Doom or Dust: Universal Credit Choices

Universal Credit IT is getting nowhere, expensively.  At least that seems in line with the opinions of the Parliamentary Work and Pensions Committee.

“Despite the millions being spent on the end-state IT solution it is still not clear when the system will be ready or even how it will work. It is still not ready for testing on the first 100 claimants, and we have no indication of when it will be possible to test it on a bigger and more representative group of claimants.”

It it 3 years since Quarkside prophesised doom.  It hasn’t quite reached that point, but how close to doom is it?  The Committee Chair said:

“The money wasted on Universal Credit so far – £40 million on IT software that now has no use and £90 million on software with a useful life of only 5 years – is a matter of deep regret.”

Perhaps the Grim Reaper should dust his (or her) spectacles and deal a death blow before the tax payers’ regrets increase.

IDS gets IDs; but has he lost the plot?

Computer Weekly has a searching blog about the state of the Universal Credit Programme.  The risk is that too many people are concentrating on the technology, such as the recent announcement of the suppliers selected for the ID Assurance programme.

What few people have talked about, are the horrors expected when UC goes operational.  The reduction in benefits is going to cause distress in many households that are already at breaking point. The Local CIO Council discussed this last week and here are some of the issues raised – none of which have Technology solutions:

• Thousands of properties are “underoccupied”, benefits will be reduced, families will have to downsize.
• Digital By Design is inappropriate for many people that are socially and digitally excluded. They will need costly, face to face, mediated access.
• Some large councils are expecting to lose £100m.
• More homelessness is expected by Councils and the Voluntary Sector.
• Domestic violence and suicides are expected to increase.
• Schools will see more hungry children.
• Child abuse is expected to rise – remember that every child taken into care will cost a local authority £250,000.
• Some currently exempt people will have to start paying council tax, which are often small amounts that are too costly to collect
• Releasing Section 106 obligations will compound homelessness problems.
• B&B costs and will increase, as will relocation into different boroughs

As one respected member said “IDS has lost his sense of reality”.  He may get his IDs, but at what cost to Councils and their poorer citizens?

Central must go Local

“With pressure to reduce spending, it is more important than ever that central government engages effectively with local government to draw on its expertise and capability in designing and delivering good quality, efficient public services.”

 The Great E-mancipator led me to this quote from a National Audit Office report “Central government’s communication and engagement with local government“.

They were not pulling punches when they wrote, ” insufficient engagement with fire and rescue authorities was one factor that led to a major project to replace control rooms being cancelled in 2010. The project did not have the support of the majority of the end-users essential to its success, which wasted a minimum of £469 million“.

DCLG are doing more now, but are other big central government departments actively improving communications and engagement?  What is the risk of similar wastage on Universal Credit, Individual Voter Registration and all things connected to e-Identities?  They should check their risk registers this week – and make sure they have enough LA engagement.

 

 

Cabinet Office eID follows Quarkside?

At the end of May, the Cabinet Office reported that Identity Assurance goes to Washington.  They seem to have taken heed of January’s Quarkside support of the OIX standard for eIDs.  This is the Open Identity Trust Framework (OITF) Model that does not require a central hub.  Perhaps the headline claim is a little strong, since there is no evidence that anybody there has read the blog!  Nevertheless, given that a central eID scheme has been ruled out by Government policy, it is a small step in the right direction.  Although a central scheme would be the most efficient to operate and implement, federation of eIDs is technically feasible.

Now for the next set of issues:

• Can the Government use a current implementation of OIX that prevents identity fraud, such as duplicate identities or impersonation?
• Will private sector identity providers, such as Google, provide eIDs at a price that makes commercial sense to themselves or citizens?
• Will the scheme be ready in time for Universal Credit with sufficient trust in electronic credentials?

With a risk manager’s hat on the answers to all of these is probably “No“, ie greater than 50% chance of missing targets.  Failure of Quality, failure of Cost and failure of Time; the fundamental triumvirate of project management.  Will this be another ill-fated YAGIF (Yet Another Government IT Failure) – which is actually a Governance failure, not ICT?

The OIX framework does not obviously include the high levels of trust that public sector agencies will need to dispense £billions with on-line transactions.  Something akin to an Identity Trust Matrix may be necessary, tailored to the specific needs of service providers such as schools and the NHS.

IDs for a UK Citizen Account

Quarkside has just heard of a way to solve the following problems:

• Benefits costs
• Under employed people
• Education maintenance allowance
• University living costs
• Basic pensions
• Enhanced pensions
• Recovering money for fines
• Health costs

It requires setting up a citizen account (UK citizens only) for EVERY citizen, including children. For sake of an abbreviation, we will call it the UK Citizen Account (UCA). The following rights are given, they are paid from taxation, without exception, into a freely spendable account (FSA).

• 0-16 child allowance, spendable by nominated parent or guardian
• 16-18 youth allowance, spendable by the young person
• 19-24 tertiary education allowance, spendable by the citizen
• 24-67 working age allowance
• 67-80 first pension
• 80+ second pension

Alongside the government input is personal input which is a proportion of taxable income.  This is a protected endowment account (PEA).  The main aim is to build up a personal fund that can be drawn down as housing, pension, health and mid-life education.  The nearest analogy is Singapore’s Central Provident Fund (CPF).  It is a colonial legacy: ” When the Japanese Occupation ended in 1945, Singapore became a British colony again. Life was hard. People struggled to make ends meet. To ensure that workers could take care of themselves in their old age, the Central Provident Fund was set up as a compulsory savings scheme. ”

The benefits to the government are:

• Simplicity of administration – entitlements are universal, every citizen independent of other income
• Means tested benefits cease, such as housing benefit.
• Personal National Insurance (NI) contributions are paid into the PEA, like a compulsory personal insurance.
• Employers NI contributions are paid into the PEA as a percentage of taxable income.
• Debts to the government can be taken from the fund, eg fines, unpaid taxes.
• Choice by the citizen for medical treatment.  The tariffs are well documented.  A percentage is taken from the PEA for every access to NHS services – lower percentage for basic services (10%) – higher percentage for more expensive, private care provision (90%).
• Funding for infrastructure from accrued savings
• Funding for low cost housing by giving loans from accrued personal PEA savings
• Choice to use the PEA for adult education and retraining for new skills.   The Working Age Allowance is always paid to provide some basic income.

The benefits to the citizen are:

• Guaranteed untaxed income throughout life, whether working or not.
• Working will always be better than not working.
• Protected Fund, built up by work, for spending on housing, further education, pensions and health.
• Additional contributions from employers (including self-employed), interest on account and profits from fund investments.
• Opportunity to obtain a mortgage from funds accrued – commercial interest rates will be charged.
• Opportunity to pay for adult education or re-training.
• No risk of bankrupt or stolen pension funds.
• Choice to pay for care at home or residential homes.
• The residue on death forms part of the estate – not taken by the government.

The details can be sorted out, but it avoids the costly mistake of Universal Credits.  Such a total restructure of the welfare state means sacrificing sacred cows. Singapore now has a handle on social welfare costs, unlike the UK.  They have a successful economy.  Rationing of health costs is left to citizens and their families.

And the governance issue is: – citizens will need to have a trusted Identity,  without too many duplicates.  Perhaps this will be good enough to allow them to vote, too.

Government sidelines SME Innovations

Innovation in Decline

Innovation is needed to kick start the economy, but the old ways are holding back growth. The public sector has been hit by budget reduction.  Large suppliers to the public sector are being squeezed in contract renewals and replacements.  Nobody is demonstrating an appetite for investing in innovation or intrapreneurship.

The old, arcane, procurement regulations are another inhibitor.  Invitations to tender published in the OJEU not only slow down the procurement process, they effectively bar entry from SMEs.  SMEs are the very companies who are most likely to have entrepreneurial ideas and innovative products.

Ministers support SMEs, understanding that they dominate the wealth creating economy.  For example, the Government ICT Strategy aims to:

“deliver policy and capability improvements covering EU procurement regulations; transparency in procurement and contracting; removing barriers to SMEs;”

But inertia in the Executive merely extends the status quo.  SMEs with innovative ideas are not welcomed with open arms into the market place. SMEs are sidelined by Government with the complicity of the big suppliers – neither of whom have the appetite for the perceived risk of innovation.

One Example

DWP’s Universal Credit programme states:

“We estimate that £5.2 billion a year is wrongly paid out as a result of fraud and error: £2.1 billion of fraud and error in Tax Credits and £3.1 billion in Department for Work and Pensions benefits.”  

An OJEU notice was duly published with a value of £15m to £45m for a “Data Access, Processing and Analytics Pan Government Framework”.  Interested SMEs are informed that “Organisations expressing an interest are expected to have a minimum turnover of £9,000,000.”

Any young SME, believing that they have innovative technology to make a £ multimillions impact on reducing error and fraud, are immediately blocked.  They are also unlikely to pass additional financial criteria.  There’s a further off-putting condition: the envisaged minimum number of suppliers is 8 and maximum number of 12.  SMEs are most unlikely to wish to spend valuable resources with virtually zero chance of jumping the pre-tender hurdles.

There’s also a sting in the tail: “DWP wishes to establish a framework agreement that may be used by or on behalf of UK public sector bodies.”  This is not just central government, but also every local authority and even Channel 4.  Does this now mean that they could also be disadvantaged from supplying throughout the public sector?  All public sector bodies should be aware of the DWP negotiated framework, including it in any data analytics contract selection.  The appointed framework suppliers will be in a monopolistic position and easily able to deflect innovative entrants into their market.

A start-up technology company, which may have developed a more effective fraud and error mousetrap, cannot enter the market.  The best it can do is treat with the usual suspects for winning a framework contract and hope to become a sub-contractor.  They may even risk being excluded from directly competing for any other contracts in the public sector.

Such is the fear in SMEs, that they dare not make such examples public. A group of SMEs had to report in camera to the Public Administration Select Committee. See their infamous report “A Recipe for Rip-Offs”.

Portfolio Planning

Every product or service passes through a life cycle of inception, growth, steady state and decline.  In the public sector, it is convenient to map this into a matrix of service portfolios with four categories.

1. Innovating for the future
2. Transforming business processes
3. Reducing transaction costs of customer facing operations
4. Improving essential internal administration and services

There may be overlap of categories, but each should be allocated a percentage of total resources. If any drops to 0%, it is a most unhealthy sign. Large suppliers excel in Transformation, Operation and Administration but Innovation is where SMEs thrive.  Innovation can be a threat to the income streams of big suppliers, so it needs special protection by the Government.  Today’s innovation could become tomorrow’s transformation and eventually the key to efficient operation.

 

 

Message to Government Ministers

Support innovative SMEs with policy changes that will:

1. Guarantee access to Department’s senior levels with a frequent opportunities to make proposals for innovations.  Encourage proposals for cross-departmental funding of joint projects.  Exclude big suppliers from the process, who already have access if they wish to innovate.
2. Reserve some funds for small contracts with SMEs.  Constrain contracts to strict time limits and learn from both negative and positive results.
3. Monitor investment in the Innovation Portfolio across all departments.  Communicate successes and recommend candidates for growing into transformational projects.

7DIG: Identify Risk with Confidence

Using Confidence to Identify Risks

Rather than starting the search for risks in a negative way, Quarkside recommends using the reverse psychology to ask about success – “How confident are you that targets will be met?” Asking about confidence levels not only helps to identify risks, it shows a positive view rather than a negative one.  Simple bar charts can be used to show targets, changes of opinion and alerts for areas of concern felt by staff.

Average Confidence

The chart above may look gloomy, but this was the state of play in a large public sector project. It was the result of interviewing many levels of staff.

• Anything below 50% confidence is worth further investigation and should be entered in the risk log.  Immediate risk reduction action should be taken.
•  For intermediate levels of confidence, say between 50% and 75%, risk log entries should reflect the reduced level of risk.  The root cause for reduced confidence should be investigated.
• Even if there is high confidence of success, greater than 75%, then there should be a risk log entry if the impact of failure is high.

Without claiming intellectual rigour,

Risk Probability% = 100% – Confidence%

Managers are comfortable with this concept – high confidence equates to low risk and vice versa.  Discussion helps people to accept that simple quantification of risks is neither difficult nor threatening.

Confidence Management Process

Confidence Management Process

It may be old-fashioned, but Quarkside is a proponent of managing to a baseline, or vision or goal or whatever you want to call it.  Lets also call them strategic objectives.  The main point is that they are organisation wide, and that leadership has ensured that everybody understands and has bought into them.

Interviews are carried out using a one-page questionnaire that records levels of confidence.  A five-point scale ranges from totally confident to minimally confident.  Subsequently, values from 90% to 10% are allocated.  The analyst can also select extreme values, say 100% or 0%, if the interviewee stresses strong opinions during the course of an interview.  Comments on the reasons for low values are welcomed – highlighting the root cause of a risk if raised by several interviewees.

To encourage open and frank responses, an independent interviewer asks questions in confidence and ensures that comments are not attributable to a specific person.  Interview data is analysed and presented in a report.  The contents include commentary on areas of high and low confidence and references to the risk log.

After several months second and subsequent reports discuss the change in confidence levels since the previous report.  A change chart graphically indicates the effect of risk reduction since the previous review.  The process provides feedback into the risk management control loop.

Most importantly it supports the risk management process by flushing out risks that may not have been formalised.  In extreme circumstances, it could contribute to a decision to change the baseline business or project targets.

Experience

The method has shown benefits in £billion programmes – but it could be applied in any form of project – even Agile ones.    Some key findings were:

• Confidential, non-attributable interviews help to open up discussions and identify root causes of problems.  It allows comment at peer level that might not surface in the presence of overbearing managers
•   The initial interview requires a few minutes to explain the concepts and establish understanding of the business objectives.  Subsequent interviews are quicker to execute and frank answers are obtained in less than one hour.
•  The questioning technique encourages managers to think more quantitatively about business targets and the probability of achieving them.  They feel comfortable that 90% confidence has a residual 10% risk, and that it is fair to include it in a risk log.
• Levels of confidence can diverge extremely between interviewees.  Whether lack of communication or “head in sand”, it is useful data worthy of further investigation.
• In programmes experiencing difficulties, the results provide a focus for debate at board level.  One organisation used the results to renegotiate a major contract.
• Even with generally satisfactory levels of confidence, it is worth investigating the target with the lowest confidence.  One internal audit team raised a security risk with an impact greater than £1 billion; procedures were tightened.  This is the company-threatening risk that is missed by using traditional risk matrices and resulted in the Risk Index to be described in the final section.

Looking to the future, the method should be used on all public sector programmes that rely on computer information for success eg Universal Credit, Health Service ICT, Individual Electoral Registration,  the Government ICT Strategy and Identity Management.

            

Household Hold-up. Universal Complexity

The first page of the Impact Assessment of Universal Credit programme, published in February, makes it clear that HOUSEHOLD is the basic unit of measure:

“In nearly 1.1 million workless households, a person would currently lose more than 70 per cent of their earnings if they move into work of 10 hours a week. The incentives to increase hours once in work are also very weak. At present around 0.7m households in low paid work would lose more than 80 per cent of any increase in their earnings because of higher tax or withdrawn benefits.”

This is great for statistical analysis, such as the principal source of data “DWP Policy Simulation Model (based on FRS 2008/9), 2014/15”.  Modellers are not concerned about the problems of individual low income people nor the staff making benefits decisions.  Quarkside now understands the difficulty of DWP officials answering straight questions like ‘What is a household?”.  Sympathy is due when they are expected to translate into Plain English paragraphs such as these:

32. In most cases workless households experience no change in their entitlement in static financial terms. This is because they do not benefit from the earnings disregard, and their basic benefit rates are as in the current benefit and Tax Credit system.

33. Claimants who are under 25, who are childless and not disabled, are currently unable to claim WTC when they are in work. Therefore they will benefit from the removal of this exclusion within Universal Credit. Likewise households who are working part-time and who receive Tax Credits and other benefits, will gain from the fact that they will have a lower withdrawal rate than under the current system and because they are likely to have a higher earnings disregard.

34. Working households not currently receiving WTC but receiving other benefits will tend to have higher entitlements under Universal Credit. They benefit from the fact the Universal Credit taper is lower than the combined taper on their current suite of benefits and Tax Credits, but they do not experience an offsetting reduction due to the removal of WTC.

35. If households are working less than 16 hours, and are either disabled or have children, then they benefit from the fact that their earnings disregards are generally higher than under the current system. Because they are working below 16 hours they are not currently entitled to WTC, and so will not be affected by the fact that the generosity of WTC is duplicated in the current system.

36. If households are in receipt of Housing Benefit, Council Tax Benefit and Tax Credits then they will have a lower withdrawal rate under Universal Credit and so are more likely to receive higher entitlements.

37. Around 200,000 households who are currently not eligible for Tax Credits because their household income is above the eligibility threshold, also receive Council Tax Benefit in the current system. These households will not be eligible for Universal Credit.

38. The households with lower entitlements will tend to be claimants who are in one or more of the following categories;

• Those in receipt of a large amount of WTC; 
• Those who do not receive HB/CTB;
• Those who have a low disregard;
• Households with substantial amounts of capital.

The policy is not in question.  The ability of agile analysts and systems developers to translate this into code that is consistent with primary legislation is the issue.  Household is a portmanteau word that is concrete enough for shaping policy, but is melting jelly in the minds of people who have to design forms and distribute money.  Computer programmers need to know whether an “or” in a sentence is of the inclusive or exclusive variety.  Drafters of legislation, fresh out of a politics degree, may not even know there is a difference. There are alternative approaches to controlling the costs of social welfare – but the have not appeared in radar of politicians.

Eventually it will be recognised that the solution is totally dependent on Technology.  If necessary, the Governance legislation and the Process practices will have to change.  UK Central Government, and their suppliers, are incapable of embracing such a concept.  UK Local Government will just have to pick up the pieces of broken households.

Universal Incredibility

Local Government have been presented with more information about DWP’s Universal Credit (UC) programme.   The complexity is such that it will replace more than 30 working age benefits, across 4 agencies, with 10,000 pages of guidance.  DWP have published their implementation plan.         

They have been coy about when design and build will finish, let’s say Dec 2012 and about 6 months testing.  All using agile programming methods!

Not declared in the document is another staggering statistic; there 19 million claims by 8 million households.  Households will become the unit to which DWP will pay benefits.  Total household income will be reconciled every month as people move in and out of work.  The new on-line self-service system will speed up registration for  benefits from weeks to days, and avoid the often devastating, annual reconciliation.  The Devil thrives in the detail.  Households may contain parents, step-parents, grandparents, uncles, aunts, children at school, young people at work, unemployed NEETs, students and cohabitees.    To complicate the issue for some beneficiaries, UC will not replace:

• Disability Living Allowance
• Contributory Benefits
• Carers’ Allowance
• Child Benefit
• Pension Credit

Quarkside’s question to DWP about how they are going to define households remains unanswered.

Attempting to design a system without a definition of the primary unit of measure points to incompetence or a guarantee of promotion.  Apparently, top flight consultants are involved.  Perhaps they only have experience of well behaved nuclear families with bags of broadband and integrated internships.  Local authorities have to deal with the fall-out when the edifice crumbles.  Any ICT developer could devise a simple agile program for a consultant’s family – not for a family of travellers where ‘household’ has no meaning and may change on a weekly basis.  Change is second-most important reason for computer system failure, the first-most is getting the wrong specification.  UC hits both sweet spots.

Many new claimants for current benefits cancel broadband contracts as a luxury.   Many older claimants are also digitally excluded.  Currently LAs handle benefits claimants face to face and they employ many staff to do so.  Quarkside does not know the numbers, neither did DWP.  So they enquired to find out the number, perhaps indiscreetly, by asking Heads of Revenues and Benefits what their redundancy costs might be when UC is implemented.  LA Chief Executives were not amused.  Face to face service will be necessary and it is not clear who will provide it from which premises.

In answer to some of these challenges a DWP spokesman was most enlightening.

• Ian Duncan Smith is only interested in outcomes
• There’s a commercial market for recycled computers, everybody should be able to afford one
• 70-80% of transactions will be on-line by beneficiaries
• Most beneficiaries will be in full-time work
• LAs may be asked to work as agents for DWP
• HMRC and DWP are working closely together, but there is a bit of a conflict with DCLG housing policy and benefits caps
• Ease of use is important and wireframe design will eventually help beneficiaries (aka customers)
• LA support is essential for success and more consultation will be carried out
• Writing the letter to Heads of Revs & Bens was a mistake
• £180,000 for developing the system must also  be a mistake, it’s more likely to be             £18million.

Finally, we learn that £8.5b is lost in error, fraud and administration in the current means tested sytems.  How much this is a result of identity error, identity fraud and identity administration?  Quarkside raised the issue in February, “Identity Icebergs to sink Universal Credits“.  There’s not been a lot of action to allay fears by LAs about providing an Identity Hub which collects personal data and matches it with third party credentials.

Pan Government Arrogance

The Local Government Delivery Council (LGDC) was established in 2007 to support the Chair, in the role as one of two local government representatives on the Cabinet Office Delivery Council. The Delivery Council was the pan government body chaired by Sir David Varney, to drive the transformation of public services so these became, ‘better for the citizen, better for staff and cheaper for the tax payer’.

We now learn that the Cabinet Office’s Delivery Council has ceased and there is no longer a pan government body which includes local government representation. Fortunately, an independent LGDC has become the recognised and established body for central government agencies to engage with when they are working with or plan to work with councils to redesign services. They provide one of the few (perhaps the only?) forum where central government departments get to see what other government departments might be planning in relation to local government. Examples from recent meetings have had representatives from:

• DfT – Blue Badge programme
• Cabinet Office – Digital Britain, Id Assurance
• DfE – Employee Authentication Services
• BIS – UK Broadband programme, Post Office programme
• DCLG – Central Local Digital Collaboration
• DWP – Tell Us Once, Universal Credit
• Home Office – Single Non-Emergency Number (101)

It is good that Local Government has the opportunity to provide feedback from the front-line about the realities of providing face to face services. A neat example is the assumption that broadband is ubiquitous and that claims for benefits could be ‘driven on-line’. It was pointed out that broadband is one of the luxuries that go when a household needs to claim benefits. Another example is a department representative having to apologise to irate Chief Executives about by-passing them in a survey of redundancy costs in a specific service.

The governance of central government projects needs much wider involvement of local government experts. They need to appreciate the diversity of requirements around the country and not assume that a token consultation with a couple of representatives is sufficient. Too much of the initial strategy and architectural work is done by World Class Enterprise Management Consultants; their experience of deprivation is as limited as the policy makers from Whitehall.