Public Services > Central Government

Universal Credit: moving “from disaster to recovery”

David Bicknell Published 06 September 2016

Institute for Government report argues project’s prospects are improving despite “unrealistic” timetable, “no bad news culture” and “incoming missiles” from other parts of Whitehall


The departmental jealousies behind Universal Credit culminating in a highly charged meeting between the Cabinet Office, Department for Work and Pensions (DWP) and Treasury officials has been revealed in an Institute for Government (IfG) report into the development of the system.

The report, by Institute for Government senior fellow, Nicholas Timmins, a former public policy editor of the Financial Times, describes “a story of  disaster and then of recovery”, recovery to the point where, much later than first anticipated and way beyond the original timetable, Universal Credit may yet become a success.

The report charts the progress of Universal Credit from three years ago when the National Audit Office (NAO) reported that the ambitious reform to Britain’s welfare system was heading for the rocks to where today, its prospects look brighter.

In its report in 2013, the NAO detailed poor management, poor governance, poor financial control, confusion among the suppliers building it, plus the continued absence “of a detailed view of how Universal Credit it meant to work”. It disclosed that, uniquely, the entire multi-billion programme had had to be “reset”.

In "Universal Credit: from disaster to recovery?", Timmins blames the single biggest cause of the initial failure on a wholly unrealistic timetable that saw DWP seeking to build Universal Credit before it had been properly defined.

Although around 300,000 people are actually receiving Universal Credit,  that compares markedly with the many millions who would have been receiving it under the original timetable. Completion is not due until 2022, a dozen years after the white paper announcing it, and five years later than originally planned.

According to Timmins, Universal Credit remains a hugely ambitious project.

“It is far too soon to tell whether Universal Credit will finally do the business,” said Timmins. “There are elements of the policy that are still not entirely clear and others that may well need changing. Huge challenges remain – not just taking on new claims but transferring the many millions on existing benefits and tax credits, including some of the most vulnerable on Employment and Support Allowance. Its generosity has repeatedly been cut.

“But the lessons from how it has been turned around from the brink of disaster to something that may eventually work could prove valuable for other government projects. And crucially, it now has a timetable that may finally prove realistic.”

Few involved with Universal Credit truly emerge with any credit, though two exceptions are, according to Timmins’ report, Liberal Democrat MPs and Coalition members Danny Alexander and Nick Clegg.

Alexander as chief secretary to the Treasury, and Clegg as deputy Prime Minister, were crucial to the project’s survival. They were supportive early on when Iain Duncan Smith and George Osborne were at loggerheads about whether Universal Credit should even be launched. And Alexander’s intervention to keep the money flowing to the project in 2013 was critical, says Timmins.

According to Lord Freud, minister of state for Welfare Reform at DWP, the Treasury approval of cash became particularly acute. “We faced double approvals. We had approval about any contract variation from the Cabinet Office and then approvals for the money separately from the Treasury. The Government Digital Service got impatient because they wanted to make sure that the department had the ability to build internally rather than going out to Accenture and IBM, who they hate. The approvals were ricocheting between the Cabinet Office and the Treasury and when we were trying to do rapid iteration. That was producing huge delays, which were undermining everything. So in the end Danny Alexander said: ‘I will clear this on my own authority.’ And that was crucial. Danny cut through all of that.”

Timmins’ report is strong on the detail behind the project, not least around the adoption of a twin-track approach and particularly the tensions around it involving the department, the Cabinet Office and the Government Digital Service (GDS) in late 2013.

Timmins’ report says: “In November 2013, a mighty and fraught meeting of ministers and officials was convened. Pretty much everyone was there. The DWP ministers, Francis Maude, Oliver Letwin who was Cameron’s policy overlord, Sir Jeremy Heywood, the Cabinet Secretary, Sir Bob Kerslake, the head of the home civil service, plus a clutch of DWP officials including Robert Devereux and Howard Shiplee as the senior responsible owner along with Danny Alexander and Treasury representatives.

“The decision was whether to give up on the original build, or run a twin-track approach: in other words, to extend the use of the original build that was by now being used in just over a dozen offices – what became dubbed the ‘live’ service – before the new, and hopefully much more effective, digital approach was finished and on stream. It was a tough and far from pleasant meeting that is etched in the memories of those who were there.”

According to the report, “there were voices for writing the whole of the original off. But that would have been too much for Robert Devereux [the Permanent Secretary] and Iain Duncan Smith. So the twin-track approach was settled on – writing a lot of the original IT down rather than simply writing it off. That, in fact, has had some advantages even if technically it was probably the wrong decision. Better and cheaper to start again.

It has, however, seen parts of the culture change that Universal Credit involves being rolled out into DWP offices as more have adopted Universal Credit, even if the IT still requires big workarounds. More and more offices, for example, have been using the new claimant commitment, which is itself an important part of Universal Credit. So it has been possible to train thousands of staff in that, and get more and more claimants used to it, while also providing feedback for the new build.”

Former Cabinet Office minister Francis Maude was among those who objected to the twin-track approach, according to leaked minutes of the project oversight board at around this time, and to those present at the meeting.

Lord Freud, quoted in the report, said: “Francis was adamant that we should not go with the live system [that is, the original build]. He wanted to kill it. But we, the DWP, did not believe that the digital system would be ready on anything like the timescales they were talking about then – I think they were talking about the following September at this stage. But I knew that if you killed the live system, you killed Universal Credit. If we did not get something out there working in the real world, with all these enemies circling, it would be labelled a failed project and would be all too easy to stop. And, just as importantly, if we had at least a Universal Credit system that was operating then our people could learn about it and see how claimants behave and react, so we could have a ‘test and learn’ approach. And that indeed is what we have had.

“So we had Howard Shiplee as the senior responsible owner who had come in from outside, who was saying we should keep the live system and have a two-horse approach and Francis being very bitter about wanting to kill the live system off as a waste of money. I suspect, but don’t know, that he believed that if we kept the live system we would dump the digital one.”

The IfG suggests there are five critical lessons from the story of Universal Credit for future government projects:

  • Never skimp on planning for implementation: Universal Credit was a huge change from the benefits system it sought to replace. But despite the scale of the change, there was underinvestment in policy design and planning. There was a failure to ‘sweat out’ what the end state would look like, or to engage with users early enough on issues like the move to monthly payments. A deep understanding of the people a policy is supposed to affect is a vital starting point for policy change.
  • Beware system overload – get the right capability and capacity in place: The Department for Work and Pensions (DWP) had 11 other major projects on its books at the same time as Universal Credit, all of which involved major business change. But cuts at the top level meant senior personnel were stretched very thinly and could not always give Universal Credit the time it needed. Ensuring sufficient capacity at the top of the organisation and investing in project management capability across government are crucial.
  • Create a culture for delivery: Two different culture challenges got in the way of delivering Universal Credit effectively. First, the separation of policy, operational and technical professions who worked in different places and with little or no collaboration: all three groups should have worked together from the start. There was also a tendency to not acknowledge or report bad news. The latter is not unique to Universal Credit – optimism bias is common. But projects fare better when established on an open-book basis.
  • Avoid too much innovation: With stretched timetables and inadequate resourcing, it can be attractive to replace the old ways of doing things with a new technique, approach or technology. But big, high-profile projects are not necessarily the best places for testing new approaches. In Universal Credit, greater attention should have been paid to adopting ‘agile’ and ‘digital by default’. Where new approaches or technologies are used, they need to be tightly controlled and managed.
  • Build resilience into the project: Universal Credit has at various points been described as an ‘unlucky’ project. It was certainly beset by a series of challenges, some of which were less predictable than others. But successful projects must be able to weather changes in internal and external context. Universal Credit might have been less susceptible to bad luck if it had more resilience built in – including strategies for limiting the turnover of senior staff and creating spaces for external challenge (something that has now happened in the programme board).

  More to follow








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