The Government must use the “hard lessons” it learnt from welfare reforms which caused “significant financial and human costs”, says the National Audit Office (NAO).
In a new report published today, the NAO criticised the Department for Work and Pensions (DWP) “important and high profile failings” in implementing an unprecedented number of welfare reforms and employment programmes.
The report says the Government “relied too heavily on uncertain and insufficiently challenged operating assumptions, and did not have a sufficient understanding of its portfolio of programmes or overall capacity.”
It adds that the DWP has a “high-level vision but needs to think more strategically when considering how reforms will work in practice.”
“The Department has thought too late about the management information and the leading indicators it needs to understand progress and performance”, says the NAO. “This meant the Department took several weeks to identify backlogs in Personal Independence Payment claims.”
Auditors credited the Government for responding well “to uncertainty”, but added that it “should be able to set out plans with specific timetables, costs and impacts and reflect where flexibility is needed.”
“They should also have clear processes for revising plans against changing circumstances or expectations”, says the NAO.
The NAO criticised the DWP’s initial handling of the Universal Credit. The NAO says the department “held too rigidly to fixed deadlines and now has adopted a more flexible approach. It will need to reconcile this approach with the requirement to monitor progress against milestones.”
In implementing a significant welfare reform programme, the DWP “relied too heavily on reacting to problems and has not been able to anticipate possible failings or establish the principal ways in which performance and progress can be measured”.
The NAO called on the Government to “plan more openly for the possibility of failure, and build an integrated view of portfolio risks and capacity”.
Amyas Morse, head of the National Audit Office, said:
“Any large portfolio of reforms will run into problems. The Department has shown a resolute approach to dealing with them. However, we think it has relied too much on dealing with difficulties as they emerge rather than anticipating what might go wrong.
“As a result it has had to learn some hard lessons with significant financial and human costs. It is important that the Department use these hard lessons to improve how it manages change and anticipates risk.”
Gillian Guy, Chief Executive of Citizens Advice, said the Government must learn from the mistakes of previous changes to welfare.
Citizens Advice has found that delays and problems with the delivery of reforms such as Employment and Support Allowance increased hardship and anxiety for many people. Last year we helped people with almost two million benefit issues, more than any other type of problem.
“As Ministers look to make further savings from the welfare budget it is important they fully understand the impact proposed reforms have on people’s lives.
The Government must be certain that further cuts won’t just shift costs away from the welfare budget and into other areas such as health and social care.
Changes to benefits can have a far-ranging impact on people’s lives, so any reforms need to delivered at a safe and steady pace.”
Source – Welfare Weekly, 29 May 2015
Iain Duncan Smith’s flagship Universal Credit programme may not deliver ‘value for money’, the Government spending watchdog has warned today (26 November).
The net value of Universal Credit is now estimated to be £14.5 billion – £1.7 billion lower than three years ago. The figure supposedly accounts for reduced welfare spending and other ‘societal benefits’.
However, the National Audit Office (NAO) said it’s too early to determine whether Universal Credit will deliver ‘value for money’ for taxpayers, “regardless of how it is implemented and the cost of doing so”.
Delays in the implementation of Universal Credit, changes to its delivery service and problems with IT mean additional costs for taxpayers, including £2.8 billion more in staffing costs (NAO estimate) and £130 million wasted on failed IT software.
The DWP is planning to start rolling out new IT software for Universal Credit in just 18 months. However, the NAO said the DWP “does not yet have a contingency plan” if the IT software (delivery service) experiences “delays or fails”. This in turn could result in yet more losses.
According to the NAO, if the new delivery service is delayed by just 6 months the value of Universal Credit “reduces by £2.3 billion due to lost societal benefits”.
Their report also criticised the government for failing to “stabilize senior leadership roles and responsibilities”. Universal Credit has seen seven chiefs in only two years, with the former DWP Work Service Director Neil Couling replacing Howard Shiplee less than two months ago.
Chair of the Public Accounts Committee Margaret Hodge MP (Labour) accused the DWP of “throwing good money after bad”, in botched attempts to fix Universal Credit.
Margaret Hodge said:
“The Department is throwing good money after bad by introducing a short-term fix with no adequate plan for delivery, insufficient skills and unclear milestones to measure progress against.”
Shadow Work and Pensions Secretary Rachel Reeves added:
“The National Audit Office has cast grave doubts over the future of Universal Credit. This shocking report says the benefits of Universal Credit have fallen by £1.7 billion and that value for money, ‘can’t be determined’. It also confirms the roll-out of the new benefit won’t be complete even by 2019 as Iain Duncan Smith has repeatedly promised.
“The National Audit Office report is further evidence that the government’s handling of Universal Credit has been disastrous. It’s neither on time or on budget as the government promised. It’s yet another example of Tory Welfare Waste. Ministers must urgently get a grip of the huge waste and delays to this failing programme.”
Amyas Morse, head of the National Audit Office, said:
“The Department for Work & Pensions has reset Universal Credit on a sounder basis but at significant cost, by extending the time for implementation and choosing a more expensive approach.
“It is now vital that the Department quickly establish clear goals for delivering the programme, in terms of cost, time and functionality, against which it can be held to account.”
Work and Pensions Secretary Iain Duncan Smith defended the botched roll-out, arguing it was “best” to properly test Universal Credit before expanding the programme to more jobcentres.
He added that poor families on Universal Credit would “get more money”. They “go into work quicker, they stay in work long and families will benefit enormously”.
Source – Welfare Weekly, 26 Nov 2014
Speaking in the House of Lords, Welfare Reform Minister Lord Freud described the write-off of a failed £40 million IT system as “deeply regrettable”.
He also insisted that the decision to “reorganise” Universal Credit, which led to the government’s flagship welfare reform being ‘reset’, was taken by the Secretary of State for Work and Pensions, Iain Duncan Smith MP.
“We all know that, when you have a £2.5 billion programme with a high IT content, there are elements that you write that you do not need.
“In the private sector that can be a third of a programme. Clearly, any write-off is always deeply regrettable, but one has to put those things into a context.
“We remain within our budget of £2.5 billion — not £12 billion — and we are looking at an overall net benefit of £35 billion from this programme. The NAO (National Audit Office) has said that it is taking a regular interest in the programme; we will continue and will see more reports on it from the NAO.
“However, as regards the way in which we are doing it, it is somewhat misleading to think of this as a twin-track system, because we have a single plan for universal credit.
“We are finding what works through the rollout we have; it may be small, but you do not need huge numbers to find out what works. It is important that we do this testing.
“At the heart of the programme is what we call the “test and learn” process, in which we take what is happening and assess and measure it against other things, aiming to find out how it works. That informs what we call the end-state build, which is thoroughly under way and is in agile.
“The first Warrington programme was trying to be agile, which I think is the best way; this end-state solution — the fully digital one, the interactive digital one — is being done on an agile basis.
Lord Freud also commented on Universal Credit being classed as ‘reset’ by the Major Projects Authority:
“What does reset mean? What happened, as noble Lords will remember, is that Ministers, the Secretary of State in particular, took a decision that the programme was not going properly and took a view to stop it and reorganise it — reset it.
“It is not a new category; it is a description of a process. If one is in charge of a programme, rather than blundering on with it regardless, I would hope noble Lords would agree that it is the job of the Ministers in charge to take that kind of decision, work out how to rebase it — reset it — and make sure it is done safely and securely, which is what we are aiming to do. That is everything that we are doing.”
> Yeah, all deeply regretable… but hey, its only public money, and you’ve got to spend big in order to be able to cut benefits, which we cant afford.
What’s that ? Stop wasting money on mad unworkable schemes and we wouldn’t need to cut benefits ?
Ho ho ho, you obviously just don’t understand how politics works… next you’ll be suggesting that IDS and myself should take personal responsibility for failures.
Source – Welfare News Service, 25 June 2014
The Work and Pensions Select Committee has accused the coalition government of over-emphasising benefit fraud in a report on fraud and error in the benefits system.
According to official statistics included in the report, of the total £5.1 billion of ‘incorrectly’ paid benefits, £1.6 billion was underpaid and £3.5 billion overpaid.
The amount lost to claimant fraud represents just 0.7% of the entire 2012/13 benefits expenditure and the figure has remained relatively constant for several years.
The report says that “there is a large disparity between the official estimate of benefit fraud and the public perception”.
> Something that neither the DWP or the media has gone out of its way to emphasis. Quite the opposite, in fact…
A survey by Ipsos Mori in 2013 found that the general public believed that 24% of all benefits were claimed fraudulently, 34 times greater than the official 0.7% estimate.
The Work and Pensions Select Committee, which consists of MPs from all the main political parties, say that the government’s approach to tackling fraud and error in the benefits system “appeared to place emphasis on addressing fraud”.
Minister for Welfare Reform, Lord Freud and David Gauke MP, Exchequer Secretary to the Treasury, “appeared to place emphasis on addressing fraud” in a strategy document announced in 2010. They highlighted the government’s intention to:
- Employ private sector firms on a payment by results basis, where appropriate, to ensure the full adoption of cutting-edge private sector fraud prevention techniques;
- Redirect resource to the front line to prevent fraud and error from entering the system in the first place, through enhanced checks and tougher sanctions for those even attempting to defraud;
- Ensure that anti-fraud activity is protected from cuts, including through the recruitment of over 200 new anti-fraud officers to sanction a further 10,000 fraudsters every year;
- Remove the current silo-based approach to tackling fraud, by creating new integrated cross-departmental data-matching and fraud investigation services (see Single Fraud Investigation Service, chapter 4);
- Introduce a system for rewarding members of the public who provide information that results in significant recovery of public funds;
- Respond to the growing threat of organised fraud through a new Identity Fraud Unit and far tougher sanctions for those involved;
- Introduce a new mobile regional fraud taskforce to investigate each and every claim in high fraud areas, to increase the certainty of detection;
- Address the weakness of the current penalty regime by abolishing cautions as a penalty for fraud, increasing asset seizures, and introducing far tougher one-strike and two-strike penalties, and a new three-strike rule;
- Clean up nearly 2 million claims to remove error; and
- Increase the frontline support provided by “Big Society partners” to help educate and support customers to get it right first time.
The Work and Pensions Select Committee say that of these measures, “seven focus solely on benefit fraud, one is aimed at fraud and error generally, and only two appear to be specifically designed to combat error”.
> That’s because their starting point is believing that anyone claiming benefit must be doing something illeagal. I mean, its what those poor people do, isn’t it ?
Benefit fraud and error is extremely complex with many different causes and ‘risk factors’. Analysis by the National Audit Office (NAO) shows that the incorrect reporting of income accounts for 47% of all benefit overpayments.
Claims made by a single person when they are living with a partner accounts for 13% of all overpayments, whilst claims made by people living ‘abroad or untraceable’ represent 11% of benefit overpayments.
The incorrect disclosure of savings accounts for 8% of all benefit overpayments, according to official statistics.
The report says that the over-reliance on claimants to report changes in their circumstances to different parts of the DWP, HMRC, local authorities and other official bodies, means that they “aren’t always aware who needs to be told what information, and when”.
Criticising the government’s over-emphasis on benefit fraud, the Work and Pensions Select Committee recommended that:
“Whilst we understand that making a distinction between claimant error and fraud is not always straightforward, we believe that DWP could be clearer about the official estimated level of benefit fraud.
> They certainly could be clearer – but that wouldn’t suit the Government’s agenda.
“We therefore recommend that DWP publish, on separate days, discrete statistical summaries of its estimated rates of a) fraud and b) official and claimant error in the benefits system, alongside its more detailed report, to reduce the risk of confusion or conflation of these statistics in media reporting and public perceptions about benefit fraud, and to emphasise the importance of actions to reduce error as well as fraud.”
Source – Welfare News Service, 19 June 2014
It remains uncertain how DWP will manage the housing costs element of Universal Credit without increased risks of fraud and error, warns a Work and Pensions Committee report.
The Government has stated that an IT system (the Integrated Risk and Intelligence Service (IRIS)) will allow it to cross-check data and provide similar safeguards against fraudulent claims under Universal Credit as are currently operated by local authorities within the Housing Benefit system.
Commenting on the report, the Chair of the Work and Pensions Committee, Dame Anne Begg MP, said:
“Through the use of RTI—real-time information on PAYE earnings—Universal Credit has the potential over the longer term to substantially reduce fraud and error in the benefits system. However, this could be seriously undermined because of the uncertainty about how DWP will administer the housing element of Universal Credit without increased risks of fraud and error.
Under the current housing benefit system, local authorities can cross-check claims across a range of data relating to other council services. Unless DWP is able to cross-check Universal Credit claims in a similar way it may be less effective in tackling fraud and error.
It is vital that a fully developed and tested IT system, which allows DWP to cross-check data, is in place before Universal Credit is implemented on a national scale. Worryingly, it appears that there is no automated system in use in the Pathfinders and is not clear when or how a system will be available.”
> It appears that UC has been developed on the basis of “we dont know how to do something, but we hope we might stumble across a solution before the system is due to go nationwide.”
The official estimated benefit fraud rate is 0.7% of total benefits expenditure. The general public’s misperception is that it is some 34 times higher. To reduce the risk of confusion or conflation in media reporting, DWP should publish statistics relating to the estimated level of benefit fraud on a separate day from those related to error in the benefits system.
> Trouble is, neither the DWP or elements of the media have any interest in presenting the true picture. They want to encourage the skivers image.
Dame Anne Begg MP said:
“Statistics relating to benefit fraud are often conflated in media reporting with those relating to error; and people’s perceptions of the level of benefit fraud are completely out of kilter with the official estimate. This is not helped by the Government publishing all of the statistics simultaneously. Whilst we understand that the boundary between claimant error and fraud is not always clear, we believe that publishing separate summaries of estimated fraud and error rates would be helpful.”
On progress towards fraud and error reduction targets
Fraud and error rates have plateaued from 2005/06 to 2012/13, despite an “uncompromising” and “zero tolerance” approach announced by the coalition Government. DWP will only meet the target set in 2010, to reduce the estimated overpayment rate to no more than 1.7% by April 2015, if it employs innovative approaches which are aligned with the known risk factors associated with each benefit.
Dame Anne Begg MP said:
“Despite DWP devoting considerable effort and resources to fraud and error reduction, rates have hardly changed since 2005/06 and estimated overpayments remain at around 2% of total benefit expenditure. If the ambitious target is to be met, innovative approaches are needed, not more of the same.”
On innovative ways of tackling fraud and error
DWP and HMRC should explore, with the Payments Council and the banking sector, the feasibility of establishing a system which flags up potentially incorrect benefits and Tax Credits payments, using data held by payments systems operators and banks on the types of payments due to enter individual bank accounts.
In the longer term biometric identity systems could have an important role to play in identity verification processes across government. The Cabinet Office is working on a government-wide system; the Government should evaluate the benefits of biometric identity verification in the social security system and more widely across public services.
Dame Anne Begg MP said:
“DWP should adopt a secure and consistent approach to public and private sector data-sharing. This should include exploring the feasibility of a system that uses data held by banks and payment system operators to identify potentially incorrect benefit payments.
The Government should also carefully consider innovative identity verification technology, such as the voice-recognition system now used in Australian public services.”
On the implementation of the Single Fraud Investigation Service (SFIS)
The Committee recommends that SFIS, a DWP-run service which will investigate all social security benefit fraud across DWP, HMRC and local authorities, be implemented, as far as is practicable, in line with the roll out of Universal Credit. The Government’s current timetable for SFIS implementation would see responsibility for Housing Benefit fraud investigations transfer from local authorities to DWP before the Department plans to take responsibility for housing costs support under Universal Credit across the country.
Dame Anne Begg MP said:
“SFIS is, in principle, a good idea but it makes no sense to rush its implementation, ahead of the roll out of Universal Credit. As far as possible SFIS and Universal Credit implementation should be aligned, otherwise there could be increased risks of fraud in relation to housing costs support. The Government also needs to pause to allow negotiations with local government and the relevant trade unions about the transfer of staff into DWP.”
Source – Welfare News Service, 15 May 2014