The minister responsible for overseeing the creation of the Universal Credit programme has said that Whitehall’s outsourcing of IT is a “fundamental mistake” and that government needs to work to attract more digital talent.

David Freud, former minister for welfare reform, said government needed to being its IT back in-house – Photo credit: PA

Giving evidence to MPs yesterday, David Freud, a Conservative peer who resigned from his position as minister for welfare reform in December last year, said that government “has to bring IT back in”.

He was brought in front of the House of Commons Work and Pensions Committee to update them on the Universal Credit programme, which was beset with problems from the start and had to be ‘reset’ in 2013.

The aim was to combine six in-work and out-of-work benefits into a single, simpler system, but poor planning, repeated changes of senior civil servant leadership and a lack of understanding of the underlying IT requirements led to it running five years behind its initial schedule.

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Freud has previously said that both his team and the Government Digital Service team that was later helicoptered in to assist were “naïve” about the complexities of building the service.

In his evidence to MPs, however, Freud indicated that the main issue was the government’s attitude to managing IT projects.

“What I didn’t know, and I don’t think anyone knew, was how bad a mistake it had been for all of government to have sent out its IT,” Freud said.

“It happened in the 1990s and early 2000s. You went to these big firms to build your IT. And I think that was a most fundamental mistake, right across government and probably across governments in the western world.”

He said it had resulted in the Department for Work and Pensions having not an IT department, but an “IT commissioning department” that didn’t know how to do the work required for the project.

“The civil service thought it had the capacity because it could commission the big firms to do it. They didn’t see it as a problem – government as a whole didn’t see it as a problem,” Freud said. “It’s only when you get into it that you realise what a big problem it was.”

Freud added that the DWP had worked to bring that knowledge back in-house, and urged other departments to do the same.

However, he added that it was hard to do this because the “image of government with the IT industry is not great”, particularly with uncompetitive pay scales. This, he said, was something that IT has in common with the specialisms of running contracts and project management.

“We need, in government, to be able to pay for those specialisms if we are to pay for those projects.”

Benefits of agile

After the 2013 reset of the Universal Credit programme, the department took a “twin-track” approach.

This involved rolling out the ‘live service’ – a programme that allowed people to register online but with all further transactions being done over the phone or by post – while continuing to develop the ‘digital’ service that would allow all interaction online.

In his evidence, Freud said that he would have built something smaller, earlier so the team had something to test and learn from.

“It’s impossible to envisage how it will work, something as big as that,” he said, adding that it was very difficult to manage something that was “just conceptual”.

Instead, Freud said, organisations need something to coalesce around and start progressing – even if it isn’t perfect at the start.

Another issue Freud identified in his evidence was a lack of continuity on the civil service side, with six senior responsible officer and six project managers in his first five years on Universal Credit.

Freud’s evidence ties in with the issues identified in an in-depth report into the failings of Universal Credit written by Nicholas Timmins, a senior fellow at the Institute for Government, last year.

That analysis, published in September 2016, concluded that – despite its many problems – something “that is recognisable as Universal Credit” is likely to emerge at the other end.