£200m of Universal Credit IT could be scrapped, MPs told

£200m of IT work on the troubled Universal Credit programme could be written off, says government project management chief Norma Wood

A further £200m of IT work on the troubled Universal Credit programme could still be written off, according to the government’s project management chief.

But the figure has been strongly contested by senior civil servants at the Department for Work and Pensions (DWP) who insist that a substantial amount of the IT developed to date can still be used.

MPs on the Public Accounts Committee (PAC) were told today by Norma Wood, interim director general of the Major Projects Authority (MPA), that “a significant chunk” of the £303m so far invested in IT development could still be written off. Wood said the amount could be at least £200m.

IT already scrapped

So far £34m of IT work has already been scrapped, as revealed in a National Audit Office (NAO) report last week.

The MPA was brought in to review Universal Credit earlier this year after the death of DWP CIO Philip Langsdale. Langsdale had himself been recruited specifically to overhaul the programme after officials realised in July 2012 there were major problems.

Wood said that, at the time of the review, the functionality of the pilot system – tested in a small number of jobcentres – was very limited. She said much of the IT was “not fit for purpose” and unlikely to be re-usable in a full roll-out.

“At time of reset and review, prospects for re-using the IT were very low, it would have been a sizable write-off,” she told MPs.

“Potential for re-use may have increased since then but not close enough to it.”

Re-use and write-off

However, the committee was later told by the new Universal Credit director general, Howard Shiplee, he believed more could yet be retrieved for future use. He said there was “substantial utility in what has been produced to date”.

In four weeks’ time Shiplee will complete a detailed review of the IT work done so far.

DWP finance director general Mike Driver also denied the figure of £200m to be written off.

“That is not the case at all,” he said.

But he admitted the total amount to be written off has yet to be confirmed, pending the review of work completed so far: “It is possible we will have to impair more of our assets, but we are not [yet] in a position to do that,” Driver said.

Poor management

The Public Accounts Committee cited numerous examples of problems from what chair Margaret Hodge called, “One of the worst NAO reports I’ve seen.”

Hodge quoted from a PricewaterhouseCoopers (PwC) report into the financial controls around Universal Credit that she described as “damning on the blank cheque given to suppliers”. She cited an example, highlighted by PwC, that, at one time, authority to rubber-stamp purchases had been delegated to a personal assistant.

Committee member Richard Bacon said the project had “extraordinarily loose controls” and the PAC painted a picture of a poorly managed programme with lax controls over suppliers and project management.

The MPA’s Wood agreed with assertions from Tory MP Stephen Barclay, that asking IT suppliers IBM and Accenture to conduct reviews of the value for money of their own work on the project was a conflict of interest.

“Did that worry you?” asked Barclay. “It did,” replied Wood, who suggested that conflict of interest presented a risk that the write-off figure could be even higher.

Security retrofit

Wood said the software developed for the Pathfinder pilot projects had serious security limitations and was unable to track fraud, support cyber security requirements or provide identity assurance.  

A revised security design is currently being reviewed by the Cabinet Office before the overall business case can be signed off.

“When we did the review, suppliers were working on different assumptions and to different standards,” said Wood. “Security was being retrofitted rather than being designed in.”

Management change

Following the review earlier this year, the IT work has been split in two. The Government Digital Service is handling the front end and the interaction with users. The DWP will look after the many legacy systems involved in supporting Universal Credit.

DWP permanent secretary Robert Devereux admitted that the senior civil servants who were originally in charge of the project had to be replaced, suggesting they were not listening to those around them.

“There came a point when they were no longer on top of it,” he said.

The key executives at the time were project chief Malcolm Whitehouse and business IT head Steve Dover, although nobody was mentioned by name in the PAC meeting.

But Devereux insisted that, having realised the project was in trouble and conducting a thorough review, Universal Credit was now on track and will be delivered on time in 2017.

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