Treasury resistance to Iain Duncan Smith's plans to introduce Universal Credit contributed to early problems with the flagship welfare reform programme that were not fully resolved until late 2015, according to a report published today by the Institute for Government.
The report, written by senior fellow Nicholas Timmins, examines the history of Universal Credit – which seeks to roll six benefits into one single payment to try to incentivise people to move into work – and suggests the project is now on track to succeed after it was reset in late 2013.
Timmins identifies several key problems in the early stages of Universal Credit, including ambitious timelines and optimism bias among officials. It was also hampered by a requirement – coming from the Cabinet Office – to make the system "digital by default" and use agile delivery methods, of which the work and pensions department had no experience or expertise.
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The report, based on interviews with politicians, special advisers, suppliers and officials reveals that Ian Duncan Smith banned his officials from interacting with Treasury civil servants in the run up to the 2010 spending review, as he battled to secure approval for his plans.
Support from Danny Alexander, then the chief secretary to the Treasury, and Nick Clegg, deputy prime minister, helped to secure approval for Universal Credit. In 2013, Alexander again intervened to support Universal Credit, authorising extra funding for the project when both the Treasury and Cabinet Office were delaying approvals.
Treasury resistance meant the DWP's white paper on Universal Credit was "greener than it should have been", Timmins says.
"This was largely at the insistence of a still deeply sceptical Treasury, which resisted the greater detail that would have nailed down aspects of the policy ahead of legislation," he writes.
As a result, it took two-and-a-half years to get all the relevant legislation through parliament, and in the early stages suppliers began to develop IT without a clear idea of what was needed to implement the policy.
"We were embarking on delivery before we could really write the plan, and that was the root of much trouble" – senior DWP figure
The department was also under intense pressure to start delivery, thanks to overly-ambitious timelines and the enforced use of agile project management which emphasises starting delivery alongside developing policy.
One senior departmental figure told Timmins: "We were embarking on delivery before we could really write the plan, and that was the root of much trouble."
Treasury resistance to the project was not fully resolved until November 2015 when, for the first time, it was in the Treasury’s financial interest to roll out Universal Credit quickly.
Until that point, the Treasury had been saving money as a result of delays, since households that would be entitled to more benefits under the new system had not yet migrated to Universal Credit.
However, from November 2015 the Treasury had a "direct and very financial interest in the programme being rolled out successfully" Timmins notes, because Osborne had retained cuts to Universal Credit even as he was forced to abandon £4bn cuts to existing tax credits after opposition from the House of Lords.
The report notes: "For many interviewees, this was one of the absolutely critical moments in Universal Credit’s history, along with the adoption of the twin-track approach, which, some way down the road, finally saw agreement about how the ‘digital’ version of Universal Credit was to be built.”
"Strengthened scrutiny"
The twin-track approach was introduced in 2013 after damning reviews from the Major Projects Authority, Government Digital Service and a supplier-led review commissioned by Duncan Smith.
Timmins writes: "In effect, Universal Credit was started again using a genuinely agile approach to its build, while continuing to use, with some enhancements, the original build – the ‘live service' – which allowed a lot of learning about how claimants and staff would react to key elements of the behaviour change and business change that is at the heart of Universal Credit."
According to the report, this meant that "essentially for the first time, that the staff who operate Universal Credit and the claimants on the receiving end, became part of the design and build process".
Another important factor in turning the project around was to strengthen the programme board, Timmins argues, with the team now larger and chaired by an independent adviser instead of its senior responsibile owner (SRO).
Current SRO Neil Couling told Timmins: “That has really strengthened the scrutiny of what’s going on, so now I take my plans to them and they give them a good going over, and there’s really good challenge in the system now."
The report also sheds light on briefings against DWP perm sec Robert Devereux (pictured) at the height of public criticism of Universal Credit.
In November 2013 the cabinet secretary Jeremy Heywood had to ask the prime minister to intervene in what he called a "concerted political briefing campaign" against Devereux.
One minister told Timmins that Francis Maude – then minister for the Cabinet Office – was the main leader of this campaign, saying: "Francis was at the height of his attacks on the competence of the civil service at this stage, and he wanted a scalp, and he wanted a big scalp."
The report notes that when the DWP launched Universal Credit, it was running 11 other major projects, implementing £12bn of benefit cuts and reducing its operating budget by a quarter.
In this context, capacity of senior leadership was inadequate, the report says, highlighting the decision to make Terry Moran both SRO for Universal Credit and Chief Operating Officer for the DWP.
“There remains a view among some former and current DWP civil servants that had that not happened, the programme would not have hit the trouble it did,” says Timmins.
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