Select Committee on Social Security Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1.  Welcome, ladies and gentlemen. Can I declare the public session of evidence on the Information Technology Services Agency open, welcome George McCorkell and his team, Brian Barnes and Pete Sharkey, and maybe just start by asking, George, if you could set the scene perhaps by describing a wee bit about what Brian and Peter particularly do, and anything else you might want to do to set the scene, and then we can maybe go into some dialogue about some of the questions that we have in our minds to ask, please?
  (Mr McCorkell)  Yes, thank you. George McCorkell. I am the Chief Executive of ITSA. I should point out that I am the Chief Executive of all of seven weeks' standing, so I am very much the new boy in the organisation. I have overall responsibility for the management of IS/IT supplied to the Department, and, as such, I sit on the Departmental Board, to give general advice to the Department on the use of IS/IT, as well as being responsible for the provision. On my left is Peter Sharkey. Peter is my Deputy Chief Executive; Deputy Chief Executive, Service Provision. Basically, that means all of the day-to-day operation, in terms of ongoing development of existing systems, on managing the day-to-day supply through our external suppliers of the overall service, Peter has direct responsibility for that. On my right is Brian Barnes. Brian is my Director of Commercial Strategy. You will probably understand, from the information we have given you, we make very heavy use of the external market-place in the supply of IS/IT services, therefore we have a specific directorate which looks after the regulation of that supply, the running of the procurement contracts and the monitoring of the overall supplier performance, at the highest level, and Brian has direct responsibility for that. That is the team we have here today.

  2.  Thank you. I start by a full-frontal attack. I found this memorandum, which you have obviously spent a lot of time putting together, and it is very helpful in some ways, but I found it very dense, in terms of, I guess it is inevitable, some of the jargon and the corporate language that you are collectively living with day to day. It is very difficult for ordinary lay people to understand a lot of this stuff, so you will forgive us if we have to stop you and ask you to explain some of these things to us. But I was particularly interested, I am just trying to understand exactly what the fundamental meaning of some of the memorandum meant to convey, if I can ask you to turn to section 2 under the heading "The DSS Corporate IS/IT Strategy", at paragraph 2.1 there is a preliminary sentence which says: "The business of the Department has changed significantly over the last ten years." And then it says: "The current organisation of the Department's IT systems reflects the limitations of the IS/IT available at the time they were designed", that sounds to me as if it was ten years ago, "and the historical benefit by benefit approach to delivering service." Now I will tell you what I think that means, your machinery is all ten years old and the change has been piecemeal; is that right?
  (Mr McCorkell)  I think your general understanding is basically correct. It is true to say that the IT systems which currently process our benefits were designed in the 1980s, and, in fact, the first implementations were in the late eighties and rolling forward into the early nineties, so they were designed on the technology at that time; you will be surprised to learn that at that time they were state of the art.

  3.  And where are you now; if you were state of the art then, where are you now?
  (Mr McCorkell)  Clearly, with the very rapid movement, development, in IT technology, we are now significantly behind state of the art; and, as I hope you will have found, from elsewhere in the memorandum and in our business plans, we clearly have plans to tackle that situation and bring us up to date, both with a radical, total replacement of the entire infrastructure, through our Modern Service programme, and, equally, we are looking at intercept strategies, where we can bring some of the newer technologies to bear even on our existing systems. So it is true to say that these systems were designed in the eighties, there were implemented in the late eighties and early nineties, they have been rolled out nationally across the country, they are now in need of a total revamp and updating. In terms of the design for the benefits systems at the time, if we go back to the eighties, the organisation that processed the benefits very much processed benefits in chimneys, individual benefits were looked at on an individual basis, and hence the systems were designed to cater for that particular aspect at that time. Clearly, now, there is a requirement to look across systems and look at individuals as people and look at how the benefits system is interacting with individuals as people; and, you are quite right, our current systems were not designed for that process and now need updating.

  4.  You see, the rest of your memorandum does go on, and I was lucky, I was able to, you very kindly, at short notice, arranged a visit for us, a week or so ago, and I found that very useful, and I am quite satisfied that the technical expertise you have is state of the art; but I have to put it to you that, over the last ten years, although you know what can be done, you have not been able to influence in a way that is as positive as perhaps one could perhaps have hoped to expect. So it does raise the question of to what extent you are able to get the message across to Ministers, or the policy-makers at Adelphi House, or whatever. How effective has the Agency been in trying to keep the systems that you are using state of the art, because it seems to me that there is evidence that you have lost ground, over the last ten years; where have you been during that time? And if you had been arguing the case to get things done the way that you know they can be done, who is it that is not listening, and why are you not more effective?
  (Mr McCorkell)  I think the first thing I should say, in answer to that, is that if you look at the forward programme we have now, and the commitment we have, through the Department and through to ministerial level, to totally update all of the systems and all of the technology, then perhaps I could say we have finally got the message through and there is now a major programme under way to do exactly what is required. As to why that has not happened earlier, it is clearly a combination of priorities and funding, there is always a limited amount of money available, there is always a huge demand, and that is not just a huge demand for new things but a huge demand for changing existing systems and changing existing policy, which we have to react to. We do, I believe, attempt to inform the Department and Ministers of what technology is coming along, what is available, what we should be trying to intercept, what we should be trying to take advantage of, but we have to recognise that our input is just one input into the overall changes, both in terms of policy and in operation, that take place across the Department, and our input has to be balanced against all of the other requirements.

  5.  So you are saying to me that things are going to get better?
  (Mr McCorkell)  I am certainly saying things are going to get better. We have a major programme to make things better, which will take some time, because the Modern Service Programme is a total replacement of the entire infrastructure, but equally through the work that we have been doing to inform that programme. You will have heard about some of the prototype working that we are doing, which its first objective was (a) to help the prototypes but to inform the future programme, so that this time round we make sure we get it right and we build in the flexibility so that we do not fall behind in the future. That work has also shown opportunities where, without the full replacement, there are a number of things which we can do which will aid the current systems while we are waiting for the new systems to come along.

  6.  Because, I put it to you that, if things do not get better, if you do not, and I am not for a moment suggesting that you do not know what you are doing, because I am convinced that you do know what you are doing, but I have said that I think that the effectiveness of getting the message across is certainly questionable, if things do not improve, the question has to arise as to whether you need the Agency at all? Looking at the Prior Options Review and the Framework for the future, and you have talked about outsourcing and the importance of that, if they are not listening to you, or they are not giving you the money, why bother?
  (Mr McCorkell)  You are absolutely right. If we cannot successfully help the Department to maximise the use of information systems and information technology then we will have failed in our remit. It is a very clear remit for the Agency, it is a very clear and personal responsibility for me, as the Chief Executive, sitting on the Departmental Board. If we do not achieve that then, obviously, we will not be fulfilling our remit. I believe, today, we have achieved that, with the announcement of the Modern Service programme and the work that we will be doing to update the current systems. My job now is to ensure that the Agency is structured and presents the information and presents its ideas in the way that will continue to keep the Department at the forefront of technology, rather than, once again, going to a situation where we lag behind. You are absolutely right; if, in ten years' time, someone was to be sitting here saying "We're ten years behind", we will have totally failed. I intend not to allow that to happen.

  7.  That has now been written down, so it may come back to you. Did the Agency have anything directly to do with the National Insurance Recording System, or the HORIZON programme, and where are we with both these projects, which are perhaps less successful than perhaps some of us may have hoped; did you have any direct involvement in either of these two things?
  (Mr McCorkell)  If I start with the National Insurance Recording System and then ask Brian to come in here and give some more detail; in terms of the development of the National Insurance Recording System, we had no direct responsibility.

  8.  None at all?
  (Mr McCorkell)  In terms of the development, no; that was a Contributions Agency project, which was contracted to Andersen Consulting to develop. Our responsibility, as the IT providers to the Department at that time, was to advise Contributions Agency, mainly on the procurement aspects of that contract; that contract has now moved with Contributions Agency to the Inland Revenue and they are now directly responsible. We maintain two people advising on the contract to allow the Inland Revenue to continue with their work on that contract, so we are still supporting, even though it is no longer a departmental responsibility. We also, clearly, have interfaces to that system, because our systems interface with it, and we have responsibility for the systems on our side which do the interfaces; hence you will find that we have responsibility for working with the Contributions Agency, and now the Inland Revenue, on the programme for our Year 2000 compliance, because we have to make sure those interfaces are compliant. But, in terms of direct responsibility for the development, we did not have that. Is there anything you would like to add to that, Brian?
  (Mr Barnes)  I think, just to expand on it, I personally worked with Contributions Agency and I managed the procurement activity for them, and the subsequent contract management. George has rightly stressed the level of interfaces that the Department has, and the number of our own systems which interface, and certainly we have had a strong involvement in the testing and ensuring that that is undertaken. I think, the other area, I would stress, of ITSA's involvement, the equipment in the local offices and on the clerks' desks are provided by ITSA, so in that aspect we provide an element of that, but the application that supports the processing was the one developed by Andersen Consulting.

  9.  What about HORIZON?
  (Mr McCorkell)  HORIZON is slightly different again, in that it is Benefits Agency who have the direct responsibility for the HORIZON project and for the contracts with both Post Office and ICL Pathway for the overall project. We work directly with Benefits Agency in the development of the DSS systems which interface with ICL Pathway systems, so we work jointly in a project with the Benefits Agency where we do the IT development on the DSS side. For the HORIZON project, we have had to develop a system called CAPS, a Customer Accounting and Payments System, in order to pass data to ICL, a personal details system, which is a system which standardises a subset of the personal details across all benefits. We said earlier, one of the problems with our systems is they were built as individual systems; in order to make the HORIZON project work, it was necessary to standardise and use a common set of personal details. We have developed that system; that system, of course, is useful for the HORIZON project, but it is also useful for our forward future strategy and is very compatible with that and, in fact, could be said to be the first step forward in the long-term strategy. We have developed that system. And, equally, each of our current benefits systems, which pay by order book and giro, we have to make amends to those systems in order to make them compatible with paying through the Pathway system. We are responsible, in a project jointly with the Benefits Agency, for all of that development and all of that implementation, and that is a part of the overall programme, which has gone extremely well. The Personal Details Computer System is now up and running, over 70,000 staff in both BA and Employment Service last year were trained to use it, it is now used on all benefits for new and repeat claims, Income Support, Child Benefit and JSA have been fully converted to it, the pensions system is now undergoing its conversion. So that end of the project has been extremely successful and is already bringing significant benefits to the Department and, as I say, could be looked at as perhaps the first tranche of the modernisation programme.

Mr Leigh

  10.  For years, I have been hearing excuses from Ministers and civil servants in the DSS about the computer systems. It seems to me that this has been a staggering failure of public policy-making that your computer systems have been allowed to become so antiquated, and every time we raise this we are told "Well, this is the most complicated organisation in the world, we have more clients than anybody else in the world, and it is all terribly difficult, and we couldn't cope, and we're doing our best", and all the rest of it. Frankly, you have only to look at any company in the private sector and in the last 15 years they have lived and died to the extent that they have managed to upgrade their IT systems. Why has there been this chronic failure deep within DSS policy-making? Is there some technical reason, is there some policy reason, what has gone wrong? I am not a computer expert, but I cannot believe it was not possible to upgrade your computers sensibly as you went along.
  (Mr McCorkell)  I think there is, obviously, a mixture of both technical issues and policy and operational issues. I said earlier that one of the reasons things may not have been done in the past is the overall priority in terms of policy implementation, operational issues and where the funding goes and how much funding you can put into upgrading your information technology. So there is no doubt that that was a major influence in the reasons that we have not kept totally up to date.

  11.  So what does that mean; it was not considered important? What were the arguments going on inside; were people going right up to Permanent Secretary level and saying "You've got to do this"? What was actually going on inside the Department?
  (Mr McCorkell)  I think, inside the Department, although I was not directly involved, there is obviously always a debate about what the priority is for this year, or for today, or for next year, and how the funding that the Department is given is allocated and which projects that goes to.

  12.  But this is the most important part. You are delivering a service to many millions of people, which is fundamentally reliant on your computer systems; there is no point repeating this mantra about how in the public sector there is always this problem of resources. What was going on; why was not this at the top of the agenda all these years?
  (Mr McCorkell)  There are also some technical reasons, which mean that it is difficult to upgrade this system in a piecemeal fashion. One of those reasons, for example, is the data network; we have a data network which has to span the entire country and has to go into every single local office. At the time that that network was purchased, which was in the middle eighties, I believe, it was purchased as part of the Government data network, and, again, at that time, it was state of the art. Replacing that network is a major task, it is a major task technically, but also you have to recognise that it is a major task operationally, because while we replace it we still have to keep producing benefits, we still have to keep the ongoing operation going; so it is a major undertaking. And it is not just a technical undertaking but you have to look at the operational implications of doing that, because you are going into an office which, while it is getting something entirely new, has to keep processing the benefits, because we have to keep paying people. So there is a combination of technical reasons, operational reasons and policy imperatives which make it difficult to do this. We have now got to the stage where we have agreement that this is going to be done, and we have plans to do it, and we are working on plans to take this forward.

  13.  When is it going to be done?
  (Mr McCorkell)  The first tranche of this, what is called the Modern Service One programme, is due to be implemented during the year 2001, and, in terms of what that will achieve, one of the things it will achieve, for example, is the replacement of this data network so that we have a modern information systems network that will give us much more flexibility to do many more things, and it will also replace the Income Support and the Child Support computer systems. There will then be a staged process where we replace the other systems, over the further years.

Ms Buck

  14.  Just a quick question on HORIZON. I heard what you said, and it is not your direct responsibility, but when we were briefed a little bit earlier in this Committee about HORIZON I think there was some concern, from the technology point of view, that again—again—we may well be pursuing a project that is out of date before it even starts, with a card, for example, which is based on a magnetic strip rather than chip technology; so already you are building in obsolescence to the system. And I just wondered, from the point of view of your IT expertise, if you could comment on that?
  (Mr McCorkell)  Again, at the time when that project was originally designed, they looked at the possibility of having a smart card, as opposed to a magnetic stripe card, and I believe the design was probably started back in 1994, or certainly 1995. At that time, the balance of the requirement for smart card technology and the cost of smart card technology weighed in favour of "This can be done with a magnetic stripe card, and hence we do not need smart card technology." However, I understand the overall design on the Pathway side allows it to be upgraded to smart card technology without any interruption to the service. So, although it was originally designed as a magnetic stripe card, it is capable of being upgraded to smart card technology, and, in fact, I believe ICL claim that the equivalent that is already on trial in 200 offices can read smart cards, and, in fact, Post Office requirements on that project require it to read smart cards.

  15.  So we are not making the same mistake again, we are not building in obsolescence to this, you can confidently state?
  (Mr McCorkell)  No. I think that, in fact, is an example where, although we were not using the latest, leading-edge technology, which was smart cards then, the possibility of them coming along was recognised and the design took account of that, so there is an opportunity to intercept smart cards when that becomes a necessary and cost-effective solution.


  16.  Does the Agency support the HORIZON programme, on a smart card basis?
  (Mr McCorkell)  The Information Technology Services Agency are supporting the overall programme; we are supporting the overall programme.

  17.  So you are in favour of it?
  (Mr McCorkell)  It depends what you mean by in favour of the overall programme. It is not our responsibility to pay benefits by any particular means. We are certainly in favour and we are advising for everything that can be done to have the most efficient method of paying benefits to customers and the most secure method of paying benefits to customers, and we are supporting all the programmes that attempt to put that in place.

  18.  I was impressed, when I visited you, that so many of your senior management were actually old benefit hands, if I can put it that way. I think, all three of you, I am right in thinking, have been through the Agency and the DSS mill, and I was reassured by that. So you will all have been, in your time, like me, because I have visited dungeons in area offices where there are millions of manilla envelopes with dog-eared, yellowing sheets of paper, with National Insurance details; will the Personal Details Computer System deal with that? There are troglodytes who work in there, and they get thrown food, from time to time, and let out, and it is mediaeval. What are you doing about that, if anything?
  (Mr McCorkell)  The first thing, the Personal Details Computer System, which I described, will not remove that problem, it is just the start of the overall replacement and it deals specifically with a small subset of personal details, and it deals specifically with the objective of no matter what benefit you are claiming we use the same set of personal details; but it is a small subset, it is name, address, date of birth, and a few other things, and we could obviously let you have details of that if you wished. However, the longer-term programme, the Modern Service programme, which is looking to replace the entire infrastructure, will, indeed, be looking at the paper mountains that have been created and have been stored, and it is part of the design objectives of that programme to get rid of those paper mountains, and that will be taken forward as part of that programme.

Chairman:  And will be put together by your scanner.

Ms Shipley

  19.  What does "looking at" mean?
  (Mr McCorkell)  It is a design requirement of the programme. The first design requirement is that we will stop producing these mountains of paper that we have to store, and in the forward programme that is the easy bit, because you can design your systems so that they do not need this amount of paper, and where they do need it, as the Chairman says, it can be stored electronically now and there is technology there to do that. The second thing we will then be looking at is that, fine, when we implement those systems, we have lots of historical data that are still stored in these brown paper envelopes; to what degree is it necessary and cost-effective to perhaps, as an answer, start scanning that information, to make that available electronically.

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