Universal Credit to abandon replacement of Tax Credits – NAO Report

Embargoed until 00:01 hrs, Wednesday November 26th, 2014 

Today’s report on Universal Credit Project from the National Audit Office reveals that the Treasury has forced DWP to abandon plans it submitted earlier this year for Universal Credit to start to replace Tax Credits from January 2015.

Today’s NAO report reveals that Treasury has torpedoed
DWP’s plans for Tax Credits to be replaced by Universal Credit
in January 2015

 

Surprising highlights from the NAO report:

– The start of Universal Credit replacement of Tax Credits from January 2015 has been abandoned. DWP has delayed plans by at least 2 years for the transfer of the majority of tax credits claimants to Universal Credit to 2019. It does not have plans to transfer the remaining 555,000 tax credit and Employment and Support Allowance claimants before 2020.

– DWP admits that up to at least £239m of IT investment has been wasted to date, up from £131m earlier this year. This will come as no surprise to those who saw my interview on the BBC TV over a year ago.

– The promised end-date has slipped from 2017 to 2019 (and will still not cover 7% of Claimants even at that date)

– Confirmation that Howard Shiplee the ‘Senior Responsible Owner’ (SRO) “since the start of 2014, had been working only one day a week due to ill health and has now left the programme”, and that his deputy also retired at the same time.

– The ‘stepping stones’ towards the final ‘Target Operating Model’ have still not been designed, and so the roll-out plans are still unclear

– The roll-out of the final ‘Digital’ solution has slipped again due to severe staffing problems after DWP threw out the experts seconded from the Cabinet Office GDS.

– There is no contingency plan in case the mobile ready ‘Digital’ solution encounters further problems.

– “A staggering £600m spent in 4 years just to get to the business case sign-off for Universal Credit” Margaret Hodge MP, Chair, Parliamentary Public Accounts Committee

Details

The report is a massive 61 pages long. Each sentence is measured and precise, there is no duplication or overlap of information – each fact reported is placed within careful context. For a mere administrative IT project to receive such careful and detailed description is unprecedented.

It is now revealed that up to at least £239m has been wasted on unusable IT to date

At the heart of the report is the narrative of how at every turn the Department for Work and Pensions (DWP) has underestimated the scale of the task being asked of it. Last year the Cabinet Office Major Projects Authority (MPA) forced DWP to ‘reset’ the project and the NAO forced DWP to admit that £131m had been wasted on a security system which was ‘unusable’, and a temporary set of IT systems that would only be used for 3 years.[ref]

Today’s report continues this theme. The NAO is forcing DWP to face up for the fact that the IT for ‘Interview’ and ‘Work Services’ have “No credible way to integrate with the digital service” – another £61m has been written off – just 4 months after DWP’s accounts had included these items as ‘sound investments’. It is revealed that another £47m of IT is also under review and may not be reusable. DWP now realises that another £108m needs to be written off its balance sheet signed off just 4 months ago. That makes up to at least £239m of IT investment that DWP so far admits has been wasted. [ref]

We know also that DWP has to subsidise the unplanned continuation of Housing Benefit administration by local authorities who are using temporary and fixed-term staff whilst they wait for the Universal Credit IT to take the strain.  Last year this subsidy cost £21m, rising to £41m this year and further as more Claimants are taken on to the temporary IT whilst the mobile-ready ‘digital’ solution is developed.

“So just elaborate on that for us… £425m has to be accounted for?”
(Brian was first to say it: September 2013…)

The Treasury’s struggle to get sensible plans from DWP

The NAO report highlights the unrealistic nature of DWP’s planning. Project management has been badly governed and over-reliant on individuals who have been put under unrealistic expectations to ‘save the day’.  In just 4 years, three ‘Senior Responsible Officers’ (SROs) have been stricken with medical problems. Tragically Philip Langsdale died[ref], and today’s report reveals that Howard Shiplee has been working one day a week after suffering a major health problem, and has now resigned.

We now know that the plans that DWP submitted to Treasury in 2013 were rejected because:

“DWP was slow to produce long-term plans for Universal Credit and HM Treasury required the programme to produce more realistic plans before approving the business case in September 2014”

Specifically the project plans did not explain how existing benefit claimants would move on to Universal Credit, nor was there a “single coherent integrated plan or clear target operating model”.

Tax Credit Take-on in January 2015 Abandoned

The Treasury has in effect forced DWP to agree that including all six benefits in Universal Credit is not possible in the short term. As explained previously on this blog, the idea of the ‘Lobster Pot Principle‘ is unworkable. Once a claim is on the existing, inadequate Universal Credit IT, you remain under Universal Credit rules, and as your circumstances become more complex, more and more manual intervention is required.  Today’s report reveals that the NAO would expect manual workarounds to cost £2.8bn if the existing IT was to be used for the target 7m claimants.

Water warmer in the Universal Credit Lobster Pot 
for a young, single man?

 The Use of an ‘Agile’ Project Management Approach

The report notes that:

“In June 2014, consultants commissioned by the programme board reported that a good agile approach is in place, and that a strong agile culture and organisation has been found inside the digital service.”

However, the consultants highlighted that long-term planning was weak, and the ‘Agile’ team structure not appropriate for the scale of the delivery. This is surprising given the amount of guidance and practical case studies available in the literature to guide the management in the use of Agile project management on large scale projects.

© Brian Wernham 2014 CC BY-NC-ND