HMRC planned IT maintenance shutdown postponed

HMRC have had to postpone their shutdown which would have seen their online IT systems being unavailable during the weekend of 11th to 14th October.

Originally, HM Revenue & Customs (HMRC) Online Services were going to be unavailable between 06:00 am on Friday 11 and 06:00 am on Monday 14 October 2013, due to planned IT upgrade and maintenance work.

This meant that, for example, submissions of Real Time Information (RTI) returns submitted after Wednesday 9 October 16:00 using Basic PAYE Tools, or commercial software for PAYE, would not necessarily receive an acknowledgement from HMRC until Tuesday 15 October.

However, on Thursday 10 October, HMRC published the following (quoted verbatim):

HM Revenue & Customs Online Services system upgrade postponed

We have decided to postpone this weekend’s scheduled upgrade of our systems and we are sorry if this has caused you any inconvenience. 

Whenever we undertake maintenance work we run rigorous tests beforehand. These checks were completed last night and we discovered that there was a problem and that part of the upgrade wouldn’t have been complete by Monday morning as previously announced.

This means that all our services will be running normally this weekend and we are working to choose a new date and approach that has the least impact on our customers.

HMRC’s Service Availability page will be updated accordingly shortly.    



Implications of employment status case that went against employer in TV industry

HMRC have published Revenue & Customs Brief 29/13 to set out their position following the decision by the Court of Appeal in the case of ITV Services Ltd.

The case concerned the employment status for National Insurance contributions purposes of actors engaged by ITV under specific contract types. The Court handed down its judgment on 23 July 2013 and found against ITV unanimously upholding the decisions of the First Tier Tribunal and Upper Tribunal that the actors’ contracts provided for remuneration by way of salary and there was liability for Class 1 National Insurance contributions on all the remuneration payable under the contract.

All national broadcasters, film companies, theatre managers, independent production companies, their representative bodies and agents in the Film & TV Production Industries, Equity, individual entertainers. and any other companies engaging entertainers to whom this judgment may also be relevant are encouraged to read this briefing.

Although the specific contracts cited in the Court of Appeal judgment only concerned actors engaged by ITV, HMRC consider that the principles established in this and previous decisions in the Tribunals cover all ‘entertainers’ as statutorily defined in the Regulations – ‘a person employed as an actor, singer, or musician or in any similar performing capacity’. HMRC now expects those in the industry engaging entertainers to comply with the Court’s decision.

Understanding the FPS/EPS ‘window’ may explain some of the disputed charges

An understanding of how and when HMRC processes Full Payment Submissions and Employment Payment Summaries will help employers understand why the amount they say they owe HMRC is not necessarily the same amount as shown on HMRC records.

To help employers understand how FPS and EPS returns are processed and when, HMRC have recently updated their guidance on PAYE/National Insurance payments and deadlines.

How you calculate the amount of PAYE to pay

Calculate your payments to HMRC by taking these steps:

1)      Add together all of the:

  • tax that you have deducted from your employees
  • employees’ and employer’s NICs due
  • student loan deductions taken from your employees

2)      Subtract any tax refunded to your employees

3)      Add deductions from payments made to subcontractors under CIS, as shown on your CIS return (CIS300)

4)      Subtract any:

  • statutory payments and NICs compensation you are entitled to recover
  • NICs holiday you are entitled to deduct under the Regional Employer NICs Holiday for New Businesses (no longer applicable)
  • CIS deductions you have suffered (only applies if you are a limited company acting as a subcontractor)

The amounts listed at (1) and (2) above are what you reported on the Full Payment Submissions (FPS) for the tax month (6th of one month to the 5th of the following month) or tax quarter (periods ending 5 July, 5 October, 5 January or 5 April).

The amounts listed at (4) above are what you reported on the Employer Payment Summary (EPS) during the tax month or quarter.

But look out… HMRC state: “The timing of the submission of an EPS, with the amounts you want to recover, determines which payment HMRC will adjust in that tax year…” What does that mean?

The ‘window’ for submitting FPS returns

The ‘window’ for submitting an FPS is from the 6th of the month to on or before the 19th of the month following.

Therefore, for example, where an employer runs a monthly payroll, the FPS for tax month six (6th September to 5th October) should be submitted to HMRC between 6th September and on or before 19th October.

Identifying an FPS for tax month six is also helped by the inclusion of two data items in the FPS:

  • Payment date (which will be between 6th September and 5th October)
  • Tax week or tax month number (in this case tax month 6)

These two data items DO NOT appear in an EPS. Which tax month HMRC processes an EPS for is strictly dependent on the date it is submitted to HMRC. You probably think that it would make sense that the EPS should include the tax week or tax month number it refers to, but it doesn’t.

The ‘window’ for submitting EPS returns

The ‘window’ for submitting an EPS is from the 20th of one month to on or before the 19th of the following month.

Where, for example, an employer is recovering statutory payments for the tax year to date, an EPS for tax month six should be submitted to HMRC between the 20th September and on or before 19th October.

If the EPS for tax month six is submitted before 20th September, HMRC will treat it as overwriting any EPS submitted for tax month five; if the EPS for tax month six is submitted on or after 20th October, HMRC will treat it as being submitted for tax month seven.

Hence you can see why an employer could end up thinking they owe HMRC one amount, and HMRC expecting a different amount all together. Granted, the payments may well balance out over a following tax month, but think of the confusion in the meantime?

For example, a small employer runs their monthly payroll for tax month six (6th September to 5th October) on 21st September. On the 22nd September they submit their monthly FPS. As they also have statutory payments they are recovering for the tax year to date, they also submit an EPS on the 22nd. So far, so good. However, as the person who looks after the payroll is going on holiday, they decide to run the payroll for tax month seven (6th October to 5th November) early. Therefore, on 28th September they submit their FPS for October as well as an EPS for the same month.

HMRC process their payment due records twice a month – around the 6th and 19th.

When HMRC come to process the FPS/EPS returns, the FPS for September will be accounted to tax month six; the FPS sent for tax month seven accounted to tax month seven. However, as both EPS returns were sent during the tax month six ‘window’ they will both be processed against tax month 6. This means the employer’s payment for tax month six will be incorrect. Although, when HMRC processes the employer’s FPS for October, the payment the employer makes for October will balance out what is due.

Another example will illustrate the problems. An employer submits their FPS for September on time. Later they realise that they need to adjust their payment for month six by an amount of statutory payment recovery. However, instead of submitting an EPS on or before 19th October, the employer sends HMRC their remittance for September, deducting the recovery, and follows this up with an EPS submitted after the 19th.

As far as HMRC is concerned they are expecting the employer to pay by 22nd October at the latest the amount as per the FPS the employer submitted for September, excluding the recovery, whereas the employer actually remits a lesser amount due to their including statutory payment recovery. Agreed it will balance out when the employer makes their October payment. But if this occurred in the tax year 2014/15 onwards, being ‘late’ in paying in full would give rise to a penalty notice.

The latest HMRC guidance on ‘payments and deadlines’ is well worth reading through. There is a useful table of dates for each tax month to help an employer ensure they submit any EPS on time for the tax month in question. There is also guidance on correcting FPS/EPS returns in-year and/or after the tax year has ‘closed’.

Getting RTI data right will greatly help awards of Universal Credit

Employers making sure their Real Time Information data is submitted on time, and it is accurate and complete, will have a positive effect on awards of Universal Credit.

Universal Credit (UC) is the new monthly payment by the Department for Work and Pensions that will replace a range of present in work and out of work benefits. Currently it is being piloted around the country with a planned final roll-out of UC for all claimants by 2017. UC is very much geared to real time payroll data.

This is because the operation of UC has two important aims:

  1. To prove to claimants that work pays and that they will never be better off not working and staying on benefits.
  2. To reduce the fraud and error that arises with current payments of benefits.

With the second aim of reducing fraud and error, the provision of employer’s RTI data is already having a positive effect. One of the UC pilots running at the moment has already revealed a significant percentage of claimants are actually working and shouldn’t be trying to claim the level of benefits they are. This is only possible because of employers’ payroll data being passed over in real time to DWP by HMRC.

And obviously, the closer an employer sends their pay data on or before employees are paid, the more up to date are the figures that DWP have to work with.

Another interesting development is employers’ reporting of redundancy pay. In one example, an employee was paid a substantial sum in enhanced redundancy pay. Although not liable to PAYE income tax and NICs, the payment was shown on the Full Payment Submission. When the real time data was received by DWP it was flagged and the relevant questions asked about whether the payment in question was a redundancy one? This informed the award of UC being claimed by the individual. Again an overpayment was saved.

The UC pilot has also emphasised the need for good personal data to be included in an individual’s payroll record. The better the alignment between employer provided data on the employee’s NINO, date of birth, gender, name(s) and address with that held by HMRC and DWP, the sooner UC claimants can be identified and their award of UC actively governed by their real time level of earnings.

Is an intended mother in a surrogacy arrangement entitled to statutory maternity leave?

If a surrogate mother gives birth for another woman can the intended mother claim a statutory right to maternity leave if she immediately starts to care for the baby? This question stumped the Employment Tribunal in Newcastle upon Tyne so they referred the question to the European Union Court of Justice for a ruling in the case CD v ST Case C‑167/12.

In this case, CD wanted to fulfil her desire to have a child with the assistance of a surrogate mother. When the surrogate mother gave birth to the child, CD began mothering and breastfeeding the child within an hour of the birth. She breastfed the child for a total of three months.

Even before the child was born CD requested paid time off ‘for surrogacy’ under her employer’s adoption leave policy – in the absence of specific occupational or legal rules. Initially her request was refused although her employer later agreed to allow her paid leave under their adoption leave policy. Nevertheless, CD brought claims of unlawful discrimination on the grounds of sex and/or pregnancy and motherhood with regard to the original refusal of her request. In addition, she claimed that she had been subject to detriment by reason of pregnancy and maternity and by reason that she had sought to claim maternity leave.

Her employer contended there had been no infringement of the law since CD was not statutorily entitled to paid time off and in particular to either maternity or adoption leave. They maintained these rights are reserved for women who have given birth to, or adopted, a child.

The first concern in a case like this is not UK domestic law but the relevant EU legislation. In other words, did an intended mother have the right to benefit from in particular Council Directive 92/85/EEC of 19 October 1992 on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding? The Directive over-rules any domestic law.

Under the Directive, a pregnant worker and workers who have recently given birth or are breastfeeding are entitled to the following minimum rights:

  • A continuous period of maternity leave of at least 14 weeks allocated before and/or after the birth;
  • The maternity leave must include compulsory maternity leave of at least two weeks allocated before and/or after the birth;
  • Maintenance of a payment to, and/or entitlement to an adequate allowance;
  • After the end of her period of maternity leave, to return to her job or to an equivalent post on terms and conditions which are no less favourable to her and to benefit from any improvement in working conditions to which she would have been entitled during her absence;
  • During her pregnancy, after giving birth, and/or whilst breastfeeding, a woman is protected from less favourable treatment and detriment.

The following is the Opinion of the Advocate General of the Court of Justice. This Opinion is often followed by the whole Court.

Clearly at no time was the intended mother herself pregnant or consequently a mother who ‘has recently given birth’, and therefore the Directive could not apply to her. However, an intended mother who is employed and breastfeeding can be included in the term ‘worker who is breastfeeding’ and is therefore covered by the Directive.

However, not all rights under the Directive would apply to an intended mother. For example, since intended mothers are not pregnant, there are no special health and safety precautions to be taken in relation to the intended mother’s working conditions. Following the birth of the child they are not subject to the same health risks as women who have recently given birth, and have no need at all to recover physically from the effects of childbirth.

But the situation of breastfeeding intended mothers is entirely comparable with that of breastfeeding biological mothers. In both cases there are health risks; in both cases there are also particular time demands arising from childcare. Furthermore, the Directive is not intended solely to protect workers; maternity leave is also there to protect the special relationship between a woman and her child over the period which follows pregnancy and childbirth. This could apply equally to an intended mother as applies to a biological mother.

But what about intended mothers who do not breastfeed? Should they be excluded? No; whether a child is breast or bottle-fed depends on circumstances which the mother can influence only in part and should not be decisive in whether the mother caring for the child after it is born is granted or refused maternity leave. After all, a biological mother who has a right to maternity leave under the Directive does not lose the right to maternity leave after the birth if she decides to bottle-feed her baby.

Therefore, in the Advocate General’s Opinion, in surrogacy cases (where that is recognised by the Member Sate in question) the mothering role is shared between two women who must each be granted the protection afforded by the Directive at the times relevant to them.

The surrogate mother who carries the child but who does not care for it after the birth requires protection only as a pregnant worker or woman who has recently given birth.

In the case of the intended mother, who was not pregnant herself but has an infant in her care and, possibly, also breastfeeds it, there is a need for protection after the birth of the child. It follows that the intended mother can rely on the protection afford by the Directive only when she has taken the child into her care and thus assumed the role of mother, because from that point onwards she is in a situation comparable with that of a biological mother.

What about the right of the surrogate mother and the intended mother to maternity leave? Are they both entitled to the full minimum entitlement of 14 weeks (with two weeks of compulsory leave) under the Directive?

Although there are no special rules on surrogacy contained in the Directive, since both surrogate and intended mothers can be ‘workers’ within the meaning of the Directive, two weeks’ compulsory leave must be granted to both women in full without it being possible to deduct any leave taken by the other.

However, the granting of maternity leave cannot result in a doubling of the overall leave entitlement. The division of roles chosen by the women concerned must be reflected in the maternity leave granted to each. Consequently, the leave already taken by the surrogate mother must be deducted from that of the intended mother, and vice versa.

In this case, the intended mother worked for the NHS, an emanation of the State and all such are required to apply Court of Justice judgements. But the complete Court has not yet given its ruling – it might follow the Opinion of the Advocate General in full or in part, or it might not.

Therefore, watch this space!

Are HMRC’s IT systems really blameless when it comes to processing RTI returns?

Are HMRC’s IT systems getting their end of Real Time Information processing wrong? Not according to a recent HMRC report. But is that strictly true?

On 12 August, HMRC admitted they had received feedback that some PAYE schemes were experiencing difficulties in reconciling the difference between the tax HMRC said is due, and the tax they thought was due. As a result, HMRC set up a dedicated team to identify the cause of these discrepancies.

On 26 September, HMRC published their report on the discrepancies setting out their team’s findings from an analysis undertaken between July and September.

The HMRC’s report states: “We have found that the majority of discrepancies have been due to misunderstanding, error or transitional issues as employers joined RTI, and there is no evidence of error in the way that HMRC’s IT systems create the charge [emphasis added].” Again they state: “No evidence [was found] that HMRC IT systems are calculating the charge incorrectly.” And to put matters in context, HMRC says that “the number of charges being queried with our specialist team is only a small proportion (less than 1%) of 1.6 million RTI-reporting PAYE schemes.”

But hold on – although HMRC say there was no error their end in how their IT systems calculated the income tax due, their own report admits “there were delays in processing FPS information. There were a small proportion of cases where there have been delays in passing information from submitted FPS’s to our accounting system, resulting in no charge being created or an understated charge.”

“This has meant that the employer can’t see a charge on the Business Tax dashboard even though they know their submissions have reached us, and in some cases this has caused specified charges [essentially a pay up or suffer the consequences notice from HMRC] to be raised. We have identified and resolved this problem, and have now corrected the majority of cases affected. We are treating the remainder as high priority.”

Isn’t that just admitting that there was an “error”, even if it was a delay in proper processing, in the way “HMRC’s IT system creates the charge”?

One problem put to HMRC was the creation of duplicate employment records by HMRC when employees were made a payment after leaving. The HMRC response? “HMRC systems are calculating the charge correctly where there is a payment after leaving. However, how an employer or their software treats the final payment on leaving and after leaving can cause incorrect charges.” In other words, HMRC are saying the problem lies entirely with the employer and their payroll software or service provider. Not true, as many payroll software and service suppliers attest!

On the subject of the calculation of liability where student loans are involved the report says: “…there is no evidence that HMRC systems have processed anything incorrectly here.” Oh yes, then why did HMRC issue a statement on 29 August admitting their RTI system is causing problems for some employees repaying student loans through the payroll?

HMRC said (quoted verbatim from their announcement): “Employers should be aware that a very small number of borrowers’ employments have been incorrectly ‘ceased’ on HM Revenue & Customs (HMRC’s) PAYE systems. This has prompted HMRC’s systems to automatically inform the Student Loans Company (SLC) that those individuals had left their employment. As a result, SLC have issued letters to these borrowers, querying their employment status. Employees affected by this issue are being asked to respond to the SLC saying they have not ceased or changed employer.”

That sounds to me that HMRC systems have found errors in their student loan processing system!

While, undoubtedly, a number of the discrepancies have been due to transitional issues as employers joined RTI, as well as employer misunderstandings or error – and this is shown by the specific examples given in the HMRC report – HMRC is by no means completely blameless!

For example, even the report admits that HMRC’s own contact centre advisors lacked the detailed knowledge and understanding of how PAYE works and this affected how they responded and handled the disputed charges.

Remember too, the HMRC report was produced by HMRC staff and is bound to be slanted in HMRC’s favour. It might have been different if an independent party had carried out the discrepancies review?

But one good thing to come out of HMRC’s report – the report outlines a number of very useful RTI processing matters that all Real Time Information employers should review as a matter of urgency. This will ensure that in the future employers will have plugged any processing errors their end.

For example, the HMRC report offers the following troubleshooting tips if an employer cannot see how HMRC have calculated the tax and NICs charge:

  • Check that you have sent an EPS (if needed);
  • Ensure that any EPS includes the year-to-date figures;
  • Ensure that you have left enough time for HMRC’s Business Tax dashboard to be updated (more help will soon be available in HMRC new guidance on how the employer charge is calculated);
  • Check your payments to HMRC match the amounts reported in your FPS and EPS; submissions, with particular reference to tax weeks and tax months;
  • Check you have correctly reported leavers and payments after leaving;
  • Check that HMRC have not allocated the payment to a different period (if this has happened, you will need to contact HMRC).

HMRC’s latest Employer Bulletin available to download

HMRC have published their Employer Bulletin Number 45, September 2013. It contains some must read information.

Employer Bulletin Number 45 highlights the progress with Real Time Information:

  • Over 1.6 million schemes are now successfully reporting PAYE in real time
  • HMRC have received over 10 million submissions from employers, and have used these to update their records
  • Around 200,000 employers are using HMRC’s Basic PAYE Tools to make their real-time submissions.

The Bulletin also states that October is a big month for RTI as the Department for Work and Pensions (DWP) starts to roll out nationally Universal Credit which is based on the information employers provide via RTI. This is not strictly true as the National Audit Office has brought to our attention. The national roll out of Universal Credit is some time away!

Starting in October 2013, HMRC is starting to send employers generic notifications. These are to help employers keep their RTI reporting up to date and will cover notifications of non-filing for a tax month, late filing, late payment, and a reminder about late payments.

Starting in April 2014, HMRC is launching PAYE Online – a new online service for taxpayers who use PAYE to pay tax via their employer. Features of the new system include enabling individuals to update a range of their benefits in kind online so they can keep their tax code up to date. For example, when they first receive the benefit of a company car, or there’s a change of car, or they no longer have a car made available for their private use. Or they start/stop receiving the benefit of private medical insurance.

There are further articles of interest in the Bulletin:

  • Mandating the Scheme Contracted-Out Number (SCON) with effect from 6 April 2014
  • Age Exception Certificates
  • Tax treatment of some transactions related to “employee shareholder” status
  • Self-certification of employee share schemes and online filing of share scheme forms

Importance of knowing an older employee’s date of birth

When an employee reaches State Pension age they don’t have to pay any more employee’s National Insurance contributions (NICs) on their earnings. But do you know when your employees, especially female workers, will reach State Pension age?

This question is important because the State Pension age for women is being equalised with that for men, at age 65. The State Pension age for women born between 6 April 1950 and 5 November 1953 will increase gradually to 65 between now and November 2018. For example, any woman born between 6 January and 5 February 1952 will be treated as having reached State Pension age on 6 November 2013, at which point she will be age 61 years and nine months.

So how do you know when one of your female employees is treated as having reached State Pension age? Help is at hand with a simple online calculator on the YOU.GOV website. All you need do is enter someone’s date of birth, enter whether male or female, and you’ll get the exact date when they are accepted as having reached State Pension age.

As long as you have proof of an employee’s age, you are within your rights to stop accounting for primary (employee) NICs from the date they reach State Pension age, although secondary (employer) NICs remain payable regardless of an employee’s age. An original birth certificate or passport is proof of the employee’s date of birth. Take a copy for your records.

Another form of proof that an employee may present is a certificate of exception (form CA4140 or CF384) issued by the Pension Service – part of the Department for Work and Pensions (DWP). The certificate shows a ‘valid from’ date and is proof that the employee has reached State Pension age and will not be liable to pay any further employee’s contributions on any payment of earnings made on or after that date. Certificates issued by the DWP are sometimes in paper format rather than card – both formats are acceptable for proof of age.

HMRC no longer issues age exception certificates (CA4140) to confirm that a person has reached State Pension age.

In all cases where you have proof that an employee has reached State Pension age, you should use National Insurance category letter C – this deducts only the secondary (employer) Class 1 NICs. The secondary NICs in this case will always be standard not contracted-out NICs even if the employee was a member of a Contracted-out Salary Related (COSR) occupational pension scheme before reaching State Pension age.

If you have deducted primary (employee) NICs beyond the employee’s State Pension age, you must correct the employee’s pay record and reimburse the employee their overpaid NICs if possible. There is online guidance on how to do this.


When is it reasonable to refuse offer of alternative employment?

You’d think that someone being made redundant would leap at the chance to be re-deployed in another job? Not necessarily, and at times it is perfectly reasonable for an employee to reject an offer of alternative employment and to take redundancy pay instead. This was illustrated in the Court of Appeal judgement in Devon Primary Care Trust v Readman [2013] EWCA Civ 1110.

In this case, Ms Readman worked for a NHS Trust as a community modern matron, with the responsibility of running community and district nursing in the locality. Following an amalgamation of services she was told her job was at risk of redundancy. She was offered other roles but these were at lower pay grades and would involve her in a loss of status and of professional lead responsibilities. She was offered a similar modern matron role, at the same pay grade, but that would have involved her working for a large part of her time as a community matron in a small hospital. Ms Readman rejected the job offer on the grounds that “her career path and qualifications were in community nursing; she had not worked in a hospital since 1985 and had no desire to do so.”

Under section 141 of the Employment Rights Act 1996, if an employee unreasonably refuses an offer of alternative employment, they are not entitled to a redundancy payment.

The original Employment Tribunal found that Ms Readman had unreasonably refused to accept alternative employment. The Tribunal stated: “It is true that she would be supervising the care of patients in that hospital rather than in their homes, but her skill set was transferable. She would need to learn or to familiarise herself with certain procedures, but none of these would require any extensive training or separate qualification and could be acquired easily with clear monitoring assistance. For these reasons we find that the offer of this position was one of suitable alternative employment.”

The case was appealed and the EAT found that the Tribunal had “failed to consider… whether her basic decision that she had no desire to work again in a hospital setting where she had not done so for more than 23 years of her career constituted a sound and justifiable reason for turning down the offer.” The EAT decided that it was “plain and obvious that the appellant’s decision to refuse the [alternative employment] for the reasons she gave and viewed from her point of view [emphasis added] was within the band of reasonable responses which were open to her.” Therefore, she was within her rights to refuse the job and take redundancy instead.

The Court of Appeal agreed with the EAT, one of the judges stating: “Having spent 30 years working in the community it was not unreasonable [for Ms Readman] to decline to work in a hospital, albeit a small one. [Her] Work would now all be done in the hospital, whereas a substantial part of it had for many years been done in the community.”

Although the original Tribunal had failed in its final judgement, they did point to the key factor in deciding whether a refusal of alternative employment was reasonable – “The reasonableness or otherwise of the refusal depends on factors personal to the employee [emphasis added] and is assessed subjectivity from the employee’s point of view [emphasis added] at the time of the refusal. ”

Therefore, the basis as to whether it is reasonable for an employee to refuse alternative employment must be down to the perceptions of the employee, and not those of the employer. As long as the employee is not being perverse in their refusal then the employer should accept their decision and move to redundancy and making a redundancy payment.

Of course, it’s a much cheaper alternative for an employer to re-deploy an employee rather than make a redundancy payment which might turn out to be a considerable sum. But the employer must not ride roughshod over an employee’s genuine objections to accepting an offer of alternative employment.

National Audit Office slams the DWP’s Universal Credit system

The National Audit Office (NAO) has concluded that the Department for Work and Pensions is totally unable to roll-out its Universal Credit nationally from October 2013, due to “weak management, ineffective control, and poor governance”.

One of the driving forces behind the introduction of Real Time Information was that RTI payroll data would be used by HMRC to feed into the DWP’s new Universal Credit (UC) system from the beginning of October 2013. It was the DWP timetable that drove the (rushed) introduction of RTI.

In a press release dated 5 September, the NAO had this to say.

“The National Audit Office has concluded that the Department for Work and Pensions has not achieved value for money in its early implementation of Universal Credit. The Department is not yet able to assess the value of the systems it spent over £300 million to develop and has been forced to delay the national roll-out of the programme to claimants.

“Today’s [NAO] report concludes that the Department was overly ambitious in both the timetable and scope of the programme. The Department took risks to try to meet the short timescale and used a new project management approach which it had never before used on a programme of this size and complexity. It was unable to explain how it originally decided on its ambitious plans or evaluated their feasibility.

“Given the tight timescale, unfamiliar project management approach, and lack of a detailed plan, it was critical that the Department should have good progress information and effective controls. In practice the Department did not have any adequate measures of progress.

“In early 2013, the Department was forced to stop work on its plans for national roll-out and reassess its options for the future. The programme still has potential to create significant benefits for society, but the Department must scale back its delivery ambition and set out realistic plans.

“Over 70 per cent of the £425 million spent to date has been on IT systems. The Department, however, has already written off £34 million of its new IT systems and does not yet know if they will support national roll-out. The existing systems offer limited functionality. For instance, the current IT system lacks a component to identify potentially fraudulent claims so that the Department has to rely on multiple manual checks on claims and payments. Such checks will not be feasible or adequate once the system is running nationally. Problems with the IT system have delayed national roll-out of the programme.

“The Department will not introduce Universal Credit for all new claims nationally in October 2013 as planned, and is now reconsidering its plans for full roll-out. Instead, it will extend the pilots to six more sites with these new sites taking on only the simplest claims. Delays to the roll-out will reduce the expected benefits of reform and – if the Department maintains a 2017 completion date [emphasis added] – increase risks by requiring the rapid migration of a large volume of claimants.

“The spending watchdog found that the Department took some action at the end of 2012 to resolve problems, but was unable to address the underlying issues effectively. The source of many problems has been the absence of a detailed view of how Universal Credit is meant to work. In addition, poor control and decision-making undermined confidence in the programme and contributed to a lack of progress. The Department has particularly lacked IT expertise and senior leadership, with frequent changes in senior management.”

The words “we told you” spring to mind!!