The National Audit Office has called for the DWP to use the hard lessons it learned from implementing its recent programme of welfare reforms to improve how it manages change and anticipates risk.

The DWP has taken on an unprecedented number of major programmes and reforms. At the same time, it has cut costs and handled a surge in demand on jobcentres following the recent economic downturn whilst maintaining performance.

The NAO report found that, despite some important and high-profile failings, the DWP has introduced a large number of other welfare reforms. It has continued to make progress in major programmes and in overcoming the operational challenges.

It said that the DWP has relied too heavily on uncertain and insufficiently challenged operating assumptions, and did not have a sufficient understanding of its portfolio of programmes or overall capacity. The study says that the DWP often has a clear, high-level vision but needs to think more strategically when considering how reforms will work in practice.

The DWP was also criticised for thinking too late about the management information and the leading indicators it needs to understand progress and performance. This meant the DWP took several weeks to identify backlogs in Personal Independence Payment claims.

In some cases, the DWP has responded well to uncertainty by adapting plans in the light of operational advice. Departments should be able to set out plans with specific timetables, costs and impacts and reflect where flexibility is needed. They should also have clear processes for revising plans against changing circumstances or expectations. For example, the child maintenance 2012 scheme programme team postponed roll-out dates several times, based on clear operational criteria. However, for Universal Credit the DWP initially held too rigidly to fixed deadlines and now has adopted a more flexible approach. It will need to reconcile this approach with the requirement to monitor progress against milestones.

The NAO concluded that, although the DWP has learnt to introduce reforms gradually, it has not always used phasing successfully. It now needs to think about how it can use the phased approach to reduce significant operational risks.

The DWP’s incremental approach to implementation of its programmes allows it to respond to some of these challenges. Overall, however, the DWP has relied too heavily on reacting to problems and has not been able to anticipate possible failings or establish the principal ways in which performance and progress can be measured, Among the NAO’s recommendations is that the DWP should plan more openly for the possibility of failure, and build an integrated view of portfolio risks and capacity.

The NAO said: “Any large portfolio of reforms will run into problems. The DWP has shown a resolute approach to dealing with them. However, we think it has relied too much on dealing with difficulties as they emerge rather than anticipating what might go wrong. As a result it has had to learn some hard lessons with significant financial and human costs.

“It is important that the DWP use these hard lessons to improve how it manages change and anticipates risk.”

The report made no specific assessment of the DWP’s performance over housing-related reforms, such as the introduction of the ‘bedroom tax’.

Full report: Welfare reform – lessons learned