Select Committee on Social Security Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40.  Thank you for that. In that partnership, and I think the partnership approach is right, is not one of the problems the inevitable imbalance between the partners, in terms of the expertise? The Chair, at the beginning, quite rightly, described your own expertise, that is those sitting in front of us today, as state of the art; is not part of the problem that that state of the art expertise in these systems does not run throughout the culture of a public body like the Department of Social Security, and is not that the root cause of some of the problems, that, inevitably, the private sector is going to be at a different stage of understanding of some of these systems than is perhaps the public sector, as a contractor?
  (Mr McCorkell)  I think, in terms of the expertise, I was very pleased with the Chairman's remarks about our internal expertise, and it is vital to the Department that we retain that expertise; and you talked earlier about outsourcing, and I am quite sure one of the things the Department is not going to outsource is that expertise. We have a responsibility, and I have a responsibility, in ITSA, to ensure that I maintain sufficient of that expertise within the Department and within ITSA in order to allow us to work with these suppliers, to make sure that we understand what they are offering and to make sure that, in the end, we in the Department retain control of what we get, that we get what we want, as opposed to what the supplier might decide he wants to give us. Now Peter may want to comment on this later, but that process is quite vital to the future of ITSA and to the future of the Department, so it is extremely important that we continue to develop people with that expertise. It is perhaps, I hope, not surprising to you that, although all three of us have worked in Benefits Agency, all three of us have come through the mill in IT as well; in years gone by, I was a plan programmer.

  41.  But how do you hang on to people, given the goodies that the private sector can offer to people with that expertise?
  (Mr McCorkell)  These are precisely the sorts of issues that we have to tackle, within ITSA, (a) how do we create that expertise, and (b) how do we hold on to that expertise. The starting-point, and this, I believe, is good news, is that there are people out there who like being public servants, even IT experts, they believe that it is a valuable job to be a public servant and they feel respected as a public servant, and even as an IT expert they wish to stay as a public servant; so even though they may well be offered significant enhancements to go and work elsewhere they remain as public servants. I would like to think there are three of them here, in front of you, who actually feel that way, and we are public servants because of that. But that is not all of it, and equally we have to look internally at our pay and awards structures; we will never totally match the private sector, because they can always add bidders, and it is not the nature of Civil Service pay that you can do that. But we have specifically looked at pay and rewards, and, again, Peter, perhaps you can remember some of the detail on this, in order to change the structure of the way we reward people, to make it more attractive to stay in-house and to stay with us. I am not sure, Peter, if there is anything else you would like to say on that.
  (Mr Sharkey)  Just a couple of points, if I may. In which other job do you get such fun as this; it is a true reward. On the IT expertise, or expertise in-house, just one point, in addition. Yes, I think we have some expertise in ITSA, and we are extremely proud, and it is both technological IT expertise but also business expertise. Now, with working with the businesses over the many years that many of us have, we actually know, I would not say as much as they do, because that would be arrogant, but an awful lot about how these businesses run and what their drivers are, at a level that helps us a lot to identify what needs they really have and to try to help re-engineer the business. What the AFFINITY consortia and people like that bring in is hard-nose IT expertise plus raw business expertise, and I think the most powerful projects are when these things are merged together, so you get a set of people who really understand the departmental business and drivers, departmental IT current, because this is not a greenfield site, you need to know what is going on. Also within ITSA we have some modern IT expertise, we bring in powerful consortia involving people like IBM, as well as the EDSs of the world, you have got to have powerful technological injection, plus a view of where the IT world generally is going; and I think that is a very powerful combination. And when you mix that with actual business people, as the MS1 project is, I think those are the recipes for success; it is a bit like under PFI, what do we bring to the party. On the pay and awards one, we had an issue last year where we were hitting much higher attrition rates of our staff, it is not a nice word, attrition rate, but they were leaving in "droves" to go to the private sector. This was caused by a few things. One, we had had fairly aggressive pay settlements over the years, and people had found a kind of pay drift between what we were paying and what the private market was. The other one, and it has to be acknowledged, was the Year 2K thing coming along, where anybody who could debug COBOL programmes, and we have lots of those, was extremely valuable around the world to debug COBOL programmes and find everything with two characters; so we lost quite a lot of people with that. The attrition rate had hit 20 per cent of our people, which is unsustainable, you are out of business, in time. We had discussions with various people in the Department, etc., and we came up with what we thought was a very imaginative pay settlement, I would not want to quote the details here, if you are interested, it is not a secret, we can send you the details, where we tried to target, in a performance-based way, on a competency-based pay, rewarding people who had the skills that we wanted to keep.[3] This was argued and debated through both the Department and Treasury, and I have to say that they were both very supportive, there was a business case there, obviously, and some people got relatively decent pay rises out of it, but it has not broken the generality of the Treasury pay guidelines, it was just an imaginative settlement that was supported by the Department, I was delighted with that, and agreed to by Treasury. Since which, our attrition rate has gone down to 5 per cent, which is about what we would expect, through time. So, I think, on the pay and rewards, there is some good news there, some imaginative work done last year which has blocked that; there is still an attrition rate in IT generally, I am sure you picked that up, the Year 2K is still a few months away, as you know. So we are quite pleased with that, and all the signals we get back from the staff are that that was a good piece of work and they appreciate it and see that the Department, ITSA, etc., made a stab at trying to make things better.

Chairman:  I want to move back to the core process with Kali, but, Doug, have you got a quick supplementary?

Dr Naysmith

  42.  I have got a very quick one, that is really only peripherally related to all this. But much of what you have been saying, about managing projects, the modern way of managing projects and involving private finance, sounds very much, to me, like what has been said about smart procurement in the Defence Procurement Agency. And I just wonder to what extent you have been influenced by that, or maybe they have been influenced by you, or whether there is something building up in the public sector to look at this different way of doing projects, and if there is any contact between you and, for instance, the Ministry of Defence, or the Defence Procurement Agency, in the modern way of handling projects and getting better results?
  (Mr McCorkell)  I will allow Brian to think, perhaps he can remember. I personally am not aware of any particular contact, but should there be, and I can check and let you know if there was, it would not surprise me at all, because one of the things that we like to say is that we wish to learn from anybody else, if people have got lessons to teach us; the "not invented here" syndrome does not apply to us. But these are difficult issues and we must capture all the experience from everyone, so it would not surprise me at all to find that we had talked to Defence Procurement. I know we talk through CCTA to other Government Departments. I know, for example, it was mentioned earlier, the EDS relationship with ES and Inland Revenue, I personally will, in fact I have already arranged meetings with my counterparts in those organisations, so that we can share experience and so that we can understand how we jointly manage a major contractor who now works across all the Agencies. So I can assure you that the general principle of (a) sharing our experience, but (b) us using and capturing other people's experience, to help us develop our strategies, is very well taken.

  43.  And there is no problem with the fact that you have got two Agencies, which might have been considered a little bit more competitive than collaborative in the recent past, but it does not make any difference?
  (Mr McCorkell)  No. The whole focus now, across Government, and this is not just in IT, is of Agencies and Departments working together and jointly collaborating on projects, and, yes, that is a relatively new and emerging scene for many of the Departments. We have, I think, the advantage, in having gone through the JSA experience, we had to work out a way of working with the Employment Service, and that went through a long gestation period but came to a very positive way of working. And we now all see the advantage of sharing and working together, and we will be taking it forward.
  (Mr Barnes)  If I can just pick up the last point as well. Working together is not a new thing for ITSA, in any event, in that the legacy systems we have got were built with a very high involvement of some of the leading IT people, so we have worked in a different form of contractual arrangement with them in the past. On the other point, about learning the lessons, I think, from my own point, I was unfortunate in NIRS, in that that was the very first PFI/IT, so I did try to see whether there were any lessons to learn, and there were not. But, since then, I have not had any direct contact with MoD, but a number of Departments have visited me or I have been to them and given them talks and presentations, so there is a general will there to share. And I suspect it is more an indirect contact we get rather than a direct, in that we feed our experience through CCTA and the Private Finance Task Force, and they spread it out to other people, as necessary.

Kali Mountford

  44.  Can I just start though by saying something totally unrelated to procurement, and that is, it is good to hear that some civil servants still think that public service matters, and I was very pleased to hear your remarks about that, and, even if we have to have a few inducements so that when we do develop marketable skills people do not go off and market them, it was very good to hear that the sense of public service still exists. I notice, in your memorandum, there are actually 15 organisations in total, if we add the three consortia together, involved, and that obviously means that there is some sharing of risk, both for them and for the Department; and, presumably, the thinking behind that is that it lends the Department a great deal of flexibility, ability to change systems and choose a relationship which is appropriate to whatever project we are about to undertake. And I was listening just to what you were saying about lessons learned; another lesson surely to be learned is picked up in paragraph 3.6 here, and that is the "Big Bang" approach and why we do not want it any more. Have you got anything more that you can share with us about the `big bang' approach, and why it is you have rejected it, and what you see as the benefits of not choosing it now, and what lessons have you learned perhaps from our past experiences?
  (Mr McCorkell)  Yes, we have very clearly rejected the `big bang' approach, and I think that is for two reasons. It is (a) the sheer practicality of implementing something as huge as the total system; and, equally, in relation to the external suppliers and the contracts, and Brian may again want to comment on this, in contracting for something as huge as this over such a long term and getting a set of contract conditions that you then have to manage in a totally changing environment leads to confrontation and leads to, you start with a contract that is perfectly valid but in four years' time it is totally invalid and you spend most of your time arguing about the contract rather than delivering the business. In terms of delivering the business, the key thing is to establish a piece of the business that is consistent with your overall strategy and brings a clear benefit and that is manageable in size to do, and Modern Service One is our first tranche, our first phase, of that, and we will contract for the development and delivery of that phase. We are now going through the process of fully understanding that phase before we write the contracts, and we are working with AFFINITY to get it very clearly defined. We will then, and in fact we have already started the process of saying, right, which is the next phase, which is the next block of work that we will bring into this. Modern Service One, I suspect, the decision on what that would be was taken probably a year ago, was it, Peter?
  (Mr Sharkey)  It was finalised about a year ago.
  (Mr McCorkell)  Finalised about a year ago. So we have had now another year before we even start thinking about what the next phase is; so we can take the opportunity to look at what has changed since we defined phase one, what is now the priority, have the priorities changed, so we do not have to complete the definition of the next phase too early, so we are better able to intercept whatever the Department's real requirement is, as the world changes and the world moves on. So it brings about those advantages. It also brings about the advantages in contract terms, that we know what we are contracting for, the supplier knows what they are contracting for, and we can get a much firmer fix on price and much more control on price. If you try to contract for something huge then you start off with the contract and the price, but as the world moves on and you change then you keep changing the price and you have a tendency to lose control. Brian, is there anything else you would like to say about the contracting strand?
  (Mr Barnes)  It is not directly contracting but it is around the dangers of implementing systems with a legislative deadline, where you almost come to a cliff edge, and if it is not there on the day there is a major issue, and we have had a number of our systems around that; so, certainly, we are looking to avoid situations, wherever possible, that we get caught up in very finite positions which give you no room for manoeuvre.

  45.  In the same paragraph, I think it is even the same sentence, it also talks about pilots and trials. Will the pilots and trials help us look at the end date and whether we can meet it, or will it look at whether or not the system is going to work; and I personally like having lots of pilots and trials, I like testing things first, but, given that, are there parts perhaps of the legislation on procurement which perhaps give some constraints to pilots and trials, and, if so, how are you going to deal with it?
  (Mr McCorkell)  I think, if I take first the pilots and trials that we have already conducted, which were not so much about how difficult is it to implement this technology, or how long it will take, it was about is this the right type of technological answer to the business requirement. So in things like Lewisham, where we had a clear requirement to interface with local authorities, then we could sit the IT people back in their black box somewhere and design a brand new system for integrating Local Authorities and Benefits Agency offices, but unless somebody actually goes out there and tries to do it then you do not see the human interaction and what things will work and what things will not work and the best ways of doing it. So those trials were designed specifically to inform the overall design of exactly what we will build, and we will continue to use those sorts of trials and model office type processes to try things out, so that we inform getting it right, rather than we decide, we nice IT people, we are going to have one of these and we go off and design it and build it and then we take it down, and the benefit clerk says "Life isn't like that." So they are very much designed to get the design right and the specification right. In terms of can they do it and can they do it in the timescale, the process that we are now going through, working with them, is allowing them (a) to be much clearer about what the requirement is, but they also have to produce very detailed development plans, which, as opposed to the way it happened on previous PFIs, we never saw; we now see those, monitor those and agree with them that these are reasonable and sensible, and hence we have confidence that it can be done.

  46.  I was going to ask you actually how exactly the ACCORD differs from PFI, because I do not really fully understand the difference. Can you explain that in a bit more detail?
  (Mr McCorkell)  I think that, in terms of the change in the nature of the relationship and the way that we will control these projects, that is one of the big differences that give me confidence that we will not allow the past problems to re-occur. Because I believe it is true, in past PFIs, we gave the contractor the specification, they told us they will do it by this date, and off they went and started working, and what we saw then was when they brought some stuff to test; that is not the way it will work here. We will see their development plans, we will see their progress reports against their development plans, we will be able to monitor where they are, we have total insight into how the whole thing is going. That is not saying we are managing it on a day-to-day basis, but we have total insight into how it is operating and where, potentially, problems may occur, that we can then sit down with them and say "Hey, hold on a minute, unless something is done about this we're going to end up being late", or whatever.

  47.  Right; but in PFI one of the supposed advantages, in any case, was that there was a transference of risk to the private sector, and we heard from NIRS that perhaps not all the risk went where we thought it would; but where does the risk now lie?
  (Mr McCorkell)  The risk in the development, and their input and cost of development, still lies with them, because we will not pay until we get useful products; so the same risk will still lie with the private sector partner. What we are doing, through this process, is allowing us, in the Department, to manage our risk, which we could not do because we did not know how they were imposing on our risk. If one of these projects is delayed then, in terms of the development, the private sector has taken the risk because they do not get paid, and if it costs them more money to do it they have to put that money in; so we have transferred that risk, wonderful. But if it is delayed we have trouble telling people what their pensions are, and not only, apart from the bad public service, that costs us a lot of money, to either do it clerically or put it right, or whatever. The difference is, we are now getting sufficient insight into what they are doing, without taking away their responsibility, to help us manage our risk and make sure that things are going on track.

  48.  So is there going to be an advantage to service delivery, or a disadvantage, indeed; how is this going to affect the quality of service delivery for the Department?
  (Mr McCorkell)  In the way we are now working, we are geared up to work in a way that will deliver the system that we actually want and need, that we have tried out and piloted in model offices, that the clerks out there know and can use and can bring the benefits and will deliver to time. So, instead of getting a system that is late and not quite what you wanted, and all the problems that causes, we will get a system on time and one that is what we want and what we are expecting, because we are involved throughout the process. We still leave the risk of investing in this development with the private sector.

  49.  And what about cost of delivery then, the cost of the delivery of the system, perhaps we can see where that lies, but are there any cost implications for service delivery from the Department, I am thinking again of NIRS 2 perhaps?
  (Mr McCorkell)  In terms of the cost on the private sector, I would argue very much that the cost of getting it right and getting it up on time is actually much less than the cost of getting it wrong and taking longer; so there is a major advantage there. Clearly, there is an internal cost, in that we now have to put more effort into doing this monitoring, to doing this input that we keep needing to do on an ongoing basis; the cost of that is a huge saving against, again, the cost of getting it wrong. So, really, rather than put a lot of effort into correcting it, it is put some effort into getting it right.

Ms Buck

  50.  I apologise, because I am going to ask my questions and go. But, certainly, some of the questions I am going to ask on the prototypes and pilots we have already covered, and some of them have certainly lapped up against this, because you have been giving very comprehensive replies; so feel free to be as crisp you like, commensurate with accuracy. We talked a little bit earlier about HORIZON and about the systems that backed up HORIZON, the Personal Details Computer System; can you just tell me, what difference does it make from the customers' point of view?
  (Mr McCorkell)  Do you mean the HORIZON system?

  51.  Standardising the data system?
  (Mr McCorkell)  Standardising the data system, let me give you an example. At the moment, if you are a pensioner and you change your address, you might well write in to the Pensions section and say "I've got a new address"; you might then, a week later, need to claim Income Support, and go into the Benefits Agency office, claiming Income Support, and they will ask you "Do you live at 46 Arcadia Avenue?", and you will say "Oh, no, I told you last week, I moved from there." That will not happen any more, in terms of the direct customer interface. And simple things, as part of the modernisation, things that you will all have seen, if you go into Comet to buy something, they ask you your post code, and that is all you have to tell them, because they pull up the rest of the address; we now do that, we did not before, because when our systems were designed that piece of technology was not there, it has now been implemented. There are some very simple things like that that make it better.

  52.  Within the whole kind of process, there is going to be built in, not just your job, but there will be built in, I mean the risk attached to that system is that a single error can then be duplicated all the way through the system; so are you looking at how you can make sure that a name misspelling, or something, does not—with a lot of ethnic minority names, I frequently get a name misspelling and becoming a chain of errors all the way through the system?
  (Mr McCorkell)  Yes, that was recognised in the design of this system, and, as you say, that is mostly dealt with with procedures in the front office and the people dealing directly with the information as it comes in; and, as I said earlier, we have trained 70,000 people to use this system. If it was just a matter of "Well, here are some new screens and you use a different screen", we would not have had to train them; the main reason for having to train them was "this actually makes your job different", because, although you are now taking an address from a pensioner, it might actually be relating to Income Support and you have to be more careful. There was a lot of awareness training went on as well as procedural training.

  53.  Has the Data Protection Registrar been involved, in terms of raising any issues about data?
  (Mr McCorkell)  We have checked with the Data Protection Register, at the time that this system was designed, and it is fully compliant with the requirements.

  54.  What has been the process of aligning DSS data with Inland Revenue data, given the two or three very large-scale projects or changes that would have affected the interface between the DSS and the Inland Revenue?
  (Mr McCorkell)  I am not sure if either of my colleagues would have any detail on that. Brian?
  (Mr Barnes)  I can give you some information, in that we do interface various elements of data with the Inland Revenue, and at the point of the interface there are certainly agreed standard definitions to preserve those interfaces across the boundaries. And, I think, in recent times, to say aligning would be too strong a word, but certainly the process of sharing the standards we each use to store names, address, marital status, etc., is being shared, and that will be sort of taken into account in any future exchanges between us.

  55.  Moving on. In your memorandum, you talked about having had a very positive response to a number of the prototypes, DSS Direct and the Camden Project, and the Lewisham Project; what is that based on, that claim of being a very positive response, and how are you using the monitoring to be constantly looking at the design side?
  (Mr McCorkell)  Again, I will probably bring in Peter here, because he had a very direct involvement in those. But those series of prototypes, as well as informing the future decisions, were reviewed quite carefully, and they did bring some significant benefits; there were reductions in claims processing times, there were reductions in the time it takes us to pass information to the Local Authorities on Housing Benefit, there were identified reductions in fraud and abuse, because we have speeded up the process and passed more accurate information. There was a clear response, I believe, from the public, in terms of our prototypes, on what we call electronic claims processing, but, basically, it is allowing somebody to ring in and we take the claim on the `phone, rather than sending a huge form, and not only take the claim on the `phone but if that is a claim to Income Support and Housing Benefit it is done at the one time. There was a very positive response to those.

  56.  And that was actually monitored——
  (Mr McCorkell)  And that was monitored and measured.

  57.  By what, by sending people response forms to report on how they were perceiving a different quality of service, or interviewing people?
  (Mr McCorkell)  I will ask Peter, who was involved.
  (Mr Sharkey)  A follow-up. I do not know exactly who did it, but it was independent of us, anyway. The study was commissioned actually by the Benefits Agency/the team who put those prototypes in, and they are independent reports and assessments, based on interviews, based on factual returns, based on, they also had, I forget what you call it now, where you check the effect on people who have not been affected, if you know what I mean. So they were independent of us, and the results were, as George says, mainly positive, in every aspect, both from the customers, the clerks, or people working in either the Benefits Agency or the local authorities, or the people just using the IT and saying "Oh, that's good, isn't it, in colour"; that was a major improvement for some.

  58.  And we are making sure, I know, again, this question of the Benefits Agency as well as you, but we are making sure that what could be an overwhelmingly positive response, and I do not doubt that it is, and should be, to these schemes, because they are very good, but an overwhelmingly positive response across the board can still mask certain groups becoming actually completely excluded, and that has just got to be borne in mind? It does not undermine the validity of the good work, but it does mean that you have got to look at, just because you get an 80 per cent response and the 20 per cent could be seriously marginalised, as a consequence, you are really making sure that you are looking at disabled people, you are looking at people whose first language is not English, all those kinds of things, you are making sure that whatever models you use across the board can encompass that?
  (Mr McCorkell)  I think the major protection there, and, again, it is why we want to expand the use of these prototypes and pilots, is the decision to do something in an entirely different way and to stop doing something can only be taken when you have done that full analysis and you know the total effect. So when we say, for example, that, apart from informing the future, we are looking at the possibility of implementing some of these ideas and technologies elsewhere, that is not saying that we will immediately replace everything else existing we do, we will take the advantage of using these, but the other facilities will still be available. The electronic claim form facility, if we make that available, until we are absolutely certain nobody needs it, it will still be possible to send in the written claim form.

  59.  The last question. The Lewisham and Camden prototypes, you had to work with Local Authorities, in one case, looking at their systems, Child Support Agency integration, in the case of Camden; just briefly tell us what were the main differences, what were the main problems you have overcome?
  (Mr McCorkell)  My understanding is that, in terms of those prototypes, and perhaps it might be part of the fact it was prototype, there was a very positive integration of the people. The fear that the people in the Local Authorities, people in Child Support, and in the Benefits Agency, would suddenly not work together, because we would all be suspicious of one another, just did not emerge at all and they all worked very positively together, and there were no real issues. Again, I am not sure, Peter, if you have any direct experience you might want to add to that.
  (Mr Sharkey)  Just to confirm, almost uniformly positive, both in the design stage and through the implementation stage and the review stage; there were odd hiccups, obviously, but in the main, from start to finish, complete co-operation.
  (Mr McCorkell)  I think, again, the thing to be careful of, and it relates to your concern that we might miss something, we do have to remember that these were prototypes, and when you are doing prototypes people do tend to feel a bit more important, because they have been selected to do something. And, therefore, as we start to expand this into working, we must be very careful about the communication to the staff and the understanding of the staff, so that we do not raise undue concerns with them, so that, basically, we help to create the same sort of atmosphere and environment. And if we take the lessons that are coming out of here, where the staff response was very positive, then I think that is something to build on, to all of them, "This is going to make your job much better."

3   See Ev. p. 27. Back

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