'Extraordinarily poor' Universal Credit project needs clear IT stategy, say MPs

The Department for Work and Pensions (DWP) must set out a clear strategy for IT development on Universal Credit and state how much of the money spent so far will be written off, according to a highly critical report by MPs.

Margaret Hodge MP, chair of the influential Public Accounts Committee (PAC) said today (7 November 2013) the implementation of Universal Credit has been “extraordinarily poor”, as the committee released the findings of its investigation into the troubled programme.

The PAC's Universal Credit report detailed a catalogue of problems, many of which were first revealed by a scathing National Audit Office review published in September 2013.

The PAC found financial controls over IT spending were “weak” with suppliers “out of control”.

“For example, when the department made payments to suppliers, it could not link these to particular pieces of work that had been delivered,” said the PAC report.

Two purchase orders, one for £22.6m and one for £1.1m, were approved by a personal assistant to the programme director, the PAC report said.

Of the £303m spent so far on IT, £34m has already been written off. The government’s own Major Projects Authority estimates that at least £140m of IT work will be scrapped.

Computer Weekly recently learned that ministers will be asked to consider the option of throwing away nearly all the IT developed so far and starting again.

“The department has yet to provide a comprehensive assessment of how much IT expenditure has proved nugatory, although the Major Projects Authority believes it will be a substantial figure, running into hundreds of millions of pounds,” said the PAC report.

The MPs called for “a clear strategy for IT development, demonstrating the best way forward for the programme and an accurate review of current investment which will not be needed in the long-term”.

The DWP is understood to be deciding very soon how much of the IT can be re-used, but the MPs warned that the department must not stick with existing systems if it will harm the wider Universal Credit programme.

“The Major Projects Authority advised that, while the department will want to salvage as much of its expenditure to date as possible by reusing systems developed so far, this should not be to the detriment of Universal Credit as a whole,” said the report.

DWP officials told the committee hearing last month that they were over the problems and the project was back on track, but the PAC report highlighted a “flawed culture of reporting good news” about Universal Credit, with the department continually “denying that problems had emerged” until it was too late.

The report cited Computer Weekly articles where DWP officials had insisted the IT was “being built and tested on time and on budget” – which was later revealed to be untrue.

“Although the department has tried to tackle this culture of secrecy, it gave misleading interviews to the press regarding progress after it became aware of difficulties with the programme,” said the PAC report.

Hodge added: “The failure to develop a comprehensive plan has led to extensive delay and the waste of a yet-to-be-determined amount of public money. £425m has been spent so far on the programme. It is likely that much of this, including at least £140m worth of IT assets, will now have to be written off.

“From the outset, the department has failed to grasp the nature and enormity of the task; failed to monitor and challenge progress regularly; and, when problems arose, failed to intervene promptly. Lack of day-to-day control meant early warning signs were missed.

“The department needs to focus on the long-term successful implementation of Universal Credit. It should evaluate what benefit it can derive from the existing IT but must not throw good money after bad by introducing a short-term fix that does not stand the test of time.”

The DWP said it had made significant progress since the problems were first uncovered, and denied the scale of the IT write-offs would be as high as the PAC report suggested.

“This report doesn’t take into account our new leadership team, or our progress on delivery. We have already taken comprehensive action including strengthening governance, supplier management and financial controls,” said a DWP spokesman.

“We don't recognise the write-off figure quoted by the committee and expect this to be substantially less. The head of Universal Credit, Howard Shiplee, has been clear that there is real potential to use much of the existing IT. We will announce our plans for the next phase of Universal Credit delivery shortly.”