DWP failed to consider welfare reform risks, says spending watchdog

Report by the National Audit Office says Department for Work and Pensions must get better at spotting potential problems with big schemes

By Matt Foster

29 May 2015

The Department for Work and Pensions struggled to identify potential pitfalls before trying to make major changes to the welfare system, the public spending watchdog has concluded.

A report by the National Audit Office, published this morning, finds that while DWP has dealt with an "unprecented number of major programmes and reforms" since 2010, it has sometimes failed to spot risks or think about how best to measure performance.

The department has cut its administrative and programme spending by 18% since 2010, with staffing levels down 23% on 2011 levels. In spite of those cuts, the NAO points out that DWP has "introduced many reforms without significant operational problems", and says it "deserves credit" for doing so at a time of major organisational change.

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However, the watchdog says DWP has "relied too heavily on uncertain and insufficiently challenged assumptions" when introducing changes, and warns that it must be more prepared "for the possibility of failure" in future schemes.

"The department has thought too late about the management information and leading indicators it needs to monitor progress and performance," the NAO's report says. "The department should consider information requirements when designing how programmes will work. It has not always developed or interpreted leading indicators for major risks within programmes."

The NAO points out that it took DWP "several weeks" to spot a backlog of claims for Personal Independence Payment, the replacement for the Disability Living Allowance benefit that provides help to meet the extra costs of being disabled. 

It says the department initially made overly "optimistic assumptions" about the assessment process for claimants, and "did not leave enough time to review performance" before extending the availability of PIP.

"The challenge for the department is not to avoid ambitious targets and introduce all programmes slowly, but it should have an appropriate assessment of the risks that timetable decisions create and be explicit on the trade-offs resulting from decisions to change timetables," the NAO says.

"The department introduced Personal Independence Payment quickly, partly to achieve projected savings to benefit spending. This limited the time available to engage with stakeholders and test assumptions. Even where the department slows down implementation to reduce operational risks, the impact of these decisions needs to be evidence-based and transparent."

The report also reiterates criticism of the department's early handling of Universal Credit, the major welfare reform programme which aims to combine six means-tested benefits and tax credits into one payment. 

Existing benefit claimants were originally due to move over to the new scheme by 2017, but the end date was moved to December 2019 after the Major Projects Authority flagged up serious concerns about the way the scheme had been managed.

The NAO says: "For Universal Credit it [DWP] had no adequate measure of programme progress and had not sufficiently considered how to initially track progress under agile development methods."

However, the watchdog notes that since the programme's "reset" in early 2013, DWP has adopted a "more flexible" approach to deadlines and managed to expand the scheme to more than 270 jobcentres for single unemployed claimants.

According to the watchdog, DWP will need to adopt "a more resilient anticipatory approach" to major programmes in the future, building in "critical working assumptions" at the planning stage.

"The department should anticipate that assumptions are likely to be wrong, beyond simply cautioning that impacts are uncertain," the report says.

"Planning for the possibility of failure shifts management attention to the core programme the department is trying to preserve, and sets clear responsibilities for managing risks. It should think through contingency arrangements rather than assumping risks can be mitigated or dealt with after the fact."

Responding to the report's findings, a spokesperson for DWP said the department had worked to "restore fairness and common sense to the welfare state whilst guaranteeing a safety net for the most vulnerable".

“This department has one of the most ambitious reform agendas across Whitehall and has successfully delivered welfare reform, while cutting overall costs – as this report acknowledges. While this report looks to the past, we are busy looking ahead, continuing to deliver reforms safely and incorporating lessons learned as we have always done," the spokesperson added.

“Delivering change on this scale is a challenge, but this government is committed to delivering a benefit system that is fairer for all."

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