The National Audit Office has concluded that it is too early to determine if the Department for Work & Pensions will achieve value for money in its implementation of the Universal Credit programme.
The Department set out to transform the benefits system with Universal Credit and suffered early setbacks. Since the reset in early 2013, it has reduced the delivery risks by significantly extending its timetable for introducing Universal Credit and choosing a more expensive twin-track approach: the roll-out of its ‘live service’ (which uses pre-2013 IT assets), while at the same time developing its new ‘digital service’.
The DWP believes the additional costs of this approach are justified because it expects Universal Credit to achieve substantial benefits for society sooner and more safely. However, such potential benefits do not mean Universal Credit will be value for money regardless of how it is implemented and the cost of doing so.
Since the reset in early 2013, the Department has developed and refined its ‘test and learn’ approach while continuing to expand its live service. The Department was slow to produce long-term plans for the future services and HM Treasury required the programme to produce more realistic plans before it approved the business case in September 2014.
In the longer term, the DWP has reduced risks in its planned transfer of most tax credit claimants to Universal Credit by extending the timetable by two years to the end of 2019. It was becoming increasingly unlikely that the DWP could transfer over one million tax credit claimants on to Universal Credit in April 2016 as planned without significant operational risks.
The Department’s digital service has been delayed and is still in the very early stages of development. At this early stage it will depend heavily on manual intervention and will handle only a small number of claims – but it is soon to be tested with all claimant types, even the most complex. The timetable is challenging, with the Department planning to start to roll out its fully scalable digital service in just 18 months time. It expects significant savings from its digital service, but does not yet have a contingency plan should the digital service be delayed or fail. It has not evaluated whether it could use the live service instead. The NAO estimates that using live service systems, without further investment, could cost £2.8 billion more in staff costs.
In principle, the DWP’s approach should allow it to learn from experience, improve the design and readiness of services and reduce risks. Given the gradual progress of the past year and the early stage of digital development, the Department has not yet tested its new digital approach, or gone through the process of integrating this with live service.
The NAO finds that the Department has continued to struggle to stabilize senior leadership roles and responsibilities. However, it has taken a more active approach to managing suppliers and establishing financial control within the programme. Among the NAO’s recommendations is that the Department ensure it has a clear basis for making decisions across the strands of the programme.
The Department for Work & Pensions has reset Universal Credit on a sounder basis but at significant cost, by extending the time for implementation and choosing a more expensive approach. It is now vital that the Department quickly establish clear goals for delivering the programme, in terms of cost, time and functionality, against which it can be held to account.
Amyas Morse, head of the National Audit Office
Notes for Editors
Claimants on Universal Credit in October 2014
Claimants planned to be on Universal Credit by April 2016
Claimants planned to be on Universal Credit by December 2019
Operational roll-out of live service
The Department starts taking new claims for single jobseekers
The Department starts taking some new claims for job-seeking couples, and singles who are also claiming housing benefits; expanding to around 100 job centres by the end of 2014
The Department starts taking some new claims for families with children
The Department starts to expand nationwide new claims for single jobseekers, reaching all 700 job centre areas by March 2016
Net present value of the expanded national roll-out of simple cases in 2015 and 2016 as estimated by the Department
Additional administrative cost to government of the expanded national roll-out of simple cases in 2015 and 2016 as estimated by the Department
Delivery of digital service
The Department's planned date for testing its digital service at scale before nationwide adoption
The Department's planned start for rolling out its new digital service to claimants nationwide; it expects no new claims to legacy benefits by December 2017
The Department's planned date for completing the transfer of 93% of claimants on to Universal Credit
Net present value of introducing Universal Credit in the Department's Autumn 2014 business case
1. The Department for Work & Pensions is introducing Universal Credit which will replace 6 means-tested benefits for working-age households. It expects Universal Credit to encourage people to work through: better financial incentives; simpler processes; and clearer job search requirements. Universal Credit is a highly ambitious and challenging transformation programme.
2. Following the reset in early 2013, the DWP proposed a twin-track approach to delivering Universal Credit by developing a strategic digital service while learning from further roll-out of live service. A ministerial oversight group reviewed this in November 2013. This approach aims to bring together the Department's short term operations and planned new systems:
• Live service: In April 2013, the Department started rolling out the Universal Credit service to limited claimant types. This 'live service' uses IT assets developed by suppliers largely before the reset in early 2013. The Department aims to use live service to roll out Universal Credit and 'test and learn' about processes and policy.
• Digital service: In parallel the Department is developing and testing a new 'digital service' which it intends will deliver Universal Credit nationally in the long term. It is developing this service in-house using an agile approach. It plans to start early tests of this service in November 2014.
3. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained by using the relevant links on our website.
4. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 820 employees. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £1.1 billion in 2013.