Was Agile project management a significant contributing factor in the problems experienced by the Universal Credit project

Was Agile project management a significant contributing factor in the problems experienced by the Universal Credit project

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1, the major is Management Project. 2, I will upload you detailed instructions, stick on them please! Thank you very much!

BMAN70391 (Managing Projects) Essay Guidelines
Do:
?
Specifically answer the essay question.
?
Submit the essay using TurnItIn (see the link on the Blackboard pages).
?
Literature
o Provide a review of the literature that is relevant to the thesis of your essay (i.e.
to your argument), but when deciding how long to make this section, bear in
mind that the majority of marks will be assigned to your critical
analysis/conclusion(s) sections.
o Cite academic quality (academic books, peer reviewed journals) sources to
justify your arguments throughout the essay. The library provide a guide to
referencing, for anyone unfamiliar:
http://subjects.library.manchester.ac.uk/referencing/referencing-guide
o A bibliography ½ a page of A4 long would be a minimum number of academic
quality references expected. There is no upper limit to how many you can use.
You should use as many as you think are necessary in order to justify your
coherent argument.
?
Formatting
o Use the Harvard Style of referencing
http://subjects.library.manchester.ac.uk/referencing/referencing-harvard
o Write in a legible font, size 12, double line spaced.
?
Structure
o Build a clear and cohesive argument, starting with a clear introduction, building
your argument throughout the essay, and providing a clear conclusion.
o The use of section headings is optional – do whatever you think is suitable in
order to ensure that your argument is cohesive and logical to read.
BMAN70391 (Managing Projects) Essay Guidelines
Do not:
?
Simply re-write either the course core text book or any of the NAO reports in your own
words. We are looking for evidence of critical analysis ability.
?
Please do not submit a paper copy of the essay.
Optional
?
Review relevant journals (e.g. International Journal of Project Management, Journal of
Information Technology, etc). You may find other comparable case studies, e.g. that
used either the Agile project management approach, or the more traditional project
management approach, which you might be able to compare against the Universal
Credit case.
?
Computerweekly.com and ft.com contain many non-academic articles about Universal
Credit which may help give you ideas of specific elements of the project to analyse.
Bear in mind that both of these sources are biased though.
?
It would be OK to argue that the Agile approach was not a significant factor in Universal
Credit’s problems, as long as you justify adopting this position, and then argue (in an
academic style) what you believe the significant factors were.

BMAN 70391 Managing Projects
Assignment 2014-15
Read  the  National  Audit  Office  Report  on  Universal  Credit  (available  at  nao.gov.uk  and  on
Blackboard).  Answer the question “Was Agile project management a significant contributing factor
in the problems experienced by the Universal Credit project?”  The question should be addressed by
way of a critical analysis of the progress of the project to date.
It is recommended that you do not address the commercial issues raised in the report as these have
not been covered in class.
Your assignment should be ~3000 words long, and should conclude with key recommendations that
you would make for the improvement of the management of the project.
The submission date is 17.00 on January 12th 2015.
Additional reading that is of relevance to the issues raised in the NAO report includes:
Special  Issue  of  the  Journal  of  Information  Technology  (2007,  vol.  22)  on  the  “UK  National  Health
Service’s National Programme for IT”.
McAvoy,  J.  and  Butler,  T.  (2009)  “The  Role  of  Project  Management  in  Ineffective  Decision-making
with  Agile  Software  Development  Projects”.  European  Journal  of  Information  Systems.  18,
372-383.
O’Leary, T. and Williams, T. (2013) “Managing the Social Trajectory: A Practice Perspective on Project
Management”. IEEE Transactions on Engineering Management. 60, 566-580.
Search: Computerweekly.com for relevant articles.
Please  note  that  you  should  follow  carefully  the  instructions  on  referencing  in  the  Programme
Handbook.  In  particular,  please  ensure  that  all  quotations  in  the  text  are  identified  by  double
inverted commas ( “xx”) and supported by the appropriate page reference. Otherwise there is a risk
that  Turnitin  will  pick  them  up  as  plagiarism.  Quotations  of  over  15  words  should  also  be  block
indented.
Example of longer quotation block indented:
To  quote  the  Chair  of  the  UK  promoter  company  for  the  Channel  Fixed  Link  talking  about  putting
together the deal in the mid-1980s:
“If I was to sum up the overriding ethos which governed the directors …it was the
unarticulated faith, difficult to define or explain, but an abiding faith that would get
there in the end”. (Henderson, 1987: 15)

Example of shorter quotation within the text:
Thus the project process is indeed a negotiated order in which “the bases of concerted action (social
order)  must  be  reconstituted  continually;  or…worked  at”  (Strauss  et  al.,  1971:  104),  and  routines
provide the raw material for this work in the context of governance and institutions.
Please use the “Submit Course Work” tab on the left hand side of the screen to start the submission
process. Do not leave submission to the last moment on the 12th as there is always a risk of technical
glitches.

Marking rubric.
Grade
90–
100%
MSc Operations Project and Supply Chain Management Marking Criteria
Distinction

Exceptional work that is nearly or wholly faultless relative to expectations at MSc
level. Demonstrates consistently that the candidate achieves all  relevant   intended
outcomes of the course unit.  Also achieves the points under grade 70–79% below.
80–89%
Distinction

Work  of  excellent  quality  throughout,  comprehensively  demonstrating  that  the
candidate  achieves  all  relevant  intended  learning  outcomes  of  the  course  unit.  Also
achieves the bulleted points under grade 70–79% below.
70–79%
Distinction

Excellent  work,  both  thorough  and  focused,  with  critical  depth  and  insight
appropriate  to  Masters  level.  Demonstrates  that  the  candidate  achieves  relevant
intended learning outcomes of the course unit and the answer fits within a distinction
profile.

The student:
? evaluates concepts and assumptions critically and thoughtfully applies concepts
to problems
? demonstrates   independent   thinking   and   insight   into theoretical issues
? shows evidence of extensive reading beyond the lecture notes and the ability to
synthesise and integrate the relevant literature
? writes well in good English and structures the response to provide a succinct,
coherent and logical answer to the question
? clearly presents solutions to calculative questions and demonstrates excellent
analytical skills and understanding
60–69%
Merit

Answers are competent and well presented, touching very good work at the top end
of the range. The work is critical and comprehensive and has a degree of depth and
imagination  in  presenting  and  considering  the  material,  especially  at  the  top  end  of
the marking range.

The student:
? integrates the concepts introduced and applies them to problems with some
evidence of critical analysis
? shows evidence of reading beyond lecture notes that is appropriately analysed
and evaluated
? provides clear and competent answers to the questions, written in good English
? clearly  presents  solutions  to  calculative  questions  and demonstrates very good
analytical skills and understanding
50–59%
Pass

This is the minimum performance required on an MSc programme. Answers provide a
competent discussion of relevant material and some evidence of critical and analytical
thought. They are well structured, well presented and demonstrate an awareness of
relevant  literature,  and  offer  appropriate  evidence,  arguments,  and  assertions  by
reference to relevant literature/research.

The student:
? demonstrates a good understanding of the material
? shows a basic knowledge of relevant literature but draws mainly on lecture
material
? addresses  the  questions  and  demonstrates  reasonable
? writing skills with some ability to structure the material logically
? provides solutions to calculative questions that demonstrate good analytical
skills
40–49%
Fail, compensatable at MSc level

Answers  provide  a  competent  discussion  of  relevant  material,  but  are  largely
descriptive  and  lack  critical/analytical  depth.  Answers  are  well  structured,  well
presented and demonstrate an awareness of relevant literature.

The student’s answer:
? shows a basic understanding of concepts introduced but with limited ability to
apply these concepts
? largely reproduces lecture notes
? tends to miss the point of the question
? is written poorly, written in note form, lacks structure or is too short to properly
address the question
? provides  solutions  to  calculative   questions   that demonstrate basic analytical
skills

30–39%
Fail, compensatable at Diploma level

Work  shows  some  understanding  of  the  main  elements  of  the  programme  material
and  some  knowledge  of  the  relevant  literature.  Shows  very  limited  achievement  of
the relevant intended learning outcomes of the course unit.

The student:
? has a weak understanding of fundamental concepts with no critical analysis
? produces  answers  that  contain  factual  or  conceptual inadequacies
? provides poorly written answers that fail to address the question,  or  answers
that  are  too  brief  to  answer  the question properly
? provides solutions to calculative questions that demonstrate inadequate
analytical skills
0-29%
Fail

Little  relevant  material  presented.  Unclear  or  unsubstantiated  arguments  with  very
poor  accuracy  and  understanding.  Little  evidence  of  achievement  of  the  relevant
intended learning outcomes of the course unit.
Report
by the Comptroller
and Auditor General
Department for Work & Pensions
Universal Credit:
progress update
HC 786  SESSION 2014-15  26 NOVEMBER 2014
4  Key facts  Universal Credit: progress update
Key facts
17,850
500,000 7m
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
April 2013
the Department starts taking new claims for single jobseekers
June 2014
the Department starts taking some new claims for job-seeking
couples, and singles who are also claiming housing benefits;
expanding to around 100 jobcentres by the end of 2014
November 2014
the Department starts taking some new claims for families
with children
February 2015
the Department starts to expand nationwide new claims for single
jobseekers, reaching all 700 jobcentre areas by March 2016
£267 million
net present value of the expanded national roll-out of simple cases
in 2015 and 2016 as estimated by the Department
£149 million
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
November 2015
the Department’s planned date for testing its digital service at scale
before nationwide adoption
May 2016
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
December 2019
the Department’s planned date for completing the transfer of
93% of claimants on to Universal Credit
£20.7 billion
net present value of introducing Universal Credit in the Department’s
Autumn 2014 business case
Universal Credit: progress update  Summary 5
Summary
1 The Department for Work & Pensions (the Department) 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 The Department struggled with the early development of Universal Credit. In
February 2013, the Major Projects Authority expressed serious concerns in its project
assessment review, leading to a reset of the programme between February and
May 2013. In September 2013, we reported on the Department’s early progress in
implementing Universal Credit, including events leading up to the reset.1
3 Following the reset, the Department 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 eventually enhance the features and functionality of the
current live service operation. It is developing this service in-house using an agile
approach. It plans to start early tests of this service in November 2014.
1
Comptroller and Auditor General, Universal Credit: early progress, Session 2013-14, HC 621, National Audit Office,
September 2013.
6  Summary  Universal Credit: progress update
Scope of our report
4 Reports in 2013 by the Committee of Public Accounts, Work and Pensions Select
Committee and National Audit Office all raised concerns about how the Department
managed the programme. In this report we update on the Department’s progress since
the reset in:
•
Developing realistic and agreed plans (Part One). In November 2013, the
Committee of Public Accounts recommended that the Department prepare realistic
plans for implementation.
•
Setting out a clear long-term operating model (Part Two). In response to concerns
from the Major Projects Authority and National Audit Office about the lack of a clear
model for Universal Credit, the Committee recommended the Department set out
its long-term strategy for services and IT development.
•
Designing short-term services to inform and prepare for full roll-out (Part Three).
The Committee recommended that the Department revise its pilot roll-out (called
pathfinder) to ensure it prepares for longer-term implementation and improvement
of services.
•
Improving programme management (Part Four). Based on evidence from the
National Audit Office and Major Projects Authority, the Committee recommended
that the Department improve its management and oversight of the programme,
its culture of ‘good news’ reporting, and control of suppliers.
Key findings
Developing plans
5 Following the reset the Department chose a twin-track approach which
costs more than waiting for digital, but which it plans will yield higher benefits and
reduce risks. Guiding principles behind this approach were the Department’s wish to
de-risk delivery by making progress on two fronts, rather than relying on just one option,
and learn how Universal Credit works in practice. The Department estimates that the
twin-track approach yields a higher net present value overall by bringing forward the
benefits of the programme (paragraphs 1.3 and 1.15 to 1.17).
Universal Credit: progress update  Summary 7
6 The Department developed and refined its ‘test and learn’ approach while
continuing to expand live service. The Department expects this approach to help it
learn from the live running of Universal Credit, inform the development of the digital service
and achieve the societal and employment benefits of the policy as early as possible. From
June 2014, the Department started expanding live service across North West England,
and introduced claims for couples and tenants. It now plans to extend the roll-out to
all new claims from families in the North West from November 2014, and from single
jobseekers nationwide from February 2015. It expects that up to 500,000 people will
receive Universal Credit by April 2016 (paragraphs 1.3, 1.6 and 1.19).
7 The Department was slow to produce long-term plans for Universal Credit
and HM Treasury required the programme to produce more realistic plans before
approving the business case in September 2014. In early 2014, the Department
submitted a draft business case to HM Treasury, but this had little detail on plans
beyond 2014. Following the reset, HM Treasury continued to provide funding in small
increments. In early 2014, the Department needed to finalise the Universal Credit
target operating model; develop more realistic roll-out plans; and provide contingency
plans. Work on these is not yet complete but HM Revenue & Customs, local authority
representatives and the Major Projects Authority are now more positive about the
direction of travel. HM Treasury has approved the strategic outline business case, and
the Department has started the considerable work needed to develop a more detailed
business case (paragraphs 1.7 to 1.12).
8 The Department has reduced risks in its planned transfer of tax credit
claimants by extending the timetable by 2 years. It was becoming increasingly unlikely
that the Department could transfer over 1 million tax credit claimants on to Universal
Credit in April 2016 as planned without significant operational risks. The Department
has now introduced a 2 year extension for the transfer of the majority of tax credits
claimants to Universal Credit to 2019. It does not yet have plans to transfer the remaining
555,000 tax credit and Employment and Support Allowance claimants before the end
of 2019 (paragraphs 1.10 to 1.14).
9 The Department continues to expect significant employment and societal
benefits from Universal Credit. In its business case the Department estimated that
the net present value of Universal Credit was £20.7 billion. This includes higher earnings
for people as they move into employment and reduced spending on benefits. The
Department expects Universal Credit to help move 250,000 people into work. Impacts
are uncertain and 64% of benefits are due to distributional benefits which are weightings
applied to benefit transfers. The Department has a substantial programme of evaluation
to determine the societal benefits of Universal Credit (paragraphs 1.15 to 1.18).
8  Summary  Universal Credit: progress update
Developing a long-term operating model
10 The Department continues to have ambitious plans for the Universal Credit
service and is developing its design for how Universal Credit will work. The
Department has developed a clearer target operating model, which sets out some of the
expectations for the service such as the proportion of claimants making and maintaining
claims online. The target operating model consists of several ‘layers’, recognising the
broader transformation of the Department, although this does mean that Universal Credit
can be defined very broadly to cover changes already in place for Jobseeker’s Allowance.
The Department still needs to set out its detailed plans for Universal Credit systems and
processes, and the interim stages it needs to reach over time. The programme board
recognises the need for these more specific milestones against which to plan and assess
progress (paragraphs 2.6 and 2.7).
11 The Department’s digital service has been delayed and is still in the very
early stages of development but is soon to be tested with all claimant types, even
the most complex. Recruitment and capacity problems have delayed the new digital
service by 6 months compared with plans at the start of 2014, and it has not yet reached
its planned staffing level. In September 2014, digital service passed its Digital by Default
Service Standard Alpha assessment, confirming that it had built a working prototype
ready to be tested with a limited group of end users. The Department is starting to test
aspects of its digital service from November 2014. The new digital service at this stage
depends heavily on manual intervention and will only handle a small number of claims
(paragraphs 2.15 to 2.20 and 3.10).
12 The Department faces a challenging timetable with just 18 months before
it plans to start to roll out its fully scalable digital service. The Department is due
to begin initial testing of the new service’s efficiency in spring or summer 2015, and
testing its scalability the following November. However, it has not set out how it will
coordinate its agile approach with delivering the other parts of the programme set out
in the target operating model. The Department is not yet able to start testing identity
assurance security systems critical to trials in 2015. These systems depend on the
successful development of the Government Digital Service’s new GOV.UK Verify
service (paragraphs 2.14, 2.21 and 2.22).
13 The Department expects significant savings from its digital service, but
does not yet have a contingency plan, should the digital service be delayed.
The Department expects the digital service to save money because it plans it to be
predominantly online, integrated and accurate. If the digital service is delayed by
6 months the net present value of the programme reduces by £2.3 billion due to lost
societal benefits. The Department does not yet have a plan should the digital service fail
and has not evaluated whether it could use live service systems instead. We estimate that
using live service systems rather than digital systems would cost £2.8 billion more in staff
costs. The Department says that it would not use live service systems at full scale without
substantial further investment and that it is already making improvements which would
bring down the cost of live service (paragraphs 2.10, 2.11 and 2.17).
Universal Credit: progress update  Summary 9
Learning from the expansion of live service
14 The Department has a broad programme of learning from live service which
has led to improvements within Universal Credit and for the wider Department.
The Department has been working to resolve problems, improve business processes and
increase efficiency before expanding the nationwide roll-out. Where elements of Universal
Credit are working well the Department is using them more widely across its existing
benefits and activities. For example, following the early trials of the claimant commitment
in Universal Credit, the Department has now rolled out this approach in all jobcentres
nationally for new claimants of Jobseeker’s Allowance (paragraphs 3.7 and 3.15).
15 The Department expects that expanding live service will increase costs but
also bring in significant wider benefits and reduce risks. The Department estimates
that the accelerated nationwide roll-out of simple claims will result in administrative costs
of £149 million. However, it believes it will generate a net present value of £267 million.
This is largely due to societal and distributional benefits from people earning more in
work. But these benefits are heavily reliant on a number of assumptions and the eventual
impact will be difficult to measure. It also expects the nationwide roll-out to reduce the
risks associated with introducing the digital solution (paragraphs 1.18 to 1.21).
16 The Department expects that the expansion of live service in 2015 will help it
develop operational capability ahead of introducing the digital service, but does not
see its main aim as enhancing learning. The Department plans to expand operational
roll-out for new single claimants to all 700 jobcentres and 10 service centres by April 2016.
By this time, the Department plans to have trained 10,000 staff and established working
relationships with local delivery partners in areas nationwide. The Department does not
see the primary purpose of the nationwide roll-out as improving its learning about the
impacts of Universal Credit. The roll-out will not allow the Department to understand
how Universal Credit will work for claimants with more challenging requirements, unless
an individual’s circumstances change. The Department has dealt with relatively low
volumes of complex cases to date (paragraphs 3.2 to 3.8 and 3.17).
17 The Department will need to carefully manage risks to the costs and quality
of the nationwide roll-out of live service. The Department has developed a challenging
schedule for nationwide roll-out. Based on its learning to date and limited available time
and resources, the Department has significantly reduced its training costs and the time
it allows staff to familiarise themselves with Universal Credit nationwide compared to
its North West plans. The nationwide roll-out will also rely on some expensive manual
processes. The Department has had problems with systems accuracy following an IT
release, and had to reintroduce manual checks of all payments until it resolved the issues.
It also introduced a new release management approach to maintain tighter control. The
Department has 3 further major IT releases planned for the coming year, which it intends
will increase automation in live service systems. If further problems occur, the Department
will need to control the pace of roll-out (paragraphs 3.16 to 3.22).
10  Summary  Universal Credit: progress update
Managing the programme
18 The Department has continued to struggle to stabilise senior leadership roles
and responsibilities. Since the start of 2014, the senior responsible owner had been
working only one day a week due to ill health. In autumn 2014, the senior responsible owner
left the programme and programme director retired. The Department has taken some time
to stabilise its new governance arrangements but staff confidence in senior leadership and
programme culture have increased significantly. An internal audit report in September 2014
found that governance arrangements had become much clearer. In 2013, the Department
also appointed an independent chair of the programme board, who has provided some
continuity in oversight. However, the programme board has been hampered on occasion
by limited time and information (paragraphs 4.2 to 4.8).
19 The Department has taken a more active approach to managing suppliers
and establishing financial control within the programme. It has set up a new financial
control framework, guidance and training for staff. The Department has improved
processes for checking invoices and delegating authorities. In November 2014, internal
audit reported that a ‘Substantial Assurance’ rating was appropriate for the programme’s
finanacial management at this time. The Department plans to review financial controls
regularly as they are implemented in practice (paragraphs 4.12 and 4.13).
Conclusion on value for money
20 The Department set out to transform the benefits system with Universal Credit and
suffered early setbacks. Since the reset, it has reduced the delivery risks by extending
roll-out and choosing a more expensive twin-track approach to developing the service.
It 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
benefits do not mean that Universal Credit will be value for money regardless of how they
are implemented and the cost of doing so.
21 In principle, the Department’s approach should allow it to learn from experience,
improve the design and readiness of services and reduce risks. However, in our view the
Programme is at too early a stage to determine if the Department will achieve value for
money in its implementation of Universal Credit. Given the gradual progress of live service
roll-out to date and the early stage of digital service development, the Department has not
yet tested its new digital approach, or gone through the process of integrating this with live
service. We consider it important that the Department, having reset the programme on a
sounder basis at significant costs in terms of resource and elapsed time, confirms its plans
for delivering Universal Credit in terms of cost, time and functionality, against which it can
be held to account for the good use of public resources.
Universal Credit: progress update  Summary 11
Recommendations
22 The Department has adopted a ‘test and learn’ approach under which it is
continuing to bring on new claims while developing its digital service. As it proceeds
with this approach the Department must:
a
b
c
Ensure it has a clear basis for making decisions across the strands of
the programme
•
The Department will need to develop a detailed service architecture
for Universal Credit that aligns with its work on the wider departmental
operating model.
•
In developing the service architecture it will need to learn from planned tests
and set out how it will handle complex issues such as family formation and
break-up, and in-work conditionality.
•
The Department will increasingly need to monitor progress and control
decisions against its service architecture, and establish strong governance
and decision-making across strands of the programme.
Develop specific milestones for both digital and live services before each
additional stage of roll-out
•
The Department should continue to develop and monitor operational criteria
for further live service expansion, including payment accuracy and backlogs
in nationwide operations.
•
It should also review progress in developing the digital service and include
this among the criteria for the timing and speed of expanding live service.
•
If there are actual or expected delays or limitations to the digital service the
Department should set out how it will adjust live service expansion to avoid
unnecessary costs or risks to services.
Set out more clearly how and at what point live service and other test
and learn activities will inform the development of Universal Credit
•
The Department should differentiate between its learning activities on the
basis of how service development would be affected, and at what point it
could make decisions on the basis of the learning.
•
Where decisions are likely to affect the design of services substantially in
the short term or be difficult to accommodate at a later point, the Department
should ensure it has appropriate flexibility in development.

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National Audit Office Report by the Comptroller and Auditor General Department for Work & Pensions U n Iversal Cred it: prog reSS u pdate Hc 786 SESSION 2014-15 26 NOVEMBER 2014

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Report
by the Comptroller
and Auditor General
Department for Work & Pensions
Universal Credit:
progress update
HC 786  SESSION 2014-15  26 NOVEMBER 2014
Our vision is to help the nation spend wisely.
Our public audit perspective helps Parliament hold
government to account and improve public services.
The National Audit Office scrutinises public spending for Parliament and is
independent of government. The Comptroller and Auditor General (C&AG),
Sir Amyas Morse KCB, 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.
Department for Work & Pensions
Universal Credit:
progress update
Report by the Comptroller and Auditor General
Ordered by the House of Commons
to be printed on 25 November 2014
This report has been prepared under Section 6 of the
National Audit Act 1983 for presentation to the House of
Commons in accordance with Section 9 of the Act
Sir Amyas Morse KCB
Comptroller and Auditor General
National Audit Office
24 November 2014
HC 786 | £10.00
This report examines the Department for Work & Pensions’
progress in implementing Universal Credit. We describe the
evolution of the Universal Credit programme since the reset
and evaluate the Department’s future plans.
© National Audit Office 2014
The material featured in this document is subject to
National Audit Office (NAO) copyright. The material
may be copied or reproduced for non-commercial
purposes only, namely reproduction for research,
private study or for limited internal circulation within
an organisation for the purpose of review.
Copying for non-commercial purposes is subject
to the material being accompanied by a sufficient
acknowledgement, reproduced accurately, and not
being used in a misleading context. To reproduce
NAO copyright material for any other use, you must
contact [email protected]. Please tell us who
you are, the organisation you represent (if any) and
how and why you wish to use our material. Please
include your full contact details: name, address,
telephone number and email.
Please note that the material featured in this
document may not be reproduced for commercial
gain without the NAO’s express and direct
permission and that the NAO reserves its right to
pursue copyright infringement proceedings against
individuals or companies who reproduce material for
commercial gain without our permission.
Links to external websites were valid at the time of
publication of this report. The National Audit Office
is not responsible for the future validity of the links.
10564 11/14 NAO
Contents
Key facts  4
Summary  5
Part One
Developing plans  12
Part Two
Developing a clear operating model  23
Part Three
Learning from the expansion
of live service 32
Part Four
Managing the programme  43
Appendix One
Our audit approach  49
Appendix Two
Our evidence base  51
Appendix Three
Target operating model  53
Appendix Four
Universal Credit IT assets  55
Appendix Five
Customer segmentation  58
Appendix Six
The Universal Credit business case  59
Glossary  60
The National Audit Office study team
consisted of:
Chris Battersby, Yvonne Gallagher,
James Gourlay, Caroline Harper,
Ian Hart, Floria Hau, Dimitris Pipinis,
David Sawer and Tom Tyson under
the direction of Max Tse.
This report can be found on the
National Audit Office website at
www.nao.org.uk
For further information about the
National Audit Office please contact:
National Audit Office
Press Office
157–197 Buckingham Palace Road
Victoria
London
SW1W 9SP
Tel: 020 7798 7400
Enquiries: www.nao.org.uk/contact-us
Website: www.nao.org.uk
Twitter: @NAOorguk
4  Key facts  Universal Credit: progress update
Key facts
17,850
500,000 7m
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
April 2013
the Department starts taking new claims for single jobseekers
June 2014
the Department starts taking some new claims for job-seeking
couples, and singles who are also claiming housing benefits;
expanding to around 100 jobcentres by the end of 2014
November 2014
the Department starts taking some new claims for families
with children
February 2015
the Department starts to expand nationwide new claims for single
jobseekers, reaching all 700 jobcentre areas by March 2016
£267 million
net present value of the expanded national roll-out of simple cases
in 2015 and 2016 as estimated by the Department
£149 million
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
November 2015
the Department’s planned date for testing its digital service at scale
before nationwide adoption
May 2016
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
December 2019
the Department’s planned date for completing the transfer of
93% of claimants on to Universal Credit
£20.7 billion
net present value of introducing Universal Credit in the Department’s
Autumn 2014 business case
Universal Credit: progress update  Summary 5
Summary
1 The Department for Work & Pensions (the Department) 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 The Department struggled with the early development of Universal Credit. In
February 2013, the Major Projects Authority expressed serious concerns in its project
assessment review, leading to a reset of the programme between February and
May 2013. In September 2013, we reported on the Department’s early progress in
implementing Universal Credit, including events leading up to the reset.1
3 Following the reset, the Department 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 eventually enhance the features and functionality of the
current live service operation. It is developing this service in-house using an agile
approach. It plans to start early tests of this service in November 2014.
1
Comptroller and Auditor General, Universal Credit: early progress, Session 2013-14, HC 621, National Audit Office,
September 2013.
6  Summary  Universal Credit: progress update
Scope of our report
4 Reports in 2013 by the Committee of Public Accounts, Work and Pensions Select
Committee and National Audit Office all raised concerns about how the Department
managed the programme. In this report we update on the Department’s progress since
the reset in:
•
Developing realistic and agreed plans (Part One). In November 2013, the
Committee of Public Accounts recommended that the Department prepare realistic
plans for implementation.
•
Setting out a clear long-term operating model (Part Two). In response to concerns
from the Major Projects Authority and National Audit Office about the lack of a clear
model for Universal Credit, the Committee recommended the Department set out
its long-term strategy for services and IT development.
•
Designing short-term services to inform and prepare for full roll-out (Part Three).
The Committee recommended that the Department revise its pilot roll-out (called
pathfinder) to ensure it prepares for longer-term implementation and improvement
of services.
•
Improving programme management (Part Four). Based on evidence from the
National Audit Office and Major Projects Authority, the Committee recommended
that the Department improve its management and oversight of the programme,
its culture of ‘good news’ reporting, and control of suppliers.
Key findings
Developing plans
5 Following the reset the Department chose a twin-track approach which
costs more than waiting for digital, but which it plans will yield higher benefits and
reduce risks. Guiding principles behind this approach were the Department’s wish to
de-risk delivery by making progress on two fronts, rather than relying on just one option,
and learn how Universal Credit works in practice. The Department estimates that the
twin-track approach yields a higher net present value overall by bringing forward the
benefits of the programme (paragraphs 1.3 and 1.15 to 1.17).
Universal Credit: progress update  Summary 7
6 The Department developed and refined its ‘test and learn’ approach while
continuing to expand live service. The Department expects this approach to help it
learn from the live running of Universal Credit, inform the development of the digital service
and achieve the societal and employment benefits of the policy as early as possible. From
June 2014, the Department started expanding live service across North West England,
and introduced claims for couples and tenants. It now plans to extend the roll-out to
all new claims from families in the North West from November 2014, and from single
jobseekers nationwide from February 2015. It expects that up to 500,000 people will
receive Universal Credit by April 2016 (paragraphs 1.3, 1.6 and 1.19).
7 The Department was slow to produce long-term plans for Universal Credit
and HM Treasury required the programme to produce more realistic plans before
approving the business case in September 2014. In early 2014, the Department
submitted a draft business case to HM Treasury, but this had little detail on plans
beyond 2014. Following the reset, HM Treasury continued to provide funding in small
increments. In early 2014, the Department needed to finalise the Universal Credit
target operating model; develop more realistic roll-out plans; and provide contingency
plans. Work on these is not yet complete but HM Revenue & Customs, local authority
representatives and the Major Projects Authority are now more positive about the
direction of travel. HM Treasury has approved the strategic outline business case, and
the Department has started the considerable work needed to develop a more detailed
business case (paragraphs 1.7 to 1.12).
8 The Department has reduced risks in its planned transfer of tax credit
claimants by extending the timetable by 2 years. It was becoming increasingly unlikely
that the Department could transfer over 1 million tax credit claimants on to Universal
Credit in April 2016 as planned without significant operational risks. The Department
has now introduced a 2 year extension for the transfer of the majority of tax credits
claimants to Universal Credit to 2019. It does not yet have plans to transfer the remaining
555,000 tax credit and Employment and Support Allowance claimants before the end
of 2019 (paragraphs 1.10 to 1.14).
9 The Department continues to expect significant employment and societal
benefits from Universal Credit. In its business case the Department estimated that
the net present value of Universal Credit was £20.7 billion. This includes higher earnings
for people as they move into employment and reduced spending on benefits. The
Department expects Universal Credit to help move 250,000 people into work. Impacts
are uncertain and 64% of benefits are due to distributional benefits which are weightings
applied to benefit transfers. The Department has a substantial programme of evaluation
to determine the societal benefits of Universal Credit (paragraphs 1.15 to 1.18).
8  Summary  Universal Credit: progress update
Developing a long-term operating model
10 The Department continues to have ambitious plans for the Universal Credit
service and is developing its design for how Universal Credit will work. The
Department has developed a clearer target operating model, which sets out some of the
expectations for the service such as the proportion of claimants making and maintaining
claims online. The target operating model consists of several ‘layers’, recognising the
broader transformation of the Department, although this does mean that Universal Credit
can be defined very broadly to cover changes already in place for Jobseeker’s Allowance.
The Department still needs to set out its detailed plans for Universal Credit systems and
processes, and the interim stages it needs to reach over time. The programme board
recognises the need for these more specific milestones against which to plan and assess
progress (paragraphs 2.6 and 2.7).
11 The Department’s digital service has been delayed and is still in the very
early stages of development but is soon to be tested with all claimant types, even
the most complex. Recruitment and capacity problems have delayed the new digital
service by 6 months compared with plans at the start of 2014, and it has not yet reached
its planned staffing level. In September 2014, digital service passed its Digital by Default
Service Standard Alpha assessment, confirming that it had built a working prototype
ready to be tested with a limited group of end users. The Department is starting to test
aspects of its digital service from November 2014. The new digital service at this stage
depends heavily on manual intervention and will only handle a small number of claims
(paragraphs 2.15 to 2.20 and 3.10).
12 The Department faces a challenging timetable with just 18 months before
it plans to start to roll out its fully scalable digital service. The Department is due
to begin initial testing of the new service’s efficiency in spring or summer 2015, and
testing its scalability the following November. However, it has not set out how it will
coordinate its agile approach with delivering the other parts of the programme set out
in the target operating model. The Department is not yet able to start testing identity
assurance security systems critical to trials in 2015. These systems depend on the
successful development of the Government Digital Service’s new GOV.UK Verify
service (paragraphs 2.14, 2.21 and 2.22).
13 The Department expects significant savings from its digital service, but
does not yet have a contingency plan, should the digital service be delayed.
The Department expects the digital service to save money because it plans it to be
predominantly online, integrated and accurate. If the digital service is delayed by
6 months the net present value of the programme reduces by £2.3 billion due to lost
societal benefits. The Department does not yet have a plan should the digital service fail
and has not evaluated whether it could use live service systems instead. We estimate that
using live service systems rather than digital systems would cost £2.8 billion more in staff
costs. The Department says that it would not use live service systems at full scale without
substantial further investment and that it is already making improvements which would
bring down the cost of live service (paragraphs 2.10, 2.11 and 2.17).
Universal Credit: progress update  Summary 9
Learning from the expansion of live service
14 The Department has a broad programme of learning from live service which
has led to improvements within Universal Credit and for the wider Department.
The Department has been working to resolve problems, improve business processes and
increase efficiency before expanding the nationwide roll-out. Where elements of Universal
Credit are working well the Department is using them more widely across its existing
benefits and activities. For example, following the early trials of the claimant commitment
in Universal Credit, the Department has now rolled out this approach in all jobcentres
nationally for new claimants of Jobseeker’s Allowance (paragraphs 3.7 and 3.15).
15 The Department expects that expanding live service will increase costs but
also bring in significant wider benefits and reduce risks. The Department estimates
that the accelerated nationwide roll-out of simple claims will result in administrative costs
of £149 million. However, it believes it will generate a net present value of £267 million.
This is largely due to societal and distributional benefits from people earning more in
work. But these benefits are heavily reliant on a number of assumptions and the eventual
impact will be difficult to measure. It also expects the nationwide roll-out to reduce the
risks associated with introducing the digital solution (paragraphs 1.18 to 1.21).
16 The Department expects that the expansion of live service in 2015 will help it
develop operational capability ahead of introducing the digital service, but does not
see its main aim as enhancing learning. The Department plans to expand operational
roll-out for new single claimants to all 700 jobcentres and 10 service centres by April 2016.
By this time, the Department plans to have trained 10,000 staff and established working
relationships with local delivery partners in areas nationwide. The Department does not
see the primary purpose of the nationwide roll-out as improving its learning about the
impacts of Universal Credit. The roll-out will not allow the Department to understand
how Universal Credit will work for claimants with more challenging requirements, unless
an individual’s circumstances change. The Department has dealt with relatively low
volumes of complex cases to date (paragraphs 3.2 to 3.8 and 3.17).
17 The Department will need to carefully manage risks to the costs and quality
of the nationwide roll-out of live service. The Department has developed a challenging
schedule for nationwide roll-out. Based on its learning to date and limited available time
and resources, the Department has significantly reduced its training costs and the time
it allows staff to familiarise themselves with Universal Credit nationwide compared to
its North West plans. The nationwide roll-out will also rely on some expensive manual
processes. The Department has had problems with systems accuracy following an IT
release, and had to reintroduce manual checks of all payments until it resolved the issues.
It also introduced a new release management approach to maintain tighter control. The
Department has 3 further major IT releases planned for the coming year, which it intends
will increase automation in live service systems. If further problems occur, the Department
will need to control the pace of roll-out (paragraphs 3.16 to 3.22).
10  Summary  Universal Credit: progress update
Managing the programme
18 The Department has continued to struggle to stabilise senior leadership roles
and responsibilities. Since the start of 2014, the senior responsible owner had been
working only one day a week due to ill health. In autumn 2014, the senior responsible owner
left the programme and programme director retired. The Department has taken some time
to stabilise its new governance arrangements but staff confidence in senior leadership and
programme culture have increased significantly. An internal audit report in September 2014
found that governance arrangements had become much clearer. In 2013, the Department
also appointed an independent chair of the programme board, who has provided some
continuity in oversight. However, the programme board has been hampered on occasion
by limited time and information (paragraphs 4.2 to 4.8).
19 The Department has taken a more active approach to managing suppliers
and establishing financial control within the programme. It has set up a new financial
control framework, guidance and training for staff. The Department has improved
processes for checking invoices and delegating authorities. In November 2014, internal
audit reported that a ‘Substantial Assurance’ rating was appropriate for the programme’s
finanacial management at this time. The Department plans to review financial controls
regularly as they are implemented in practice (paragraphs 4.12 and 4.13).
Conclusion on value for money
20 The Department set out to transform the benefits system with Universal Credit and
suffered early setbacks. Since the reset, it has reduced the delivery risks by extending
roll-out and choosing a more expensive twin-track approach to developing the service.
It 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
benefits do not mean that Universal Credit will be value for money regardless of how they
are implemented and the cost of doing so.
21 In principle, the Department’s approach should allow it to learn from experience,
improve the design and readiness of services and reduce risks. However, in our view the
Programme is at too early a stage to determine if the Department will achieve value for
money in its implementation of Universal Credit. Given the gradual progress of live service
roll-out to date and the early stage of digital service development, the Department has not
yet tested its new digital approach, or gone through the process of integrating this with live
service. We consider it important that the Department, having reset the programme on a
sounder basis at significant costs in terms of resource and elapsed time, confirms its plans
for delivering Universal Credit in terms of cost, time and functionality, against which it can
be held to account for the good use of public resources.
Universal Credit: progress update  Summary 11
Recommendations
22 The Department has adopted a ‘test and learn’ approach under which it is
continuing to bring on new claims while developing its digital service. As it proceeds
with this approach the Department must:
a
b
c
Ensure it has a clear basis for making decisions across the strands of
the programme
•
The Department will need to develop a detailed service architecture
for Universal Credit that aligns with its work on the wider departmental
operating model.
•
In developing the service architecture it will need to learn from planned tests
and set out how it will handle complex issues such as family formation and
break-up, and in-work conditionality.
•
The Department will increasingly need to monitor progress and control
decisions against its service architecture, and establish strong governance
and decision-making across strands of the programme.
Develop specific milestones for both digital and live services before each
additional stage of roll-out
•
The Department should continue to develop and monitor operational criteria
for further live service expansion, including payment accuracy and backlogs
in nationwide operations.
•
It should also review progress in developing the digital service and include
this among the criteria for the timing and speed of expanding live service.
•
If there are actual or expected delays or limitations to the digital service the
Department should set out how it will adjust live service expansion to avoid
unnecessary costs or risks to services.
Set out more clearly how and at what point live service and other test
and learn activities will inform the development of Universal Credit
•
The Department should differentiate between its learning activities on the
basis of how service development would be affected, and at what point it
could make decisions on the basis of the learning.
•
Where decisions are likely to affect the design of services substantially in
the short term or be difficult to accommodate at a later point, the Department
should ensure it has appropriate flexibility in development.
12  Part One  Universal Credit: progress update
Part One
Developing plans
1.1 The Department for Work & Pensions (the Department) is introducing Universal Credit
which will replace 6 means-tested benefits for working-age households. Universal Credit is
an ambitious and challenging transformation programme. In September 2013, we reported
on the Department’s early progress in implementing Universal Credit, including events
leading up to the reset in early 2013.2 In this part we consider:
•
the approach the Department has adopted since the reset; and
•
how its plans have developed.
Established a test and learn approach
1.2 In May 2013, the Department appointed a new senior responsible owner to lead
the Universal Credit programme. He started a 100-day planning period to take forward
the recommendations of the reset, resulting in new proposals for the programme. Staff
from the Government Digital Service worked with the programme to start developing
the new digital service recommended by the reset team. A ministerial oversight group
for the programme was formed of ministers and senior officials from the Department,
HM Treasury and Cabinet Office.
1.3 In November 2013, the ministerial oversight group reviewed the Department’s
‘twin-track’ approach to delivering Universal Credit. The Department’s guiding principles
behind this approach were: its wish to de-risk delivery by making progress on two fronts,
rather than relying on just one option; and to learn how Universal Credit works in practice.
The new approach was announced in a written ministerial statement on 5 December
2013, which set out that the Department would:
•
test and implement an enhanced online digital service, capable of delivering the
full scope of Universal Credit and making provision for all claimant types; and
•
expand the current ‘live service’ across North West England in order to learn
from the live running of Universal Credit at scale and for more claimant types.
2
Comptroller and Auditor General, Universal Credit: early progress, Session 2013-14, HC 621, National Audit Office,
September 2013.
Universal Credit: progress update  Part One  13
1.4 The Department does not regard digital service and live service as separate
systems running in parallel. Rather, it now describes them as complementary parts of
an integrated approach, whereby digital service will eventually enhance the features
and functionality of the current live service operation, reinforcing behaviour change and
reducing costs.
1.5 The Department will need to take care as it integrates the live service and digital
service strands of the programme. In our view the twin-track nature of the programme
creates uncertainty about the relative emphasis on the digital service as the end state
for Universal Credit, or a more traditional view of benefit reform with planned updates
to IT systems. We recognise that the Department has had to design this approach
as a pragmatic response to what happened before the reset, but this uncertainty or
ambiguity in approach could create risks later in implementation.
1.6 The Department has built on processes and systems developed for the programme
before the reset to expand the current ‘live service’ to all jobcentres in North West
England by December 2014. During 2014, it also introduced new claims to some couples
and families (Figure 1 overleaf). The Department now intends to expand live service for
single unemployed claimants nationwide by 2016 as a contingency option, following its
decision to extend its delivery timetable for the digital service by 2 years. Alongside its
initial intention that the early roll-out of Universal Credit will inform the digital service, the
Department now anticipates that expanding nationwide will help prepare the organisation
for wider transformation and bring forward benefits.
Incremental approvals for spending during 2013-14
1.7 While the Department continued to develop its business case during 2013-14,
HM Treasury approved a series of funding requests for specific activities. Figure 2
on page 15 shows that between December 2013 and October 2014 the Department
spent £193 million on Universal Credit. It spent £8 million developing the digital service,
substantially less than the £34 million it has spent with external suppliers to enhance
live service systems.
Apr to Jun
2014
Source: National Audit Office analysis of Departmental documents and business cases
Apr 2013 to Apr 2014
Roll-out of live service to 10 jobcentres across Britain
Oct to Dec
2014
Jun to Dec
Roll-out of live service to 87 jobcentres across
North West England
Live service began accepting
claims from families
Nov
Jul to Sep
2014
Live service began accepting
claims from couples
Jan to Mar
2014
Revised strategic outline business
case approved by HM Treasury
Sep
First live service site started
accepting claims from singles
Oct to Dec
2013
Strategic outline business case
submitted to HM Treasury
Feb
Jun
Jul to Sep
2013
Ministerial Oversight Group
approved twin-track approach
Nov
Nov to Feb
Business case development
under test and learn approach
Apr
Apr to Jun
2013
Reset ended and
planning period began
Programme paused
and reset began
Jan to Mar
2013
May
May to Sep
100-day planning period
Feb
Feb to May
Reset period
The Department has established a test and learn approach
Figure 1
Universal Credit developments since January 2013
14  Part One  Universal Credit: progress update
Universal Credit: progress update  Part One  15
Figure 2
Expenditure on Universal Credit since December 2013
Staff and
non staff costs
(£m)
External
supplier costs
(£m)
Total
Live service
39
54
93
Investment
22
34
56
Operations
18
20
37
Digital development
2
6
8
Rest of programme
59
32
92
Claimant commitment
20
–
20
6
14
20
Central programme team
11
2
12
HM Revenue & Customs
8
7
15
11
0
11
Digital jobcentres
1
7
7
Consultancy support costs
–
3
3
Pilots and trials
–
–
1
Project recharges
2
–
2
100
93
193
Security
Non-programme Department for
Work & Pensions staff
Total
(£m)
Notes
1 Figures up to and including October 2014.
2
Core programme staff and non-staff include HM Revenue & Customs programme team.
3
External supplier costs include Department for Work & Pensions and HM Revenue & Customs IT costs,
IT security, consultancy, contractors, external legal costs, estates and Government Digital Service costs.
4
Expenditure on claimant commitment and digital job centres include both Jobseeker’s Allowance and
Universal Credit jobcentres.
5
Numbers do not sum due to rounding.
Source: National Audit Office analysis of departmental financial data
16  Part One  Universal Credit: progress update
Business case approved in September 2014
1.8 The Department produced the Winter 2013 strategic outline business case for
Universal Credit following the ministerial oversight group’s review.3 It submitted this
to HM Treasury in February 2014, when the Major Projects Authority conducted a
project assessment review of the programme post-reset. Following the Major Projects
Authority’s review, HM Treasury raised 3 main concerns (Figure 3).
1.9 Before HM Treasury would approve the business case, it required the Department
to address concerns by: finalising a target operating model; developing more realistic
plans for transferring new and existing claimants on to Universal Credit; and developing
contingency plans in case the digital service is delayed or proves not to be possible.
The Department worked closely with HM Revenue & Customs and local authority
delivery partners to develop its revised plans.
1.10 The Department submitted a revised strategic outline business case to HM Treasury
in September 2014. Key features of the revised approach are: completing the national
roll-out of live service for single claimants by 2016; and delaying the completion of full
roll-out of the digital service by 2 years (Figure 4).
Figure 3
HM Treasury concerns with the Winter 2013 draft business case
Business case sign-off depended on the programme addressing HM Treasury concerns
HM Treasury’s concerns about the programme
in April 2014
HM Treasury required the Department to provide
Little progress made on the later stages of the
plan to transfer legacy benefit claimants on to
Universal Credit.
Further detail on the transition and migration plans
for the next Parliament.
No single coherent integrated plan or clear target
operating model.
A more detailed target operating model.
Considerable work needed to prove the viability
and affordability of the new digital approach.
Contingency plans in the event that the digital
approach is not deliverable.
Note
1
HM Treasury’s concerns and requirements were made in reference to the February 2014 Major Projects Authority
project assessment review of the business case.
Source: National Audit Office analysis of Major Projects Authority’s project assessment review, February 2014; and
correspondence between HM Treasury and the Department in March and April 2014
3
The purpose of the strategic outline business case stage is to confirm the strategic context of the proposal and to make
a robust case for change, providing stakeholders and customers with an early indication of the ‘preferred way forward’
(not the preferred option). (HM Treasury, Public Sector Business Cases – using the five case model: Green Book
supplementary guidance on delivering public value from spending proposals, 2013, p.18).
Universal Credit: progress update  Part One  17
Figure 4
Changes to programme plans in September 2014
HM Treasury signed off the Department’s Autumn 2014 business case in September 2014
Winter 2013 plan
Autumn 2014 plan
North West roll-out
New simple claims from singles, couples
and families by the end of 2014
No change
North West tax credits
All new tax credit claims on
Universal Credit from January 2015
Postponed until digital service
Nationwide roll-out to single ‘simple’
new claims
No plans
February 2015 to April 2016
Testing of digital service
May 2014 to October 2015
November 2014 to April 2016
Nationwide roll-out to new claims and
claimants whose circumstances change
December 2015 to November 2016
May 2016 to December 2017
Live service
New digital service
Managed transfer of existing legacy benefit claims
Jobseekers’ Allowance, Housing Benefit
and Income Support
December 2016 to December 2017
January 2018 to December 2019
Tax credits
2 large mass transfers in
April 2016 and April 2017
Natural migration from 2016 when
claimants’ circumstances change
No managed transfer before end of 2019
when only 9% will be left on tax credits
Employment and Support Allowance
No plans before end of 2017
Natural migration from 2016 when
claimants’ circumstances change
No plans before end of 2019 when only
9% will be left on Employment and
Support Allowance
Notes
1
Live service uses the existing IT systems created prior to the reset in early 2013.
2
‘Simple’ claims include claims from single claimants without children who, in the absence of Universal Credit, could claim Jobseeker’s Allowance.
3
During nationwide roll-out to new claims and claimants whose circumstances change, gateways for claiming legacy benefits and tax credits will close.
4
‘Managed transfer’ is where the Department moves claimants from legacy benefits on to Universal Credit without waiting for individual moves to be
triggered by a change in circumstances. Movement from legacy benefits on to Universal Credit as a result of changes of circumstances is called ‘natural
migration’. The Department estimates that in December 2019, 390,000 (out of 4.4 million) tax credits claimants and 165,000 (out of 1.8 million) Employment
and Support Allowance claimants will not have transferred on to Universal Credit through change of circumstances since the nationwide roll-out of digital
service in May 2016.
Source: National Audit Office analysis of the Department’s February 2014 and September 2014 business cases
18  Part One  Universal Credit: progress update
1.11 In September 2014, the Major Projects Authority reviewed the Department’s revised
plans for national roll-out of live service and its new transition and migration approach.
It recommended that the business case be approved and that not proceeding with the
national roll-out would be a lost opportunity. It concluded, however, that the Department
needed to do considerable work to develop an outline business case, which is the
next stage before delivering a full business case.4 In particular, the Department would
need to provide detailed transition and migration plans, and progress on delivery of the
digital service.5
1.12 HM Treasury signed off the strategic outline business case at the end of
September 2014, in line with the Major Projects Authority’s recommendation. As the next
stage, the Department will produce a more detailed outline business case in summer 2015
to inform the next spending review.6 HM Treasury has told the Department that it expects
the outline business case to provide more detail on:
•
The target architecture for digital service systems, based on an agreed position
about the level of re-use of existing systems.
•
The target operating model for Universal Credit in its steady state, incorporating
evidence the Department has gained from its test and learn approach.
•
The financial and economic case, with improved forecasts of costs and benefits
based as far as possible on evidence from the live service.
Reduced risks by extending transfer period
1.13 The Department has substantially reduced the risks in its plans. The Department
had planned to transfer over 1 million tax credit claimants on to Universal Credit
in April 2016 (Figure 5). It was becoming increasingly unlikely that the Department
would have established fully-tested systems in time. Instead, the Department is now
planning to introduce the new digital service for new cases between May 2016 and
December 2017. This will reduce the extent and risk of transferring existing claims from
January 2018 onwards.
1.14 Not all legacy benefit claimants will have moved to Universal Credit by the end
of 2019. The Department has delayed the transfer of those claiming Employment
and Support Allowance only and tax credits only beyond 2019.7 Cases will transfer
where claimants are also claiming one of the other benefits; or where claimants’
circumstances change, for example, they become part of a Universal Credit household.
The Department estimates that in December 2019, 165,000 Employment and Support
Allowance claimants and 390,000 tax credits only claimants will not have transferred.
4
5
6
7
HM Treasury, Public Sector Business Cases – using the five case model: Green Book supplementary guidance on
delivering public value from spending proposals, 2013, p. 17.
Digital service was not in scope of the Major Projects Authority’s September 2014 review.
The purpose of the outline business case is to: identify the spending option which optimises value for money;
prepare the scheme for procurement; and put in place the necessary funding and management arrangements for the
successful delivery of the scheme (HM Treasury, Public Sector Business Cases – using the five case model: Green
Book supplementary guidance on delivering public value from spending proposals, 2013, p. 46).
The Department had previously announced, on 5 December 2013, that it would postpone completing the transfer of
existing Employment and Support Allowance claimants on to Universal Credit until all other claimants had been transferred.
Universal Credit: progress update  Part One  19
Figure 5
Universal Credit caseload projections
Subsequent business cases have delayed the introduction of Universal Credit
Total Universal Credit caseload (m)
8
7
6
5
4
3
2
1
0
Apr
Jul
Oct
2014
Jan
Apr
Jul
2015
Oct
Jan
Apr
Jul
2016
Oct
Jan
Apr
Jul
2017
Oct
Jan
Apr
Jul
Oct
2018
Winter 2012
Winter 2013
Autumn 2014
Note
1 The caseload is the total of claimants on live and digital services.
Source: National Audit Office analysis of the Department’s business cases of December 2012, February 2014, and September 2014
Jan
Apr
Jul
2019
Oct
20  Part One  Universal Credit: progress update
Continued expansion of live service
1.15 HM Treasury approved the Department’s business case which assumes an
integrated, nationwide ‘twin-track’ approach. In earlier drafts of the business case
the Department estimated that the twin-track approach would bring forward the
benefits of Universal Credit and increase the net present value of introducing the
programme (Figure 6).
1.16 The Department has chosen to incur higher administrative costs under the
twin-track approach and accelerated nationwide roll-out. In its winter 2013 business
case, the twin-track option cost £1.9 billion more than its wait for digital option, but the
two options were not based on consistent assumptions. The Department has recently
recalculated the difference at £244 million on a comparable basis.8 Given this late
change we have not been able to audit this new estimate.
1.17 In Autumn 2014 the Department estimated that its nationwide twin-track approach
would cost £270 million more than rolling out live service more slowly in a limited
twin-track approach. The cost of the Autumn 2014 plan is lower than for Winter 2013,
as are the estimated benefits, reflecting the slower roll-out of Universal Credit in the
longer term. In choosing between its options in either the Winter 2013 or Autumn 2014
business cases, the Department has estimated that its preferred option has a higher
overall net present value.
1.18 The Department’s estimates of net present value are driven by societal benefits
which are heavily dependent on a number of assumptions. The Department’s business
case includes sensitivity analysis to illustrate the impact of these assumptions on the
Department’s current estimate:9
•
Employment benefits. The Department believes that it is cautious in its current
estimate of net benefits. It believes this figure could be £7 billion higher if it used
different, less conservative, assumptions.10 The Department is evaluating the
programme but it needs further time and claimant numbers before changing the
assumptions in its business case.
•
Claimant numbers and baseline effects. The Department’s estimate of societal
benefits is primarily based on its estimate of the number of Universal Credit claimants.
If claimant numbers are 10% lower than forecast, the Department estimates that the
net present value of Universal Credit would be reduced by £2.1 billion.
8
In the Department’s estimates prepared for the ministerial oversight group in November 2013, the costs of both options
were £0.6 billion. In preparing the subsequent Winter 2013 business case, the Department updated its estimates for
the twin-track option, which increased administrative costs to £2.5 billion. It did not recalculate the costs of the ‘wait
for digital’ option at that time, suggesting a difference in costs of £1.9 billion. On 24 November 2014 the Department
told us it had now recalculated the comparable administrative costs of the wait for digital option in the Winter 2013
case  as £2.2 billion.
9 Universal Credit impacts depend on policy assumptions. For example, there was a £30 billion movement between
2011 and 2012 in the Department’s estimate of benefit spending, which went from a £19.7 billion cost to a £10.8 billion
saving. The Department changed its methodology over this time but the size of this movement was largely due to
changes in benefit entitlement and conditionality. See Appendix Six for further comparison of historic business cases.
10 The current business case assumes a 3-year time lag between rolling out Universal Credit in an area and achieving
the labour market impacts. This assumption is based on academic research on the time it takes for the labour market
to reach a new equilibrium and the Department’s modelling work. The Department believes this to be a conservative
approach to estimate and that there is evidence for more rapid labour market impacts.
Universal Credit: progress update  Part One  21
•
Distributional benefits. The Department estimates the changes in people’s
income as a result of Universal Credit. It reweights transfers or changes in income
on the basis that people on lower incomes value a given change in income more
than those on higher incomes. Net present value estimates are uncertain given the
difficulty of estimating labour market impacts, and this uncertainty is magnified by
the subsequent use of distributional impacts.11
Figure 6
Business case options: financial costs and benefits
The Department’s business cases show benefits from twin-track
Total value for the period from 2013-14 Q4 to 2023-24
Business case
Winter 2013
Option
Autumn 2014
Wait for digital
(£bn)
Twin-track
(£bn)
Limited twin-track
(£bn)
Nationwide twin-track
(£bn)
Government DEL savings (costs)
(0.6)
(2.5)
(1.1)
(1.4)
Government AME savings (costs)
7.7
10.2
8.9
9.5
Total savings (costs) to government
7.1
7.7
7.8
8.2
Gain to households from increased employment
3.7
2.7
0.9
1.6
Distributional benefits
16.0
24.3
16.3
17.5
Total benefits (costs) to wider society
19.7
26.9
17.1
19.0
Net saving
26.9
34.6
25.0
27.2
Net present value
20.4
26.7
18.9
20.7
Notes
1
See Figures 4 and 5 for assumptions behind the Department’s Winter 2013 ‘twin-track’ option and Autumn 2014 ‘nationwide twin-track’ option.
2
The Winter 2013 ‘wait for digital’ option assumed no further roll-out beyond the existing seven pathfinder sites until the digital solution was planned to
be ready in mid-2015. It then assumed a roll-out profile which was slower than the Autumn 2013 twin-track option.
3
The Autumn 2014 ‘limited twin-track’ option assumes no further roll-out beyond the North West couples and families until the digital solution is planned
to be ready in May 2016. It then assumes a slower expansion compared to the ‘nationwide twin-track’ option. This is because this option does not include
the nationwide expansion of live service and its operational preparation.
4
In November 2013, the Department estimated that the DEL costs of the ‘wait for digital’ and twin-track options were both £0.6 billion. For its Winter 2013
business case, the Department then updated its estimates for the twin-track option, which increased administrative costs to £2.5 billion. The Department
says it has now recalculated the comparable administrative costs of the wait for digital option in the Winter 2013 case as £2.2 billion. At the time of this
report we have not been able to audit the Department’s recalculated costs.
5
The Department did not fully revise the Autumn 2014 AME figures to reflect changes since the Winter 2013 business case. The Department is doing
further work to improve its estimates for the next stage of business case approval as requested by HM Treasury.
6
Departmental expenditure limit (DEL) impacts in this figure include administration costs and investment costs for programme implementation.
7
Annually managed expenditure (AME) impacts in this figure include both the programme’s direct impact on benefit payments and fraud savings, and its
indirect fiscal impacts on tax, benefits, and NHS spending through increased employment. Fraud savings were estimated to be £1.5 billion in all business
case options, except in the Winter 2013 ‘wait for digital’ option for which the estimate was £1.3 billion.
8
The Department’s business cases are based on its central estimate that 250,000 more individuals will be in work because of Universal Credit in steady
state. This includes: 145,000 more in work due to increased financial incentives, for example by increasing in work benefit entitlement; 60,000 more
in work because Universal Credit is simpler, more transparent and removes barriers that deter some people from moving from out of work benefits to
employment; and 50,000 more in work because they will become subject to greater conditionality requirements.
Source: National Audit Office analysis of the Department’s business cases of February 2014 and September 2014
11 The methodology and research behind distributional impacts is set out in the HM Treasury Green Book guidance on
business cases in Annex 5.
22  Part One  Universal Credit: progress update
Expected benefits of nationwide roll-out
1.19 In its approved Autumn 2014 business case the Department set out plans for
an accelerated nationwide roll-out of new claims for simpler single claimants from
February 2015. It estimates that around 500,000 claimants will receive Universal Credit
by mid-2016, and believes that nationwide roll-out will help to prepare staff and enable
local services to adapt. We discuss the Department’s approach to learning from live
service in Part Three.
1.20    The Department estimates that the accelerated nationwide roll-out will generate a
net present value of £267 million (Figure 7). This is largely based on the value of societal
benefits which the Department estimates to be £457 million. This estimate includes labour
supply benefits of £268 million from around 7,500 more people being in work in 2019
because of the early nationwide roll-out. The Department has also estimated that, with less
conservative assumptions, the labour supply benefits could be £474 million (77% higher).
1.21    The Department estimates that the nationwide roll-out of Universal Credit will
be a net administrative cost to government of £149 million. This is the net cost after
taking into account the savings to government in the delivery of legacy benefits such
as Jobseeker’s Allowance and Housing Benefit. Of the net cost, 81% will be IT supplier
costs, with £97 million in recurrent costs (systems maintenance) and £24 million in
investment costs (infrastructure and hosting).
Figure 7
Nationwide roll-out costs and benefits
Societal benefits outweigh the costs to government
10 years from
2014-15 to 2023-24
(£m)
Government DEL savings (costs)
(149)
Government AME savings (costs)
12
Total savings (costs) to government
(138)
Gain to households from increased employment
268
Distributional benefits
189
Total savings (costs) to wider society
457
Net saving
319
Net present value
267
Notes
1
Departmental expenditure limit (DEL) impacts in this figure include the additional operational and investment costs
associated with live service expansion.
2
Annually managed expenditure (AME) impacts in this figure only include the direct impact of live service expansion on
benefit payments.
3
Labour supply benefits in this figure take account of the indirect fiscal impact of live service expansion on tax, benefits,
and NHS spending through increased employment.
Source: National Audit Office analysis of the Department’s September 2014 business case
Universal Credit: progress update  Part Two  23
Part Two
Developing a clear operating model
2.1 In the early years of Universal Credit several reviewers raised concerns about
the absence of a complete target operating model or blueprint for Universal Credit.
This is necessary for the Department to manage priorities in a large and complicated
programme, help establish a consistent basis for decisions about the design of services,
and assess progress against objectives. In this part we consider the Department’s
progress in:
•
setting out its target operating model; and
•
developing the long-term digital service for Universal Credit.
Gradually developing a target operating model
2.2 The absence of a clear operating model was a main reason the Major Projects
Authority recommended a reset of the programme in early 2013. The Major Projects
Authority continued to raise the importance of a clear operating model with the
Department in its review in February 2014, and in April 2014, HM Treasury made it
a requirement for approving the Department’s business case.
2.3 The Department commissioned consultants to help develop the Universal Credit
target operating model, adapting a standard industry framework and drawing together
existing work by the Department into a single document. The programme board agreed
the new model in June 2014. The new target operating model outlines the programme’s
multi-layered approach to delivery and covers the range of factors it needs to manage,
coordinate and change. The model is intended to show how Universal Credit will affect the
way the Department will work in achieving its objectives. This addresses criticism from the
reset team, in early 2013, that the programme had been overly reliant on its IT solution.
2.4 The Department plans to use an iterative approach to produce more detailed
versions of the target operating model. It accepts that some areas of the current
model need significant development and that it is not yet complete. For example, the
Department has not confirmed plans for how it will support claimants who are in work,
even though it expects that around 1 million in-work claimants will have conditions
attached to their claim (Appendix Five). The Department’s intention is to provide support
that will help such claimants increase their earnings and skills. The Department has yet
to decide the extent of any mandatory activities for claimants, or associated compliancechecking, and it plans trials in 2015 to test various approaches. The business case does
not currently include funding to support claimants who are in work.
24  Part Two  Universal Credit: progress update
2.5 The Department is working with HM Revenue & Customs to develop plans for the
transfer of tax credit debt to the Department, and the resource implication of this for
both organisations. Tax credit debt arises when a tax credit recipient is paid more than
they are entitled to receive. At 31 March 2014, tax credit debt was £5.5 billion, compared
with the Department’s existing debt stock of £3.5 billion.
Need for a clearer critical path
2.6 The Department plans to move towards its target operating model using a series
of interim operating models, with a new one for each significant stage of the programme’s
development. Although the Department produced 4 new interim operating models in 2014,
reflecting developments in both live and digital service, and a high-level plan for 2015 and
beyond, it does not have detailed plans setting out this critical path. Our analysis suggests
that there are several important questions that the Department still needs to resolve for
every part of its Universal Credit target operating model (Appendix Three). The Department
will also need to align the Universal Credit model with the target operating model for the
Department as a whole, which is at a very early stage of development.
2.7 As the Department continues to develop its operating model and plans to achieve
this, it will need to set out how all the components of the model interrelate along the
programme’s critical path. The plan should break the target operating model down into
a set of deliverable items for which the Department can: estimate required resources,
costs and effort; identify dependencies; mitigate risks; and identify appropriate delivery
approaches. The programme board has recognised that the programme needs clearer
milestones against which to plan and assess progress.
Digital service a longer-term requirement
2.8 The Department believes that the most effective way to deliver Universal Credit at
scale is to develop a new digital service designed around user needs and behaviour,
and which enables claimants to use online channels where appropriate. The Department
aims to develop the digital service for £105 million. At present it expects to reuse
21% (£34 million) of the live service systems which it developed before the reset for
£165 million (Appendix Four).
2.9 The Department intends that digital service will avoid technical limitations in
current systems. For example, undertaking digital development in-house has helped
the Department design security into new systems from the outset. It is working closely
with CESG, the UK government’s national technical authority for information assurance,
to avoid the difficulty in addressing security problems which contributed to the decision
to reset the programme in 2013.12
12 These included the systems at that time being unable to identify potentially fraudulent claims, and not having the
security needed to allow claimants to make changes in circumstances online (Universal Credit: early progress,
paragraphs 2.17 to 2.18 and 3.12 to 3.16).
Universal Credit: progress update  Part Two  25
2.10 The Department expects the digital service to save operating costs because it plans
it to be predominantly online, integrated and accurate. This would increase automation
and self-service, and reduce the need for manual intervention required to use the live
service system. This automation will save the Department around £610 million more a year
in staff costs than if it were to roll-out using unenhanced live service systems (Figure 8).
On this basis, we estimate the net present value of savings from the planned digital service
through to 2023 to be £2.8 billion compared to using live service systems instead.13 The
Department says that it would not use live service systems at full scale without substantial
further investment.
Figure 8
Planned digital system features and savings
New digital systems are planned to significantly reduce staff costs
System feature
Improvement
Annual savings
from 2020-21
(£m)
Net present value
of savings from
2014-15 to 2022-23
(£m)
Online channel
Reduce need for telephony channel,
and automate high volume changes
in claimant circumstances.
330
1,600
System integration
Reduce need for clerical work by
automating the interfaces between
systems.
260
1,150
System accuracy
Reduce need for manual checks
on system payments.
20
50
610
2,800
Total
Notes
1 Annual cost savings are the projected staff cost savings of operating the digital systems compared to the live service
IT systems with the 7 million cases expected once roll-out is completed.
2
The Department provided volumetric estimates up to March 2021. The net present values in this figure include a
National Audit Office extrapolation of savings to 2022-23.
3
Existing live service IT systems are online only for the initial application; claimants must declare changes of
circumstances by telephone. Existing systems have not been fully integrated together and staff need to perform
tasks manually which could be automated. Problems with live service payment calculation accuracy are explained
in paragraphs 3.18–3.21.
Source: National Audit Office analysis of the operational cost models supporting the Department’s September 2014
business case
13 The Department plans to complete roll-out using its new digital systems. Our estimated saving compares the planned
cost of using digital systems with an extrapolated cost of using live service systems. We take the Department’s
estimate of the efficiency of live service systems and calculate the cost of using them for the total planned volume of
Universal Credit claimants. This assumes that the Department does not make further substantial investments in live
service systems (see paragraph 2.11).
26  Part Two  Universal Credit: progress update
2.11 The Department believes that further investment could make live service into a
viable alternative option if the digital service fails, and it already plans to expand its use
nationwide for single claimants. The Department is investing further in live service to
increase its efficiency ahead of national roll-out but has not yet modelled the impact.
Further investment will reduce the relative savings figures shown in Figure 8, by increasing
live service efficiency further. However, functionality may be limited. To realise potential
savings from a fully functional online channel, it would need to address security concerns
over pre-reset systems.14 The Department has not carried out detailed analysis of the
potential cost and work required for this option. HM Treasury has expressed concerns
about the value for money of further investment in live service systems.
2.12 Following the Major Projects Authority’s review, HM Treasury requested, in April 2014,
the Department provide it with contingency plans should the digital service be delayed or
fail. The Department is due to update HM Treasury at the end of November 2014 on its
progress in developing such plans.
More limited digital ambition
2.13    The Department has reduced the scope of its digital ambitions in some areas.
It has moved away from the demanding interpretation of ‘digital by default’, whereby it
expected claimants to use services online as a matter of course. It now aims for ‘digital
as appropriate’ for the digital service.15 For example, the Department no longer plans
that claimants will make changes to bank account details online. The Department now
expects that 37% of claimants’ activity to maintain their claim will require assistance,
rather than be through online self-service (Figure 9).16
2.14 This reduction in digital ambition is partly in recognition that for some claimants
digital interaction with government will never be possible, and because the Department
recognises that some interactions will be more effective with human intervention. This
reduced ambition simplifies requirements for security. The programme’s new plans for
security use a multi-layered approach, a key element of which is successful integration
with the Cabinet Office’s identity assurance programme (called GOV.UK Verify). The
government is currently using the identity assurance service in public testing with select
services and plans to be using it at scale by January 2015. The Department expects to
start using the identity assurance service in Universal Credit digital service trials from
March 2015 onwards.
14 In June 2012, CESG found that security had not been properly considered from the start. The systems were developed
by multiple suppliers without an overarching plan for how it would work as a whole. A Red Team review concluded
that the programme lacked appropriate detail around the security measures it needed because of: ineffective links
between design and security teams; invalid assumptions being made by technical teams about what was acceptable
to the business; a lack of balance between usability and security; poor understanding of dependencies between
components; and little consideration of the technical implications of business design activities. The Department was
unable to address these concerns prior to the reset in February 2013.
15 Universal Credit: early progress, paragraphs 3.12 to 3.16.
16 The Department is unclear what impact these changes have had on the target running costs per claimant, which
increased by 25% from £183 to £230 between the Department’s 2011 plan and its current plan. Since 2011, the
Department has refined its methodology for costing the operating model, which has contributed to the increase
in target running costs per claimant since then.
Universal Credit: progress update  Part Two  27
Figure 9
Predicted channel use
Channel
Making a claim
(%)
Maintaining a claim
(%)
General enquiries
(%)
Self-service online
74
63
66
Assisted self-service
12
14
14
4
6
5
10
17
14
Face-to-face
Non face-to-face
human contact
Note
1
Non face-to-face human contact includes the use of telephones and digital channels.
Source: Department for Work & Pensions, Universal Credit programme: target operating model
Slow start to developing the digital service
2.15    Following the withdrawal of Government Digital Service (GDS) experts in
January 2014, the Department has been slow to build up the in-house expertise it needs
to develop the systems it requires. Following the reset in early 2013, the Department
and GDS agreed that GDS staff would assist with the design and build of digital service
up to the ‘proof of concept’ stage, which occurred in October 2013. In December 2013,
the Department and GDS agreed a transition plan for the withdrawal of day-to-day GDS
support of digital service by the end of January 2014. The Department told us that it had
initially expected GDS to remain involved with the programme until the Department was
ready to run the first test of the service, originally planned for May 2014, but there was
no written agreement for this.
2.16    Since January 2014, the Department struggled to attract suitably qualified staff to
meet its planned numbers. In September 2014, the Department benchmarked the salaries
it offered for a range of digital posts against data on average salaries from 4 recruitment
agencies and GDS. This indicated that the maximum salaries the Department was
offering were between 8% and 22% lower than the average comparator salaries. At the
end of October 2014, the digital service had 59 contingent labour hires in post. This was
11 less than the total requirement identified by the Department at that stage.
28  Part Two  Universal Credit: progress update
2.17    The resulting capacity problems have delayed the new digital service by 6 months
(Figure 10). The Department estimates that a further 6-month delay reduces the net
present value of the programme by £2.3 billion (11%), including a £58 million increase in
administrative costs. A year’s delay would reduce the net present value by £4.8 billion
(23%), with administrative costs increasing by £133 million. Most of this reduction is
because of lost societal benefits that cannot be recovered.
Figure 10
Digital development timeline
Development is up to 6 months behind schedule
Stage
Planned start
Actual (or revised plan)
Change
Proof of concept
May 2013
June 2013
1 month delay
‘Test the service’
May 2014
November 2014
6 months delay
‘Improve efficiency’
November 2014
Spring/summer 2015
6 months delay
‘Make scalable’
May 2015
November 2015
6 months delay
Full service available
December 2015
May 2016
5 months delay
Source: National Audit Office analysis of Departmental documents
2.18    The Department’s digital development team now combines IT expertise, mainly
via contractors, with departmental staff who have operational and policy experience.
They have combined to develop the digital service using an agile approach.17
Critical 18 months to develop the digital service
2.19    Work to date has focused on the short-term requirements of delivering the
‘test the service’ phase in late November 2014. The Department plans to test its
new systems with all types of new claims (Figure 11). The Department is planning
to test new processes and online systems and their impact on claimant behaviour. In
September 2014, digital service passed its Digital by Default Service Standard Alpha
assessment, confirming that it had built a working prototype ready to be tested with
a limited group of end users.18
17 Prior to the reset the Department sought to use an agile approach to manage the programme, but it struggled to
adopt this appropriately (see Universal Credit: early progress, paragraphs 3.4 to 3.10). Since the reset, the Department
has concentrated its use of agile on developing digital service using a co-located, mixed-skill team. In June 2014,
consultants commissioned by the programme board reported that a good agile approach is in place, and that a
strong agile culture and organisation has been found inside the digital service. The consultants also found that a
focus on long-term planning and effective communication of progress is required to drive scale and delivery, and that
adjustments to the team structure will be required to ensure scalability.
18 The Digital by Default Service Standard is a set of criteria for digital teams building government services to meet.
The standard needs to be met by all new or redesigned transactional government services going live after April 2014
(www.gov.uk/service-manual/digital-by-default).
Universal Credit: progress update  Part Two  29
Figure 11
New claim types accepted
Legacy benefits
Live service
Pathfinder
from Apr 2013
Live service
North West roll-out
from Jun 2014
Live service
National roll-out from
Feb 2015
Digital service
from Nov 2014
Single claims
Yes
Yes
Yes
Yes
Couples without children
No
Yes
No
Yes
Couples with children
No
Yes
(from Nov 2014)
No
Yes
Lone parents with children
No
Yes
(from Nov 2014)
No
Yes
Rented accommodation
No
Yes
(if JSA criteria met)
Yes
(if JSA criteria met)
Yes
Owned or partially owned home
No
No
No
Yes
Couples
No
Yes
No
Yes
Lone parents
No
Yes
(from Nov 2014)
No
Yes
Carers
No
No
No
Yes
Pregnant or unable to work
No
No
No
Yes
Child tax credits
No
Yes
(if JSA or IS criteria met)
No
Yes
Working tax credits
No
No
No
Yes
Employment and Support Allowance
No
No
No
Yes
Jobseekers Allowance
Housing Benefit
Income Support
Tax credits
Notes
1
Claimants remain on Universal Credit once they start claiming it, regardless of how complex their circumstances become. For example, a ‘simple’ single
Universal Credit claimant may get married and move into work while continuing to claim Universal Credit.
2
Claimants are eligible for Universal Credit if they fall into one of the accepted groups above and have the following eligibility criteria: do not own or part
own their home; have a bank or building society account; do not live in temporary accommodation; are not pregnant or given birth within the last
15 weeks; are not a carer; are not self-employed; are unemployed or have household earnings of less than £330 per month if over 25 or £270 if under 25;
not challenging or awaiting a decision on Jobseekers Allowance, Housing Benefit, Employment and Support Allowance, Income Support or tax credits;
not be staying away from their main home; not be responsible for a child or young person who is: adopted, fostered, being looked after, registered blind
or have a disability benefit.
Source: National Audit Office analysis of the Department’s September 2014 business case
30  Part Two  Universal Credit: progress update
2.20    The Department did not intend that digital service would be fully automated during
the ‘test the service’ phase. For example, it planned not to use automated integration
with existing Department-wide systems, such as its central payment system. In August,
it re-prioritised the tasks it needed to complete to be ready for the test the service phase.
Because the Department had not recruited as many digital staff as intended, it could not
complete all the lower-priority tasks in time for launch. As a result, initially more processes
than originally planned will be carried out manually by staff. The Department intends to
gradually automate these manual processes through a series of planned regular update
releases during the test the service phase. The programme board has signed off high
level entry criteria for this phase, and is due to consider draft exit criteria at its December
meeting. The Department will only be able to make an informed decision about how and
when to proceed to the next phase of development, ‘improve efficiency’, once exit criteria
have been defined.
2.21    To remain on track, the Department will have 18 months to increase functionality to
create a fully integrated service eventually capable of handling up to 10 million claimants
(Figure 12). It will use an agile approach to do this. The Department plans to trial new
systems in spring 2015, when it intends to start testing efficiencies and delivery against
policy intent. It then plans to test increased capacity from November 2015.
Figure 12
Digital service development
The Department plans to have developed a full digital service within 18 months of its initial testing
Test the service
Improve efficiency
Make scalable
Full service
Start date
November 2014
Spring/summer 2015
November 2015
May 2016
Number of claimants
100 to 500
1,000 to 5,000
Up to 10,000
Rising to
10 million
Hosting of system
In-house
To be confirmed
Cloud
Cloud
Automated links to
other systems
0
5
20
20
Notes
1 During ‘test the service’ there will be manual links between the new systems and 10 wider departmental systems.
2
Claimant numbers for improve efficiency and make scalable are broad estimates used to populate the business case.
The actual numbers brought onto the digital service will be decided as part of the agile planning process in response
to learning from test the service and to ensure a full range of claimant types are represented.
Source: National Audit Office analysis of Departmental documents
Universal Credit: progress update  Part Two  31
2.22    The Department has overarching plans for developing digital service. However,
these do not set out how it plans to coordinate its agile approach for developing digital
service in-house, with the other parts of the target operating model that are essential for
delivering Universal Credit. For example, the Department will continue to use traditional
approaches for buying and maintaining systems supplied commercially, such as existing
Department-wide systems and cloud hosting. In June 2014, external consultants
commissioned by the programme board reported that they had been unable to assess
the depth and rigour of the Department’s longer-term planning. The consultants
recommended that the Department produce and publicise plans that include sufficient
detail to confirm key activities and milestones; the Department has made some progress
in doing so.
32  Part Three  Universal Credit: progress update
Part Three
Learning from the expansion of live service
3.1 The Department has continued to roll out Universal Credit since 2013 and now
plans to expand operational roll-out nationwide for single unemployed claimants by
April 2016. In this part we consider:
•
The expected benefits from the continued expansion of live service; and
•
Risks to maintaining quality and accuracy.
Expected benefits of expanding live service
3.2 The Department intends to use the expansion of live service to secure earlier
economic and societal benefits and inform and prepare for digital development in
different ways (Figure 13).
Developing operational capability through live service
3.3 Implementing Universal Credit is a very large operational challenge. By the time
it has fully rolled out Universal Credit the Department expects to have trained nearly
38,000 staff across its jobcentre network and service centres. Expanding live service – both
in terms of scope to more complex cases and in terms of scale to more jobcentre areas
– helps to develop staff understanding and experience of Universal Credit.
3.4 Since April 2013, the Department has continued to expand new simple claims
from single claimants from the 4 initial jobcentre areas in North West England to
nearly 100 jobcentre areas by the end of 2014.19 It has also started to take new claims
in North West England from couples in June 2014, and families in November 2014,
starting with a few jobcentres. In June 2014, it also started accepting claims from
unemployed individuals and couples currently in receipt of housing benefit, provided
they met all the eligibility criteria (see Figure 11, note 2).
19 ‘Simple’ claims include claims from single claimants without children who, in the absence of Universal Credit, could
claim Jobseeker’s Allowance. They may also be eligible to claim a housing element. Claimants remain on Universal
Credit once they start claiming it, regardless of how complex their circumstances become. For example, a ‘simple’
single Universal Credit claimant may get married and move into work while continuing to claim Universal Credit.
Universal Credit: progress update  Part Three  33
Figure 13
Possible benefits of live service learning
Planned impact on stages
Operational capability
Live service
Short-term
Digital service
Medium-term
Long-term
High
High
Low
Speeds up the transition to digital by bringing
forwards creation of nationwide capacity
and infrastructure. Operational benefits are
in the transition not long term running
(paragraphs 3.3 to 3.6).
High
Medium
Low
Partly speeds up learning about simple cases
and processes. No substantial increase in
knowledge about complex cases or digital
systems (paragraphs 3.7 to 3.9).
Medium
Medium
High
Limited impact as roll-out only accepts new
out-of-work single claimants. Some use for the
digital service but not all trials are using online
channels (paragraph 3.11).
Low
Medium
High
Slows down evaluation plans because it speeds
up removal of the control group. However provides
benefits of learning about single claimants at scale.
Longer term impact subject to creation of control
groups (paragraph 3.12 to 3.14).
n/a
n/a
n/a
Little impact as the scope for wider use has
already been established. Some possible iteration
of learning from other service back to Universal
Credit (paragraph 3.15).
Building understanding
and experience of staff
Process improvement
Refining processes based
on live experience
Labour market trials
Testing claimant
responses to support
Overall evaluation
Testing long-term labour
market impacts
Wider use of elements
Using parts of Universal
Credit in other benefits
Impact of expanded national live service roll-out
Note
1 Assessments of low, medium and high impacts are designed to show the possible impacts of live service on the development of Universal Credit
to help decompose some of the effects. They are not our assessments of the actual test and learn programme within Universal Credit or the
benefits of the programme itself.
Source: National Audit Office
34  Part Three  Universal Credit: progress update
3.5 The Department now plans to expand live service so that all 700 jobcentres
nationwide support at least some claimants on Universal Credit. It is still developing
plans but in broad terms it intends to expand new claims for single claimants in tranches
between February 2015 and March 2016 (Figure 14). The Major Projects Authority has
reviewed these plans and supported the nationwide roll-out, though it acknowledges
risks and dependencies remain.
3.6 One of the major benefits the Department expects from nationwide roll-out is the
opportunity this will give to form working relationships with local authorities and housing
associations. For example, housing associations need to prepare for the payment of
benefits directly to tenants rather than to the landlord as rent, and even small numbers of
new claims could help them to understand the new benefit. The Department also needs to
form local delivery partnerships to provide wider budgeting and digital support to claimants
to help them manage the move to monthly payments and identify more work opportunities.
Figure 14
The Department’s roll-out schedule for jobcentres and service centres
The Department is expanding roll-out of simple new claims but has not yet worked out its
staffing requirements beyond February 2015
Jobcentres
Jobcentre staff
Service centres
Service
centre staff
Apr 2013 to Apr 2014
10
117
2
213
May 2014 to Aug 2014
28
160
1
207
Sep 2014 to Jan 2015
59
988
1
600
Feb 2015 to Apr 2015
(Tranche 1)
150
To be
determined
3
To be
determined
May 2015 to Jul 2015
(Tranche 2)
160
To be
determined
1
To be
determined
Sep 2015 to Nov 2015
(Tranche 3)
180
To be
determined
2
To be
determined
Dec 2015 to Mar 2016
(Tranche 4)
110
To be
determined
0
To be
determined
Total planned in
March 2016
700
To be
determined
10
To be
determined
Total planned in
December 2019
To be
determined
23,700
Numbers added in period
To be
determined
14,100
Notes
1 These numbers are provisional and reflect the Department’s latest planning assumptions. Jobcentre numbers in
each tranche are based on plans developed in October 2014. The Department was not able to provide expected staff
numbers for these roll-out plans and expects these to be complete in December 2014.
2
Staff numbers correspond to full time equivalents.
Source: National Audit Office analysis of departmental roll-out plans
Universal Credit: progress update  Part Three  35
Improving operational processes
3.7 The Department has been working to resolve problems, improve business
processes and increase efficiency before expanding nationwide roll-out (Figure 15). For
example, it is working on changes to social security regulations in response to problems
in sharing information about claimants with landlords. Some landlords and claimants
have struggled with rent arrears where support for housing costs is included in a single
payment direct to claimants. The Department expects to resolve this problem before
expanding nationwide.
3.8 As the digital service develops, the Department will continue to provide significant
support to claimants, and will need to learn how best to interact with different claimant
groups. However, the nationwide roll-out of live service will only accept new claims from
single claimants so there will be limited learning about more complex cases unless an
individual’s circumstances change. The Department had hoped that the North West
roll-out would include new in-work claims from January 2015 but this plan did not
proceed following a feasibility study.
Figure 15
Examples of learning from live service
The Department has used live service to improve processes in some areas
Data sharing
Departmental staff have been unable to communicate effectively with landlords
about tenants who may face financial difficulty due to the move from Housing Benefit
to Universal Credit. The Department is working on changes to the Social Security
Regulations 2012 to improve communication and help landlords identify tenants who
may need budgeting support or alternative payment arrangements.
Direct payments
The Department ran Direct Payment Demonstration projects across the country
to understand how well claimants cope when paid all their benefit directly in one
single monthly payment. The projects demonstrated that a third of tenants could not
adequately cope with direct payment. In those cases, the Department decided to
switch back to making payments for housing direct to landlords instead of claimants.
The Department is using the lessons from these projects to improve its support to
claimants who cannot cope with direct payments.
Hardship payments
The hardship payment process was not working effectively. Universal Credit agents
now call claimants back within an hour about hardship payments to help ensure they
are processed efficiently. Since April 2014, around 220 claimants have requested
hardship payments.
Personal
budgeting support
Few claimants were taking up the personal budgeting support provided by the
Department or local partnership provider. Work coaches now routinely tell claimants
about personal budgeting support. Between April and October 2014 the Department
has agreed 330 alternative payment arrangements and referred around 440 claimants
to the local authority or money advice service for budgeting support.
Benefit calculation
Payments were delayed where Real Time Information did not match automatically to
Universal Credit claimants records and had to be matched manually. The Department
has now improved the data matching process.
Staff training
Staff training was not fully tailored to their different roles. The Department has
redesigned staff training to tailor it to different staff roles and increase applied learning.
Source: National Audit Office analysis of Departmental documents on learning and management information
36  Part Three  Universal Credit: progress update
3.9 The Department does not see the main purpose of its nationwide roll-out as
supporting its test and learn approach to improve the digital service. However, the
Department will use the digital service test in November 2014 to identify problems with
its new systems and complex cases, for example home owners and families with more
challenging circumstances. This first test is small scale and will not immediately capture
the full range of cases that Universal Credit will include.
Trialling different approaches
3.10 The Department has been conducting trials in Jobseeker’s Allowance, tax credits
and Housing Benefit, including approaches to in-work conditionality and claimant support
(Figure 16). The Department is using trials to improve its live service processes in the short
term and inform its longer-term plans for Universal Credit. While the Department has seen
some early positive results in some of its trials, it is considering their cost-effectiveness as
they are often based on face-to-face approaches which may increase costs in the long
term. Its digital and remote trials have had limited success to date.
3.11    The Department aims to implement large scale randomised trials of in-work
conditionality within Universal Credit in 2015. Within these trials, it plans to learn from
families and couples from the North West roll-out in addition to single claimants that
move into work nationwide. It will take some time before there are sufficient numbers
of claimants in work to compare different approaches robustly.
Overall evaluation
3.12    The nationwide roll-out will expand Universal Credit to single claimants in different
geographic areas. This may affect the Department’s longer-term test and learn plans.
It had planned to gather evidence about the effectiveness of Universal Credit by
comparing claimants to similar legacy benefit claimants in areas outside the North West
of England. An independent review of the Department’s evaluation strategy for the North
West noted that in most respects the strategy seemed entirely appropriate. It highlighted
that one of the key strengths of the Department’s evaluation plan was that the rest of
the country would largely remain on legacy benefits for some time. While this remains
the case for couples and families, the accelerated national roll-out to single unemployed
claimants will reduce the number of areas where only legacy benefits are available.
3.13    The Department does not believe that their evaluation of single claimants will be
undermined by its new approach as it provides an opportunity to study the impact of
Universal Credit in different regions. It believes there will be sufficient time to follow-up
the earlier cohorts of Universal Credit claimants before rolling it out to their chosen
comparative areas. However, it will need to carefully manage the roll-out schedule
to retain clean comparison areas for as long as possible.
Universal Credit: progress update  Part Three  37
Figure 16
Labour market trials
The Department has been conducting trials in legacy benefit areas
Stages
Applies for
Universal Credit
Work search
support
Moves
into work
In-work
conditionality
and support
Trial
Date
Department assessment
External digital platform to match
micro-jobs to unemployed claimants
Jun 2013 to Jan 2014
Limited learning; challenges to engaging
employers with this approach
Intensive Activity Period trial
Aug 2013 to Apr 2014
Positive early results but expensive to deliver
Face-to-face adviser support
to low income households
Sep 2013 to Sep 2014
Challenges around identifying and
engaging households
Providing strong face-to-face adviser
support to in-work JSA claimants
Sep 2013 to present
Positive early results; trial ongoing
Extending telephone support for up
to 6 months after leaving JSA
May 2013 to present
Positive early assessment of activity
Extending telephone support for up
to 2 months after leaving JSA
Jun 2013 to May 2014
Trial ended due to limited impact
Providing external support to JSA
claimants who are working
Jul 2013 to Apr 2014
Positive results but trial ended due to low
value for money
Local partnerships with colleges to
provide in-work skills development
Jul 2013 to present
Refocused trial due to limited take up
Digital in-work progression support
after leaving JSA
Sep 2013 to May 2014
Positively received by claimants but limited
engagement and impact
Engaging employers and newly
employed in progression discussion
Sep 2013 to May 2014
Limited impact; trial ongoing
Extending face-to-face adviser
support, after leaving JSA
Sep 2013 to Sep 2014
Limited impact and take up
External face-to-face support to drive
employer flexibility and broker high-paid
work for low-paid household
Jan 2014 to present
Trial ongoing, too early to form judgement
External support to change aspirations
of people in low paid work
Aug 2014 to present
Trial ongoing, too early to form judgement
Local area partnership
Sep 2013 to May 2014
Limited results, new trials up and running
Note
1 Trials conducted with Jobseeker’s Allowance, Tax Credits and Universal Credit claimants. In some cases trials may have informed more than
one step in the process.
Source: National Audit Office analysis of departmental documents on trials and evaluation
38  Part Three  Universal Credit: progress update
3.14    The Department’s future test and learn plans have been limited to date by the
slower increase in claimant numbers than expected, although this is in part due to lower
than expected unemployment (Figure 17). As a rule of thumb it planned on the basis of
10,000 claims in each of its claimant groups are needed for a robust evaluation of the
labour market impact of Universal Credit. This has reduced the scope for extensive and
timely findings to inform the Department’s development of new digital systems:
•
Couples. In the 4 months after accepting new claims from couples, there were only
around 400 applications compared to the 3,000 expected. The Department has
revised its projections but still expects to achieve 10,000 claims by September 2015.
This would require a large increase in the rate of couples applying.
•
Families. The Department aims to start testing claims from families in sites from
late November. This is 2 months later than the Department’s original planning
assumptions. It does not have plans to accept claims from more complex
households with children outside of the digital service tests and roll-out.
•
In-work claimants. The Department had planned to redirect all new tax credit
claims on to Universal Credit in the North West from January 2015. It does not
now expect large numbers of new claims from people in work until 2016.
Figure 17
Planned claimant numbers
Longer-term evaluation plans have been delayed by low numbers of couples and families
Target date to reach 10,000 claimants
Actual claimant
volumes
Winter 2013 plan
Autumn 2014 plan
Delay
October 2014 actual
Singles
February 2014
June 2014
4 months
17,450
Couples without children
June 2015
September 2015
3 months
400
Couples with children
February 2015
September 2015
7 months
0
Lone parents
May 2015
June 2015
1 month
0
Note
1 In addition, 2,690 claimants had left Universal Credit up to October 2014. A total of 20,540 people have started
Universal Credit.
Source: National Audit Office analysis of Departmental test and learn documents and claimant projections
Universal Credit: progress update  Part Three  39
Wider use of parts of the service
3.15    Where elements of Universal Credit are working well the Department is using
them more widely across its existing benefits and activities (Figure 18). For example,
following the early trials of the claimant commitment in Universal Credit, the Department
has now rolled out this approach in all jobcentres nationally for new claimants of
Jobseeker’s Allowance.
Figure 18
Reuse of Universal Credit Element
Elements of the Universal Credit programme have been reused in the Department’s wider work
Real Time Information (RTI)
Claimant commitment
The Department is starting to use RTI more widely to reduce
fraud and error by:
•
conducting a one off exercise to check reported earnings in
Jobseeker’s Allowance (JSA) and Pension Credit claims;
•
•
validating job outcomes claimed by Work Programme suppliers; and
developing strategic plans to routinely incorporate RTI into
benefit streams.
The Department has applied its learning from implementing claimant
commitment to:
•
•
•
inform new JSA Claimant Commitment design;
build better understanding of legacy benefit conditionality; and
develop a cross-government communications guide on the
use of behavioural economics and social psychology to drive
behavioural change.
Security
The Department has shared its learning from documenting
online security patterns with Digital Leaders and security staff
across Government.
Local partnerships
The Department has shared its learning from Local Authority-led pilots
in face to face services with Departmental staff and other councils.
Source: National Audit Office analysis of Departmental documents
40  Part Three  Universal Credit: progress update
Risks to maintaining quality and accuracy
3.16    The Department acknowledges that the challenge will be to keep consistency of
quality while rolling out at scale. The Department needs to have strong risk management
in place to maintain standards of service. It will also be critical for the Department to
have timely information on potential backlogs before and during its accelerated national
roll-out from February 2015.
Rapid recruitment and training
3.17    The Department aims to open 3 more service centres and recruit an additional
600 to 700 people before February 2015. It also intends to train around 10,000 people
by April 2016. The Department believes that it has learned from experiences in 2013
and 2014 and will be able to expand live services more efficiently in nationwide roll-out.
It has reduced its learning and development costs, increasing risks to service quality.
Planned changes include:
•
Reduced training plans and costs. The Department has developed a challenging
schedule for nationwide roll-out and acknowledges that the learning and
development approach it used in the North-West would not be feasible at scale.
As a result, it has reviewed and improved its training provision. The Department
now plans to condense and tailor the training and mentoring it gives to staff
compared to the North West roll-out in 2014. It has reduced planned training
budgets up to April 2016 by 68% from £117 million to £37 million.
•
Reduced familiarisation period for live service. The Department will halve the
time it gives to new staff to familiarise themselves with Universal Credit compared
to the North West roll-out in 2014. This reduces costs by £14 million.
•
No budgeted costs for digital system familiarisation. In its plans for the
digital roll-out from May 2016 onwards, the Department does not allow in its cost
model for any familiarisation period. This avoids costs of £72 million over 5 years
compared to its plans for nationwide live service familiarisation.
Universal Credit: progress update  Part Three  41
System accuracy problems
3.18 Universal Credit is not a mature service and the Department will need to tackle
problems with technical systems as they arise, and also staff and claimant understanding
of processes. The Department’s operational performance improvement team has mapped
live service processes and continues to identify areas for improvement, but the frequent
changes also increase the risks of staff giving outdated or incorrect advice to claimants.
3.19    Since April 2013, the Department has been manually checking system payment
calculations and correcting them prior to making payments. The Department has been
working with the IT suppliers to improve system accuracy. The error rate fell below
5% in late 2013 (Figure 19 overleaf). As a result, the Department stopped checking
100% of claims in December 2013 and concentrated on targeted checks.
3.20    In April 2014, a software update created new problems for calculations and
inaccuracy increased again. Between April and June 2014, over 10% of payments
made to claimants were incorrect. This damaged staff and stakeholder confidence in
the system and the Department had to reintroduce 100% manual checking of payments
in June 2014. The Department reduced the error rate to below 5% in September 2014
before committing to the nationwide roll-out plans from February 2015 and intends to
revert to targeted checking.
3.21    The Department does not intend to continue checking all payments as it rolls out
Universal Credit nationwide. Manually checking payments would be expensive if required
at scale. We estimate that the Department spends £10 per claim monthly for manual
checking assuming no further investment to improve the system. For example, if further
problems occur, the Department would have to spend around £5 million per month for
manual checking once live service caseload peaks in May 2016.20
3.22    The successful nationwide roll-out of Universal Credit will depend on the integrity
of future IT releases needed to maintain live service systems. A further 3 major IT
releases are planned over the next year, which the Department intends will increase
automation in live service systems. The Department put in place additional controls
over IT releases following the problems in April 2014 and has introduced more rigorous
testing and release management approaches. If further problems occur, the Department
must use these effectively to control the pace of roll-out.
20 The Department plans to use the live service system nationwide until May 2016. It then plans to complete moving
areas on to new digital systems by December 2017. We estimate that the total inefficiency in the Department’s planned
use of live service to this date will be around £150 million in staff costs (compared to the Department’s planned digital
efficiency over time). This does not include the cost of IT system maintenance.
42  Part Three  Universal Credit: progress update
Figure 19
Payment error rates
Live service systems are still reliant on manual intervention to correct errors
Percentage
40
35
30
25
20
15
10
5
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
2013
May
Jun
Jul
Aug
Sep
2014
Notes
1 The Department stopped doing 100% checks in December 2013 and started again in June 2014. As a result, the figures for this period will not
reflect any undetected errors in payments.
2
At present the Department is undertaking 100% checking of all payments before they go out.
3
The Department’s working target for error levels is below 5%.
4
Error rate in this figure is the percentage of total claim payments that is incorrect or missing.
Source: National Audit Office analysis of Departmental management information and error reports
Oct
Universal Credit: progress update  Part Four  43
Part Four
Managing the programme
4.1 In our report on Universal Credit: early progress21 in September 2013 we identified
several failings in the early management of the programme. In this part we consider how
the Department has tackled these concerns, and:
•
strengthened leadership of the programme;
•
clarified governance and oversight arrangements; and
•
improved supplier management and financial control.
Continuing changes in senior leadership
4.2 The Department experienced high turnover in the senior leadership of Universal
Credit between 2011 and 2013. This contributed to difficulties in making decisions and
managing the programme. Frequent changes in leadership and direction also affected
staff morale; in mid-2013, a staff survey found that programme staff had little confidence
in the leadership team and few opportunities to challenge decisions.
4.3 The Department has continued to experience turnover in key roles. From the start
of 2014, the programme’s senior responsible owner worked only 1 day a week due to ill
health, and left in September 2014. The programme director since May 2013 retired in
October 2014. In both cases the Department has had time to plan for their departures
and bring in replacements without interruption (Figure 20 overleaf).
4.4 Confidence in the leadership team has improved despite continuing difficulties and the
heavy demands on the programme director through 2014 caused by the limited availability
of the senior responsible owner. A follow-up survey found a large increase in the number of
staff expressing confidence in the actions of senior leadership (from 30% in 2013 to 75% in
2014) and an increase in the number of staff who feel that senior management encourages
challenge and welcomes their suggestions (from 30% in 2013 to 70% in 2014).
21 Universal Credit: early progress, Part Three.
44  Part Four  Universal Credit: progress update
Figure 20
Leadership of Universal Credit over time
Universal Credit has lacked a full-time SRO since putting its new plan into place
SRO: Howard Shiplee
(review and revision of the
programme Sep to Dec)
SRO: David Pitchford
(Reset Feb to May)
Retirement of SRO Howard Shiplee
Neil Couling appointed as new SRO
(Oct 2014)
SRO: Howard Shiplee
(‘100 days’ May to Aug)
2013
2014
SRO Howard Shiplee worked reduced hours
due to health issues
Programme Director in charge in his absence
(Dec 2013 to Oct 2014)
Retirement of Programme Director
New Programme Director appointed
(Oct 2014)
Source: National Audit Office analysis of Departmental documents
Improving but not established governance
4.5 During 2013, the Department started substantial restructuring of the programme’s
governance and oversight arrangements. It also created a draft Universal Credit
programme handbook, but this was not taken forward. Changes included the creation of
strand checkpoints to reflect the twin-track approach agreed by the ministerial oversight
group in November 2013.
4.6 The Department has continued developing new arrangements during 2014
(Figure 21). In early 2014, the Department concluded that the regular Programme
Design Authority meetings were not routinely used for the appropriate level of senior
and strategic decision-making. As a result, in February it established the Business Design
Authority, Technical Design Authority and Security Design Authority, which have met
fortnightly to discuss detailed design issues. The Programme Design Authority, which
the Department had anticipated would meet weekly to discuss detailed issues, now
considers design issues that cannot be resolved at a working level by the subordinate
design authorities, or which have Department-wide implications. Since February it
has met twice.
Universal Credit: progress update  Part Four  45
Figure 21
Universal Credit governance
The Department has set out new governance arrangements
Internal Programme Management
Strand
Checkpoints
Policy
Live Service
Development and
Delivery Checkpoint
Business
Transformation
Checkpoint
Integrated Test and
Learn and Business
Case Checkpoint
Programme
Management
Checkpoint
End State Service
Development
Checkpoint
Security Design
and Delivery
Checkpoint
Commercial
Checkpoint
IT
Checkpoint
Business Design Authority
Technical Design Authority
Security Design Authority
UC Programme
Change Board
UC Programme
Design Authority
UC Programme
Checkpoint and Risk
Review Board
UC Executive Team
UC Programme Board
Departmental Challenge and Oversight
Portfolio Board
Portfolio Management
Committee
DWP Accounting
Officer
Ministerial Change
Delivery Committee
Independent Review or Assurance
Major Projects
Authority
Source: National Audit Office analysis of Departmental documents
Ministerial
Oversight Group
Major Project
Review Group
DWP Board
Government
Digital Service
Departmental Audit &
Risk Committee
HM Treasury
Internal Audit
46  Part Four  Universal Credit: progress update
4.7 In September 2014 internal audit reported that during the previous 6 months
programme governance arrangements had become much clearer, and that these
arrangements are continuing to evolve to ensure they provide effective management
of both live service and digital service delivery. Internal audit said that the programme
was working through the respective purpose of each governance body, to ensure that
the structure is optimised and effective in managing the delivery of both the ‘live’ and
digital service. The Department accepted that it needs to continue with its plans to
further strengthen the programme’s governance in relation to planning, embedding
risk management and enhancing management information.
4.8 The Department has strengthened the challenge provided by the programme
board by adding a new independent chair. For example, in March 2014 the programme
board recommended against an accelerated transfer of tax credit claimants. The level of
overall attendance has improved compared with 2012 but the former senior responsible
owner has been unable to attend any meetings. Our review of board papers suggested
that some board members have on occasion found discussion limited by meetings
being only 2 hours long, once a month.
4.9 The programme board has noted a need for papers it receives to have a sharper
focus on facts, as opposed to advocacy. This is despite the steps the Department
has taken in other areas to address criticism in 2013 of a ‘fortress mentality’ within the
programme. The board also had limited opportunity to influence the Department’s key
decisions in addressing the strategic risk in plans for the mass transfer of legacy benefit
claimants onto Universal Credit. After an initial discussion with the board on strategic
risks and issues in March, the Department updated the board on its progress at the end
of July, when the board asked for a detailed feasibility report on the mass transfer plans
for its September meeting. The board, which was given a further update at its August
meeting, approved the feasibility report at the end of September, by which time the
Department’s revised plans had already been submitted to HM Treasury for approval.
4.10    The Department has strengthened the independence of the programme assurance
function by moving the Programme Assurance Office out of the programme.22 The
Department has since reorganised this function and divided it between the finance and
business transformation groups. It has continued to use external consultants for expert
challenge on and assurance over digital development.
4.11 The Department has been working to clarify the respective responsibilities of its
Business Transformation Director General and other senior digital staff for the technical
architecture, the design and build of the new Universal Credit IT systems and their
strategic role in the Department’s wider technical target operating model. In March 2014,
the Chief Information Officer left the Department and was replaced by a deputy until
September, when a new Director General for Technology was appointed.
22 Universal Credit: early progress, paragraph 3.23.
Universal Credit: progress update  Part Four  47
More active supplier management and financial control
4.12 The Department has made changes to improve its financial management, launching
a new financial control framework in April 2014 (Figure 22 overleaf). This was in response
to various reports produced in 2012 and 2013 which identified problems in its management
of suppliers and poor financial control over the Universal Credit programme.23 The new
framework sets out the financial policies and guidance, roles and responsibilities, processes
and key controls, assurance activities and reporting.
4.13    The Department’s new financial control framework is still bedding-in, and the
Department is monitoring it regularly. The first 2 quarterly Universal Credit Financial
Assurance Reports, covering the 6 months ending June 2014, have found that the
programme complies with key financial controls and procedures, and that there are no
systemic failings: the new delegated financial authority policies and procedures are in
place and compliance is being monitored; budgetary control is effective; and financial
procedures are in place to enable appropriate accounting treatment and accurate
reporting of expenditure. The Department’s internal audit reported in November 2014
on the effectiveness of the programme’s financial management, and concluded that the
framework of governance, risk management and control was adequate and effective,
which equates to a ‘Substantial Assurance’ rating being appropriate at this time.24
4.14 The Department’s management of suppliers has been tested by the problems that
emerged following an IT update in April 2014 designed to enhance live service. A supplier
made significant changes in addition to the work that had been commissioned by the
Department. It did not fully inform the Department of this, therefore the update was not
adequately tested before it went live. The release caused an increase in payment errors
described in Part Three. The supplier agreed to rectify the coding at its own expense.
This delayed the next release by 2 weeks because of constraints on departmental and
supplier resources, and the need to implement further controls recommended in a
review commissioned by the Department after the April release. In November 2014, the
Department’s internal audit reported that the programme has built technical capability
to challenge, monitor and review supplier performance, including challenge of the
management information provided.
23 Universal Credit: early progress, paragraphs 3.25 to 3.26 and Figure 15.
24 ‘Substantial’ is the highest rating used by the Department’s internal audit.
48  Part Four  Universal Credit: progress update
Figure 22
Changes to the financial management and control framework
The Department changed its financial management controls following
earlier recommendations
Programme management and control
Financial Control Framework has been devised,
including new Finance Manual
Roles and responsibilities for Financial, Supplier and
Delivery Management have been clarified
Capacity and capability to review supplier work has
been increased
Financial management and control
Processes for checking invoices before payment have
been improved
Processes to ensure appropriate approval is obtained
before contracts are let have been improved
Clear guidance on the appropriate levels of Delegated
Financial Authority have been produced
Suppliers are required to provide greater levels of billing
information and evidence of progress
Forecasting and financial reporting
New financial reporting pack has been developed
Framework for the Quality Assurance of Financial Models
has been developed
Contract management
Measurable milestones are built into supplier contracts
Roles and responsibility around contract requirements,
milestones and monitoring have been clarified
Supplier performance is monitored through improved
management information
Source: National Audit Office analysis of Departmental documents
Universal Credit: progress update  Appendix One  49
Appendix One
Our audit approach
1 This report examined the Department for Work & Pensions’ (the Department) progress
in implementing Universal Credit. We reviewed how the Department: developed the
Universal Credit programme since the reset; made progress in implementing revised plans;
and managed the programme. Our audit approach is summarised in Figure 23 overleaf).
Our evidence base is described in Appendix Two.
50  Appendix One  Universal Credit: progress update
Figure 23
Our audit approach
The objective of
government
The primary aim of Universal Credit is to reduce welfare dependency by:
•
•
•
How this will
be achieved
Our study
Our evaluative
criteria
Our evidence
(see Appendix Two
for details)
Our conclusions
improving the incentives for work;
removing actual or perceived barriers to work; and
simplifying the benefits system by consolidating 6 existing benefits into a single and integrated, income-related,
working-age benefit administered by the Department.
The programme will be implemented by developing a secure system to calculate and make a single payment
consisting of a basic personal amount with additional amounts for disability, caring responsibilities, housing costs
and children. If successful, Universal Credit should make a net reduction in the amount that government pays out
in benefits together with reductions in fraud and error, reduced administration costs and a better-focused system
which targets benefit spending to those in greatest need.
The study describes the evolution of the Universal Credit programme since the reset. We review the Department’s
latest plans and compare these against progress and examine how effectively the programme is being managed.
Live Service is working well in
practice and has the capacity
and capability to accommodate
the planned expansion.
DWP has a clear target
operating model for its end state
service, and a well worked-out
delivery plan.
There is strong programme
management and a clear
understanding of risks.
We assessed the programme’s planning by:
•
•
•
reviewing departmental documents;
interviewing key staff at the Department and other stakeholders; and
reviewing the results of internal and external challenge.
The Department has reduced the delivery risks by extending roll-out and choosing a more expensive twin-track
approach to developing the service. It 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 benefits do not
mean that Universal Credit will be value for money regardless of how they are implemented and the cost of doing so.
In principle, the Department’s approach should allow it to learn from experience, improve the design and readiness
of services and reduce risks. However, in our view the programme is at too early a stage to determine if the
Department will achieve value for money. Given the gradual progress of live service roll-out to date and the early
stage of digital service development, the Department has not yet tested its new digital approach, or integrated this
with live service. We consider it important that the Department confirms its plans for delivering Universal Credit in
terms of cost, time and functionality, against which it can be held to account for the good use of public resources.
Universal Credit: progress update  Appendix Two  51
Appendix Two
Our evidence base
1 We completed our independent review of the Universal Credit programme after
analysing evidence that we collected between June and November 2014.
2 We used an evaluative framework to consider the implications for value for money
by comparing the Department’s progress against its plans, and reviewing what the
experience shows about programme management. Our audit approach is outlined
in Appendix One.
3
The Department’s planning and programme implementation:
•
We reviewed departmental documents and modelling to understand how the
business case for Universal Credit has been developed, and changed since
the reset.
•
We reviewed the Department’s documents to understand how its policy for
Universal Credit evolved, and how this impacted on implementing the programme.
•
We interviewed departmental officials to understand how the programme has
developed and the progress of both live service and digital service.
•
To understand live service operations, we observed claimant interviews within
jobcentres and interviewed jobcentre staff. We also listened to telephone calls from
claimants in service centres and interviewed staff involved in telephony, accounts
development, decision making and operational control.
•
We reviewed the results of internal and external reviews to establish whether the
Department acted on findings and recommendations regarding the programme’s
rationale and objectives.
52  Appendix Two  Universal Credit: progress update
4
The Department’s governance and programme management:
•
We reviewed key governance documents to assess clarity and coverage.
•
To assess understanding of risks we reviewed programme management
documents, including risk registers, expenditure and progress reports and
project management plans.
•
We interviewed senior department officials to understand changes in
governance and programme management.
•
We reviewed programme board minutes and assurance reports to examine
whether the Department was acting on recommendations regarding governance
and programme management.
5 Costs of implementation of Live Service and the work that has been
undertaken on the digital system:
•
We reviewed Departmental documents and modelling to assess the cost of work
so far and what this spending has produced.
•
We interviewed Department staff to understand its management and cost control.
•
We interviewed the Department’s main suppliers and reviewed their analysis to
understand their assessment of the value and progress of their work so far.
Universal Credit: progress update  Appendix Three  53
Appendix Three
Target operating model
1 The Department for Work & Pensions (the Department) has set out target
and interim operating models for Universal Credit, which it is continuing to develop.
Figure 24 sets out the Department’s current status in delivering the key elements
of the target through both its live and digital service, and areas where it needs to
develop the model.
Figure 24
Operating model gap analysis
The Department has work to do in all areas to deliver its target operating model
Key elements of the target
Current status
Customers: National roll-out
to all eligible customers
Various exclusions mean that not all claimants are eligible for Universal Credit in
live service areas
Digital service, which is open to all claimant types, is only available in a single
postcode area
Need to continue to build the evidence base for investing in the support offer
for in-work claimants
Need to secure funding to support the in-work labour market regime
Channels: Multi-channel approach which
uses digital to interact with claimants more
efficiently and effectively
Need better understanding of volumes that will be using each channel
Need to continue to ensure alignment with wider departmental channel strategy
Face-to-face contact is required with claimants to verify identity
Products and services: Products and
services are clearly defined and understood
Products and services needed to support delivery of Universal Credit for claimants
in live service and digital service areas have been developed
Need to confirm products and services required for other stakeholders, such as
employers and landlords
Delivery partners and stakeholders:
Integrated working with delivery partners
and stakeholders
Developing partnerships through roll-out in live service and digital service areas
Work needed to identify budgeting support providers and what the Department
must do to prepare them
Need to agree detailed scope of local authority roles
Need to understand future service offer regarding contracted employment
programmes including the work programme
Need to clarify nature of service the Department will provide to other departments
that will rely on Universal Credit for passporting benefits
54  Appendix Three  Universal Credit: progress update
Figure 24 continued
Operating model gap analysis
The Department has work to do in all areas to deliver its target operating model
Key elements of the target
Current status
Processes: Digital service delivers
transformed customer service by
automating back-end processes
As planned, many processes in live service and digital service areas currently remain
dependent on manual interventions
Organisation: Organisation to enable
end-to-end accountability for the
customer journey
Some reorganisation of the Department in live service and digital service areas
Need to establish correct balance between standardised processes and local flexibility
Need to determine the number of regional support centres needed, and their
staffing requirements
Need clearer understanding of what ‘regional accountability’ and ‘end-to-end’ means
Need to determine how many regions will be required nationally, and the number of
local offices in each
People: Staff delivering a ‘once and done’ service
Staff trained to deliver Universal Credit in live service and digital service areas
By January 2015, 2,300 jobcentre and service centre staff will have been trained,
out of the 38,000 required in the steady state
Technology: Development and ownership of
digital service technology that is more flexible
and cheaper to maintain
As planned, technology operating in both live service and digital service areas
currently requires manual intervention
Interfaces with legacy systems that have been created for live service will be reused
by digital service
Department is finalising which live service systems it will reuse
Some architecture, design and delivery decisions still to be made in accordance
with digital service’s agile approach
Information: Analysis of Management
Information enabling ongoing improvements
to service design
Current Management Information aimed at supporting test and learn
Security, counter fraud and error: Service is
supported and protected by a range of services
that provide security and counter fraud and error
Neither live service nor digital service currently have in place the automated security
measures required to support and protect the full range of services Universal Credit
is ultimately intended to provide
The Department is establishing what management information it needs to gather
to help it improve service design in the long term
Need contingency in case Transactional Risk Engine is not available when required
by the programme
Location: Local delivery outlets and service
centres on a regional basis
Live service and digital service using existing sites
Need to determine location ‘footprint’ in each region, including both service centres
and local offices
Need to examine opportunities for co-location
Source: National Audit Office analysis of Universal Credit target operating model and interim operating models
Universal Credit: progress update  Appendix Four  55
Appendix Four
Universal Credit IT assets
1 Before the reset, the Department for Work & Pensions (the Department) spent
£303 million with large IT suppliers to develop Universal Credit IT systems. Of this,
£165 million was used to construct IT systems and £31 million to buy software licences.
In November 2013, the Department carried out an impairment review and wrote off
£40 million of these IT systems (Figure 25 overleaf). The remaining systems, which cost
£125 million to develop, are being used in live service and will support the accelerated
national roll-out from February 2015. Following the impairment review, the Department
expected to reuse systems that cost £34 million in its planned digital service; this is
17% of IT assets created for £196 million.
2 The Department is re-examining which of the live service systems it can reuse to
meet the long-term needs of the programme (Figure 26 on page 57). The Department’s
reuse assessment will provide it with a better understanding of which parts of the
final Universal Credit technical architecture it will need to develop and which existing
systems it will need to incorporate in the digital service. It will be able to make any
changes to its amortisation policy and impairment decisions accordingly.
56  Appendix Four  Universal Credit: progress update
Figure 25
Department’s estimates of Universal Credit IT investment and assets
£ million
IT investment up to 31 March 2013
Further IT investment 1 April 2013 to 31 October 2014
303
41
Total cost of IT investment
344
Value of assets created
196
Of which:
•
IT systems
•
Software licences
165
31
Movement in value of assets up to 31 March 2013
(44)
Of which:
•
IT systems impaired
•
Software licences transferred within the Department
(40)
(4)
Value of Universal Credit assets used in live service on 31 March 2013
152
Of which:
•
IT systems used only in live service
91
•
IT systems expected to be reused in digital service
34
•
Software licences expected to be reused within the Department
27
Movement in value of assets between 1 April 2013 and 31 October 2014
(27)
Of which:
•
Additions
•
Amortisation
•
Other adjustments
19
(44)
(1)
Value of Universal Credit assets used in live service on 31 October 2014
125
Notes
1 The Department expects that live-service-only IT systems will be used up to December 2017 and will be fully
amortised by then. This means they are being amortised over 5 years at most, instead of the 15 years as
intended prior to the reset in early 2013.
2
Software licences are amortised over 5 years.
3
Software licences are for standard products which the Department expects to reuse, but not specifically
in digital service.
4
Asset values and accounting treatments have been audited up to 31 March 2014, when the value of Universal
Credit assets used in live service was £131 million.
5
Additions relate to work completed on service improvements, enhancements to allow claims to be received from
couples and families, and Work Services Platform infrastructure remediation. The audited value of additions up
to 31 March 2014 was £7 million.
6
Other adjustments include impairments, disposals and reclassifications, and revaluations.
7
Numbers do not sum due to rounding.
Source: National Audit Office analysis of Departmental financial data
Universal Credit: progress update  Appendix Four  57
Figure 26
Live service systems reuse decisions
Since August 2014, the Department has assessed live service systems against reuse criteria and has recommended
which will be reused by digital service
System
Capitalised cost
(£m)
Recommendation
Rationale
Earnings
6
Reused
Reuse is practical and consistent with the digital service
approach and development
Payments
7
Further analysis
Reuse could provide tactical short-term benefit
System may form part of the longer-term solution
Analysis needed to identify what enhancements would
be required
Evidence
33
Partially reused
Expect to reuse eligibility, entitlement and conditionality
rule set
Wider use of full component not recommended as integration
with digital service would involve significant complexity
Interview
Work services
Business process manager
Workgroup and payment
57
Not reused
No credible way to integrate it with digital service
4
Not reused
Change of scope between digital service and live service
Not capitalised
Not reused
Process flows are specific to live service
Partially reused
Reuse of payments rules set
1
Wholesale reuse would require significant change to
integrate it to support real-time payments calculations
Source: National Audit Office analysis of Department’s documents
58  Appendix Five  Universal Credit: progress update
Appendix Five
Customer segmentation
1 Under Universal Credit, claimants will fall into 1 of 6 groups depending on
their characteristics and earnings (Figure 27). The Department for Work & Pensions
(the Department) intends to provide support for, and require commitments from,
claimants that are appropriate to their circumstances. The Department expects
the largest proportion to be claimants who are in work, who will constitute over
half of all claimants.
Figure 27
Customer segmentation
The majority of Universal Credit claimants will be in work
Claimants
(million)
Customer segments
Contact
Face-to-face
Frequency
In work – earning
Above conditionality threshold
Individual or household earnings over the level
at which conditionality applies
4.0
No
Low
Below conditionality threshold
In work but could earn more, or not working
but has a partner with low earnings
1.0
To be
decided
Low to
Medium
Intensive work-search
No income, or with very low income from
other sources
1.8
Yes
High
Work preparation
Expected to start preparing for the future,
eg carer for child aged 3–4
0.6
Yes
Medium
Work focused interviews
Expected to work in the future,
eg carer of child aged 1–2
0.5
Yes
Low
No work related requirements
Not expected to work at present,
eg due to health or carer of child aged under 1
1.7
No
Low
Out of work groups
Notes
1 Total number of claimants here is 9.6 million. This is higher than the number of Universal Credit cases shown in Figure 4 which counts couple claimants and
family units as a single case.
2
The customer segments shown are those envisaged by the Department when Universal Credit is fully rolled out, rather than the segments currently adopted.
Source: National Audit Office analysis of departmental documents
Universal Credit: progress update  Appendix Six  59
Appendix Six
The Universal Credit business case
Figure 28
The analysis of the Universal Credit business case
Twelve years 2010-11 to 2022-23
(£ billion)
Business case
Autumn
2011
Summer
2012
Winter
2012
Winter
2013
Autumn
2014
Investment Cost
(2.2)
(2.1)
(2.4)
(1.9)
(1.7)
Administration savings/(cost)
3.0
3.7
1.8
(1.0)
(0.3)
Government DEL (costs)/savings
0.8
1.6
(0.6)
(2.9)
(2.0)
(35.8)
(29.4)
(16.6)
(11.8)
2.6
15.5
14.2
15.0
14.0
0.6
5.8
12.4
5.8
4.7
(19.7)
(9.4)
10.8
8.0
7.3
16.9
30.9
18.6
20.7
14.5
2.4
6.8
6.1
2.9
2.3
Cash impact on individuals
22.0
16.7
3.1
(0.9)
(1.4)
Total savings (cost) to wider society
41.3
54.4
27.8
22.8
15.5
Net saving
22.4
46.6
38.0
27.8
20.9
Net present value
16.2
33.7
27.0
19.5
14.5
Increase in benefits spending
Reduced overpayments
Gain to government from increased employment
Government AME (costs)/savings
Distributional benefits (non-cash)
Wider gains from increased employment
Notes
1 This analysis compares the Universal Credit business case figures over the same 12-year period from 2010-11 to 2022-23. This differs from the
Department’s business cases shown in Figure 6, for Winter 2013 and Autumn 2014, which cover the 10.25 years from quarter 4 2013-14 to 2023-24.
As such the Department’s business case follows HM Treasury Green Book guidance by excluding sunk costs from past periods because they are
not relevant to investment decisions. Our analysis includes sunk costs to show the movement in costs and benefits between the business cases.
2
In Autumn 2014, the government AME figure of £2.6bn is the sum of increases in benefit spending and reduced overpayments. This is because the
Department did not fully revise the Autumn 2014 AME figures to reflect changes since the Winter 2013 business case.
3
Distributional benefits are explained by the Department as follows: “a) Universal Credit will increase payments to people on lower incomes; and
b) people on lower incomes value a given change in income more than those on higher incomes, which makes society better off.”
4
Departmental Expenditure Limits (DEL): firm multi-year plans are set in spending reviews. Departments may not exceed the limits that they
have been set. All spending should be assumed to be in DEL unless HM Treasury has stated otherwise.
5
Annually Managed Expenditure (AME): spending that is demand-led, volatile as to amount and so large as to be unable to be absorbed within
normal DEL controls.
Source: National Audit Office analysis of Universal Credit business cases of Autumn 2011, Summer 2012, Winter 2012, Winter 2013 and Autumn 2014
60  Glossary  Universal Credit: progress update
Glossary
Department-wide
systems
Existing systems used by the Department which the digital service will need
to work in conjunction with when it becomes operational.
Digital service
Enhanced online service, being developed in-house, intended to deliver the full
scope of Universal Credit and make provision for all claimant types.
Interim operating model
Single high-level view of the business change planned for each stage of the
programme as it builds towards the Universal Credit target operating model.
Jobcentres
Local sites that provide face-to-face services to claimants and manage local
delivery partnerships.
Legacy benefits
6 existing working-age benefits that Universal Credit will replace.
Live service
Further roll-out of limited service, used in 10 pathfinder sites, across North West
England between June and December 2014, and nationwide between
February 2015 and March 2016.
Existing systems have been enhanced during 2014 to enable claims from some
couples and families in North West England and pathfinder sites.
Live service systems
IT systems developed by suppliers prior to the reset.
Pathfinder
Limited service, launched at 10 job centres between April 2013 and April 2014.
Uses IT systems developed before the 2013 reset.
Restricted to claims from some single jobseekers.
Reset
12-week exercise after Universal Credit was paused in February 2013 which
developed a ‘blueprint’ for the programme, launched pathfinder in April 2013,
and sought to address serious problems that the Major Projects Authority had
identified with the programme.
Service centre
Regional centres, used for: handling enquiries; support services for claimants’
accounts; telephone assistance for claimants; and specialist functions, such as
considering appeals.
Target operating model
Single high-level view of how the Department will be configured to deliver Universal
Credit in its steady state, and how the Department needs to change to do so.
Test and learn
Approach that uses learning from the roll-out of live service, and from a range
of pilots testing specific aspects of policy, to drive continuous improvement in the
design and development of Universal Credit.
Universal Credit: progress update  Glossary  61
Transition and migration
Managed 2-stage process for bringing digital service into national operation, involving:
• Transition. All new claimants, or existing claimants whose circumstances change,
are enrolled on Universal Credit rather than legacy benefits (national roll-out
planned from May 2016 to December 2017).
• Migration. Current claimants of legacy benefits are moved in to Universal Credit
(planned from January 2018 to December 2019).
Twin-track approach
Department’s plan to operate live service while it develops digital service,
called ‘test and learn’.
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