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Session 1999-2000
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Delegated Legislation Committee Debates

Report by the Secretary of State for Social Security under Section 82 of the Welfare Reform and Pensions Act 1999

First Standing Committee on Delegated Legislation

Wednesday 5 April 1999

[Mr. Jim Cunningham in the Chair]

Report by the Secretary of State for Social Security under Section 82 of the Welfare Reform and Pensions Act 1999

4.30 pm

Mr. Eric Pickles (Brentwood and Ongar): On a point of order, Mr. Cunningham. Those who read our deliberations in Hansard may not appreciate that the Committee's documentation includes the second report from the Select Committee on Social Security, or that there was a first report. This is the first occasion on which we have considered these matters, and it is important to establish the precedent that we should be provided with all the reports that Select Committees produce. I notice that Clerks are trying to locate the first report while I speak. I attach no criticism to the Chair or to the Clerks, but it is important to establish the appropriate precedent.

The Chairman: I understand that someone has gone to get copies of the first report. I leave it to Committee members to decide how to handle this matter. Do you want to wait or to proceed?

Mr. Pickles: Perhaps we should proceed.

4.31 pm

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): I beg to move,

    That the Committee has considered the Report by the Secretary of State for Social Security under Section 82 of the Welfare Reform and Pensions Act 1999.

It was only very recently that we considered the Welfare Reform and Pensions Bill in great detail in Committee. We may have thought that we had disposed of that legislation, but we return to it once again.

We are in an unprecedented situation—this is the first debate on these new powers. The fact that such a debate has not previously taken place may explain why the first report of the Social Security Committee was not available. The House authorities and Committee members are probably trying to get used to this new form of debate, the relevant powers for which are contained in section 82 of the Welfare Reform and Pensions Act 1999.

I should remind Committee members why the power was granted. By any standards, the scope of activity of the Department of Social Security is enormous. The Secretary of State's report concerns child support and it deals with the changes that we are introducing to the system in the Child Support, Pensions and Social Security Bill. With such huge systems that are dependent on information technology, change is complex to deliver and can be correspondingly slow. However, when Parliament and the public believe that change is necessary—that is clearly the case with child support—there is pressure for change to be introduced as quickly as possible.

The rule is that such major preparatory expenditure, which could be spent on a new information technology system to give practical effect to an Act, should await the enactment of that legislation. That has been the case since the Treasury concordat of 1932. However, that places in great doubt the early implementation of change.

In order to facilitate major preparation for change, which includes applying the provisions as early as possible, while preserving parliamentary control over spending—which is equally important—section 82 of the 1999 Act enables the Secretary of State to seek from the House approval for expenditure before a Bill is granted Royal Assent. That is done by tabling a report.

Before I set out the report's main features, I should explain that the final report emerged as a result of consultation with the Social Security Committee. That consultation proved to be fruitful, and I should like to place on record my thanks to that Committee's Chairman, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), and to members of that Committee for the speed with which they conducted their initial consideration, for the thoroughness of the report that they issued in January and for the value of their recommendations, most of which have been incorporated into the final version of the report, which the Committee commended in turn in its later report of 21 March.

To make the child support system work properly and in a manner that gives the agency's customers a decent service, we need to replace the hopeless IT system that was given to it by the previous Administration with a modern system that is based on up-to-date components. There is also a need to transform the way in which the agency works—it needs to be converted from an organisation that is smothered by paper into a modern, client-focused organisation that uses the methods of communication of today and tomorrow—the telephone and the internet—not simply the methods of yesterday, including paper and clerical systems.

In order to realise that system, investment is required, and in order to have it in place by April 2002, we must start preparing for change as early as possible. Hence the condition in section 82(1)(b) of the Welfare Reform and Pensions Act 1999, which is that the Secretary of State should believe that a change that is brought about by any Act to a social security function will not be effectively provided from the date on which the Act comes into force unless preparatory expenditure is available to cope with the change before that legislation receives Royal Assent.

I now turn to the details of the Secretary of State's report. It seeks authorisation for a maximum of £45 million for those reforms of the child support system that are dependent on the passage of the Child Support, Pensions and Social Security Bill. Of that total, £6 million relates to the Child Support Agency's expenditure on reform implementation, and the other £39 million involves the liability that will accrue under agreements with the Affinity consortium, which is the lead supplier of the CSA's new IT system.

The report deals with spending until the end of 2000. That period was chosen to provide authority for spending in case the Child Support, Pensions and Social Security Bill is not enacted during this Session, and a small additional period allows for efficient handling of any necessary staff redeployment. I should also make it clear that the report does not cover the entire expenditure on child support reform this year.

Reforming the child support system involves changing the rules by legislation, changing the skills and culture of the CSA and improving the tools that the CSA uses to do its job. For example, I am sure that those Committee members who have constituency cases involving the CSA—let us face it, that is all of us—will be glad to hear that this year the agency plans to introduce bank statement-style statements of accounts for all clients. That great advance, which it was not previously possible to introduce, is dependent on investment in systems improvement, although it is not linked to the legislation that I mentioned earlier, and the report does not deal with it.

The report deals with the agency's spending on: the development and testing of the legislation-dependent parts of the new IT system, including work on the new calculation of liability; data cleansing, which involves tidying up the massive and inaccurate data that are held in the current, inadequate and outdated IT system; staff training; the provision of reform implementation teams in the Department; and communications in the agency and with outside stakeholders in the reform process.

The bulk of the expenditure that is covered by the report refers to a liability accrued, rather than to a cash outlay, in 2000. The inclusion of the liability in the expenditure that is covered by the report is based on legal advice that we have received. The liability in respect of work by the Affinity consortium appears in the report because it was written with the worst-case scenario in mind. We believe that it was prudent to include that liability in this context.

If the report were rejected, there would be delay, but perhaps not for long. If Parliament enacts the Child Support, Pensions and Social Security Bill before the summer recess, there will be some delay in the CSA's work. However, a huge project of transformation is involved, and any delay places in jeopardy the implementation of the reforms by April 2002. The upshot of rejecting the report might be that reform will take place later than would otherwise have been achievable.

When the power was originally proposed, some suggested that the House's control over Government spending was being seriously weakened. I hope that our extensive consultation with the Social Security Committee has helped to resolve those fears. I am a former member of the Public Accounts Committee and I accept, and guard with much commitment, Parliament's power to check the Executive's expenditure. In addition, the chief executive of the CSA assured me that appropriate machinery to track the spending is in place. That will enable her to report on the spending in her annual report for the year 2000–01. That control over spending will enable the National Audit Office to monitor the use of the money that is referred to in the report. I am sure that Committee members agree that that is important.

The Government believe that the procedures that have been adopted give the House entirely satisfactory assurances that the procedure does not breach parliamentary control of finance.

That initial use of the power contained in section 82 of the Welfare Reform and Pensions Act 1999 will enable the earliest practicable start to the transformation of the child support system to one that achieves a good quality of service to clients and ensures that maintenance reaches the children who need it faster.

4.39 pm

Mr. Eric Pickles: (Brentwood and Ongar): The Minister was commendably brief and thorough.

I want to raise a point on what she said about delay. In its 10th report of 1998–99, the Social Security Committee made a recommendation that has been repeated in the first report in paragraph 15 on page vii. It says:

    The importance of effective computer systems cannot be exaggerated. We recommend that the new child support scheme should not be implemented until the new computer system is fully operational.

The report goes on to say that the Committee was given assurances by witnesses

    that if the new IT system is not in place in the target period (late 2001), the Child Support reforms will be delayed until the system is fully operational.

It might be helpful if the Minister, in reply, again puts that assurance on the record.

This is the first time that we have done such scrutiny, and I commend the Minister's words about the amount of scrutiny that the Select Committee has done. I have read both reports and it seems to have done an extremely thorough job and to have made ministerial advisers jump through several hoops, which is always pleasing. We are dealing with £45 million—£6 million immediately. I cannot help remembering the words of former President Reagan, who said: ``A million here, a million there. We'll soon be talking serious money.'' Indeed, this is very serious money.

The Minister referred to two of the Select Committee's concerns. One related to the kind of information that it received and the other to incomplete information. It is important to establish early on that we expect full disclosure, or as near full disclosure as possible while protecting commercial confidentiality. I draw the Committee's attention to paragraph 8 of the first report, on page vi, which says:

    During introductory questioning it became apparent that the figures contained in the attachment to the Secretary of State's letter had been changed significantly . . . Bearing in mind that this is the first occasion on which this new and unusual procedure is to be used we would have expected to receive a more accurate document on which to base our examination of the witnesses.

That is right.

Negotiations have been carried out with the commercial undertaking and, as far as I know, negotiations or discussions may well be going on. That has prevented our giving as much scrutiny as I might have wanted to give the matter. We need to establish guidelines, and I should be grateful if the Minister would tell us what stage the negotiations have reached. Again, paragraph 13 on page vii of the first report says:

    The witnesses were unable to inform the Committee on the relative value of the bids but were satisfied that Value for Money had been obtained for the taxpayer.

I have no doubt that those officials are diligent and reasonable people and are doing an excellent job for us, but Parliament places its trust in the Committee and its procedures to ascertain such information. We are probably taking a leap in the dark, because we are having to take an official's view that we are getting value for money. It would be helpful if we knew what the position was.

In paragraph 14 on page 4 of ``Child Support Reform'', HC 270, the Secretary of State says:

    Discussions with Affinity are proceeding but are not yet completed. In those circumstances, certain terms of the contract remain commercially confidential, including information on the long-term costs of the project. These details are, therefore, not revealed in this Report.

In the normal use of the English language, the Secretary of State's words would mean that, because commercial negotiations are taking place, the details cannot be revealed. If those commercial negotiations were now complete, presumably he could reveal them. Will the Minister tell us what stage the negotiations have reached and whether she can now reveal the terms? It is unsatisfactory if the Committee does not know what the position is.

Once discussions are complete, we need to know precisely what the position is. Proper scrutiny of the report should be done by the Select Committee. It is in a better position to scrutinise it than we are: it can call witnesses, as it has done, and can examine them. It has a more important function than this Committee, because it can make changes—and the Secretary of State made several changes. The sum of £6 million out of £40-odd million simply cannot go through on the nod.

I noted with approval the Select Committee's recommendation that in future a clear statement should be made. In particular, I draw the Committee's attention to recommendation 6 on page vi of the second report, which says:

    While the power to incur expenditure in this way has been passed into law, we believe it would be appropriate to consider how best the House and its Committees should deal with any future similar cases.

It recommends that these matters should be referred to the Procedure Committee. I readily and heartily endorse that.

I ask the Minister to respond to a final point about the management. She has made many references to the Department's computers and has been most restrained in her words today. She referred to them as being outmoded, but of course computers become outmoded. She was perhaps less kind about other computers. I believe that it was on Monday that she painted a picture of the Conservative party going up Tottenham Court road with a load of used fivers, trying to get a knockdown deal.

The Minister is now setting a very high standard for herself in terms of competence in computers, to put it bluntly. Intelligent and urbane as she undoubtedly is, I doubt whether she has much idea about computers, or whether I have. I suspect that the people who sold us the previous set of donkeys are about to sell us this set. She must realise that when she makes these statements she is placing herself on a much higher plane of responsibility. If this set of computers goes out of date as quickly as the previous set, we will know who to turn to: the Minister will have been sent up Tottenham Court road with a computer magazine. What puzzles me is who will manage the computer system. I notice that, on 28 March, the hon. Member for Colne Valley (Kali Mountford) asked the Secretary of State:

    What plans he has for the strategic management of information technology.

The Minister replied:

    Following a review carried out in 1999, my right hon. Friend the Secretary of State approved a recommendation . . . for the strategic management of the Department's information technology services.

She also said that responsibility would be transferred

    from the Information Technology Services Agency (ITSA) to within the Department's HQ. This change will help maximise our ability to get the most out of our IT suppliers and facilitate the continued development of the Department's corporate IT strategy—[Official Report, House of Commons, 28 March 2000; Vol. 347, c.11SW].

That does not tell us a lot. What was the point of having a question for written answer to say: ``We've done it''? She might as well just say so. Why make the change? What implications does it have in relation to the report? What about the cost? This is the first opportunity that we have had to discuss the matter.

I am perplexed and shocked. I read last year's departmental report. It painted a very positive picture in relation to the Information Technology Services Agency—according to the report, the agency was doing a terrific job. However, there is also an annual business plan for 1999–2000, and, before the ink on that plan was dry, the agency was thrown out. We need to know what the position is. We know that, under that august body, things have not gone too well for the national insurance recording system, NIRS2, and that the new deal for lone parents was a conspicuous failure. Now, we want to know why responsibility was transferred and what the cost implications are. Will the money be better spent in the Department's IT facility, rather than on using the Information Technology Services Agency? That is a wholly reasonable question.

The Minister has covered just about every other point that I wanted to raise, and we do not intend to divide the Committee on the issue. We recognise that money has to be spent, in order to get the information technology ready for the new system. However, we should lay down clear guidelines to show that the House is not a rubber stamp, and that people should be held to account.

None the less, and subject to the relatively small caveat that I have just described, I am entirely satisfied with the Select Committee's scrutiny. We should commend it for that.


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