Select Committee on Social Security Minutes of Evidence

Examination of witnesses (Questions 346 - 359)



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.


  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.


  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.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 1999
Prepared 14 July 1999