Examination of witnesses (Questions 346
- 359)
WEDNESDAY 29 JULY 1998
DAME ANN
BOWTELL DCB, MR
STUART LORD
AND MR
GEORGE MCCORKELL
Asterisks in the Oral Evidence denote that part
or all of a question or answer thereto, or a passage of Evidence
has not been reported, at the request of the Department of Social
Security and with the agreement of the Committee.
Chairman: Perhaps we can reconvene the
session and look at the two Private Finance Initiatives. The Committee
is concerned that we are still able to scrutinise properly the
work of the Department openly and honestly as best we can, subject
to rules of commercial confidentiality. I think we would just
like to spend a moment with you exploring that question and how
we proceed in the future.
Mr Wicks
346. I suppose my concern is, and I am not a
constitutional expert, but I guess the job of the House of Commons
is to scrutinise the Executive and, therefore, to ask proper questions
to both Ministers and, within Select Committees, to civil servants,
but in this area where there are issues about commercial confidence
and contracts and possible litigation maybe and so on, and I am
talking now theoretically, I am not talking about any particular
issue we are about to discuss, if we are told from time to time
by Ministers, as we have been, or by civil servants that we really
cannot have our questions answered, where does that leave accountability
to Parliament? It could mean that we are in a situation where
on one day we are told that something is proceeding and then,
and I am just talking hypothetically, we are told that there is
a major problem with parliamentary accountability and scrutiny,
so that is my question.
(Dame Ann Bowtell) I think the major difficulty is
while we are at particular points in an event. I do not think
there is a problem once the event is finished, so there should
not be a problem about scrutinising what has happened afterwards
and indeed I think the NAO and the PAC with some of our projects
already has and when they looked at the early stage of NIRS 2
project, there is a lot of information there and there is a lot
more information about various parties to the contract than I
suspect the parties to the contract would have wanted, and indeed
we are now making it clear to the contractors that after the event,
a lot of information may well come out about what was in these
various things. The difficulty is if we are in the middle of some
negotiations for something like that which could then affect the
outcome. To put it bluntly, if the people we are negotiating with
know what our negotiating position is, we are not going to get
the best result, and if we are in the middle of something which
might result in litigation and our case is then published somewhere,
we are not going to get the best result, so it is the "in
action" bit that is the problem. I do not think there should
be a problem after the event and clearly when it is in action,
I think that officials are going as far as they possibly can.
347. But is it not too late after the event
for some things? Again talking hypothetically, if something goes
terribly wrong and public money is lost, it is too late then,
is it not?
(Dame Ann Bowtell) It seems to me that when you are
looking at decisions which have to be made about managing bits
of the public sector, to some extent you have to let the managers
manage and then chop up in little bits if they do it wrong afterwards.
You cannot in effect by committee or by Parliament manage each
decision.
Mr Pond
348. But you can have parliamentary committees
being aware of the process of those decisions.
(Dame Ann Bowtell) Yes.
349. And there must be people within the Department,
I would suggest, not large numbers, but significant numbers of
people who know the state of the negotiations.
(Dame Ann Bowtell) Indeed.
350. They know what the bargaining position
is and they know what the parameters are.
(Dame Ann Bowtell) Yes.
351. Therefore, in a private session like this,
why should Members of Parliament not also be aware?
(Dame Ann Bowtell) There is no problem about private
sessions. My concern is only about what gets on the public record.
I would share with you what we know. The only thing I could not
share is clearly sort of advice to Ministers and the normal things
that I would not share, but as between us and the contractors,
I am very happy to speak frankly, as long as it does not get outside
this room.
Chairman
352. It is a bigger issue which we may need
to take up with the House, but let us see how far we can go. Turning
to NIRS 2 and the question of National Insurance numbers, what
is the timetable and can you please tell us what you think the
problems are and what the timetable is now for the new NIRS 2
process?
(Dame Ann Bowtell) Would it be helpful if I went through
the history of NIRS 2?
353. Briefly, yes.
(Dame Ann Bowtell) NIRS 2 was our first major IT contract
under PFI and it is a contract with Andersen Consulting. It has
been quite a long, hard ride and for us it has been a learning
process on PFI because we started being pretty hands-off, you
know, and the theory was just to tell them to get on with it,
but we discovered that that did not actually work because they
needed to know so much about the business and needed to be so
sort of integrated with the users and it just was not possible
for us to stand that far back. In early 1996, Andersen's came
to us and said that they thought it was now not sensible to implement
in one big bang, which is what we had been proposing to do, and
they wanted staged implementation. We had a negotiation with them
about that and we decided that was what we should do because actually
it was a safer way of proceeding.
354. Did they carry the financial consequences
of that decision?
(Dame Ann Bowtell) They did. There were some consequences
for us in terms of additional work and they paid for those. So
the roll-out we then settled on was that we would start with a
thing called release 1A in February 1997 and we would then have
the second release, 1B, which was due in October and then release
1C which would be the main release and would come on stream in,
I think, early 1998. We have been managing this through with Andersens
and release 1A, I think, went fine and release 1B, which was much
bigger, it was the release which dealt with the contracting-out
employments group, was delayed by three months and came in in
January. When we got to release 1C, we did not think that it was
in a good enough state in April for us to accept it. Release 1C
is the transfer of all the accounts from NIRS 1 to NIRS 2, 65
million accounts have to be moved over, and we agreed to let them
start that in June, so that migration took place then. We had
a new go-live date of 13th July, which has happened, so NIRS 2
has now gone live with two-thirds of the capability of that release.
The go-live date for the rest of the release is 24th August and
we believe that that will go ahead. What we have had has been
a much more controlled and phased implementation than we expected
and it is later than it should have been, but the project is under
control. This is an IT project being difficult, it is a huge project,
it is harder than they had expected, but the whole process is
very tightly under control and the Contributions Agency, I think,
are managing it very well in that they are going bit by bit and
opening the system to a few users and seeing if it works and then
expanding it and that is a bit frustrating because you just want
to get on with it and clear the backlogs, but it is working and
delivering. The system itself, did you see it when you were in
Newcastle?
355. Yes.
(Dame Ann Bowtell) It is lovely. The system, when
they get it, is great and I think it will transform the way in
which they do business.
Mr Wicks
356. It was not working when we were there.
(Dame Ann Bowtell) No, it was not working initially
the day I went either, but it is good, the system. Now, inevitably
while this has been going on, we have had backlogs of work building
up because it has not been available when it should have been.
The Contributions Agency have been taking a lot of trouble to
try and manage that work and those backlogs have come in in a
number of different places. The biggest ones are in the contracting-out
employments group and they relate to rebates, to pension schemes,
and there have been some delays in the direct debiting of self-employed
where they can collect the contributions direct and some of that
has had to be done on slightly old information and that will have
to be updated, but I am told that the 8th August direct debit
will go ahead okay. The retirement pension forecasting service
is not currently available, but that is an extra service that
we give to people. The Benefits Agency payments, because of course
this computer supplies the contributions information on which
benefits are based, ongoing payments are not affected, but the
things which can be affected are new claims and there have been
some delays there in determining entitlement and we are doing
some of that on a manual basis and in some cases we have had to
put in special rates, but, as I say, the Benefits Agency have
got their contingency in place for that.
Chairman
357. So it should all be done and dusted by
the 24th August?
(Dame Ann Bowtell) The system should be all up and
running by the 24th August. We will not have cleared all these
backlogs by then. Some of them are going to take us quite a long
time to clear. The way the Contributions Agency works is that
it has always had backlogs at this time of year because it has
got a sort of annual cycle. You get all the end-of-year returns
in and all the rebates to be done, so there is always a lot of
work now, and they are actually clearing what they have got now.
I think some of it will run into the beginning of next year because
we are not going to get it all cleared this year. Some of the
pensions stuff is stuff that we can catch up with. So what we
have got is a situation where the system is getting steadily better
every day, but we have backlogs and we have plans to clear the
backlogs and we have kept the customer effectively informed about
what is going on.
Ms Stuart
358. I am afraid you have mentioned pensions—
(Dame Ann Bowtell) I should have kept quiet.
359. Well, the point is can you confirm that
the rough deal with Andersen Consulting on NIRS 2 was that they
would do it for free provided they get to keep the copyright.
(Mr Lord) It is not for free. The original contract
price was estimated at £44 million.
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