IT that is supposed to support payments of farmer subsidies.

With GDS’s help Defra’s Rural Payments Agency adopted an agile approach to paying subsidies but the two parties fell out and GDS stopped working on the programme.

The NAO’s report suggests that the Rural Payments Agency is glad to be rid of GDS.

“The GDS no longer has significant involvement in the Programme and the Rural Payments Agency told us it has not sought any further support.

“Its distance from the Programme has allowed the Department [DEFRA] to shift from a focus on agile and digital delivery to an approach that combines agile software development with programme management and governance arrangements with which the RPA is more familiar.”

Government Computing has a good analysis of the NAO report.

Mandarin power

Francis Maude, meanwhile, has warned that the work of GDS, which has helped to “stop the wrong things happening”, is being undermined, reports Public Finance.

Maude, who set up GDS in 2011, blamed mandarins who were trying to reassert their autonomy.

Maude said that developments such  as controls on spending and improvements in service standard assessment processes do not happen spontaneously.

“You have to drive it centrally, and departments, separate ministries and separate agencies prize their autonomy and they will always want to take it back, and that is now happening.

“Just at the moment when the UK has just recently been ranked top in the world for digital government, we are beginning to unwind precisely the arrangements that had led to that and which were being copied in America and Australia and also some other countries as well,” said Maude.

“This is, for me, a pity – there is a sense these old structures in government, which are essentially about preserving the power of the mandarins, are being reasserted.”

He said there was a “continuing need for very strong central strategic leadership with the power backing it up to stop the wrong things happening.”

Tom Kibasi, director of the Institute for Public Policy Research, said any dismantling of GDS illustrated “government’s extraordinary propensity to self harm”.

He said it was very odd that GDS was being “scaled back and unwound at just the moment that it appears to be successful”.

In August 2016 Maude warned that it would be a “black day” if GDS were dismantled.

That said, GDS has its critics.

Comment

A clash of cultures between GDS and the Rural Payments Agency made it almost inevitable that the two sides would fall out. This is also what happened between GDS and the DWP.

Agile-wedded idealists?

If some senior civil servants had their way, particularly at the DWP, GDS would slowly lose its identity and its staff gradually dispersed throughout the civil and public services.

Clearly civil servants at the Rural Payments Agency looked at GDS  as comprising mostly agile-wedded idealists obsessed with technological innovation rather than paying subsidies to farmers.

But long before the arrival of GDS, the RPA had a history of IT failure. Perhaps the RPA would rather be left on its own to fail without GDS’s help?

The latest NAO report is a little more positive about the RPA’s achievements than some past reports.

But this week’s Farmers Weekly, which has reported extensively on delays of correct subsidy payments to farmers, quoted the National Farmers Union as saying that problems from 2015 claims were still far from over.

The future of GDS?

How easy is it for senior officials in any large central department to work closely with the Government Digital Service?

Departments – particularly HMRC and the DWP – cherish their autonomy, so GDS is seen by some permanent secretaries as an unnecessary interference.

And when it comes to the IT of central departments, GDS has no clear role.

But GDS’s creation was a good idea. Without it, departments will be left alone to continue IT spending on a vast scale.

GDS’s admittedly brief challenge at the Rural Payments Agency and at the DWP on the Universal Credit IT programme has, arguably, slightly modernised IT approaches within those departments.

And even if the costs of big Whitehall IT contracts have not changed much, there’s no doubt that the public face of government IT has improved noticeably (eg using digital passport photos for online driving licence renewals),

The more its people are resented by high-ranking civil servants, the better job GDS is probably doing on behalf of the public.

Consensus can sometimes mean complacency. Long may GDS’s relationship with departments be characterised by a state of creative, noble tension.

National Audit Office report “Progress on the Common Agricultural Policy Delivery Programme”.

GDS’s departure from CAP programme leads RPA to ditch agile approach – Government Computing

Is Sir Humphrey trying to kill off GDS and the innovations it stands for?

 

Excellent reports on lessons from Universal Credit IT project published today – but who’s listening?

By Tony Collins

“People burst into tears, so relieved were they that they could tell someone what was happening.”

The Institute for Government has today published one of the most incisive – and revelatory – reports ever produced on a big government IT project.

It concludes that the Universal Credit IT programme may now be in recovery after a disastrous start, but recovery does not mean recovered. Much could yet floor the programme, which is due to be complete in 2022.

The Institute’s main report is written by Nick Timmins, a former Financial Times journalist, who has written many articles on failed publicly-funded IT-based projects.

His invaluable report, “Universal Credit – from disaster to recovery?” – includes interviews with David Pitchford, a key figure in the Universal Credit programme, and Howard Shiplee who led the Universal Credit project.

Timmins also spoke to insiders, including DWP directors, who are not named, and the former secretary of state at the Department for Work and Pensions Iain Duncan Smith and the DWP’s welfare reform minster Lord Freud.

Separately the Institute has published a shorter report “Learning the lessons from Universal Credit which picks out from Timmins’ findings five “critical” lessons for future government projects. This report, too, is clear and jargon-free.

Much of the information on the Universal Credit IT programme in the Timmins report is new. It gives insights, for instance, into the positions of Universal Credit’s major suppliers HP, IBM, Accenture.

It also unearths what can be seen, in retrospect, to be a series of self-destructive decisions and manoeuvres by the Department for Work and Pensions.

But the main lessons in the report – such as an institutional and political inability to face up to or hear bad news – are not new, which raises the question of whether any of the lessons will be heeded by future government leaders – ministers and civil servants – given that Whitehall departments have been making the same mistakes, or similar ones, for decades?

DWP culture of suppressing any bad news continues

Indeed, even as the reports lament a lack of honesty over discussing or even mentioning problems – a “culture of denial” – Lord Freud, the minister in charge of welfare reform, is endorsing FOI refusals to publish the latest risk registers, project assessment reviews and other Universal Credit reports kept by the Department for Work and Pensions.

More than once Timmins expresses his surprise at the lack of information about the programme that is in the public domain. In the “acknowledgements” section at the back of his report Timmins says,

“Drafts of this study were read at various stages by many of the interviewees, and there remained disputes not just about interpretation but also, from some of them, about facts.

“Some of that might be resolvable by access to the huge welter of documents around Universal Credit that are not in the public domain. But that, by definition, is not possible at this stage.”

Churn of project leaders continues

Timmins and the Institute warn about the “churn” of project leaders, and the need for stable top jobs.

But even as the Institute’s reports were being finalised HMRC was losing its much respected chief digital officer Mark Dearnley, who has been in charge of what is arguably the department’s riskiest-ever IT-related programme, to transfer of legacy systems to multiple suppliers as part of the dismantling of the £8bn “Aspire” outourcing venture with Capgemini.

Single biggest cause of Universal Credit’s bad start?

Insiders told Timmins that the fraught start of Universal Credit might have been avoided if Terry Moran had been left as a “star” senior responsible owner of the programme. But Moran was given two jobs and ended up having a breakdown.

In January 2011, as the design and build on Universal Credit started, Terry Moran was given the job of senior responsible owner of the project but a few months later the DWP’s permanent secretary Robert Devereux took the “odd” decision to make Moran chief operating officer for the entire department as well. One director within the DWP told Timmins:

“Terry was a star. A real ‘can do’ civil servant. But he couldn’t say no to the twin posts. And the job was overwhelming.”

The director claimed that Iain Duncan Smith told Moran – a point denied by IDS – that if Universal Credit were to fail that would be a personal humiliation and one he was not prepared to contemplate. “That was very different from the usual ministerial joke that ‘failure is not an option’. The underlying message was that ‘I don’t want bad news’, almost in words of one syllable. And this was in a department whose default mode is not to bring bad news to the top. ‘We will handle ministers’ is the way the department operates…”

According to an insider, “Terry Moran being given the two jobs was against Iain’s instructions. Iain repeatedly asked Robert [Devereux] not to do this and Robert repeatedly gave him assurances that this would be okay” – an account IDS confirms. In September 2012, Moran was to have a breakdown that led to early retirement in March 2013. He recorded later for the mental health charity Time to Talk that “eventually, I took on more and more until the weight of my responsibilities and my ability to discharge them just grew too much for me”.

Timmins was told, “You cannot have someone running the biggest operational part of government [paying out £160bn of benefits a year] and devising Universal Credit. That was simply unsustainable,”

Timmins says in his report, “There remains a view among some former and current DWP civil servants that had that not happened (Moran being given two jobs), the programme would not have hit the trouble it did. ‘Had he been left solely with responsibility for UC [Universal Credit], I and others believe he could have delivered it, notwithstanding the huge challenges of the task,’ one says.”

Reviews of Universal IT “failed”

Timmins makes the point that reviews of Universal Credit by the Major Projects Authority failed to convey in clear enough language that the Universal Credit programme was in deep trouble.

“The [Major Projects Authority] report highlighted a lack of sufficient substantive action on the points raised in the March study. It raised ‘high’ levels of concern about much of the programme – ‘high’ being a lower level of concern than ‘critical’. But according to those who have seen the report, it did not yet say in words of one syllable that the programme was in deep trouble.”

Iain Duncan Smith told Timmins that the the Major Projects review process “failed me” by not warning early enough of fundamental problems. It was the ‘red team’ report that did that, he says, and its contents made grim reading when it landed at the end of July in 2012.

Train crash on the way

The MPA [Cabinet Office’s Major Projects Authority] reviewed the programme in March 2011. “MPA reports are not in the public domain. But it is clear that the first of these flagged up a string of issues that needed to be tackled …

” In June a member of the team developing the new government’s pan-government website – gov.uk – was invited up to Warrington [base for the Universal Credit IT team] to give a presentation on how it was using an agile approach to do that.

“At the end of the presentation, according to one insider, a small number from the audience stayed behind, eyeing each other warily, but all wanting to talk. Most of them were freelancers working for the suppliers. ‘Their message,’ the insider says, ‘was that this was a train crash on the way’ – a message that was duly reported back to the Cabinet Office, but not, apparently, to the DWP and IDS.”

Scared to tell the truth

On another occasion when the Major Projects Authority visited the IT team at Warrington for the purposes of its review, the review team members decided that “to get to the truth they had to make people not scared to tell the truth”. So the MPA “did a lot of one-on-one interviews, assuring people that what they said would not be attributable. And under nearly every stone was chaos.

“People burst into tears, so relieved were they that they could tell someone what was happening.

” There was one young lad from one of the suppliers who said: ‘Just don’t put this thing [Universal Credit] online. I am a public servant at heart. It is a complete security disaster.’

IBM, Accenture and HP

“Among those starting to be worried were the major suppliers – Accenture, HP and IBM. They started writing formal letters to the department.

‘Our message,’ according to one supplier, ‘was: ‘Look, this isn’t working. We’ll go on taking your money. But it isn’t going to work’.’ Stephen Brien [then expert adviser to IDS] says of those letters: ‘I don’t think Iain saw them at that time, and I certainly didn’t see them at the time.”

At one point “serious consideration was given to suing the suppliers but they had written their warning letters and it rapidly became clear that that was not an option”.

Howard Shiplee, former head of the project, told Timmins that he had asked himself ‘how it could be that a very large group of clever people drawn from the DWP IT department with deep experience of the development and operation of their own massive IT systems and leading industry IT suppliers had combined to get the entire process so very wrong? Equally, ‘how could another group of clever people [the GDS team] pass such damning judgement on this earlier work and at the stroke of a pen seek to write off millions of pounds of taxpayers’ money?’

Shiplee commissioned a review from PwC on the work carried out to date and discovered that the major suppliers “were genuinely concerned to have their work done properly, support DWP and recover their reputations”.

In addition, when funding had been blocked at the end of 2012, the suppliers “had not simply downed tools but had carried on development work for almost three months” as they ran down the large teams that had been working on it.

“As a result, they had completed the development for single claimants that was being used in the pathfinder and made considerable progress on claims for couples and families. And their work, the PwC evaluation said, was of good quality.”

On time?

When alarm bells finally started ringing around Whitehall that Universal Credit was in trouble,  IDS found himself under siege. Stephen Brien says IDS was having to battle with the Treasury to keep the funding going for the project. He had to demonstrate that the programme was on time and on budget.

‘The department wanted to support him in that, and didn’t tell him all the things that were going wrong. I found out about some of them, but I didn’t push as hard as I should have. And looking back, the MPA [Major Projects Authority] meetings and the MPA reports were all handled with a siege mentality. We all felt we had to stand shoulder to shoulder defending where we were and not really using them to ask: ‘Are we where we should be?’

‘As a result we were not helping ourselves, and we certainly were not helping others, including the MPA. But we did get to the stage between the end of 2011 and the spring of 2012 where we said: ‘Okay, let’s get a red team in with the time and space to do our own challenge.’”

The DWP’s “caste” system

A new IT team was created in Victoria Street, London – away from Warrington but outside the DWP’s Caxton Street headquarters. It started to take a genuinely agile approach to the new system. One of those involved told Timmins:

“It had all been hampered by this caste system in the department where there is a policy elite, then the operational people, and then the technical people below that.

“And you would say to the operational people: ‘Why have you not been screaming that this will never work?’ And they’d say: ‘Well, we’re being handed this piece of sh** and we are just going to have to make it work with workarounds, to deal with the fact that we don’t want people to starve. So we will have to work out our own processes, which the policy people will never see, and we will find a way to make it work.’

Twin-track approach

IBM, HP and Accenture built what’s now known as the “live” system which enabled Universal Credit to get underway, and claims to be made in jobcentres.

It uses, in part, the traditional “waterfall” approach and has cost hundreds of millions of pounds. In contrast there’s a separate in-house “digital” system that has cost less than £10m and is an “agile” project.

A key issue, Shiplee told Timmins, was that the new digital team “would not even discuss the preceding work done by the DWP and its IT suppliers”. The digital team had, he says, “a messiah-like approach that they were going to rebuild everything from scratch”.

Rather than write everything off, Shiplee wanted ideally to marry the “front-end” apps that the GDS/DWP team in Victoria Street was developing with the work already done. But “entrenched attitudes” made that impossible. The only sensible solution, he decided, was a “twin-track” approach.

“The Cabinet Office remained adamant that the DWP should simply switch to the new digital version – which it had now become clear, by late summer, would take far longer to build than they anticipated – telling the DWP that the problem was that using the original software would mean ‘creating a temporary service, and temporary will become permanent’.

“All of which led to the next big decision, which, to date, has been one of the defining ones. In November 2013, a mighty and fraught meeting of ministers and officials was convened. Pretty much everyone was there. The DWP ministers, Francis Maude (Cabinet Office minister), Oliver Letwin who was Cameron’s policy overlord, Sir Jeremy Heywood, the Cabinet Secretary, Sir Bob Kerslake, the head of the home civil service, plus a clutch of DWP officials including Robert Devereux and Howard Shiplee as the senior responsible owner along with Danny Alexander and Treasury representatives.

“The decision was whether to give up on the original build, or run a twin-track approach: in other words, to extend the use of the original build that was by now being used in just over a dozen offices – what became dubbed the ‘live’ service – before the new, and hopefully much more effective, digital approach was finished and on stream.

“It was a tough and far from pleasant meeting that is etched in the memories of those who were there…

“One of those present who favoured the twin-track approach says: There were voices for writing the whole of the original off. But that would have been too much for Robert Devereux [the DWP’s Permanent Secretary] and IDS.

” So the twin-track approach was settled on – writing a lot of the original IT down rather than simply writing it off. That, in fact, has had some advantages even if technically it was probably the wrong decision…

“It has, however, seen parts of the culture change that Universal Credit involves being rolled out into DWP offices as more have adopted Universal Credit, even if the IT still requires big workarounds.

“More and more offices, for example, have been using the new claimant commitment, which is itself an important part of Universal Credit. So it has been possible to train thousands of staff in that, and get more and more claimants used to it, while also providing feedback for the new build.”

Francis Maude was among those who objected to the twin-track approach, according to leaked minutes of the project oversight board at around this time.

Lord Freud told Timmins,

‘Francis was adamant that we should not go with the live system [that is, the original build]. He wanted to kill it. But we, the DWP, did not believe that the digital system would be ready on anything like the timescales they were talking about then …But I knew that if you killed the live system, you killed Universal Credit…”

In the end the twin-track approach was agreed by a majority. But the development of the ‘agile’ digital service was immediately hampered by a spat over how quickly staff from the GDS were to be withdrawn from the project.

Fury over National Audit Office report

In 2013 the National Audit Office published a report Universal Credit – early progress –  that, for the first time, brought details of the problems on the Universal Credit programme into the public domain. Timmins’ report says that IDS and Lord Freud were furious.

“IDS and, to an only slightly lesser extent, Lord Freud were furious about the NAO report; and thus highly defensive.”

IDS tried to present the findings of the National Audit Office as purely historical.

In November 2014, the NAO reported again on Universal Credit. It once more disclosed something that ministers had not announced – that the timetable had again been put back two years (which raises further questions about why Lord Freud continues to refuse FOI requests that would put into the public domain – and inform MPs – about project problems, risks and delays without waiting for an NAO report to be published)..

Danny Alexander “cut through” bureaucracy

During one period, the Treasury approval of cash became particularly acute. Lord Freud told Timmins:

“We faced double approvals. We had approval about any contract variation from the Cabinet Office and then approvals for the money separately from the Treasury.

“The Government Digital Service got impatient because they wanted to make sure that the department had the ability to build internally rather than going out to Accenture and IBM, who (sic) they hate.

“The approvals were ricocheting between the Cabinet Office and the Treasury and when we were trying to do rapid iteration. That was producing huge delays, which were undermining everything. So in the end Danny Alexander [Lib-dem MP who was chief secretary to the Treasury] said: ‘I will clear this on my own authority.’ And that was crucial. Danny cut through all of that.”

Optimism bias

So-called optimism bias – over-optimism – is “such a common cause of failure in both public and private projects that it seems quite remarkable that it needs restating. But it does – endlessly”.

Timmins says the original Universal Credit white paper – written long before the start of the programme – stated that it would involve “an IT development of moderate scale, which the Department for Work and Pensions and its suppliers are confident of handling within budget and timescale”.

David Pitchford told Timmins,

“One of the greatest adages I have been taught and have learnt over the years in terms of major projects is that hope is not a management tool. Hoping it is all going to come out all right doesn’t cut it with something of this magnitude.

“The importance of having a genuine diagnostic machine that creates recommendations that are mandatory just can’t be overstated. It just changes the whole outcome completely. As opposed to obfuscation and optimism bias being the basis of the reporting framework. It goes to a genuine understanding and knowledge of what is going on and what is going wrong.”

Sir Bob Kerslake, who also identified the ‘good news culture’ of the DWP as being a problem, told Timmins,

“All organisations should have that ability to be very tough about what is and isn’t working. The people at the top have rose-tinted specs. They always do. It goes with the territory.

And unless you are prepared to embrace people saying that ‘really, this is in a bad place’… I can think of points where I have done big projects where it was incredibly important that we delivered the unwelcome news of where we were on that project. But it saved me, and saved my career.”

Recovery?

Timmins makes good arguments for his claim that the Universal Credit programme may be in recovery – but not recovered – and that improvements have been made in governance to allow for decisions to be properly questioned.

But there is no evidence the DWP’s “good news” culture has changed. For instance the DWP says that more than 300,000 people are claiming Universal Credit but the figure has not been audited and it’s unclear whether claimants who have come off the benefit and returned to it – perhaps several times – are being double counted.

Timmins points out the many uncertainties that cloud the future of the Universal Credit programme  – how well the IT will work, whether policy changes will hit the programme, whether enough staff will remain in jobcentres, and whether the DWP will have good relations with local authorities that are key to the delivery of Universal Credit but are under their own stresses and strains with resourcing.

There are also concerns about what changes the Scots and Northern Irish may want under their devolved powers, and the risk that any ‘economic shock’ post the referendum pushes up the volume of claimants with which the DWP has to deal.

 Could Universal Credit fail for non-IT reasons?

Timmins says,

“In seeking to drive people to higher earnings and more independence from the benefits system, there will be more intrusion into and control over the lives of people who are in work than under the current benefits system. And there are those who believe that such an approach – sanctioning people who are already working – will prove to be political dynamite.”

The dire consequences of IT-related failure

It is also worth noting that Universal Credit raises the stakes for the DWP in terms of its payment performance, says Timmins.

“If a tax credit or a Jobseeker’s Allowance payment or any of the others in the group of six go awry, claimants are rarely left penniless in the sense that other payments – for example, Housing Benefit in the case of Jobseeker’s Allowance or tax credits, – continue.

“If a Universal Credit payment fails, then all the support from the state, other than Child Benefit or disability benefits not included within Universal Credit, disappears.”

This happened recently in Scotland when an IT failure left hundreds of families penniless. The DWP’s public response was to describe the failure in Scotland as “small-scale”.

Comment

What a report.

It is easy to see how much work has gone into it. Timmins has coupled his own knowledge of IT-related failure with a thorough investigation into what has gone wrong and what lessons can be learned.

That said it may make no difference. The Institute in its “lessons” report uses phrases such as “government needs to make sure…”. But governments change and new administrations have an abundance – usually a superfluity – of confidence and ambition. They regard learning lessons from the past as putting on brakes or “nay saying”. You have to get with the programme, or quit.

Lessons are always the same

There will always be top-level changes within the DWP. Austerity will always be a factor.  The culture of denial of bad news, over-optimism about what can be achieved by when and how easily it can be achieved, over-expectations of internal capability, over-expectation of what suppliers can deliver, embarking on a huge project without clearly or fully understanding what it will involve, not listening diligently to potential users and ridiculously short timescales are all well-known lessons.

So why do new governments keep repeating them?

When Universal Credit’s successor is started in say 2032, the same mistakes will probably be repeated and the Institute for Government, or its successor, will write another similar report on the lessons to be learned.

When Campaign4Change commented in 2013 that Universal Credit would probably not be delivered before 2020 at the earliest, it was an isolated voice. At the time, the DWP press office – and its ministers – were saying the project was on budget and “on time”.

NPfIT

The National Audit Office has highlighted similar lessons to those in the Timmins report, for example in NAO reports on the NPfIT – the NHS IT programme that was the world’s largest non-military IT scheme until it was dismantled in 2011. It was one of the world’s biggest IT disasters – and none of its lessons was learned on the Universal Credit programme.

The NPfIT had an anti-bad news culture. It did not talk enough to end users. It had ludicrous deadlines and ambitions. The politicians in charge kept changing, as did some of programme leaders. There was little if any effective internal or external challenge. By the time it was dismantled the NPfIT had lost billions.

What the Institute for Government could ask now is, with the emasculation of the Government Digital Service and the absence of a powerful Francis Maude figure, what will stop government departments including the DWP making exactly the mistakes the IfG identifies on big future IT-enabled programmes?

In future somebody needs the power to say that unless there is adequate internal and external challenge this programme must STOP – even if this means contradicting a secretary of state or a permanent secretary who have too much personal and emotional equity in the project to allow it to stop. That “somebody” used to be Francis Maude. Now he has no effective replacement.

Victims

It’s also worth noting in the Timmins report that everyone seems to be a victim, including the ministers. But who are perpetrators? Timmins tries to identify them. IDS does not come out the report smelling of roses. His passion for success proved a good and bad thing.

Whether the direction was forwards or backwards IDS  was the fuel that kept Universal Credit going.  On the other hand his passion made it impossible for civil servants to give him bad news – though Timmins raises questions about whether officials would have imparted bad news to any secretary of state, given the DWP’s culture.

Neither does the DWP’s permanent secretary Robert Devereux emerge particularly well from the report.

How it is possible for things to go so badly wrong with there being nobody to blame? The irony is that the only people to have suffered are the genuine innocents – the middle and senior managers who have most contributed to Universal Credit apparent recovery – people like Terry Moran.

Perhaps the Timmins report should be required reading among all involved in future major projects. Competence cannot be made mandatory. An understanding of the common mistakes can.

Thank you to FOI campaigner Dave Orr for alerting me to the Institute’s Universal Credit reports.

Thanks also to IT projects professional John Slater – @AmateurFOI – who has kept me informed of his FOI requests for Universal Credit IT reports that the DWP habitually refuse. 

Update 18.00 6 September 2016

In a tweet today John Slater ( @AmateurFOI ) makes the important point that he asked the DWP and MPA whether either had held a “lessons learned” exercise in the light of the “reset” of the Universal Credit IT programme. The answer was no.

This perhaps reinforces the impression that the DWP is irredeemably complacent, which is not a good position from which to lead major IT projects in future.

Universal Credit – from disaster to recovery?

Learning the lessons from Universal Credit

 

Inside Universal Credit IT – analysis of document the DWP didn’t want published

dwpBy Tony Collins

Written evidence the Department for Work and Pensions submitted to an FOI tribunal – but did not want published (ever) – reveals that there was an internal “lack of candour and honesty throughout the [Universal Credit IT] Programme and publicly”.

It’s the first authoritative confirmation by the DWP that it has not always been open and honest when dealing with the media on the state of the Universal Credit IT programme.

FOI tribunal grants request to publish DWP's written submission

FOI tribunal grants request to publish DWP’s written submission

According to the DWP submission, senior officials on the Programme became so concerned about leaks that a former member of the security services was brought in to lead an investigation. DWP staff and managers were the subjects of “detailed interviews”. Employee emails were “reviewed”, as were employee access rights to shared electronic areas.

Staff became “paranoid” about accidentally leaving information on a printer. Some of the high-security measures appear still to be in place.

Unpublished until now, the DWP’s written legal submission referred, in part, to the effects on employees of leak investigations.

The submission was among the DWP’s written evidence to an FOI Tribunal in February 2016.

The Government Legal Service argued that the DWP’s written evidence was for the purposes of the tribunal only. It should not be published or passed to an MP.

The Legal Service went further: it questioned the right of an FOI Tribunal to decide on whether the submission could be published. Even so a judge has ruled that the DWP’s written evidence to the tribunal can be published.

Excerpts from the submission are here.

Analysis and Comment

The DWP’s submission gives a unique glimpse into day-to-day life and corporate sensitivities at or near the top of the Universal credit IT programme.

It reveals the lengths to which senior officials were willing to go to stop any authoritative “bad news” on the Universal Credit IT programme leaking out. Media speculation DWP’s senior officials do not seem to mind. What appears to concern them is the disclosure of any credible internal information on how things are progressing on Universal Credit IT.

Confidential

Despite multiple requests from IT suppliers, former government CIOs and MPs, for Whitehall to publish its progress reports on big IT-based change programmes (some examples below), all central departments keep them confidential.

That sensitivity has little to do with protecting personal data.

It’s likely that reviews of projects are kept confidential largely because they could otherwise expose incompetence, mistakes, poor decisions, risks that are likely to materialise, large sums that have been wasted or, worst of all, a project that should have been cancelled long ago and possibly re-started, but which has been kept going in its original form because nobody wanted to own up to failure.

Ian watmore front cover How to fix government IROn this last point, former government CIO and permanent secretary Ian Watmore spoke to MPs in 2009 about how to fix government IT. He said,

“An innovative organisation tries a lot of things and sometimes things do not work. I think one of the valid criticisms in the past has been when things have not worked, government has carried on trying to make them work well beyond the point at which they should have been stopped.”

Individual accountability for failure?

Oblivious to MPs’ requests to publish IT progress reports, the DWP routinely refuses FOI requests to publish IT progress reports, even when they are several years old, even though by then officials and ministers involved will probably have moved on. Individual accountability for failure therefore continues to be non-existent.

Knowing this, MPs on two House of Commons select committees, Public Accounts and Work and Pensions, have called for the publication of reports such as “Gateway” reviews.

This campaign for more openness on government IT projects has lasted nearly three decades. And still Whitehall never publishes any contemporaneous progress reports on big IT programmes.

It took an FOI campaigner and IT projects professional John Slater [@AmateurFOI] three years of legal proceedings to persuade the DWP to release some old reports on the Universal Credit IT programme (a risk register, milestone schedule and issues log). And he had the support of the Information Commissioner’s legal team.

universal creditWhen the DWP reluctantly released the 2012 reports in 2016 – and only after an informal request by the then DWP secretary of state Stephen Crabb – pundits were surprised at how prosaic the documents were.

Yet we now know, thanks to the DWP’s submission, the lengths to which officials will go to stop such documents leaking out.

Understandable?

Some at the DWP are likely to see the submission as explaining some of understandable measures any government department would take to protect sensitive information on its largest project, Universal Credit. The DWP is the government largest department. It runs some of the world’s biggest IT systems. It possesses personal information on nearly everyone in Britain. It has to make the protection of its information a top priority.

Others will see the submission as proof that the DWP will do all it can to honour a decades-old Whitehall habit of keeping bad news to itself.

Need for openness

It’s generally accepted that success in running big IT-enabled change programmes requires openness – with staff and managers, and with external organisations and agencies.

IT-based change schemes are about solving problems. An introspective “good news only” culture may help to explain why the DWP has a poor record of managing big and successful IT-based projects and programmes. The last time officials attempted a major modernisation of benefit systems in the 1990s – called Operational Strategy – the costs rose from £713m to £2.6bn and the intended objective of joining up the IT as part of a “whole person” concept, did not happen.

Programme papers“watermarked”

The DWP’s power, mandate and funding come courtesy of the public. So do officials, in return, have the right to keep hidden mistakes and flawed IT strategies that may lead to a poor use – or wastage – of hundreds of millions of pounds, or billions?

The DWP’s submission reveals that recommendations from its assurance reports (low-level reports on the state of the IT programme including risks and problems) were not circulated and a register was kept of who had received them.

Concern over leaks

The submission said that surveys on staff morale ceased after concerns about leaks. IT programme papers were no longer sent electronically and were delivered by hand. Those that were sent were “double-enveloped” and any that needed to be retained were “signed back in”. For added security, Universal Credit programme papers were watermarked.

When a former member of the security services was brought in to conduct a leaks investigation, staff and mangers were invited by the DWP’s most senior civil servant to “speak to the independent investigator if they had any information”. This suggests that staff were expected to inform on any suspect colleagues.

People “stopped sharing comments which could be interpreted as criticism of the [Universal Credit IT] Programme,” said the submission. “People became suspicious of their colleagues – even those they worked closely with.

“There was a lack of trust and people were very careful about being honest with their colleagues…

“People felt they could no longer share things with colleagues that might have an honest assessment of difficulties or any negative criticism – many staff believed the official line was, ‘everything is fine’.

“People, even now, struggle to trust colleagues with sensitive information and are still fearful that anything that is sent out via email will be misused.

“For all governance meetings, all documents are sent out as password protected, with official security markings included, whether or not they contain sensitive information.”

“Defensive”

dwpLines to take with the media were added to a “Rolling Brief”, an internal update document, that was circulated to senior leaders of the Universal Credit IT programme, the DWP press office and special advisors.

These “lines to take” were a “defensive approach to media requests”. They emphasised the “positive in terms of progress with the Programme without acknowledging the issues identified in the leaked stories”.

This positive approach to briefing and media management “led to a lack of candour and honesty through the Programme and publically …”

How the DWP’s legal submission came about is explained in this separate post.

Were there leaks of particularly sensitive information?

It appears not. The so-called leaks revealed imperfections in the running of the Universal Credit programme; but there was no personal information involved. Officials were concerned about the perceived leak of a Starting Gate Review to the Telegraph (although the DWP had officially lodged the review with the House of Commons library).

The DWP also mentioned in its statement a leak to the Guardian of the results of an internal “Pulse” survey of staff morale – although it’s unclear why the survey wasn’t published officially given its apparent absence of sensitive commercial, personal, corporate or governmental information.

NPfIT

The greater the openness in external communications, the less likely a natural scepticism of new ways of working will manifest in a distrust of the IT programme as a whole.

The NHS’s National Programme for IT (NPfIT) – then the UK’s biggest IT programme costing about £10bn – was dismantled in 2011 after eight fraught years. One reason it was a disaster was the deep distrust of the NPfIT among clinicians, hospital technologists, IT managers, GPs and nurses. They had listened with growing scepticism to Whitehall’s oft-repeated “good news” announcements.

Ex-Government CIO wanted more openness on IT projects

When MPs have asked the DWP why it does not publish reports on the progress of IT-enabled projects, it has cited “commercial confidentiality”.

But in 2009, Ian Watmore (the former Government CIO) said in answer to a question by Public Account Committee MP Richard Bacon that he’d endorse the publication of Gateway reviews, which are independent assessments of the achievements, inadequacies, risks, progress and challenges on risky IT-based programmes.

“I am with you in that I would prefer Gateway reviews to be published because of the experience we had with capability reviews (published reports on a department’s performance). We had the same debate (as with Gateway reviews) and we published them. It caused furore for a few weeks but then it became a normal part of the furniture,” said Watmore.

Capability reviews are no longer published. The only “regular” reports of Whitehall progress with big IT programmes are the Infrastructure and Projects Authority’s annual reports. But these do not include Gateway reviews or other reports on IT projects and programmes. The DWP and other departments publish only their own interpretations of project reviews.

In the DWP’s latest published summary of progress on the Universal Credit IT programme, dated July 2016, the focus is on good news only.

But this creates a mystery. The Infrastructure and Projects Authority gave the Universal Credit programme an “amber” rating in its annual report which was published this month. But neither the DWP nor the Authority has explained why the programme wasn’t rated amber/green or green.

MPs and even IT suppliers want openness on IT projects

Work and Pensions Committee front coverIn 2004 HP, the DWP’s main IT supplier, told a Work and Pensions Committee inquiry entitled “Making IT work for DWP customers” in 2004 that “within sensible commercial parameters, transparency should be maintained to the greatest possible extent on highly complex programmes such as those undertaken by the DWP”.

The Work and Pensions Committee spent seven months investigating IT in the DWP and published a 240-page volume of oral and written in July 2004. On the matter of publishing “Gateway” reviews on the progress or otherwise of big IT projects, the Committee concluded,

“We found it refreshing that major IT suppliers should be content for the [Gateway] reviews to be published. We welcome this approach. It struck us as very odd that of all stakeholders, DWP should be the one which clings most enthusiastically to commercial confidentiality to justify non-disclosure of crucial information, even to Parliament.”

The Committee called for Gateway reviews to be published. That was 12 years ago – and it hasn’t happened.

Four years later the Committee found that the 19 most significant DWP IT projects were over-budget or late.

DWP headline late and over budget

In 2006 the National Audit Office reported on Whitehall’s general lack of openness in a report entitled “Delivering successful IT-enabled business change”.

The report said,

“The Public Accounts Committee has emphasised frequently the need for greater transparency and accountability in departments’ performance in managing their programmes and projects and, in particular, that the result of OGC Gateway Reviews should be published.”

But today, DWP officials seem as preoccupied as ever with concealing bad news on their big IT programmes including Universal Credit.

The costs of concealment

The DWP has had important DWP project successes, notably pension credits, which was listed by the National Audit Office as one of 24 positive case studies.

But the DWP has also wasted tens of millions of pounds on failed IT projects.

Projects with names such as “Camelot” [Computerisation and Mechanisation of Local Office Tasks] and Assist [Analytical Services Statistical Information System) were cancelled with losses of millions of pounds. More recently the DWP has run into problems on several big projects.

“Abysmal”

On 3 November 2014 the then chairman of the Public Accounts Committee Margaret Hodge spoke on Radio 4’s Analysis of the DWP’s ‘abysmal’ management of IT contracts.”

1984

As long ago as 1984, the House of Commons Public Accounts Committee called for the civil service to be more open about its progress on major computer projects.

Today there are questions about whether the Universal Credit IT will succeed. Hundreds of millions has already been spent. Yet, as mentioned earlier, current information on the progress of the DWP’s IT programmes remains a state secret.

It’s possible that progress on the Universal Credit IT programme has been boosted by the irregular (but thorough) scrutiny by the National Audit Office. That said, as soon as NAO reports on Universal Credit are published, ministers and senior officials who have seen copies in advance routinely dismiss any criticisms as retrospective and out-of-date.

Does it matter if the DWP is paranoid about leaks?

A paper published in 2009 looks at how damaging it can be for good government when bureaucracies lack internal challenge and seek to impose on officials a “good news” agenda, where criticism is effectively prohibited.

The paper quoted the then Soviet statesman Mikhail Gorbachev as saying, in a small meeting with leading Soviet intellectuals,

“The restructuring is progressing with great difficulty. We have no opposition party. How then can we control ourselves? Only through criticism and self-criticism. Most important: through glasnost.”

Non-democratic regimes fear a free flow of information because it could threaten political survival. In Russia there was consideration of partial media freedom to give incentives to bureaucrats who would otherwise have no challenge, and no reason to serve the state well, or avoid mistakes.

The Chernobyl nuclear disaster, which occurred on April 26, 1986, was not acknowledged by Soviet officials for two days, and only then after news had spread across the Western media.

The paper argued that a lack of criticism could keep a less democratic government in power. But it can lead to a complacency and incompetence in implementing policy that even a censored media cannot succeed in hiding.

As one observer noted after Chernobyl (Methvin in National Review, Dec. 4, 1987),

“There surely must be days—maybe the morning after Chernobyl—when Gorbachev wishes he could buy a Kremlin equivalent of the Washington Post and find out what is going on in his socialist wonderland.”

Red team

Iain DuncanSmithA lack of reliable information on the state of the Universal Credit IT programme prompted the then secretary of state Iain Duncan Smith to set up his own “red team” review.

That move was not known about at the time. Indeed in December 2012 – at a point when the DWP was issuing public statements on the success of the Universal Credit Programme – the scheme was actually in trouble. The DWP’s legal submission said,

“In summary we concluded (just before Christmas 2012) that the IT system that had been developed for the launch of UC [Universal Credit] had significant problems.”

One wonders whether DWP civil servants kept Duncan Smith in the dark because they themselves had not been fully informed about what was going on, or because they thought the minister was best protected from knowing what was going on, deniability being one key Whitehall objective.

But in the absence of reliable internal information a political leader can lose touch completely, said the paper on press freedom.

“On December 21, 1989, after days of local and seemingly limited unrest in the province of Timi¸ Ceausescu called for a grandiose meeting at the central square of Bucharest, apparently to rally the crowds in support of his leadership. In a stunning development, the meeting degenerated into anarchy, and Ceausescu and his wife had to flee the presidential palace, only to be executed by a firing squad two days later.”

Wrong assumptions

Many times, after the IT media has published articles on big government IT-based project failures, TV and radio journalists have asked to what extent the secretary of state was responsible and why he hadn’t acted to stop millions of pounds being wasted.

But why do broadcast journalists assume ministers control their departments? It is usually more likely that ministers know little about the real risks of failure until it is too late to act decisively.

Lord Bach, a minister at DEFRA, told a House of Commons inquiry in 2007 into the failure of the IT-based Single Payment Scheme that he was aware of the risks but still officials told him that systems would work as planned and farmers would receive payments on time. They didn’t. Chaos ensued.

Said Lord Bach,

“I do think that, at the end of the day, some of the advice that I received from the RPA [Rural Payments Agency] was over-optimistic.”

Lord WhittyAnother DEFRA minister at the time Lord Whitty, who was also party in charge of the Single Payment Scheme, told the same inquiry,

“Perhaps I ought also to say that this was the point at which I felt the advice I was getting was most misleading, and I have used the term ‘misleading’ publicly but I would perhaps prefer to rephrase that in the NAO terms …”

Even the impressive Stephen Crabb – who has now quit as DWP secretary of state – didn’t stand much of chance of challenging his officials. The department’s contracts, IT and other affairs, are so complex and complicated – there are bookcases full of rules and regulations on welfare benefits – that any new ministers soon find themselves overwhelmed with information and complexity.

They will soon realise they are wholly dependent on their officials; and it is the officials who decide what to tell the minister about internal mistakes and bad decisions. Civil servants would argue that ministers cannot be told everything or they would be swamped.

But the paper on press freedom said that in order to induce high effort within a bureacucracy, the leader needs “verifiable information on the bureaucrats’ performance”.

The paper made a fascinating argument that the more complacent the bureaucracy, the more aggressively it would control information. Some oil-rich countries, said the paper, have less media freedom than those with scarcer resources.

“Consistent with our theory, [some] non-democratic countries … have vast resources and poor growth performance, while the Asian tigers (South Korea, Taiwan, Hong Kong, and Singapore), while predominantly non-democratic in the 1970s and 1980s, have high growth rates and scarce natural resource.”

In an apparent opening up of information, the government in China passed a law along the lines of the U.S. Freedom of Information Act (“China Sets Out to Cut Secrecy, but Laws Leave Big Loopholes,” New York Times, Apr. 25, 2007). But was this law self-serving? It, and the launch of local elections, provided the central government with relatively reliable information on the performance of provincial bosses.

These stories from less democratic countries may be relevant in Britain because politicians here, including secretaries of state, seem to be the last to know when a big IT-based programme is becoming a disaster.

Bad news

Whtehall’s preoccupation with “good news only” goes well beyond the DWP.

T auditors Arthur D Little, in a forensic analysis of the delays, cost over-runs and problems on the development of a huge air traffic control IT project for National Air Traffic Services, whose parent was then the Civil Aviation Authority, which was part of the Department for Transport, referred to an “unwillingness to face up to and discuss bad news”.

Ministers helpless to force openness on unwilling officials?

Francis Maude came to the Cabinet Office with a reforming zeal and a sophisticated agenda for forcing through more openness, but the effects of his efforts began to evaporate as soon as he left office. Even when he was at the height of his power and influence, he was unable to persuade civil servants to publish Gateway reviews, although he’d said when in opposition that he intended to publish them.

His negotiations ended with central departments agreeing to publish only the “traffic light” status of big projects – but only after a minimum delay of at least six months. In practice the delay is usually a year or more.

Brexit

Brexit campaigners argue that the EC is undemocratic, that decisions are taken in Brussels in secret by unelected bureaucrats. But the EC is at least subject to the scrutiny, sometimes the competing scrutiny, of 29 countries.

Arguably Whitehall’s departments are also run by unelected bureaucrats who are not subject to any effective scrutiny other than inspections from time to time of the National Audit Office.

Yes Minister parodied Sir Humphrey’s firm grip on what the public should and should not be told. Usually his recommendation was that the information should be misleadingly reassuring. This was close enough to reality to be funny. And yet close enough to reality to be serious as well. It revealed a fundamental flaw in democracy.

Nowhere is that flaw more clearly highlighted than in the DWP’s legal submission. Is it any surprise that the DWP did not want the submission published?

If officials had the choice, would they publish any information that they did not control on any of their IT projects and programmes?

That’s where the indispensable work of the National Audit Office comes into the picture – but it alone, even with the help of the Public Accounts Committee, cannot plug the gaping hole in democracy that the DWP’s submission exposes.

These are some thoughts I am left with after reading the legal submission in the light of the DWP’s record on the management of IT-based projects …

  • Press freedom and the free flow of information cannot be controlled in a liberal democracy. But does Whitehall have its own subtle – and not so subtle – ways and means?
  • In light of the DWP’s track record, the public and the media are entitled to distrust whatever ministers and officials say publicly about their own performance on IT-related programmes, including Universal Credit.
  • More worryingly, would the DWP’s hierarchy care a jot if the media and public didn’t believe what the department said publicly about progress on big projects such as Universal Credit?
  • Is the DWP’s unofficial motto: Better to tell a beautiful lie than an ugly truth?
  • AL Kennedy mentioned the “botched” Universal Credit programme  when she gave a “point of view” on Radio 4 last week. Not referring specifically to Universal Credit she said facts can be massaged but nature can’t be fooled. A girder that won’t hold someone’s weight is likely to fail however many PR-dominated assurance reports have gone before. “Facts are uncompromising and occasionally grim. I wish they weren’t. Avoiding them puts us all at increased risk,” she said.

 Excerpts from the DWP submission

Some Twitter comments on this post:

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Aspire: eight lessons from the UK’s biggest IT contract

By Tony Collins

How do you quit a £10bn IT contract in which suppliers have become limbs of your organisation?

Thanks to reports by the National Audit Office, the questioning of HMRC civil servants by the Public Accounts Committee, answers to FOI requests, and job adverts for senior HMRC posts, it’s possible to gain a rare insight into some of the sensitive commercial matters that are usually hidden when the end of a huge IT contract draws closer.

Partly because of the footnotes, the latest National Audit Office memorandum on Aspire (June 2016) has insights that make it one of the most incisive reports it has produced on the department’s IT in more than 30 years.

Soaring costs?

Aspire is the government’s biggest IT-related contract. Inland Revenue, as it was then, signed a 10-year outsourcing deal with HP (then EDS) in 1994, and transferred about 2,000 civil servants to the company. The deal was expected to cost £2bn over 10 years.

After Customs and Excise, with its Fujitsu VME-based IT estate, was merged with Inland Revenue’s in 2005, the cost of the total outsourcing deal with HP rose to about £3bn.

In 2004 most of the IT staff and HMRC’s assets transferred to Capgemini under a contract known as Aspire – Acquiring Strategic Partners for Inland Revenue. Aspire’s main subcontractors were Accenture and Fujitsu.

In subsequent years the cost of the 10-year Aspire contract shot up from about £3bn to about £8bn, yielding combined profits to Capgemini and Fujitsu of £1.2bn – more than double the £500m originally modelled. The profit margin was 15.8% compared to 12.3% originally modelled.

The National Audit Office said in a report on Aspire in 2014 that HMRC had not handled costs well. The NAO now estimates the cost of the extended (13-year) Aspire contract from 2004 to 2017 to be about £10bn.

Between April 2006 and March 2014, Aspire accounted for about 84% of HMRC’s total spending on technology.

Servers that typically cost £30,000 a year to run under Aspire – and there are about 4,000 servers at HMRC today – cost between £6,000 when run internally or as low as £4,000 a year in the commodity market.

How could the Aspire spend continue – and without a modernisation of the IT estate?

A good service

HMRC has been generally pleased with the quality of service from Aspire’s suppliers.  Major systems have run with reducing amounts of downtime, and Capgemini has helped to build many new systems.

Where things have gone wrong, HMRC appears to have been as much to blame as the suppliers, partly because development work was hit routinely by a plethora of changes to the agreed specifications.

Arguably the two biggest problems with Aspire have been cost and lack of control.  In the 10 years between 2004 and 2014 HMRC paid an average of £813m a year to Aspire’s suppliers.  And it paid above market rates, according to the National Audit Office.

By the time the Cabinet Office’s Efficiency and Reform Group announced in 2014 that it was seeking to outlaw “bloated and wasteful” contracts, especially ones over £100m, HMRC had already taken steps to end Aspire.

It decided to break up its IT systems into chunks it could manage, control and, to some extent, commoditise.

HMRC’s senior managers expected an end to Aspire by 2017. But unexpected events at the Department for Work and Pensions put paid to HMRC’s plan …

Eight lessons from Aspire

1. Your IT may not be transformed by outsourcing.  That may be the intention at the outset. But it didn’t happen when Somerset County Council outsourced IT to IBM in 2007 and it hasn’t happened in the 12 years of the Aspire contract.

 “The Aspire contract has provided stable but expensive IT systems. The contract has contributed to HMRC’s technology becoming out of date,” said the National Audit Office in its June 2016 memorandum.

Mark DearnleyAnd Mark Dearnley, HMRC’s Chief Digital Information Officer and main board member, told the Public Accounts Committee last week,

“Some of the technology we use is definitely past its best-before date.”

2. You won’t realise how little you understand your outsourced IT until you look at ending a long-term deal.

Confidently and openly answering a series of trenchant questions from MP Richard Bacon at last week’s Public Accounts Committee hearing, Dearnley said,

“It’s inevitable in any large black box outsourcing deal that there are details when you get right into it that you don’t know what’s going on. So yes, that’s what we’re learning.”

3. Suppliers may seem almost philanthropic in the run-up to a large outsourcing deal because they accept losses in the early part of a contract and make up for them in later years.

Dearnley said,

“What we are finding is that it [the break-up of Aspire] is forcing us to have much cleaner commercial conversations, not getting into some of the traditional arrangements.

” If I go away from Aspire and talk about the typical outsourcing industry of the last ten years most contracts lost money in their first few years for the supplier, and the supplier relied on making money in the later years of the contract.

“What that tended to mean was that as time moved on and you wanted to change the contract the supplier was not particularly incented to want to change it because they wanted to make their money at the end.

“What we’re focusing on is making sure the deals are clean, simple, really easy to understand, and don’t mortgage the future and that we can change as the environment evolves and the world changes.”

4. If you want deeper-than-expected costs in the later years of the contract, expect suppliers to make up the money in contract extensions.

Aspire was due originally to end in 2004. Then it went to 2017 after suppliers negotiated a three-year extension in 2007. Now completion of the exit is not planned until 2020, though some services have already been insourced and more will be over the next four years.

The National Audit Office’s June 2016 memorandum reveals how the contract extension from 2017 to 2020 came about.

HMRC had a non-binding agreement with Capgemini to exit from all Aspire services by June 2017. But HMRC had little choice but to soften this approach when Capgemini’s negotiating position was unexpectedly strengthened by IT deals being struck by other departments, particularly the Department for Work and Pensions.

Cabinet Office “red lines” said that government would not extend existing contracts without a compelling case. But the DWP found that instead of being able to exit a large hosting contract with HP in February 2015 it would have to consider a variation to the contract to enable a controlled disaggregation of services from February 2015 to February 2018.

When the DWP announced it was planning to extend its IT contract with its prime supplier HP Enterprise, HMRC was already in the process of agreeing with Capgemini the contract changes necessary to formalise their agreement to exit the Aspire deal in 2017.

“Capgemini considered that this extension, combined with other public bodies planning to extend their IT contracts, meant that the government had changed its position on extensions…

“Capgemini therefore pushed for contract extensions for some Aspire services as a condition of agreeing to other services being transferred to HMRC before the end of the Aspire contract,” said the NAO’s June 2016 memo.

5. It’s naïve to expect a large IT contract to transfer risks to the supplier (s).

At last week’s Public Accounts Committee hearing, Richard Bacon wanted to know if HMRC was taking on more risk by replacing the Aspire contract with a mixture of insourced IT and smaller commoditised contracts of no more than three years. Asked by Bacon whether HMRC is taking on more risk Dearnley replied,

“Yes and no – the risk was always ours. We had some of it backed of it backed off in contract. You can debate just how valuable contract backing off is relative to £500bn (the annual amount of tax collected).  We will never back all of that off. We are much closer and much more on top of the service, the delivery, the projects and the ownership (in the gradual replacement of Aspire).”

6. Few organisations seeking to end monolithic outsourcing deals will have the transition overseen by someone as clear-sighted as Mark Dearnley.

His plain speaking appeared to impress even the chairman of the Public Accounts Committee Meg Hillier who asked him at the end of last week’s hearing,

Meg Hillier

Meg Hillier

“And what are your plans? One of the problems we often see in this Committee is people in very senior positions such as yours moving on very quickly. You have had a stellar career in the private sector…

“We hope that those negotiations move apace, because I suspect – and it is perhaps unfair to ask Mr Dearnley to comment – that to lose someone senior at this point would not be good news, given the challenges outlined in the [NAO] Report,” asked Hillier.

Dearnley then gave a slightly embarrassed look to Jon Thomson, HMRC’s chief executive and first permanent secretary. Dearnley replied,

“Jon and I are looking at each other because you are right. Technically my contract finishes at the end of September because I was here for three years. As Jon has just arrived, it is a conversation we have just begun.”

Hiller said,

“I would hope that you are going to have that conversation.”

Richard Bacon added,

“Get your skates on, Mr Thompson; we want to keep him.”

Thompson said,

“We all share the same aspiration. We are in negotiations.”

7. Be prepared to set aside millions of pounds – in addition to the normal costs of the outsourcing – on exiting.

HMRC is setting aside a gigantic sum – £700m. Around a quarter of this, said the National Audit Office, is accounted for by optimism bias. The estimates also include costs that HMRC will only incur if certain risks materialise.

In particular, HMRC has allowed around £100m for the costs of transferring data from servers currently managed by Aspire suppliers to providers that will make use of cloud computing technology. This cost will only be incurred if a second HMRC programme – which focuses on how HMRC exploits cloud technology – is unsuccessful.

Other costs of the so-called Columbus programme to replace Aspire include the cost of buying back assets, plus staff, consultancy and legal costs.

8. Projected savings from quitting a large contract could dwarf the exit costs.

HMRC has estimated the possible minimum and possible maximum savings from replacing Aspire. Even the minimum estimated savings would more than justify the organisational time involved and the challenge of building up new corporate cultures and skills in-house while keeping new and existing services running smoothly.

By replacing Aspire and improving the way IT services are organised and delivered, HMRC expects to save – each year – about £200m net, after taking into account the possible exit costs of £700m.

The National Audit Office said most of the savings are calculated on the basis of removing supplier profit margins and overheads on services being brought in-house, and reducing margins on other services from contract changes.

Even if the savings don’t materialise as expected and costs equal savings the benefits of exiting are clear. The alternative is allowing costs to continue to soar while you allow the future of your IT to be determined by what your major suppliers can or will do within reasonable cost limits.

Comment

HMRC is leading the way for other government departments, councils, the police and other public bodies.

Dearnley’s approach of breaking IT into smaller manageable chunks that can be managed, controlled, optimised and to some extent commoditised is impressive.  On the cloud alone he is setting up an internal team of 50.

In the past, IT empires were built and retained by senior officials arguing that their systems were unique – too bespoke and complex to be broken up and treated as a commodity to be put into the cloud.

Dearnley’s evidence to the Public Accounts Committee exposes pompous justifications for the status quo as Sir Humphrey-speak.

Both Richard Feynman and Einstein said something to the effect that the more you understand a subject, the simpler you can explain it.

What Dearnley doesn’t yet understand about the HMRC systems that are still run by Capgemini he will doubtless find out about – provided his contract is renewed before September this year.

No doubt HMRC will continue to have its Parliamentary and other critics who will say that the risks of breaking up HMRC’s proven IT systems are a step too far. But the risks to the public purse of keeping the IT largely as it is are, arguably, much greater.

The Department for Work and Pensions has proved that it’s possible to innovate with the so-called digital solution for Universal Credit, without risking payments to vulnerable people.

If the agile approach to Universal Credit fails, existing benefit systems will continue, or a much more expensive waterfall development by the DWP’s major suppliers will probably be used instead.

It is possible to innovate cheaply without endangering existing tax collection and benefit systems.

Imagine the billions that could be saved if every central government department had a Dearnley on the board. HMRC has had decades of largely negative National Audit Office reports on its IT.  Is that about to change?

Update:

This morning (22 June 2016) on LinkedIn, management troubleshooter and board adviser Colin Beveridge wrote,

“Good analysis of Aspire and outsourcing challenges. I have seen too many business cases in my career, be they a case for outsourcing, provider transition or insourcing.

“The common factor in all the proposals has been the absence of strategy end of life costs. In other words, the eventual transition costs that will be incurred when the sourcing strategy itself goes end of life. Such costs are never reflected in the original business case, even though their inevitability will have an important impact on the overall integrity of the sourcing strategy business case.

“My rule of thumb is to look for the end of strategy provision in the business case, prior to transition approval. If there is no provision for the eventual sourcing strategy change, then expect to pay dearly in the end.”

June 2016 memorandum on Aspire – National Audit Office

Dearney’s evidence to the Public Accounts Committee

DWP “evasive” and “selective” with information on Universal Credit programme

By Tony Collins

Has the Department for Work and Pensions put itself, to some extent, beyond the scrutiny  of Parliament on the Universal Credit IT programme?

Today’s report of the Public Accounts Committee Universal Credit progress update was drafted by the National Audit Office. All of the committee’s reports are effectively more strongly-worded NAO reports.

If the Department for Work and Pensions cannot be open with its own auditors – the National Audit Office audits the department’s annual accounts – are the DWP’s most senior officials in the happy position of being accountable to nobody on the Universal Credit IT programme?

The National Audit Office and the committee found the Department for Work and Pensions “selective or even inaccurate” when giving some information to the committee.

In answering some questions, the committee found officials “evasive”.

Today’s PAC report says:

“We remain disappointed by the persistent lack of clarity and evasive responses by the Department to our inquiries, particularly about the extent and impact of delays. The Department’s response to the previous Committee’s recommendations in the February 2015 report Universal Credit: progress update do not convince us that it is committed to improving transparency about the programme’s progress.”

On the basis of the limited information supplied by the DWP to Parliament the committee’s MPs believe that the Universal Credit has stabilised and made progress since the committee first reported on the programme in 2013, but there “remains a long way to go”.

So far the roll-out has largely involved the simplest of cases, and the ineligibility list for potential UC claimants is long.  By 10 December 2015, fewer than 200,000 people were on the DWP’s UC “caseload” list.

The actual number could be far fewer because the exact number recorded by the DWP by 10 December 2015 (175, 505)  does not include people whose claims have terminated because they have become ineligible by for example having capital more than £16,000 or earning more so that their benefits are reduced to zero.

The plan is to have more than seven million on the benefit, and the timetable for completion of the roll-out has stretched from 2017 originally to 2021,  although some independent experts believe the roll-out will not complete before 2023.

Meanwhile the DWP appears to be controlling carefully the information it gives to Parliament on progress. The committee accuses the DWP in today’s report of making it difficult for Parliament and taxpayers to hold the department to account. Says the report,

“The programme’s lack of clear and specific milestones creates uncertainty for claimants, advisers, and local authorities, and makes it difficult for Parliament and taxpayers to hold the Department to account.”

These are more excerpts from the report:

“In February 2015 the previous Committee of Public Accounts published Universal Credit: progress update … The Department accepted the Committee’s recommendations.

“However, we felt that the Department’s responses were rather weak and lacked specifics, and we were not convinced that it is committed to ensuring there is real clarity on this important programme’s progress.

“As a result, we recalled both the Department and HM Treasury to discuss a number of issues that concerned us, particularly around the business case, the continuing risks of delay, and the lack of transparency and clear milestones.

“Recommendation: The Department should set out clearly how it is tracking the costs of continuing delays, and who is responsible for ensuring benefits are maximised.

“The Department does not publish accessible information about plans and milestones and we are concerned by the lack of detail in the public domain about its expected progress.

“For proper accountability, this information should be published so that the Committee, the National Audit Office and the general public can be clear about progress…

“… the Department did not acknowledge that the slower roll-out affects two other milestones, because it delays the date when existing claimants start to be moved onto Universal Credit and reduces the number of Universal Credit claimants at the end of 2019.

“The flexible adaptation of milestones to circumstances is sensible, but the Department should be open about when this occurs and what the effects are. Instead, the Department’s continued lack of transparency makes it very difficult for us and the public to understand precisely how its plans are shifting.

“Claimants need to know more than just their benefits will change ‘soon’; local authorities need time to prepare additional support; and advisers need to be able to help people that come to them with concerns…

“Recommendation: By May 2016, the Department should set out and report publicly against a wider set of clearly stated milestones, based on ones it currently uses as internal measures, including plans for different claimant groups, local authority areas and for the development and use of new systems. We have set out the areas we expect these milestones to cover in an appendix to this report…

“The Department was selective or even inaccurate when highlighting the findings of its evaluation to us.”

The DWP has two IT projects to deliver UC, one based on its existing major suppliers delivering systems that integrate the simplest of new claims with legacy IT.

The other and more promising solution is a far cheaper “digital service” that is based on agile principles and is, in effect, entirely new IT that could eventually replace legacy systems. It is on trial in a small number of jobcentres.

The DWP’s slowly slowly approach to roll-out means it is reluctant to publish milestones, and it has reached only an early stage of the business case. The final business case is not expected before 2017 and could be later.

The committee has asked the DWP to be more transparent over the business case. It wants detail on:

  • Projected spending, including both investment and running costs for:
  • Live service (split between ‘staff and non staff costs’ and ‘external supplier costs’)
  • Digital service (split between ‘staff and non staff costs’ and ‘external supplier costs’)
  • Rest of programme (split between ‘staff and non staff costs’ and ‘External supplier costs’)
  • Net benefits realised versus forecasts.

Meanwhile the DWP’s response to those who criticise the slow roll-out is to give impressive statistics on the number of jobcentres now processing UC claims, without acknowledging that nearly all of them are processing only the simplest of claims.

Comment

To whom is the DWP accountable on the Universal Credit IT programme? To judge from today’s report it is not the all-party Public Accounts Committee or its own auditors the National Audit Office.

No government has been willing to force Whitehall departments to be properly accountable for their major IT-enabled projects or programmes. Sir Humphrey remains in control.

The last government with Francis Maude at the helm at the Cabinet Office came close to introducing real reforms (his campaign began too forcefully but settled into a good strategy of pragmatic compromise) but his departure has meant that open government and greater accountability for central departments have drifted into the shadows.

The DWP is not only beyond the ability of Parliament to hold it accountable it is spending undisclosed of public money sums on an FOI case to stop three ageing reports on the Universal Credit IT programme being published. The reports are nearly four years old.

Would that senior officials at the DWP could begin to understand a connection between openness and Lincoln’s famous phrase “government of the people, by the people, for the people”.

Public Accounts Committee report Universal Credit, progress update

DWP gives out “selective” information on welfare reform even to its auditors (a similar story in 2015)

Department for Work and Pensions “evasive” – Civil Service World (This article is aimed at its readers who are mostly civil servants. It is likely it will find favour with senior DWP IT staff who will probably mostly agree with the Public Accounts Committee’s view that the DWP hierarchy is, perhaps because of culture, evasive and selective with the information it gives to Parliament and the public.)

 

Beyond the Universal Credit headlines: what IDS doesn’t say

By Tony Collins

The “good news” headlines over the weekend suggest that Universal Credit is finally rolling out nationally, the implementation problems having been ironed out.

But do senior officials at the Department for Work and Pensions know themselves whether the IT will ever work at scale, handling millions of UC claims?

The national roll out begins today (16 February 2015) says a brochure on the success of the programme “Universal Credit at Work – Spring 2015“.  It’s issued by the Department for Work and Pensions and has a foreword signed by Iain Duncan Smith and his welfare minister Lord Freud.

“Throughout the report, robust evidence shows that Universal Credit is working,” says the brochure, which adds:

“Over the last four months, the roll-out of Universal Credit has continued and from 16 February, it will be available to:
• single claimants in 112 jobcentres
• couples without children in 96 jobcentres
• families in 32 jobcentres
• all claimant types in a limited postcode area in London (Sutton) to test the enhanced Digital Service.”

Ahead of national roll out, DWP officials have been briefing the media on the success of the UC programme. Hence the headlines yesterday.

BBC Online’s headline: Universal Credit roll-out £600m under budget”

Even the Guardian was positive. The reinvention of Iain Duncan Smith – is he the man to save the Tories?

The Sunday Times declared that Universal Credit “will be operating in every jobcentre across the country by this time next year if the Conservatives remain in power, Iain Duncan Smith, the work and pensions secretary, has vowed”.

The Telegraph’s headline was supportive of IDS: Coalition’s welfare shake-up is working

When Andrew Marr asked IDS about Universal Credit’s IT, IDS suggested that the computer systems to handle complicated claims are already in place.

Marr: “This roll-out across the country is only for single claimants, not for families, so it’s nothing like universal at this point.  Do you think you have a computer system able to cope with much more complicated claims?

IDS:  “Yes we have. In fact we rolled it out first in the North West where we rolled it out to singles, to couples and to families so it is now complete pretty much across the North West …

“What we are doing now is exactly what we did in the North West – roll it out stage-by-stage, so singles first, to every jobcentre by early Spring next year,  and then you’ll do couples and then you’ll do families.

“And then you’ll do the final development which is digital which will allow much more things like apps on your phone.”

The reality

Is the UC programme really on track for a national roll-out? Are the concerns of the National Audit Office and the Public Accounts Committee about the slow and troubled UC programme unfounded?

The reality can be gleaned from the DWP’s plans for the roll-out, as inspected by the National Audit Office, and by documents on the gov.uk website on who is entitled – or rather who is not entitled – to claim UC during the roll-out.

It’s true that UC is being gradually extended from single claimants to couples and families, but the DWP has issued such a long list of exemptions on eligibility that numbers of claimants will continue to be tiny at least until the middle of this year (election time).

The small number of claimants will allow the DWP to continue handling more complicated claims using, in part, manual processes. This means that a fully-automated UC system to calculate benefits need not be in place for the time being.

The small number of claimants also means that the risk of implementation problems coming to public attention in the next few months is minimal.

In two days time – Wednesday 18 February 2015 – gov.uk is due to reveal the latest figures on UC take-up. As of today, the latest figures available show the total number of successful UC claimants at 30, 850 on 11 December 2014 – whereas the system needs to be able to cope with around 7-8 million claimants.

Comment

It’s good news that UC is rolling out nationally and that it’s being gradually extended to couples and families as well as single people. But the IT has not been tested properly because the numbers of eligible claimants is so small. The DWP has narrowed the band of eligibility for UC by a long list of exemptions.

You cannot claim, as a single person or a couple, if, say, you receive Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Incapacity Benefit, Severe Disablement Allowance, Disability Living Allowance or Personal Independence Payment. You cannot claim if you own, or partly own, your home, or are homeless, or in supported or temporary accommodation.  Many other exclusions apply.

The result is that nobody knows yet whether the main UC IT systems, and its dependent business processes and systems, will work at scale. Shouldn’t the DWP come clean on the technical and business change challenges it still faces?

UC will not be an economic proposition on the basis of the partly automated processes that exist at present. It’s possible, though, that the cheap-to-build digital systems – which are on trial in Sutton, South London – will work and will eventually take over from the mixture of legacy, new and manual systems and processes that are now in place.   Nobody knows whether they will work at scale.

The reality is that the UC programme, despite years of IT coding and a spend of hundreds of millions of pounds, is still at an early stage of development. It could be at an early stage of development for several more years, even though the positive headlines at the weekend give a different impression.

It may also be worth mentioning that the UC programme has yet to gain Treasury approval for the full business case – or indeed the outline business case. There is therefore no Treasury approval for the scheme long-term funding. There are still questions to be answered over its economic feasibility.

None of this has been said by the DWP or IDS. We’ll have to wait for another National Audit Office update to know the facts.

Thank you to Dave Orr for his emails to me on Universal Credit

Universal Credit and its IT – an inside track?

By Tony Collins

An excellent BBC Radio 4 “Inside Welfare Reform” Analysis broadcast yesterday evening gave an insider’s view of the IT-based Universal Credit programme from its beginnings to today.

It depicted Iain Duncan Smith as a courageous reformer who’s kept faith with important welfare changes that all parties support. If they work, the reforms will benefit taxpayers and claimants. The broadcast concludes with an apparent endorsement of IDS’s very slow introduction of UC.

“When real lives and real money are at stake, being cautious is not the worst mistake you can make.”

So says the BBC R4 “Analysis” guest presenter Jonathan Portes who worked on welfare spending at the Treasury in the 1980s and became Chief Economist at the Department for Work and Pensions in 2002. He left the DWP in 2011 and is now director at the National Institute of Economic and Social Research.

The BBC broadcast left me with the impression that UC would today be perceived as meeting expectations if DWP officials and ministers had, in the early days:

– been open and honest about the complexities of IT-related and business change

– outlined the potential problems of implementing UC as set out in internal reports and the minutes of programme team meetings

– explained the likelihood of the UC programme taking more time and money than initially envisaged

– urged the need for extreme caution

– made a decision at the outset to protect – at all costs – those most in genuine need of disability benefits

– not sold UC to a sceptical Treasury on the basis it would save billions in disability claims  – for today thousands of disability claimants are in genuine need of state help, some of whom are desperately sick, and are not receiving money because of delays.

Instead UC is perceived as a disaster, as set out in Channel 4’s Dispatches documentary last night.

A £500m write-off on IT?

Other noteworthy parts of the BBC R4 Analysis broadcast:

– The Department for Work and Pensions gave selective responses to the BBC’s questions. Portes: “We did ask the Department for Work and Pensions for an interview for this programme but neither Iain Duncan  Smith nor any minister was available. We sent a detailed list of questions and have had answers to some.”

– Margaret Hodge, chairman of the Public Accounts Committee, gave her view that the next government will have to write off £500m on IT investment on Universal Credit – about £360m more than the Department for Work and Pensions has stated publicly.

Hodge told the BBC: “We are now on our fourth or official in charge of the project and the project has only been going four or five years. Anyone who knows about project management will tell you that consistency of leadership is vital. I don’t think there has been ownership of the project by a senior official within DWP.  I think they and ministers have only wanted to hear the good news. Management of the IT companies has been abysmal.

“I still believe, though I haven’t t got officials to admit to this, that after the general election we will probably be writing off in excess of half a billion  pounds on investment in IT that had failed to deliver… The investment in IT that they are presently saying they can re-use in other ways is not fit for purpose. The system simply cannot cope.”

The BBC asked the DWP for its comment on the scale of the write-offs. “No answer,” said Portes.

Parliament told the truth?

Stephen Brien, who has been dubbed the architect of Universal Credit, gave his first broadcast interview to Analysis. He worked with IDS at the Centre for Social Justice, a think tank set up by IDS in 2004. Brien saw IDS on a nearly daily basis.

Portes asked Brien when IDS first realised things were going off track. “The challenge became very stark in the summer of 2012,” said Brien.

Portes: What was your relationship with IDS?

“My office was across the corridor from his.  I would join him for all the senior meetings about the programme. I would keep him updated as a result of the other meetings I was addressing within the programme team. When it became materially obvious we had to change plans it was over that summer [2012].

Portes: But that was not the public line. In September 2012 this is what IDS said (in the House of Commons):

“We will deliver Universal Credit on time, as it is, on budget, right now.”

IDS appears to have given that assurance while being aware of the change to UC plans.

UC oversold to Treasury?

Portes: “The really big savings were supposed to come from disability benefit. And here trouble was brewing. The problem was the deal IDS had done with the Treasury. The Treasury never liked UC. It thought it was both risky and expensive. And the Treasury, faced with a huge budget deficit, wanted to save not spend.

“With pensions protected disability benefits were really the only place savings could be made.  The previous government had contracted ATOS to administer a new medical test – the Work Capability Assessment – to all 2.5 million people on Incapacity Benefit but only a few pilots had started.

“IDS and the Treasury agreed to press ahead.  Some claimants would be moved to new Employment and Support Allowance but the plan was that several hundred thousand would lose the benefit entirely – saving about £3bn a year.

“Disability living allowance which helps with the extra cost of disability would also be replaced with the new, saving another £2bn…

But …

“By now the new work capability assessment was supposed to have got more than 500,000 people off incapacity benefits. Instead they are stuck in limbo waiting for an assessment.

“By now the new Personal Independence Payment should have replaced disability living allowance saving billions of pounds more. Instead it too has been dogged by delay.

“Just a few days ago the Office for Budget Responsibility said delays in these benefits are costing taxpayers close to £5bn a year. This dwarfs any savings made elsewhere and leaves a potential black hole in the next government budget.”

How many people left stuck in the system?

The BBC asked the Department of Work and Pensions’ press office how many claimants, and for how long, they have been waiting for claims to be resolved. Portes: “They didn’t answer. But their own published statistics suggest it is at least half a million.

“One aim of the reforms was to cut incapacity benefit and the numbers had been on a long slow decline between 2003 and 2012 but now it is rising again. So much for the Treasury saving.”

Who is at fault?

Publicly IDS talks about a lack of professionalism among civil servants and that he has lost faith with their ability to manage the UC-related problems. Rumours in the corridors of Westminster are that behind the scenes IDS has attempted to blame his permanent secretary Robert Devereux.  On this point, again, the DWP refused the BBC’s request for a comment.

Gus O’Donnell, former head of the civil service, who appointed Devereux, told the BBC that tensions between IDS and Francis Maude at the Cabinet Office did not help. “Robert [Devereux] was in a very difficult position. He was in a world where Francis Maude was trying to deliver, efficiently, programmes for government and on the other hand IDS was seeing the centre as interfering and criticising whereas he knew best: it was his project; he was living it every day. There was a lot of tension there. Really what we need to do is get everyone sitting round a table trying to work out how we can deliver outcomes that matter.”

Was Devereux set up to fail?

O’Donnell: “With hindsight one can say this is a project that could not be delivered to time and cost.”

Were DWP officials to blame?

Stephen Brien said: “There was a real desire from the very beginning to get this done. I think there was a desire within DWP to demonstrate that it could again do big programmes. The DWP had not been involved in very large transformation programmes over the previous decade. There was a great enthusiasm to get back in the saddle,  a sense that it [UC] had to get underway and it had to be well entrenched through Parliament.

“These forces – each of them – contributed to a sense of ‘we have got to get this done and therefore we will get this done.’”

Too ambitious?

Richard Bacon, a member of the Public Accounts Committee, told the BBC: “If you know what it is you want to do and you understand what is required to get there, then what’s wrong with being ambitious?

“The trouble is that when you get into the detail you find you are bruising people, damaging people, people who genuinely will always need our help. Taxpayers, our constituents, expect us to implement things so that they work, rather than see project after project go wrong and money squandered.

“There may come a point where we say: ‘we have spent so much money on this and achieved so little, is the game worth the candle?’”

Thank you to Dave Orr for drawing my attention to the Dispatches documentary. 

DWP wastes money on another Universal Credit FOI appeal

By Tony Collins

Officials at the Department for Work and Pensions are to pay external lawyers to attend another FOI hearing as part of the department’s efforts to stop four old reports on the Universal Credit programme being published.

A hearing will take place in London on 3 December for the DWP to put its case for a third time that it should be allowed to appeal a ruling of the first tier information tribunal that the four reports be published.

Although the DWP’s lawyers have lost every tribunal decision they have contested in the case, there is no sign the department’s officials will restrict the amount of public money they allocate to stopping publication of the reports.

If lawyers for the DWP continue to lose every judicial decision, officials will always have the option of a ministerial veto.

The DWP’s multiple appeals are arguably a pointless plundering of the public purse for legal costs, because officials have known from the initial FOI requests in 2012 that they would never publish the reports in question.

Despite the efforts of Cabinet Office minister Francis Maude to introduce open government, no central department has agreed to issue reports on the progress or otherwise of its big IT-dependent projects and programmes.

This is the chronology so far in the DWP’s attempts to stop the four Universal Credit reports being published:

March 2012 – I make a freedom of information request for a Project Assessment Review of the Universal Credit programme, as carried out by the Cabinet Office’s Major Projects Authority.  The PAR would have given early indications of the problems the IT teams faced while the DWP’s ministers and press office were issuing public statements that the programme was on time and on budget.

April 2012 – John Slater, a programme and project management professional, makes an FOI request for the Universal Credit programme Risk Register, which gives a traffic light status of the risks most likely to occur and who should take ownership of them. He also requests an Issues Register which details the problems and failures that have occurred and why, how they can be managed, and how their effect on the programme can be minimised or eliminated. The Milestone Schedule he requests would show whether milestones have been met or changed.

May 2012 – DWP minister Lord Freud personally signs refusals to release any of the four reports. John Slater and I request internal reviews of the refusals. The DWP rejects our appeals so we complain to the Information Commissioner.

June 2013 – The Information Commissioner orders that the DWP publish three of the reports but not the Risk Register. The DWP appeals the ruling.  John Slater appeals the Commissioner’s decision to keep the Risk Register confidential.

Jan 2014 – A two-day appeal hearing is held in Leicester, before the First-Tier Information Tribunal. Slater appears at the hearing, as do representatives of the Information Commissioner and the DWP.

March 2014 –  Judge David Farrer and his First-Tier tribunal members rule that the DWP publish all four reports.  The DWP discovers that the version of the PAR [Project Assessment Review] it supplied to the Tribunal is not the final version that has been requested. It is evidently a draft. “How the mistake occurred is not entirely clear to us,” says Judge Farrer. He suggests that the DWP might not have read the PAR closely and has refused to publish it on principle. Under the FOI every request is supposed to be considered on its merits.

“Whilst the differences [between the draft and final versions] related almost entirely to the format, it did raise questions as to how far the DWP had scrutinised the particular PAR requested, as distinct from forming a generic judgement as to whether PARs should be disclosed,” says the judge.

He also comes close to saying the DWP had not been telling the truth about the state of Universal Credit programme. He and his tribunal members have read the four reports in question. He says the Tribunal had been “struck by the sharp contrast” between “the unfailing confidence and optimism of a series of press releases by the DWP or ministerial statements as to the progress of the Universal Credit programme” and some of the criticisms and controversy the programme was attracting at the time of the public statements.

April 2014 – The DWP seeks Judge’s Farrer’s permission to appeal his ruling. Unexpectedly the judge refuses the DWP permission.  The DWP’s lawyers had argued that the Tribunal had “wholly misunderstood the nature and/or manifestation of any chilling effect”. [The chilling effect suggests that public servants will not tell the whole truth in project reviews if they know the reports will be published.] The DWP said the Tribunal’s misunderstanding about the chilling effect “amounted to an error in law” and was “perverse”. Judge Farrer said he had not misunderstood the DWP’s claims of a chilling effect.

May 2014 –  The DWP’s lawyers ask the Upper Tribunal for permission to appeal the ruling of the First Tier Tribunal that the four reports be published. The DWP’s arguments are long and complex – but they are, arguably, useful only to the bank account of lawyers because the DWP will not publish the four reports whatever the outcome of its appeals.

June 2014 – The judge of the Upper Tribunal (Nicholas Wikeley)  refuses to give the DWP permission to appeal the ruling of the First-Tier Tribunal.  On the DWP’s claim that the First-Tier Tribunal has misunderstood the chilling effect, the Upper Tribunal’s ruling says,

“This [the chilling effect] is a well known concept, and I can see no support for the argument that the Tribunal misunderstood its meaning …”

Having lost the case, the DWP requests permission from the Upper Tribunal for another appeal hearing so it can put its arguments in person, not just in writing. The Tribunal agrees.

August 2014 – The Upper Tribunal sets a date of 3 December 2014 in London for a hearing to decide whether the DWP can appeal the First-Tier Tribunal’s ruling that the four reports be published. The DWP’s lawyers have had the case open now for more than a year.

Comment

If the DWP’s ministers and officials were spending their own money on legal costs, doubtless the four reports would have been published within days of our FOI requests; and their publication would have made no difference except to make officials a little less confident that they could, in future, cover up serious problems on their big IT-dependent projects and programmes.

The irony of the whole case is that the DWP argues that it needs to keep the reports confidential because candid assessments of a programme’s problems are essential tools for good project management. But the DWP has presided over a succession of failed IT-dependent programmes.

Clearly the routine suppression of reports on its problems has not helped the DWP’s project management. The National Audit Office’s report on Universal Credit could hardly have been more negative about the DWP’s management of the Universal Credit programme.

Isn’t it time the DWP did things differently and published reports on the progress or otherwise of its biggest programmes? With improved public scrutiny the department may then start to have a succession of successes. What a surprise that would be, to the department’s officials at least.