The head of delivery for the Department for Work and Pensions' (DWP) flagship welfare reform project, Universal Credit, has said that the department didn't adopt open source and web-based technologies at the beginning of the project because "such things weren't available" two and a half years ago.
Howard Shiplee told the Work and Pensions Committee this week that the department is now using open source technologies in its enhanced version of Universal Credit, which was initially developed by the Government Digital Service (GDS) and will be rolled out nationally by 2017 for most claimants.
The existing system being used in pathfinder pilots and developed by the likes of IBM, HP and Accenture will be largely be replaced by the digital version.
"The current system for Universal Credit is a conventional system being developed on a waterfall approach. When you look at digital [the enhanced system], it's very different - it relies not on large amounts of tin, black boxes, but uses open source and mechanisms on the web to store and access data," Shiplee told MPs.
When asked why he didn't adopt this approach two and a half years ago at the start of the project, Shiplee said: "Technology is moving very rapidly, such things weren't available as they are today."
Universal Credit aims to merge benefits such as jobseeker's allowance, income support, housing benefit, child tax credit and working credit. The IT system supporting it will require real-time data on the earnings of every adult, from a new Pay as You Earn (PAYE) system being developed by HM Revenue & Customs (HMRC).
DWP plans to spend £2.4 billion to implement Universal Credit up to April 2023 and has spent £425 million up to April 2013. Most spending so far (£303 million) has been on contracts for designing and developing IT systems. However, to date there have been a number of suspected problems with delivery.
Writing down IT assets over five years
Work and pensions secretary of state Iain Duncan Smith told the committee that he is in control of the project and that there is "no debacle". However, he admitted that the department has had to write off, or 'impair', £40.1 million worth of IT assets to date - nearly a fifth more than the £34 million figure revealed to the National Audit Office earlier this year.
Moreover, this figure could increase: "If anything goes wrong going forward, that [figure] might be different," said Duncan Smith.
Mike Driver, finance director general at DWP, said that Universal Credit consists of £152 million worth of intangible assets, with £34 million of this to be used as software code in the final digital version.
Driver said that the remaining IT assets will now be written off over a five-year period, as opposed to the 15-year period that the department had originally planned. He said that the 15-year period "was too long" and he was talking to the National Audit Office (NAO) about how DWP could apply accounting practices going forward.
Taxpayer, not the IT supplier, carries the risk
When Shiplee was asked by MPs why penalty clauses had not been included in the contracts, to impose fines on the suppliers if they failed to deliver on targets, he said: "You would find it very hard to find vendors in the market place to do this work at full risk. So the department took up the risk."
The DWP also took most of the blame for write-offs and writing down of assets, Shiplee said. The code that had been produced was of good quality, he said, but it didn't reflect the needs of the project anymore because the specifications had changed so much.
"This software isn't something that gets done on the back of a cigarette packet, it's very complicated," said Shiplee.
However, DWP is now looking at how the suppliers can take some of the risk.
"There's no perfect contract - but we are doing some early work, while we agree what we want the suppliers to do, on getting a fixed price or target cost arrangement, which will put a reasonable amount of risk on the suppliers," said Shiplee.
He said that this will be happening early in the New Year.
Universal Credit is not digital by default
Shiplee also told the committee that although the digital by default "mantra" was adopted as an approach at the beginning of the Universal Credit project, this "went away a long time ago".
He believes it would be "inappropriate" to use this approach and that it would "take some time to get totally online".
"There's nothing wrong with having an aspiration, but perhaps it was an aspiration too far at the time," he said.
According to Duncan Smith and Shiplee, a totally online and digital approach failed because of the security implications. They told the committee that Universal Credit needed to replicate practices in the banking industry, where when details needed to be verified, people have to go and present themselves in a branch.
However, MPs were told that the second generation Universal Credit system was being built for smartphones, as the pathfinder revealed that this is how people were mostly interacting with the service.
DWP is also planning, it was revealed, to move couples onto Universal Credit in the New Year, with children and families joining the new system in the autumn. At present Universal Credit can only handle the simplest of claims from single applicants.
MPs cited that the Office of Budget Responsibility had initially expected 4.5 million people to be on Universal Credit by March 2015, but this has now been down-graded to 400,000. Duncan Smith explained that the figures have changed to ensure the system doesn't buckle under pressure.
"The earlier plan was we were loading large numbers much earlier on and then the system didn't cope.
"Following the rest of the project, we wanted to do it in a different way, which is where we have the system set up, then bring on the larger numbers towards the later stages because you understand how the system will work under that stress," he said.
"Go slow, test the system, then do the volume."
MPs on the committee told the DWP representatives that they had been made aware of conflicts occurring between the department and the Cabinet Office, after the Government Digital Service (which falls under the Cabinet Office's responsibility) had been brought in to put Universal Credit back on track.
But Shiplee said: "I can't comment on tittle tattle, one has disagreements and one has to get on with things.
"I'm talking to the Cabinet Office about helping us to move things forward."
Shiplee was then asked how sure he was that Universal Credit could be delivered at the scale required for a national rollout, on a scale of one to 10.
"I've never been keen on one to 10s, but I believe Universal Credit can be delivered as it has been delivered. I have no doubt in my mind. It has to be," he said.