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Universal Credit business case still not approved as concerns continue over digital service

MPs reveal internal project reviews that show full business case yet to be approved and ongoing worries over digital system for welfare reform programme

Eight years after the project started, the full business case for Universal Credit has still not been submitted to the Treasury for approval.

The controversial welfare reform programme continues to “face major challenges” in the roll-out of its new digital service, and the Department for Work and Pensions (DWP) has been forced to develop its own identity assurance system because of ongoing problems with the Cabinet Office’s Verify service.

However, MPs on the Work and Pensions Committee have praised the DWP for its “substantial achievement” in reaching the point of national roll-out after the near failure of the programme in 2013, but acknowledged that “some of its biggest challenges are yet to come”.

The committee has released a summary of five years of Project Assessment Reviews (PARs) for Universal Credit, which DWP had repeatedly refused to release under Freedom of Information laws. The reviews were only provided to MPs after the House of Commons ordered DWP to do so following a vote in December last year, although the department insisted the full reports should remain confidential.

The reviews were conducted by the government’s Infrastructure and Projects Authority (IPA), which is responsible for overseeing major programmes. They provide further evidence of the “chaotic” early days of Universal Credit (UC), the substantial work conducted since it was “reset” in 2013, and the problems that still need to be resolved even as national implementation of the digital service targets completion by the end of this year.

Business case delays

The full business case for UC has been consistently delayed and is now due to be approved by March. The report reveals that funding is currently being provided on an “ad hoc basis” by the Treasury pending approval.

The committee criticised DWP for its lack of transparency and said delays to the business case meant it was difficult to assess the claimed benefits for the programme.

“The effects of a slower roll-out timetable and delays to automation on projected efficiency savings are also far from clear,” said the committee report.

“[DWP] has been consistently over-optimistic about the time it would take to roll out UC. According to its initial plans, the programme should have been complete by October 2017”
Work and Pensions Committee

“Public, parliamentary and governmental scrutiny of this major reform would be better served by a more transparent approach by the department. Given its confidence that the programme is on track, the DWP would also benefit from greater openness.”

Computer Weekly revealed last month that problems with Verify meant that barely one-third of benefits claimants have been able to successfully apply for the new UC digital service using the government’s flagship online identity system.

The committee report confirmed this, saying that as of March 2017, “around 30% of claimants were completing the Verify process, compared to an original projection of 80% and the target of 60% for the accelerated roll-out in October 2017”.

The report revealed that DWP has had to develop its own system, called Prove Your Identity, to complement Verify, but even the combined systems are only achieving a 50% verification rate for users. A new version of Verify, which has a lower threshold of proof for identity assurance, is also being considered.

Costs above target

The report said that online verification “continued to be a significant risk to the programme” because costs for UC assume that much of the digital system is automated. A September 2016 health check warned that delivery of UC was “at risk” if a significant proportion of the service did not become automated, because costs would “become prohibitive”.

As of January 2018, the cost per claimant was £963 – down from £1,750 in April 2016, but still well above the target of £250 by May 2019.

“The UC digital service is currently operating with more staff and fewer claimants than the DWP expected. This makes it expensive to run,” said the report.

The reliance on manual identity checking remains a major risk, said the MPs.

“To make its promised efficiency gains, [UC] must become a far more automated system. Key areas such as identity verification, however, are currently manual processes for a large proportion of claimants. Delays to the roll-out and automation of the digital service reduce projected efficiency savings,” said the report.

The report also revealed that DWP may yet delay the timetable further – a planned pause in the project in January was being used to “consider whether the roll-out plan remained appropriate”.

Targets not met

In September 2016, the IPA set out four factors that needed to be improved before large-scale roll-out of the digital service could proceed – automation, IT performance, management information and verification.

By March 2017, there were still problems against all four criteria, and “progress had not, at that stage, been sufficient to give full confidence that UC was ready for the scale of change proposed”, according to the report.

“Operational targets were not being met: the programme was underperforming on several measures that indicated how quickly claims were being processed. There was also considerable variation between the 58 Jobcentres operating the full [digital] service at that stage,” it said.

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Nonetheless, the plan to accelerate roll-out went ahead in July 2017. A further health check in September approved implementation in a further 150 Jobcentres by the end of the year, but warned there was “less certainty about the continuation of plans into the 2018/19 financial year”.

However, the committee recognised the success in turning round the UC programme after being “on the brink of complete failure” in 2013.

“It is to the department’s credit that it has brought [UC] back from that brink. The programme is now run more professionally and efficiently with a collective sense of purpose. Rolling out the live service nationally and developing a digital service in-house are substantial achievements. UC continues, however, to face major challenges,” said the report.

Continued delays

The MPs also criticised the continued delays to the programme, which in March 2013 was targeted for completion by the 2018/19 financial year. The latest plan expects the project to run to 2023.

“The department has been consistently over-optimistic about the time it would take to roll out UC. According to its initial plans, the programme should have been complete by October 2017,” said the report.

The delays have a significant effect on the projected benefits of the scheme, said the MPs.

“The effects of a slower [UC] roll-out timetable and delays to automation on projected efficiency savings are far from clear”
Work and Pensions Committee

“Delays are not simply an embarrassment to the DWP; they are also expensive. The digital service is expected to be ‘predominantly online, integrated and accurate’ and result in major savings from automation and self-service. The department is expected to reduce numbers of administrative staff by 11,000 – more than 25% of the total. The National Audit Office noted in its November 2014 report that a six-month delay to the digital service reduced the net benefits of the programme by £2.3bn,” said the report.

But the committee concluded that lessons learned from Universal Credit will be important in helping to successfully deliver further large-scale digital transformation programmes across government.

“The October 2015 PAR found that the programme had left behind its ‘fixation’ with in-vogue ‘agile’ software development methodology, which had left ‘the agile tail wagging the digital dog’. By September 2016, the IPA was confident UC had become a transformation programme and [in] September 2017 identified a ‘very clear delivery culture’ across the UC programme,” it said.

“UC is a valuable case study of the challenges in achieving transformational change in government which should be examined by ministers and civil servants planning major projects.” 

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