Corporate report

BPDTS Ltd tailored review

Published 29 September 2020

Applies to England, Scotland and Wales

Foreword

In the summer of 2019 I was asked to lead a Tailored Review of BPDTS Limited, which was set up in 2016 to transfer contracted technology services to the public sector, which in turn underpin the Department for Work and Pensions’ (DWP) services to over 20 million people. Over the last four years DWP has made considerable progress in modernising its legacy infrastructure, improving the stability and security of its services, and building brand new digital services at scale - most significantly to underpin delivery of Universal Credit. A key enabler to designing government services around the needs of users and achieving better value for the tax payer has been to recruit and train more civil servants to provide in-house digital skills, whilst reducing reliance on large and inflexible IT contracts.^{[footnote 1]} At the time of our Tailored Review, over 1000 company employees of BPDTS (with a budget of around £80 million in 2019 to 2020) provided IT services and support alongside around 2,500 DWP civil servants in the Digital Group.

This review found that the set-up of BPDTS as a hybrid model to insource previously contracted out services and recruit digital staff into a government-owned company had been very successful in achieving the primary aims of the business case. My team heard consistent and extremely positive feedback about the performance and contribution of BPDTS to delivering a more resilient IT technology estate and bringing new capabilities into the department. Equally we received strong feedback that the disadvantages of a dual-running model of civil servant and BPDTS digital teams with different management, reward and career development structures are felt by the department to now substantially outweigh the delivery benefits.

We have concluded that the strategic context and challenges which BPDTS was designed to address have fundamentally altered since 2016, particularly in the ability of departments to flex their pay and reward offer to better fit the requirements of a competitive and dynamic hiring market. When BPDTS was first established, there was very limited scope for central departments to otherwise tailor their pay and reward structures to attract employees with scarce digital skills. Over the past few years, the Government Digital Service (GDS) has progressively tested and rolled out a new pay flexibilities framework to start to tackle the most critical gaps and to make different options available for departments to tailor their approach, both for new recruits and for existing staff with key skills.

The outcome of this review is therefore an unusual one – we commend the performance and achievements of the BPDTS senior team and Board, but have recommended to ministers that the timing is right to plan for closure of BPDTS and to design a single digital service inside DWP, consistent with the Government Digital Service’s intent to grow core civil service capability. However, we recognise that this requires considerable and careful delivery planning to mitigate the risks and to embed the valuable lessons and new ways of working demonstrated by colleagues in BPDTS. It is widely acknowledged that people are at the heart of any successful organisation, and securing the insight and commitment of management and staff from both organisations to design and deliver the future will be key to a successful transition. This is an opportunity to shape a fresh vision, operating model and reward structure, building on the innovation demonstrated in BPDTS, allied with the insight and experience of the current DWP teams. In the medium term, we would also expect a redesigned single function for DWP digital and technology services to deliver efficiency savings, compared to the running costs of two distinct organisations.

Whilst being the subject of an intensive review process is always an unsettling period, I am particularly conscious that this has been more difficult than usual for many of our contributors. The review timetable was impacted by both the general election in December 2019 and the vital work undertaken by BPDTS and DWP Digital to respond effectively to the Covid-19 pandemic.

We are extremely grateful to the BPDTS Executive, Board members and colleagues, and likewise to departmental teams who have generously given their expertise and challenge to the review process. I would also like to thank the Challenge Panel (expertly chaired by David Holt, one of DWP’s Non-Executive Board members) and the many central Cabinet Office, Treasury and other departmental digital teams who openly and constructively shared their data and advice.

Finally, I would like to thank Richard Price, Alison Findlater and Evelyn Geoghegan who have provided excellent support for all stages of the review, and the completion of this report.

Hazel Hobbs
Lead Reviewer

Recommendations

The review makes the following recommendations:

Form and function

1. The functions conducted by BPDTS Ltd are still required by government. BPDTS has met its objectives and delivered successfully against its core operational and recruitment performance measures. Feedback about the Chief Executive Officer’s (CEO’s) leadership and the calibre of the BPDTS workforce was very positive.

2. When BPDTS Ltd was established it met the test for being an Arm’s-Length body, on the basis of a business case which reflected government priorities for breaking up monolithic IT contracts and testing the benefits of a differentiated staff reward package. As departments now have greater opportunity to tailor their pay frameworks to reflect labour market realities in this sector, the Review Team have concluded that BPDTS will cease to meet the test for requiring external expertise.

3. DWP should create a single function to deliver the department’s digital service, and close BPDTS Ltd as an Arm’s-Length Body. This will require shared commitment to co-design the future vision, culture and organisational design, learning from the most effective elements and processes of each organisation.

4. DWP will need to establish a well-resourced Project Team jointly with BPDTS to plan, manage and maximise the opportunities for a smooth transition into the newly created function. This should include cultural and change management, organisational design, communications and HR and legal expertise, sourced externally where required.

5. The delivery timetable and approach should be carefully considered and sequenced to take account of other important priorities, including the work required for DWP to implement the GDS pay framework and capability assessments.

6. Progress should be reported regularly to the DWP Permanent Secretary, DWP Risk Assurance Board and to the Cabinet Office Public Bodies Team.

Relationships between DWP and BPDTS

7. As an early step, we recommend the DWP Partnership team supports the Digital Executive Team, BPDTS Chair/CEO and relevant internal stakeholders to agree any changes required to current operational governance and ways of working to set the tone for a successful transition.

Operational effectiveness, organisational effectiveness and efficiency

8. BPDTS should review the financial and commercial information contained in the Board reporting pack, to assist their challenge of trends and opportunities for efficiency and reduction of future cost liabilities ahead of transition.

9. The BPDTS Executive Team are fully aware of the limitations of the diversity data they hold. The Review Team recommends that BPDTS considers opportunities to improve the comprehensiveness of its workforce data. This will also provide valuable insight for DWP to set plans and key performance indicators (KPIs) for improving overall future workforce diversity, benchmarked against comparable digital teams in the public and private sector.

DWP

10. DWP should identify any lessons learned from the original insourcing and other government projects including either Transfer of Undertakings (Protection of Employment) regulations (TUPE) transfers or Arm’s-Length Body closure or merger projects. We recommend this sits with the transition Project Director.

Cabinet Office

11. The Review Team considers it important that further evaluation of the lessons learned from the BPDTS Gov Co reward and performance model is undertaken and documented with GDS and Civil Service Employment Policy (CSEP) to inform future Civil Service specialist pay and capability policy. This could form part of both transition planning and post-implementation project review.

1. Introduction

Aims of the Tailored Review

Tailored Reviews are periodic reviews that provide assurance and challenge about the continuing need, efficiency and good governance of public bodies. All Tailored Reviews are carried out in line with the Cabinet Office ‘Tailored Reviews: Guidance on Reviews of Public Bodies’. The full terms of reference for the review can be found in Annex A.

As a non-departmental public body (NDPB), BPDTS Limited is subject to a Tailored Review at least once in the lifetime of a Parliament. As a relatively new body it had not previously been subject to any form of independent review.

Following ministerial agreement, the recommendations of this review involve significant change to close BPDTS as a company and as an NDPD, but to seek to retain its most valuable asset – skilled staff – by offering a transfer under TUPE^{[footnote 2]} terms to a single, digital organisation in DWP. Given the proposed change of status and organisational structure, the department has commissioned separate work to plan, communicate and implement those changes, whilst protecting the delivery of critical services to the public.

Overview of BPDTS Ltd

BPDTS Limited is a digital service company which provides managed services to DWP. Under the terms of its Articles of Association, BPDTS may only provide services to DWP or to other Arm’s-Length Bodies of DWP.

BPDTS Ltd was originally established in 2016 to meet a very specific business need. As part of the 2015 Spending Review (SR), DWP committed as part of investment plans to reform the welfare system to achieve a 34% reduction in real terms spend on technology by the end of the SR period, whilst investing in new services and information security^{[footnote 3]}. Consistent with the wider government strategy for transformation of services and more effective use and management of technology vendors, DWP decided to transfer IT services delivered by Hewlett Packard Enterprises (HPE) to the public sector. At the time this contract provided critical maintenance and change support to a large number of DWP’s business applications.

It was agreed with HM Treasury (HMT) and Cabinet Office (CO) this should be achieved through a new government-owned limited company, drawing on a similar model adopted by HM Revenue & Customs (HMRC). In part this reflected political priorities and constraints, including maintaining downward pressure on the number of civil service employees, and to maximise flexibility to go back out to the private sector market for services where that offered better value for money. The original full business case had 2 key objectives: the first being to deliver savings (£55.6 million investment to release £45 million per annum by 2018 to 2019); and secondly to provide competitive remuneration for skilled IT staff.

After careful analysis and co-operation with the central policy and pay teams in CO, the Government Digital Service (GDS) and HMT, it was agreed that BPDTS would operate a differentiated pay and reward package but within the same overall pay envelope relative to DWP. There are a number of differences between the two organisations, and the pay structures are relatively complex as they encompass a range of historical overlapping arrangements in both organisations (for example to reflect previous TUPE transfers and retained arrangements). These are set out in more detail in the table in Annex B. In our field-work, the Review team were informed by a number of interviewees that the most important difference was perceived to be a higher salary and potential for in-year pay progression, traded off against lower pension contributions.

BPDTS was incorporated as a Limited Company in Aug 2016, initially with a Board of DWP senior officials and classified by the Office for National Statistics as a central government public body. Between December 2016 and March 2017 approximately 450 staff were successfully transferred from Hewlett Packard to BPDTS Ltd.

In May 2017, the Chief Digital and Information Officer agreed with the BPDTS Board and DWP ministers an expansion in the size and remit of BPDTS Ltd. This decision was based primarily on the ability of BPDTS to offer a reward package considered to be more attractive than the standard government offer. At the time, the Government Digital Service was working with a number of departments, including DWP, to develop and pilot a new approach to professional pay and capability assessments for scarce digital skills, but this was in its early stages. HMT agreed that BPDTS could recruit up to a headcount of 943 digital and data specialists to enable delivery against SR15 plans, including a reduction in more expensive external contractors. Future BPDTS recruitment would be kept under review as part of regular quarterly reporting to HMT. Following this longer term agreement, the process commenced for classification by Cabinet Office as a Non-Departmental Public Body, which was finalised in 2019.

BPDTS is organised into 6 service practices; architecture, delivery management, product design, engineering, data and analytics and service management, broadly aligned to DWP Digital’s 9 practices which include additional areas such as security and resilience.

The map below, illustrates the distribution of BPDTS staff by DWP hub in September 2019 at the time of our fieldwork. After an initially slow ramp up to scale recruitment activity and induction from late 2017, BPDTS largely met its required targets for recruiting to reach over 1,000 employees, plus utilising some contingent labour in short term or priority roles.

Location	Number of employees
Newcastle	553
Blackpool	182
Manchester	127
Leeds	58
London	38
Sheffield	27
End User Computing	48

In early 2019, as BPDTS had achieved the target service capacity requested, the DWP Digital Executive Team determined that future recruitment would, subject to limited exceptions, be directly into DWP. For the subsequent operational year (April 2019 to March 2020), BPDTS was asked by DWP to assume no further growth but to broadly maintain its current size and scope of activities.

Review process

The Tailored Review was led by Hazel Hobbs, supported by a small team, independent of the relationship between the Partnership Team and BPDTS Ltd.

A Challenge Panel was established to bring a range of external perspectives to the process. As noted in the Foreword, the Panel was chaired by a DWP Non-Executive Director, together with individuals with an expertise in digital delivery and commercial models. A list of Panel members is at Annex C.

Evidence and stakeholder engagement

The Review team considered a significant quantity of written materials including:

• the BPDTS Articles and Memorandum of Association

• business cases, post-programme review

• Government Digital Service strategy and pay framework

• BPDTS published plans and annual report

• HR and finance data

• Board papers

• other key reports (for example Internal Audit, GDS analysis of DWP pay data)

It should be noted that fully comparative data and time series data has been difficult to source given the early maturity of BPDTS systems and some data limitations including in DWP.

The Review team identified relevant stakeholders in consultation with BPDTS Ltd, the DWP Partnership Team, Cabinet Office and several other government departments.

We also undertook a significant amount of face-to-face engagement, conducting over 100 interviews, and engaging across DWP, BPDTS Board members and staff. Members of the team conducted staff focus groups for both BPDTS and also DWP Digital staff. Each focus group was asked similar questions, informed by social research expertise in the department (question topics are outlined in Annex D). The Review team also benchmarked the strategic aims and progress cross-government, holding valuable discussions with Cabinet Office, including the Digital Profession team and head of GDS, and with several other departments who had experience of applying elements of the new central pay framework for Digital, Data and Technology specialists.

A working group comprising DWP and BPDTS senior officials was established to support the Review, particularly in the later stages to test the risks and opportunities of potentially closing BPDTS. The working group included both the Chief Digital Information Officer and the BPDTS Chief Executive.

It should be noted that the Review team set out in interviews and focus groups that information and views provided would not be attributed to individuals; this approach is consistent with other Tailored Reviews. A list of those interviewed by the review team are at Annex E.

Terms of Reference

The full terms of Reference are at Annex A.

With the agreement of Cabinet Office, this Review was originally scheduled to be carried out in two stages. The first stage focussed on the ongoing need for the functions performed by BPDTS Ltd. We assessed whether the current delivery model and relationship with DWP remained fit for purpose and whether BPDTS Ltd continued to meet the Cabinet Office tests to remain an Arm’s-Length Body.

The second stage of the Review would have considered in more detail BPDTS Ltd’s efficiency, effectiveness, the robustness of its governance arrangements and any other areas for improving performance.

The Review concluded that BPDTS Ltd did not meet the ongoing tests to remain an Arm’s-Length Body and did not therefore proceed to stage two. Given the review conclusions we have not considered operational effectiveness and efficiency to any significant extent. We have included a small number of more operational recommendations where we either consider that short term improvements are important or to strengthen the further work and relationships required to transition safely to a single organisation in DWP.

Following initial discussions on the draft conclusions of the Review with the Board on a confidential basis in January 2020, the final clearance process was subsequently paused in line with wider de-prioritisation of all non-essential work to focus on the Covid-19 response. The conclusions of the Review have not been impacted by the pause during spring and summer 2020, but the timing and handling of the DWP’s response have rightly been adjusted to reflect the current context and government priorities.

2. Form and function

Are the functions of BPDTS still needed?

As described in the Introduction, BPDTS Ltd provides a range of technology services to DWP. This still includes the application support of most DWP legacy systems following the original transfer. More recently, BPDTS has been providing a broader range of services including software and infrastructure engineering, local IT support and business analysis, and contributing to resourcing of a number of major change programmes with new digital services (for example Universal Credit).

It is important to note clearly here that we found compelling analysis in the post-programme review and further management information to support the successful achievement by BPDTS of its core performance objectives. This is covered in more detail in section 5 ‘Efficiency and effectiveness’.

Having considered the current and future strategic plans, for example to inform 2020 Spending Review preparations, it is clear that DWP is only part-way through its ambitious and wide-ranging journey of digital transformation. Whilst DWP has largely completed its transition to break up long term, captive contracts to a cloud-based and more diverse supplier base, many of its services and data architecture require considerable further investment to meet public expectations.

There is a considerable and exciting change agenda still to pursue both in terms of public-facing services, and to enable more cost-efficient and agile maintenance, change management and support for customers and staff (for example through greater automation, more reusable data and products). It quickly became apparent in all of our interviews that delivery of enhanced digital capability and services remain critical to DWP’s strategic plans for improving services and outcomes for citizens. Whilst trade-offs on the overall priorities are inevitable, the overall pace and demand for digital transformation and skills is not likely to reduce for the foreseeable future. The further societal shift to digital communications, home-working and on-line service provision catalysed by the Covid-19 impacts will only increase public expectations.

Does each function of BPDTS contribute to the core business of DWP and to the government as a whole?

Whilst the functions of BPDTS Ltd do not contribute to government as a whole they do contribute directly to the core business of DWP.

Recommendation 1

The functions conducted by BPDTS Ltd are still required by government. BPDTS has met its objectives and delivered successfully against its core operational and recruitment performance measures. Feedback about the Chief Executive Officer’s leadership and the calibre of the BPDTS workforce was very positive.

Is BPDTS’s current form the most appropriate for its functions?

Alongside scrutinising the DWP’s forward strategy, the Review team also paid close attention to the wider framework for building a strong Digital, Data and Technology profession in government, led by GDS. The Government Transformation Strategy 2017^{[footnote 4]} set the ambition to “have one of the most digitally skilled populations of civil servants in the world” by:

• growing a skilled body of civil servants with deep Digital, Data and Technology (DDAT) expertise

• the creation of a single set of DDAT job families and capability assessment framework

• developing a pay strategy to reduce internal competition and make government an attractive place to join and stay

• building the best possible learning opportunities (for example Digital Academy)

• building leadership capability in other professions to enable agile working, policy and services based on user insight and effective leadership for digital-age organisations

We have spoken in-depth to GDS leaders and other government digital leadership and HR teams, to confirm there is a cross-government continuity of strategy. Subject to any steers from the incoming ministerial team in December 2019, GDS expect to maintain a focus on maturing the profession, addressing residual pay barriers to effective recruitment and retention (for example for senior roles) and enabling more proactive talent management across departments. Whilst the experience of both HMRC and DWP in developing a hybrid ‘Government Company’ model was considered appropriate to the early evolution of the profession, the core objective remains to grow internal departmental digital capability.

The Review team, after engaging widely with cross government stakeholders identified that other government departments are at varying stages of implementing the new DDAT pay framework which enables both higher starting salaries and in-year progression subject to agreed funding arrangements and tailored to the harder-to-recruit roles. Nevertheless, it is also the case that whilst reliance on contingent labour is reducing in many departments, it accounts for a significant proportion of overall labour costs in most departments, including in DWP. GDS data reported from departments for November 2019 (other than DWP or BPDTS) suggested that an average of around 16% of the total DDAT roles in departments were filled by contractors; in DWP Digital the proportion was 29% in autumn 2019 at the time of our field work, although this has since been reduced significantly.

The 3 main tests to meet CO requirements for establishing or maintaining an NDPB are:

1. Is this a technical function, which needs external expertise to deliver?

2. Is this a function which needs to be, and be seen to be, delivered with absolute political impartiality?

3. Is this a function which needs to be delivered independently of ministers to establish facts and or figures with integrity?

The Review team concluded that the provision of digital services is not a function which needs to be, and be seen to be, delivered with absolute political impartiality (such as certain regulatory or funding functions). Neither is it a function which needs to be delivered independently of ministers to establish facts and figures with integrity.

As evidenced by the approach adopted by the significant majority of other government departments, the provision of digital services does not necessarily require external expertise to deliver given the greater pay flexibilities now on offer. We would also expect to see the GDS pay framework evolve and adapt to market conditions over time, and believe there is a strong collective rationale to transparently address any continuing shortcomings in the government’s ability to bring in and keep the right talent, at lower cost than using contingent labour. For that reason, we consider it beneficial for DWP to put its weight behind adopting, shaping and improving any residual constraints in the pay flexibilities that could still hinder best value delivery of the required technical expertise.

We have therefore concluded that whilst it was a sensible approach in 2016, based on a sound business case, the current form of BPDTS Ltd no longer meets the requirements for classification as an Arm’s-Length Body. A more strategic approach is now required to support employee retention and future recruitment for technical skills. Although it is beyond the scope of this review to make detailed recommendations on DWP pay policy, we note that there is much to learn from the experience in BPDTS of offering a more flexible and market-facing reward package. DWP is committed to implementing the DDAT pay approach, but there is considerable further work for DWP Digital and HR to progress to develop a detailed policy, plan and timetable for implementation at the earliest opportunity.

Recommendation 2

When BPDTS Ltd was established it met the test for being an Arm’s-Length body, on the basis of a business case which reflected government priorities for breaking up monolithic IT contracts and testing the benefits of a differentiated staff reward package. As departments now have greater opportunity to tailor their pay frameworks to reflect labour market realities in this sector, the Review Team have concluded that BPDTS will cease to meet the test for requiring external expertise.

Future operating model

In evaluating future alternative delivery models the Review team considered a number of factors to be important:

• DWP Digital and business priorities – including the risk appetite of the Principal Accounting Officer (Permanent Secretary) and DWP Executive Team, for example, to move away from a single customer approach

• consistency with broader government strategy – as outlined above to build core civil service capability

• responsiveness and readiness of DWP and BPDTS Ltd to deliver alternative options – protecting key operational and change priorities

• value for money – the review team consulted colleagues to request an indicative outline business case which compared the shortlisted options. Further work will need to be commissioned by the transition Project senior responsible officer (SRO) to develop and assure a business case, for approval in the normal way by DWP and HM Treasury

Initially a long list of options, drawn largely from the Cabinet Office Tailored Review guidance and with input from the BPDTS Board on potential future scenarios were considered and tested in a workshop with Cabinet Office Commercial Models advisers. In October, we put our assessment to the Challenge Panel and they agreed with our advice to discount the following long list options:

• Outsource – give notice to BPDTS to terminate and put out to tender to the private sector some or all BPDTS services.
  • The Review team commissioned advice from DWP Commercial Directorate. Their assessment concluded this would add cost and risk to core systems (particularly as application support relates largely to sun-setting legacy IT services where the market is less attractive).
  • The Review Team and Challenge Panel agreed with this assessment, but recommended that this should be kept under review as part of routine ongoing strategic sourcing analysis in the department.
    
    
• Allow BPDTS to compete actively for further work currently undertaken by third party suppliers and potentially to increase support to DWP arm’s-length bodies.
  • As we discuss below, in respect of the recommendation to close BPDTS, we found a shared view across all of the senior DWP Digital Executive Team and more widely in the department that the BPDTS model is no longer optimal for DWP.
  • The Review also heard there were concerns as to whether BPDTS could compete with the market in areas where cutting edge skills were required, though we believe there remains considerable scope in line with ongoing DWP plans to make reduced and more appropriate use of contracted labour.
  • The Review team also consider that in the short term BPDTS can play a valuable role, commissioned by DWP Digital, to provide capability, advice and assurance to support the wider family of DWP Arm’s-Length Bodies.
  • However, we do not consider expansion of BPDTS to be a viable option, in part due to lack of support from the sponsor department.
    
    
• Transfer all DWP Digital staff to BPDTS.
  • The Review team considered this option and concluded it would be significantly more expensive for DWP. In particular, the BPDTS pay model of a higher salary and potential bonus applies to the whole organisation, whilst the DDAT pay framework is focused on the technically skilled and harder-to-recruit roles, which applies to only a subset of total DWP Digital current roles.
  • A transfer of all DWP digital staff to BPDTS would lead to loss of strategic control by DWP, with an impact upon efficiency and effectiveness. This is also in opposition to the broader aim of building internal civil service capability and strengthening the ‘intelligent customer’ function inside government.
    
    
• Enable BPDTS to sell its services to other departments, as an Arm’s-Length Body of DWP.
  • This option would essentially convert BPDTS into a shared services provider. The DWP Permanent Secretary would be the responsible Accounting Officer to Parliament and this would require new capabilities and resources for BPDTS, for example in marketing and customer and risk management.
  • The Review concurred with the BPDTS Board’s assessment that there was insufficient maturity within the organisation to move in the short-term to this scenario.
  • More fundamentally, we could not identify any appetite from DWP’s Executive Team to host a specialist shared service, to underwrite the financial risk or to dilute the focus on building departmental digital capability.
    
    
• Float off as a commercial vehicle with private investment (for example mutual, joint venture).
  • The Review team took advice from Cabinet Office Commercial experts to explore this as a longer term option. We were advised that the establishment of a commercial vehicle would require either sufficient intellectual property or a compelling public sector justification for underwriting a shared venture.
  • In conjunction with the Commercial Modelling Team, the Challenge Panel could not identify any key market differentiator that would justify this type of public investment at the present time.
    
    
• Merger or host in another government department.
  • The Review team explored this as an option and could not find any practical support for this option in DWP, HMRC or at GDS. Advice from the Commercial Models team in Cabinet Office suggested there was no strategic commercial reason for government to underwrite such a model.
  • As noted earlier, the current direction of travel is for departments to build internal capability with a view to mobilising cross-Whitehall career planning and talent management as the profession matures. Our ‘soft’ and small-scale market testing suggested that some organisations would potentially be interested in buying from a specialist hybrid like BPDTS, that combined an ethos of public service values and expertise with a lower cost base than private sector consultancies. This could especially apply to those with less mature or smaller digital teams (for example other ALBs across the public sector). Conversely, the acknowledged challenges of running shared services and the importance for departments of integrating their delivery teams into the wider structures of their departments made it rather more difficult to identify any willing hosts.

The Review Challenge Panel agreed our recommendation to discount the above options and to focus the remainder of the Review process on two plausible ‘short list’ options. These were:

• DWP create a single digital function, closing BPDTS through a managed transition, with TUPE terms to offer BPDTS staff a transfer as DWP civil servants, or

• maintain BPDTS with a clearer mandate within the department and refocus as a managed service supplier with consolidation around whole service execution and legacy support and review again within 3 years

Both the Challenge Panel and Review Team took the view that the recommendation best aligned with the strategic government and DWP objectives would be to create a single digital function and to close BPDTS as an Arm’s-Length Body. However, we noted that before closing an organisation with a well-regarded leadership culture, and a track record of success, we should carefully explore the risks of this course of action.

The Review Team decided that it should keep both options open and seek further evidence from the department ahead of making final recommendations to ministers, which was deferred until after the purdah period for the December 2019 General Election.

Benefits and risks

In November 2019, the Review team established a small working group to support the consideration of the risks and possible mitigations surrounding the creation of a single digital function and closure of BPDTS. This group was tasked with considering a number of issues including:

• identifying key legal parameters and critical choices required to determine BPDTS transfer terms and conditions (especially in relation to the pension scheme, pay arrangements and non-contractual elements of the reward package).

• considering the key trade-offs in agreeing a feasible implementation timetable that took account of wider DWP plans to review the options and future funding for adopting the DDAT pay framework and capability assessments, plus a planned organisational design review.

• preparation of a high level business case by DWP Digital, drawing on HR and Finance data from BPDTS. The Review team was not resourced to produce or assess the validity of the initial business case, but to form a view as to whether it provided sufficient understanding of the up-front costs and potential longer term efficiencies from bringing together two organisations. At a high level, my Review Team were reassured that for an upfront investment and with careful management of the risks, there were potential savings, for example, in reduced corporate overheads and dual management structures. This initial assessment also provided sufficient assurance that there were no major obstacles in terms of legal issues or procurement, or the scale of investment needed to release potential medium term efficiency savings from reducing duplication and overheads of running a separate ALB. It also gave high level initial consideration to how some of the risks could be managed, including possible staff attrition. We considered other financial issues which have had substantial scrutiny in recent years already in DWP Finance, particularly the position in relation to the extent to which Value Added Tax is payable or can be exempted under HMRC rules for technology services – but this was not material to our overall recommendations.

As noted earlier, the more notable financial implications will involve a linked pay case to embrace the GDS DDAT pay framework and the effort required to design, consult upon and make appropriate capability assessments. In practical terms, we were told that DWP was currently using, for certain digital roles, a range of temporary allowances to allow it to recruit or retain digital staff at salaries closer to those offered by BPDTS. At the recruitment stage, DWP have been able to take some advantage of pay flexibility to attract staff, but this does not address the more fundamental issues around overall coherence of the reward structures, including for in-post pay progression. At the point of reaching our conclusions, the work required to develop a detailed plan for implementing the DDAT pay approach in DWP was still at an early stage (and has subsequently been impacted by the prioritisation needed to respond to the Covid pandemic).

Operating models: conclusion

In summary, the Review Team took the view that, as set out in recommendation 4 below, provided a project team was properly led and resourced the risks to the department arising from the creation of a single digital function and closure of BPDTS as an Arm’s-Length Body were manageable. We would, though, emphasise the critical role of senior leadership in both organisations to give sustained and committed direction over the next couple of years to the creation of a shared vision, culture, and ways of working for a single team.

A key principle of managing an effective relationship between departments and an Arm’s-Length Body is strategic alignment and a shared view on purpose, value and accountabilities. The Review found a shared view across all of the senior DWP Digital Executive Team and more widely in the department that whilst BPDTS colleagues were highly valued, a dual operating model was no longer optimal. We received strong feedback that the initial advantages of creating a separate delivery structure have now been outweighed by the costs and friction of managing complex matrix management arrangements, different grade and pay structures and an inability to manage talent development and capability across teams. We weighed this factor quite heavily in our deliberations, given the central importance for any Arm’s-Length Body of having a shared strategy with the lead department. DWP leaders at all levels of the organisation were clear that even though BPDTS and DWP colleagues already work in integrated, agile teams, they expected to see enhanced benefits from being able to join together to create a stronger and more flexible organisation.

Further work will be required as part of the transition project to develop and assure a robust risk management, communication, and implementation plan. The preliminary work undertaken to date will need to be validated or adjusted for the working practices and departmental priorities emerging in the recovery phase following the Covid-19 pandemic.

Recommendation 3

DWP should create a single function to deliver the department’s digital services and close BPDTS Ltd as an Arm’s-Length Body. This will require shared commitment to co-design a future vision, culture and organisational design, learning from the most effective elements and processes of each organisation.

We do not underestimate the challenge of successfully creating a single digital function at pace, particularly against the backdrop of the current national pandemic response and recovery. This transformation and transition project should now be led collaboratively and with sustained and committed leadership by the department and BPDTS Executive and Board, harnessing the evident skills, learning and commitment from the experience of colleagues in both organisations. To maximise the likelihood of success the Review team advised that DWP should appoint the necessary SRO and Project leaders at the earliest possible opportunity.

Whilst the composition of the Project Team and the Programme Board and Steering Group are matters for DWP, we suggest the department draws on the collective skills of the non-executive directors of the BPDTS Board, particularly given their wider commercial experience in change management and merger activity. In our view, the central component of this project is about winning over hearts and minds, giving everyone in the new organisation the opportunity to shape the culture and ways of working of a joint organisation.

Recommendation 4

DWP will need to establish a well-resourced Project Team jointly with BPDTS to plan, manage and maximise the opportunities for a smooth transition into the newly created function. This should include cultural and change management, organisational design, communications and HR and legal expertise, sourced externally where required.

We heard concerns from a number of interviewees that the Director General for Digital and Information^{[footnote 5]} planned to deliver significant other activity which might be impacted by the substantial programme of change management required to create a single digital function and also to close BPDTS. Key examples of this include scoping out and consulting on the approach for pay and reward for technical DDAT roles within DWP Digital and an organisational design review. This activity is central and interlinked, and whilst it presents a capacity and capability challenge we ultimately concurred with the Director General’s view that it was preferable to co-design these activities on the basis of full involvement of BPDTS and transition plan to a single team, rather than to defer a decision on the future of BPDTS until all those building blocks were complete.

Recommendation 5

The delivery timetable and approach should be carefully considered and sequenced to take account of other important priorities, including the work required for DWP to implement the GDS pay framework and capability assessments.

As we have already explained the creation of a single digital function is not without risk, with a key task being to value and retain the energy and skills which BPDTS has demonstrated. A full project business case will need to be developed and assured in the normal way, as part of project governance in DWP. The Review Team considers that a change of this nature should be subject to regular senior oversight, with a realistic delivery plan and timetable agreed with the BPDTS Board (as part of the transition programme governance), DWP Digital and HR and with the Permanent Secretary. The plan will need to trade off the benefits of giving certainty as soon as possible to individuals, with the right level of employee engagement and communications with those impacted in both organisations. It is also crucial that the sponsor team is resourced to provide consistent and comprehensive support and oversight (including representation in project management governance) during the critical transition period.

Recommendation 6

Progress should be reported regularly to the DWP Permanent Secretary, DWP Risk Assurance Board and to the Cabinet Office Public Bodies Team.

How does BPDTS work with other government departments and ALBs?

BPDTS Ltd does not routinely work with other government departments. It has undertaken one assignment with one of DWP’s Arm’s-Length Bodies. Where it has provided services to other DWP Arm’s-Length Bodies the department has funded BPDTS for the activity and the department has then recharged the Arm’s-Length Body. For all effective purposes its sole customer is DWP.

Devolution

BPDTS Ltd undertakes work solely for DWP. In any event the recommendation of this Review is that DWP should create a single Digital function and close BPDTS Ltd as an Arm’s-Length Body. There are no devolution implications.

The UK’s Exit from the European Union

BPDTS Ltd undertakes work solely for DWP. In any event the recommendation of this Review is that DWP should create a single Digital function, and close BPDTS Ltd as an Arm’s-Length Body. There are no significant implications arising from the UK’s exit from the EU (although as in other sectors of the labour market, the future UK framework for immigration and work visas may impact on broader market factors, including pay).

3. Relationship between DWP and BPDTS

Due to the overarching recommendation for closure of BPDTS Ltd, we have only made recommendations in respect of the relationship with DWP in the context of managing the closure and creation of a single, digital function.

It is, however, important to note that we did identify an absence of shared strategy or clarity on the operating model between DWP and BPDTS (for example whether BPDTS was a service company as opposed to a resourcing model). Particularly in the course of our interactions with staff of both DWP and BPDTS we found confusion around the role and purpose of BPDTS due to inconsistencies in communication. We also found some inter-organisational tensions which detracted from the ability of BPDTS to make a full contribution, for example to influence DWP decision-making around future architecture. Common themes in our discussions included the following:

• DWP Digital leadership and BPDTS Board do not have a shared vision for the future of the company

• concern that there was duplication and overheads from running parallel governance and management systems (consistent in scale with CO guidance which suggests around 10% overheads for running an ALB)

• a desire to ensure that the full range of career development opportunities should be open to current BPDTS staff, given that project and task leadership roles currently sit in DWP as the ‘client’

• discontent amongst DWP staff around different pay and conditions for staff sitting alongside each other doing ‘the same job’

In our view, consistent leadership and communication will now be required across the Digital Executive Team and BPDTS to address these issues in the context of the bigger task of a transition project and focus on the positive opportunities.

Is the current relationship between DWP and BPDTS effective and proportionate?

The relationship with BPDTS Ltd is currently treated differently to other ALBs in DWP. In all other cases the relationship with the department is managed solely by the ALB Partnership Division. In the case of BPDTS there are 2 separate governance mechanisms:

• a core sponsorship role owned by the Partnership Division, but with commissioning

• an operational performance oversight operated via a Service Delivery Board, owned by DWP Digital

The ALB Partnership Division formally manages the relationship, on behalf of the Permanent Secretary, using mechanisms outlined in other DWP Tailored Reviews, for example Quarterly Assurance Reviews. A Service Delivery Board chaired by the Digital Commercial Director provides both accountability for delivery of services and determines the budget of BPDTS on the basis of a DWP requirement for skills and services in specific locations or teams. The budget-holder and service performance management for BPDTS currently is based in DWP Digital, with support from the Commercial and Finance teams.

Given the recommendation to close BPDTS, we consider there is little merit in any significant changes to the governance arrangements for day-to-day performance, although we would expect the Partnership Team to be represented across all of the relevant governance to provide join-up and consistency in planning and resolving issues. We recommend that the Partnership Team consider with the BPDTS Chair and CEO and DWP Digital colleagues whether any interim adjustments are required to the current oversight arrangements, for day-to-day business that will remain outside of the scope of a new transition Project. The escalation route for any key operational issue, risks or conflicts (for example, in terms of the legal obligations resting with the Company Directors) remains the Deputy Director for the Partnership Team, or ultimately to the Permanent Secretary.

Recommendation 7

As an early step, we recommend the DWP Partnership team supports the Digital Executive Team, BPDTS Chair and CEO and relevant internal stakeholders to agree any changes required to current operational governance and ways of working to set the tone for a successful transition.

4. BPDTS governance

Due to the closure recommendation, the Review Team has not (with the exception of observing a Board Meeting, reviewing Board Papers and interviewing Board Members) undertaken any significant activity in respect of the effectiveness or otherwise of the Board. The Board is a new entity, the current Chair was appointed in January 2019 and other external Board members were appointed with approval from the Secretary of State between June 2018 and February 2019. A list of the Board members is contained at page 25 of the Annual Report and Accounts 2018 to 2019^{[footnote 6]}.

The Review team observed that the Board has an appropriate balance of diverse backgrounds and broad-ranging expertise and was making a very valuable contribution at an early stage of formation. The Board understandably has identified concerns about the outcome of this Review, but has been very constructive in identifying the key risks which require careful management in transition.

5. Efficiency and effectiveness

Whilst stage 2 of the review did not proceed, we did carefully review the available evidence relating to both the original 2016 business case and the rationale for directing recruitment for digital roles to BPDTS between 2017 and 2019. We concluded that:

• Through the establishment of BPDTS, efficiencies were made and an under-performing contract was transformed. An early post-project evaluation report in 2017 showed that annual savings had exceeded the original forecasts in the first full year. From 2018/19 onwards the department has estimated that the original services contracted in were estimated to cost £55 million per annum compared with a £102 million baseline.

• BPDTS has also played a key role in wider service performance improvements in DWP operations (for example systems downtime reduced steadily from 2.1% in 2014 to 2015 to 0.1% in 2018 to 2019).

• There was an overall positive story on service key performance indicators – this was supported by interview feedback from across a broad range of DWP clients.

• But, there was a lack of any formal risk assessment around the decision reached in 2017 to expand BPDTS’s role. This suggests that the longer term challenges of building 2 large public sector teams alongside each other had not been fully considered, which is a relevant lesson for other departments who may be interested in the Gov Co model.

The Review team found that, after a challenging start, BPDTS had effectively managed the challenge of recruiting digital professionals at scale from 2018 up until the change of approach in early 2019. We found an impressive growth trajectory after getting logistics up to scale and we received positive feedback on the calibre of BPDTS recruits.

The joint recruitment team which supports DWP and BPDTS campaigns was unable to provide conclusive evidence in relative success rates compared to DWP, but the evidence the joint team supplied of success rates from more recent recruitment campaigns from spring 2019 up to late 2019 provided some reassurance. We were not able though to reach any definitive conclusions on relative success and risks in staff retention, which would have required longer running of the BPDTS model.

What is clear, as the information generated for this Review shows below, is that BPDTS has generally been successful in recruiting approximately 80% of new staff from the private sector.

Employee origin	Number
External (private sector)	454
BPDTS (TUPE)	383
DWP (permanent)	70
BPDTS (contractor)	49
DWP (contractor)	41
External (other public sector)	31
External (other government department)	17
Secondee	15
BPDTS (non-TUPE)	6
Total issues	1,066

Whilst BPDTS recruitment has been generally successful certain key gaps remain. These are, however, consistent across government and relate, as noted earlier, to software developers and technical architects - most acutely in London where the contractor market was extremely strong.

We tried to understand whether the new staff recruited by BPDTS would have been likely to join DWP. There was a lack of robust survey evidence on whether BPDTS recruits would have joined a civil service department like DWP. The insight we obtained from staff focus groups and individual interviews was mixed, although the available evidence confirms that a range of factors inform appeal other than pay. For example, our focus groups indicated some staff do strongly value being part of a vibrant technology focused company with a public sector ethos, but which is outside the mainstream civil service. One interviewee described this as “enterprise scale challenges but with the culture of a smaller tech company”.

Other responses suggested that the quality of leadership, pace and stretch of accountability, opportunities for career progression, flexible working and other factors such as location and intrinsic technical interest of the work offered in reshaping government services are just as crucial.

We received substantial positive feedback and comment around the leadership and operation of BPDTS including:

• creativity and innovation – for example in cutting through recruitment processes to radically reduce the time from advert to offer and operating ‘always on’ hiring campaigns

• the development of a BPDTS social media presence, ongoing hiring manager engagement and good networks to attract high quality candidates

• developing a tailored approach to induction and subsequent work to improve the on-boarding experience

• BPDTS management’s ability to respond more nimbly to both client requests and to staff feedback compared with a more hierarchical and large-scale employer like DWP (for example BPDTS staff appetite for a clearer focus on personal development, leadership training and career progression resulted in an enhanced offer)

• developing a trust-based approach to Smarter Working for all employees –reflecting the broader expectation for staff in similar digital roles in the private sector

The Board received relevant and detailed financial and commercial information. From our observations, the Review team considered at the time of our field work that there were still opportunities within BPDTS to reduce costs, for example to manage down contingent labour within the organisation. We would encourage the Board, through the transition planning, to retain a focus on challenging these activities and minimising closure liabilities, risks or any underperformance which will impact on transfer to the department. We would like to have seen stronger scrutiny and input from the DWP Finance team to highlight opportunities for efficiency, and this will be important to ensure the potential economies of scale and overhead reductions are realised in moving to a single digital organisation for DWP.

Recommendation 8

BPDTS should review the financial and commercial information contained in the Board reporting pack, to assist their challenge of trends and opportunities for efficiency and reduction of future cost liabilities ahead of transition.

Diversity

At the commencement of this Review we asked BPDTS for a range of diversity information as is the case with all Tailored Reviews. Only very limited data was held for a significant proportion of staff. We were told this was in part due to limitations arising from the original transfer activity from HP Enterprises and ongoing HR and finance systems issues. A limited amount of information is publicly reported, which for example shows the gender pay gap^{[footnote 7]} in line with statutory requirements (which is favourable relative to other relevant comparators). Additional information is also published in the Annual Report and Accounts^{[footnote 8]}.

The Executive Team were fully cognizant of the gap and had a clear desire and plans, subject to resourcing in part, to improve their approach and data on diversity. A more mature ALB would be expected not just to be able to report on and analyse its performance in recruiting a diverse workforce but to have a broader strategy for increasing inclusion and measuring progress. We understand this is an area which DWP Digital also needs to develop further, so we consider that steps that BPDTS can take to improve this will be materially useful (as part of individual staff engagement and data capture that will be required to support transfer to DWP systems and a new management structure).

Recommendation 9

The BPDTS Executive Team are fully aware of the limitations of the diversity data they hold. The Review Team recommends that BPDTS considers opportunities to improve the comprehensiveness of its workforce data. This will provide valuable insight for DWP to set plans and KPIs for improving overall future workforce diversity, benchmarked against comparable digital teams in the public and private sector.

The Review team did not undertake significant review of the original transfer project into BPDTS from HPE, we were however told that the work was undertaken by a project team of around fifty posts including external consultants. We understand it was a complex process and that it was broadly successful. However, in the course of interviews with some former HPE staff we heard of staff being transferred into BPDTS and not having line managers for approximately 6 months after transition.

We are concerned that the transition of staff from BPDTS to DWP employment should be as seamless and straightforward as possible. Any lessons learned should be applied both in this transition Project, and also to other change management best practice captured by the DWP HR and Change Portfolio and Assurance teams.

Recommendation 10

DWP should identify any lessons learned from the original insourcing and other government projects involving either TUPE transfers or Arm’s-Length Body closure or merger projects. We recommend this sits with the transition Project Director.

6. Recommendations for Cabinet Office

When BPDTS was established there were significant challenges in the recruitment of digital professionals into the Civil Service. HM Treasury approval was obtained, by DWP, for an innovative pay and reward model operating outside of standard Civil Service pay controls. The BPDTS model, as outlined above, involves a higher level of pay, bonus flexibility and a reduced pension offer.

A key question for the Review was to determine to the best of our ability whether DWP could sufficiently replicate the factors our analysis suggested had led to BPDTS recruiting successfully, in a challenging market. The available evidence was not conclusive, not least because the tenure of most staff in BPDTS is too short to make any definitive study of retention rates relative to market norms, and no plans were put in place at the outset to evaluate in a meaningful way the recruitment performance of BPDTS relative to DWP, or to other comparable digital teams in government.

To the best of our ability, we judged that the available recruitment evidence before and after BPDTS led on the majority of recruitment for technical roles between 2017 and 2019 compared with DWP provided some reassurance that the department could sustain a similar performance, although there are still roles which prove very difficult to attract sufficient candidates due to market shortages and especially in London.

The Review discussed this differential pay offer with a number of interviewees. One of the drivers behind the BPDTS pay offer was an assumption that, particularly young, digital professionals were only likely to stay with an employer for 2 or 3 years and were not concerned about pension but more with the salary. This assumption, whilst consistent with broader sector analysis and ONS data on job moves, was primarily on the basis of anecdotal evidence and we could not source any robust analysis undertaken to prove or disprove the assumption.

Prior to the economic impacts of Covid-19, the Bank of England’s analysts noted that pay growth continued to rise in sectors experiencing labour shortages, such as IT…”^{[footnote 9]}. We are mindful that the DDAT pay framework, whilst warmly endorsed by a range of civil service digital leaders who spoke to us as a major step forward, should not be static. It is crucial that cross-government evaluation is enabled by GDS to spot and address gaps that could still hinder retention or recruitment in the overall ‘offer’ and brand management. This is particularly pertinent given the growing demands since 2017 on civil service capacity for EU Exit activity and systems and large-scale investment in infrastructure, innovation and data expertise outlined in the March 2020 Budget by HMT.

Recommendation 11

The Review Team considers it important that further evaluation of the lessons learned from the BPDTS Gov Co reward and performance model is undertaken and documented with GDS and CSEP to inform future Civil Service specialist pay and capability policy. This could form part of both transition planning and post-implementation Project review.

7. Next Steps

The Tailored Review Team has worked closely with BPDTS, the Department for Work and Pensions and the Cabinet Office. This Review has made eleven recommendations, including the creation of a Single Digital Function within DWP and the closure of BPDTS Ltd as an Arm’s-Length Body. All of the Recommendations have been accepted by the department and Cabinet Office and approved by the Secretary of State. It is for the department and for BPDTS Limited to work together to implement those recommendations. Progress against the recommendations of the Review will be monitored by the department’s ALB Partnership Division. As part of the formal cross government clearance processes DWP will be required to seek HMT approval for the closure of BPDTS as an Arm’s-Length Body.

In all our conversations with the department, we know that the scale of the challenge has not been under-estimated and the importance of getting this right for all those impacted is foremost in the considerations of both the Digital Executive Team and the BPDTS Board. To ensure that due diligence is being applied to all aspects of the change, joint Strand Leads have been appointed ahead of a formal Project Board, bringing together senior representatives from both organisations to work collaboratively and embed the ‘best of both worlds’.

Annex A: BPDTS Tailored Review terms of reference

Background

As a Non Departmental Public Body, BPDTS Limited is subject to a Tailored Review at least once in the lifetime of each Parliament.

In line with Cabinet Office principles, Tailored Reviews are designed to be proportionate, challenging, transparent, and delivered at pace. The Cabinet Office has designed a ‘three tier’ approach which suggests the appropriate levels of scrutiny and governance for the review.

Cabinet Office has classified the Tailored Review of BPDTS as Tier 2 priority review. This means that the Cabinet Office will review the emerging findings and then sign off on the final report, alongside the DWP Permanent Secretary and Minister for Work and Pensions (Lords) before publication.

A body is considered for a Tier 2 review based on a number of criteria including an annual spend of over £50 million; size of organisation (100 or more staff); sensitivity; potential for commercial models; when the public body was last reviewed and whether the body contributes to the government’s manifesto commitments.

BPDTS Limited was established in 2016 and this is the first review to which it has become subject. It was set up to supply DWP with specialist digital services, initially focussed on services previously supplied by Hewlett Packard Enterprises Ltd under commercial contract. DWP is the only customer of BPDTS Ltd.

BPDTS provides a dedicated collaborative service to DWP, where BPDTS will design, build and maintain digital, data and technology solutions that support DWPs strategic aims and objectives.

BPDTS is funded by DWP on a cost recovery basis, invoicing the department for all services provided.

Purpose and scope

The Tailored Review aims to provide a robust challenge to, and assurance of, the continuing need for BPDTS with regard to its functions, form, governance and how effective and efficient it is.

Form and Function

This will consider BPDTS’s position and its status as an DWP-sponsored NDPB. This will focus on:

• whether the functions performed by BPDTS remain necessary and appropriate, including whether these should continue to be delivered by one body

• whether the functions performed by BPDTS are able to contribute to the core business of the organisation, DWP and to government as a whole

• whether the functions performed by BPDTS are best delivered through an NDPB or whether any other delivery model would be more appropriate

• BPDTS’s interaction with DWP and other government functions, including wider Cabinet Office led strategies for Digital, Data and Technology capability (GDS and Civil Service HR policy) and commercial delivery models (CCS) and as to whether they allow it to fully and effectively achieve the above

Governance

This will consider the governance both within BPDTS and between BPDTS and the department, including:

• the BPDTS Board, its composition and effectiveness

• DWP current and future partnership arrangements with BPDTS

• the governance and risk management processes within BPDTS and how these are assessed

• whether the governance controls in place follow the Code of Good Practice^{[footnote 10]}

Effectiveness

This will consider how BPDTS delivers its functions and how this is assessed, including:

• BPDTS’s effective delivery of its current set of functions and responsibilities against the current business case

• how BPDTS sets priorities and conducts business planning, including alignment with the department

• how BPDTS’s performance and effectiveness is assessed and improved

• BPDTS’s public standing, for example in the recruitment market, and its engagement with relevant stakeholders

• BPDTS’s staff engagement and diversity, including gender pay

• BPDTS’s workforce planning, recruitment and reward strategy

Efficiency

This will consider how BPDTS manages its resources, including:

• BPDTS’s efficiency in delivery and the value for money offered for the taxpayer, using benchmarking data and insight including from HMRC’s experience of operating a GOV CO and wider cross government DDAT workforce data.

• how BPDTS is funded

• whether any improvements could be made to ensure greater efficiency

• a forward look on accommodation and location strategy, including how location impacts upon recruitment

• BPDTS’s project portfolio, whether there are major projects, and whether it is realistic, including the planning and oversight of projects

• consideration of the projected pipeline and future budget requirements and how future funding may develop, with a view to options for the forthcoming Spending Review

• consideration of any opportunities for charging and other sources of income for BPDTS’s activities

Devolution

How the context of devolution impacts upon BPDTS and how it interacts with the Devolved Administrations.

The UK’s exit from the European Union

The extent to which BPDTS’ activities are impacted by the UK’s exit from the European Union, and the implications for BPDTS of any changes for UK occupational pension schemes, and how preparations are being governed.

Approach

The Tailored Review will be conducted on behalf of the Secretary of State for Work and Pensions. The Lead Reviewer will be supported by a small dedicated Review Team. To ensure the objectivity of the review, the Lead Reviewer has been appointed from outside of the department’s ALB Partnership team and BPDTS; and the review team will consist of departmental staff who have not been involved in the partnership of BPDTS. Evidence will be gathered from BPDTS, stakeholders within DWP and consider existing information on the views of external stakeholders.

The approach will be inclusive and so BPDTS and the DWP Partnership team will be involved in the review. The points of contact at BPDTS will be Loveday Ryder (Chief Executive) and Mal Singh (Chief Finance Officer). The review team will share these Terms of Reference with BPDTS and the DWP Partnership team, and submit them to the Minister for Work and Pensions (Lords) and the Minister for the Constitution (Cabinet Office) for clearance.

The review will work with BPDTS to agree the approach and timings, organise interviews and ensure that evidence is understood. The review team will share emerging findings with BPDTS and the DWP Partnership team, including drafts of the report. Upon completion of the review, the Lead Reviewer will communicate the findings and recommendations to the BPDTS Board, the DWP Lead Partner and DWP’s Private Pensions Director. An implementation plan for any recommendations will be agreed between BPDTS and the department and progress against this will be tracked, in line with agreed partnership processes.

The review will be subject to a challenge panel which meet at appropriate points throughout the review. The panel membership is currently being confirmed.

The review will produce a clear and concise report that will describe the areas considered, evidence examined and any recommendations. The final report will be published on GOV.UK, with any sensitive information redacted. Before publication, it will be discussed with the department, BPDTS and cleared by the Cabinet Office, and receive clearance from the DWP Permanent Secretary and Minister for Work and Pensions (Lords).

Annex B: Key differences in DWP and BPDTS salary offer

	DWP	BPDTS
Starting pay range	Aon-Radford benchmarks Aligned to civil service ‘grade’ structures (+ Digital Allowances payable subject to certain business case rules and approvals of up to £15,000 per annum)	Aon-Radford benchmarks[footnote 11] 87% total remuneration to account for pensions + 10% Flatter organisational structure, with four seniority bands
Pension	Civil Service salary-related (variable rate of employee contribution linked to pay and employer contribution totals an average of 24.5% of salary)	Defined contribution scheme – 5% employee contribution, matched with up to 10% employer contribution (totalling approximately 15% of salary)
Bonus	No individual bonus – DWP operates a team based performance management system with the exception of Senior Civil Servants	Up to 10% individual bonus for top performers; this non-consolidated pay pot is negotiated annually with HM Treasury
Annual pay increases	Civil Service wide – determined by the government’s broader public sector pay framework and caps	Market leaning - annual remit to HM Treasury. Consistent with the approach for many other Arm’s-Length Bodies, particularly with specialist skills, this has to date always exceeded annual pay increments for the core civil service departments
Trade Union recognition	Public and Commercial Services, Prospect and First Division Association – for pay and terms and conditions negotiations	No union recognition or pay negotiations

Annex C: Challenge Panel members

David Holt (Chair), Non-Executive Director, DWP

Holly Ellis, Director, Digital and Data Technology, Department for International Trade

James Steel, Crown Commercial Lead, Commercial Models Team, Cabinet Office

Kuljit Dhillon, Deputy Director, Public Bodies Reform Team, Cabinet Office

Annex D: Focus group questions

DWP Staff

What attracted you to DWP?

How proud are you to work for DWP?

If you could change one thing, what would you change in DWP?

Views on relationship between DWP and BPDTS. How do you feel about the relationship?

What makes you want to be here, Key reason?

Structure of BPDTS in DWP, what are the benefits?

BPDTS Staff

Why did you choose to work for BPDTS?

How proud are you to work for BPDTS?

If you could change one thing, what would you change in BPDTS?

Views on relationship between BPDTS and DWP. How do you feel about the relationship?

Do you think BPDTS fits into the DWP model?

Annex E: Interviewees

Debbie Alder, DWP, Director General, HR

Julian Balaam, DWP Communications – seconded to BPDTS as Head of Communications

Thomas Beautyman, DWP Digital

Matthew Bradley, DWP Commercial

Elliot Brinkworth, UKGI

Chris Brown, CO - Civil Service Employee Policy

Tamara Bruck, DWP Digital

BPDTS Board, BPDTS

Charlotte Clark, DWP

Andy Cook, DWP

Martin Coombs, HMRC

Neil Couling, DWP Director General, Universal Credit

Debbie Crewe, HMRC

Kevin Cunnington, GDS, Chief Executive

Jane Cunliffe, DWP Finance

Stefan Czerniawski, DWP Policy Group

Mark Davidson, HMRC

Alistair Davies , CO

David Dilley, GDS

Joe Dean, MOD

Peter Dewfall, BPDTS Head of Digital Service Management

Robert Devereux, Former DWP Permanent Secretary

Peter Dorman, HMT

Karen Edwards, CO Digital

Rob Evans, Government Internal Audit Agency

Amy Taaffe-Evans, DVLA

Katie Farrington, NHS Digital

Tammy Fevrier, DWP ALBPD

Paul Fisher, Government Digital Service

Focus Groups, DWP Staff

Focus Groups, BPDTS Staff

Ed Foster, DWP Commercial Directorate

Andrew Garton , DWP Finance Business Partner

Valerie Gordon-Walker, BPDTS Non-Executive Director Chair of RemCom

Paul Greening, Former BPDTS Chief Financial Officer

Lucy Guy, BEIS

Matt Guy, CO

Nic Harrison, DWP Digital

John Hatton, DWP Chief Commercial Officer

Emily Hobbs, DWP HR

Chris Holden , BPDTS Finance

Stephanie Howe, DWP Commercial

David Hughes , DWP

Flora Huskinson, Government Commercial Organisation

Helen John, DWP (former BPDTS Board member and also head of Partnership Division)

Claire Johnstone, BPDTS (former BPDTS Board Chair)

Liz Johnstone, DWP Commercial Directorate

Nick Joicey, DWP, Director General, Finance

Roland Knell, DWP Digital

Samea Khawaja, DWP HR

Stephane Laffly , Deloitte

Anna Leake, GDS

Justina Lewis , Government Legal Department

Jenny Liebenberg, Money & Pension Service

Paul Lodge, DWP Digital

Andy Lucas, DWP Digital

Chris Lyne , BPDTS Governance Team

Ashley Machin, DWP Non-Executive Director

Ross Maud , Companies House

Jo MacDonald, DWP Risk

Richard McHugh, BPDTS Head of Digital Delivery

Julie Eaton-Mckay, Government Legal Department

Simon McKinnon, DWP, Chief Digital Information Officer

Clare Millington-Hume, BPDTS Head of People

Steve McReady, BPDTS – not from BPDTS

Simon Monks, DWP HR

Jeremy Moore, BPDTS Non-Executive Director and Chair

Saira Moughal, CO

Michael Moss, DWP

John Murphy, DWP Commercial seconded to BPDTS

Mark Murphy, DWP Finance

Adam Partington, Government Legal Department

Jamie Patton, CO

Jackie Pennant, NHS

Dave Perry, HMCTS

David Peskett, HMRC

Esther Pilditch, CO

Charles Price, HMT

Lavelle Prior, Home Office

Alison Pritchard, GDS, interim CEO

Lexi Rees, DWP ALB Partnership Division

Helen Roberts, DWP Digital

Kenny Robertston, DWP Digital

Linda Ross, Money & Pension Service

Margaret Russell, DWP ALB Partnership Division

Loveday Ryder, BPDTS Chief Executive

Lara Sampson, DWP Digital

David Silk, HMT

Mal Singh, BPDTS Chief Finance Officer

James Steel, CO

Chris Thompson, DWP

Sam Todd, HMT

Juan Villamil, DWP Digital

Carol Wallbank, Government Legal Department

Neil Warsop, GDS

Ian Wilson , BPDTS Non-Executive Director, Chair of Audit and Risk Committee

1. https://www.gov.uk/government/publications/government-transformation-strategy-2017-to-2020 ↩

2. Transfer of Undertakings (Protection of Employment) Regulations which move employees and any liabilities associated with them to a new employer when a business or set of functions changes hands. ↩

3. https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents/spending-review-and-autumn-statement-2015 ↩

4. https://www.gov.uk/government/publications/government-transformation-strategy-2017-to-2020/government-transformation-strategy ↩

5. Subsequent to our Review the post-holder’s tenure was confirmed following promotion to Chief Digital and Information Officer for two years to March 2022. ↩

6. https://www.gov.uk/government/publications/bpdts-ltd-annual-report-and-account-2018-to-2019 ↩

7. https://www.gov.uk/government/publications/bpdts-ltd-gender-pay-gap-report-and-data-2019 ↩

8. https://www.gov.uk/government/publications/bpdts-ltd-annual-report-and-account-2018-to-2019 ↩

9. https://www.bankofengland.co.uk/agents-summary/2019/2019-q3 ↩

10. Cabinet Office and HM Treasury, (2017), ‘Corporate Governance in Central Government Departments: Code of Good Practice’, https://www.gov.uk/government/publications/corporate-governance-code-for-central-government-departments-2017 ↩

11. The AON Radford Global Technology Survey provides market pay data for digital roles. DWP and BPDTS draw from Aon – Radford a total remuneration value which is used as their starting point for setting salaries. In DWP initial salary is usually 70% of the total remuneration value, whilst in BPDTS initial salary, reflecting the lower pension offer, is generally 87% of total remuneration value. ↩