Select Committee on Social Security Second Report


Letter dated 23 February 2000 from the Secretary of State for Social Security to the Chairman of the Committee


Since our exchange of correspondence in December on this issue, the Social Security Committee has taken evidence from officials, on 12 January, and published its report into the issue of the first use of the power granted to me by section 82 of the Welfare Reform and Pensions Act 1999.

I am grateful for the urgency with which the Committee conducted the hearing into the draft Report and for the speed with which this Report was completed.

You made a series of recommendations in your Report. I enclose a final draft of the Report[7] that I intend to lay before Parliament as soon as possible. Given the need for consultation with Treasury colleagues and the printing timetable, I aim to lay the Report in the week beginning 13 March.

I agree with the substance of your recommendations, and have therefore included a great deal of additional material. The areas of the text that represent a change or addition are sidelined for your convenience.

There are a few areas where the revision does not wholly accord with your recommendations. You have asked that the total liabilities accrued by signing a contract with Affinity should be on the face of the Report. The requirements of section 82 require that an estimate of the financial liabilities under the contract for the period covered by the Report be included. This has been done for the relevant period, but I cannot provide, at this juncture, further information on the total liabilities that might be incurred under the contract. This is mainly because we have not yet signed a contract with Affinity and, until full agreement is reached, it would not be right to reveal this information—for obvious reasons. The Report refers to these matters at paragraphs 13 to 18.

You proposed, at paragraph 12 of your Report, that we could avoid accrual of financial liabilities with Affinity by adjusting the timetable to ensure that work specifically related to the Child Support, Pensions and Social Security Bill did not begin until after the Bill had achieved Royal Assent. The plan is that the legislation-dependent work will not begin until September this year. (This is spelled out on the face of the report at paragraph 15.) If we achieve Royal Assent by the summer recess, then no liability in respect of legislation-dependent work will have been accrued. While I clearly hope that the Bill will achieve Royal Assent by the summer recess, there is of course a risk that it may not. In these circumstances I would be concerned about the effect of any consequent delay in the creation of the new IT system.

At paragraph 11 of your Report, you recommended that we make clear how we could minimise the risk to the taxpayer from signing a contract in advance of Royal Assent. This is done in paragraph 20. You go on to ask that the House be told of the scale of the unavoidable expenditure in the event of the Bill not being enacted or being substantially amended. As far as a failure to enact the Child Support, Pensions and Social Security Bill is concerned, essentially all of the spending authorised by the passing of this Report would be unavoidable expenditure. That is the purpose of this Report—to allow necessary spending in advance of Royal Assent to a Bill. If the Bill falls, then what was believed to be necessary is no longer so, and becomes the scale of nugatory expenditure. The effect of a substantial amendment is difficult to accurately determine—it would depend on what the amendment was.

I am sending a copy of this letter, along with a copy of the revised section 82 report, to David Davis at the PAC, and further copies to the Clerk of the Social Security Committee and that of the Public Accounts Committee.

7  Not printed herewith. Back

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