Examination of Witnesses (Questions 20
- 39)
WEDNESDAY 15 NOVEMBER 2000
ANGELA EAGLE
MP AND MR
SIMON JUDGE
20. You seem to be arguing that the DSS has
a special way of interpreting the concordat because of the business
case?
(Angela Eagle) No, what happened was the concordat
was there and I think quite a lot of focus was taken off it the
further people got away from 1932 and I am told, because I was
not in Government at the time, that there was a Treasury clarification
of what the interpretation of the concordat meant with respect
to expenditure that could be incurred by Government ahead of Royal
Assents which considerably tightened up on the assumptions that
some departments had made about what it meant up to that date.
That was when the DSS realised that what it had been doing, for
example with the JSA Bill, was actually outwith the spirit of
the concordat and that another procedure would have to be adopted
in future to stay within the spirit of the concordat.
Mr Drew: Thank you very much.
Mr Stunell
21. Minister, it is obviously all very much
about certain exceptions and limits and so on and we, as a Committee,
are very concerned to make sure that those are tightly drawn and
very clearly understood. I wonder if you could just say a little
bit more about the limitations that you see? You have not, for
instance, told us how much money was actually spent in that interval
and what you would see as being the ceiling and whether the department
would find it of value or what hindrance it would be if we were
to say that there should be a limit.
(Angela Eagle) In doing my preparatory work for my
appearance today it occurred to me that because there is an end
to this process, and that is Royal Assent, it might be a good
idea to then produce an update for Parliament on what had actually
happened. In essence, when we make an application to use Section
82 powers, certainly in this case we were still in middle of actually
negotiating a contract with our suppliers, we were still in the
middle of honing more effectively, for example, the training and
preparatory work that we would have to do for the Child Support
Reform, so we could only give ball park figures. It might be a
good idea once Royal Assent has been got if we actually published
further information about the money that was spent.[2]
I think that would be a good thing that we could do to give a
final update on the outcome of the use of Section 82 in that case.
I do not know, Simon, whether you want to say something about
that?
(Mr Judge) Indeed, I think that would
be a very useful thing to do. In terms of the question, the original
Section 82 Report sought cover for some £6 million of spending
actually within the department, and the possible incurring of
a £39 million liability under the IT contract with our suppliers,
Affinity. That was done on the assumption that we might sign the
contract before Royal Assent. In the event, those two events happened
the other way around, so we did not use any of the £39 million
covered in the Section 82 Report, we were able to rely on Royal
Assent of the Act to incur that liability. In terms of the £6
million within the department, we actually spent about half of
that because we got Royal Assent in July rather than in November,
which was the assumption we used in putting together the original
£6 million figure, so it was roughly half the time period.
In summary, that was the outturn.
22. Those limits and the justification for them
were the subject of the two reports which were discussed prior
to any expenditure at all on those limits?
(Mr Judge) Yes.
(Angela Eagle) Yes, and the figures in there, as Simon
has just said, were the worst case scenario, the longest period
between Royal Assent and when we were having to start the work,
which was in April, and making the assumption that we would sign
the contract with Affinity prior to Royal Assent rather than after
Royal Assent. Had we signed before then some of that £39
million and up to £39 million, had it gone to November, would
have been spent in financial liabilities, although not actually
paid.
23. So if this Committee was of a mind to take
up the suggestion you have put to us that we might have a post
hoc report on what had happened, that would seem quite useful.
Can you just say something about what views the department would
take about having an absolute limit on the powers that could be
exercised under Section 82 in terms of financial limits, either
in pounds or some other defined term?
(Angela Eagle) The application that we made in the
report that we put to the Social Security Select Committee did
have an upper limit of, in this case, £45 million, which
was again a worst case scenario kind of estimate of what we would
need if Royal Assent was delayed and contracts were signed early.
I am not certain about having an overall absolute limit whatever
the project because each project and each potential use of Section
82 powers is going to be different from the last one, but I do
think that the draft report should contain a maximum. Whether
you should have an objective maximum across any potential project
I would doubt, but I do think that the draft report itself and
the report that goes to Parliament should have a maximum for each
project, whatever that is.
Mr Darvill
24. Can we now turn to the use of Section 82
powers by a department. In the DSS memorandum that you provided,
paragraphs 6.2 and 6.3, it implies that the Government may wish
to make extensive use of the powers but does not give any details.
What plan does the department have to seek further powers under
Section 82? Can you give details of the projects concerned and
the likely order of costs and timing?
(Angela Eagle) I can give you a general view that
I think we may well have to in the future because of our extensive
modernisation programmes which are rolling forward. If you look
at the Comprehensive Spending Review outturn for the department
you will see that over the next three years we have approximately
£2 billion of money to modernise our IT systems. Much of
that we will be able to do without recourse to primary legislative
changes and we can do that in the normal Estimates way, but if
there is primary legislation which changes the way we deliver
benefits then we are in that concordat situation again. I would
say that there is a limit and that is how many pieces of primary
legislation you can get space for in a parliamentary session in
a year. The answer is I suspect we may well come back to Parliament
at some time in the future with our extensive modernisation programme
but it would be attached to some kind of change in primary legislation
well signalled in advance. I certainly do not have a list of times
when we are planning to use it in my pocket that I can produce
for you. Given the state of our IT, given the huge agenda of welfare
modernisation that we are developing in the department, I think
it would be wrong of me to suggest that we are not going to seek
its use again.
25. It would be unlikely at this stage that
we could be more precise?
(Angela Eagle) I could not be more precise. Clearly
Child Support Reform was our first priority in this respect and
it did need a complete rebuild of the computer system and that
computer system will be the first building block to a much more
integrated system that we hope to create. Again, Simon might want
to say a bit about that. These changes will only attract Section
82 type discussions and considerations on our part if changes
to primary legislation are involved.
Mr Darvill: Thank you very much.
Mr Beith
26. In the House of Lords last year, Baroness
Hollis stated that Section 82 could be used in preparation for
joining European Monetary Union. Is that something on which your
department expects to need significant expenditure? I do not know
how it would come about, whether it would be simply changing the
denomination of currency on the payment order or what. If it does,
do you have any plans as to when you might embark on such a thing?
(Angela Eagle) It is an interesting question.
Chairman
27. And how much might be involved?
(Angela Eagle) It is an interesting question you are
asking me. The change programme documents that are published contain
our estimate of what it is we are likely to have to spend in the
event of any decision to join Monetary Union. To the extent that
we need primary legislation specifically for the DSS then I suppose
Section 82 could be in the running there. Simon, do you have any
comments?
(Mr Judge) It is clear that implementing a single
currency within the DSS's IT systems as they are now would be
a very major series of projects and undertakings, it is not simply
a question of changing symbols.
(Angela Eagle) You cannot just cross out "pounds"
and put in "euros".
(Mr Judge) It is a lot more complex than that. Clearly
we have done some thinking about the scale of that and how we
would actually do it if the decision were taken, and that is in
line with the general approach the Minister was describing. I
think the point is if a decision is taken to join the euro then
there is clearly a Government-wide issue about how Parliament
gives authority to departments to spend money to actually prepare
and implement for the euro. I am not aware of what would actually
happen on that but Section 82 is a possible route for the department
if it was felt to be necessary.
(Angela Eagle) That route would imply that each Government
department somehow had to change its own legislative position.
(Mr Judge) Yes.
Mr Beith: You are the only ones that could.
Chairman
28. The point that I think we are trying to
get at, I say it both to you, Minister, and to Simon Judge, is
in an area like that it would be really very dangerous for Parliament
to be bypassed before it had actually undertaken any proper debate
over the sums of money concerned as a result of what would be
a highly political decision.
(Angela Eagle) I do not think that we would use Section
82 powers with anything other than the greatest seriousness.
Chairman: I accept your assurance, Minister.
Mr Beith
29. The timing is rather difficult to manage
in the concept of, let us say, a piece of paving legislation which
provides for a referendum. The whole process might take more than
two years.
(Angela Eagle) Yes. There is a limit, two years, as
you have rightly pointed out, for Section 82 powers. We are all
here speculating on how the Government, should that be the position
and should there be a referendum and should the triple lock unlock
all three doors, how Parliament would then deal with it. We can
have great fun speculating but that is all we would be doing.
Chairman
30. I think, Minister, that Mr Judge has indicated
that in such a situation a very substantial sum of money indeed
could well be involved. I think that is very helpful to have that
on record.
(Angela Eagle) Just on that, remember we are, again,
only talking about the time between when we may have to begin
signing contracts and working with contractors, training staff,
and the Royal Assent for whatever the Bill is that we are talking
about. We are not talking the whole period, it is just that period
between Royal Assent and when we would judge, and we would share
with Parliament this information, the work would have to be done
in order to make sure there was a smooth and proper transition
in a timely fashion.
Mr Efford
31. Just two points, just to clarify the record
for what it is worth. There is no suggestion that the money spent
under the Section 82 powers up to date has been used in preparation
for the euro?
(Angela Eagle) No, absolutely no suggestion whatsoever.
Child Support Reform and Child Support Reform only.
32. I thought that was worth putting on record.
The other point being, I would assume that should the time arrive
when the Government is preparing to join the euro that something
that covers all Government departments perhaps would be before
Parliament which would allow scrutiny?
(Angela Eagle) We can speculate about that. I personally
think it would be odd to try to use a power that is unique to
the DSS as a more general way of enabling any such decision. This
is all speculation. Certainly I, as a Government Minister, have
seen no plans one way or the other as to how this might be done.
Chairman
33. That question was just thrown in for a range
of obvious reasons.
(Mr Judge) Can I just add one factual point very briefly
in answer to Mr Efford's question. The Minister is quite right
that we have not used the power to make preparations for the euro.
It is also the case that in building our new IT systems in the
future, in line with best practice, we are building possible euro
functionality into those new systems. That is quite different
from saying that we are spending money modifying our old systems
but we are building new systems in a way that makes them future
proof for any possible decisions.
Chairman: Are you able then to give us—I
think this is relevant—any indication of the amount of money
that is being spent on providing that extra function at this stage?
Mr Efford
34. Under Section 82.
(Angela Eagle) Let me be absolutely clear here. Section
82 powers have been used once and they were used between the period
of April this year and 28 June this year in order to facilitate
work on the move to the organising and building the new Child
Support Agency computer, developing and testing the way in which
the new formula to develop Child Support, and work out what Child
Support entitlements will be, could be in a computer setting and
initially beginning to train staff, to cleanse the data that we
have on our old systems. That is what Section 82 monies have been
spent on, they have been spent on nothing else. As you heard earlier,
out of the potential £45 million that we asked for permission
to spend ahead of Royal Assent as the CSA Bill was making its
passage through the House, £3 million was spent.
Chairman
35. I am grateful but I was merely picking Mr
Judge up on a point he made just then in respect of the IT equipment,
that it would be able to accommodate an additional function in
respect of the move to a single currency. Is that right? If that
is right, there must be an amount of money in the money that we
have spent which would be involved in that particular additional
function. I am just trying to clarify.
(Angela Eagle) Hang on. Let me just come in again,
Chairman. We spent the £3 million on initial design work.
The computer build, build-zero they call it, began in April. We
got Royal Assent 28 July. There would be no actual creation of
software programmes or programmes that the CSA computer was going
to use in the event that we had Royal Assent early in that period.
Chairman: I think we have taken that matter
as far as we can do today, I am very grateful.
Mr Efford
36. What is your response to the suggestion
by the Chairman of the PAC that items of preparatory expenditure
approved under Section 82 should be identified separately in Supply
Estimates?
(Angela Eagle) It depends really on the timing. Again,
we have to focus on the fact that Section 82 expenditure is only
for that period in between when we must start our preparatory
work and Royal Assent. Some of the money that we will have spent
in that time will have been from Estimates in the past year that
we do not need Section 82 expenditure for. The only bits of Section
82 expenditure that apply are actually those that bear upon the
changes that were in the Bill going through the Commons. I do
not think that it is easy to include estimated details in the
way that he suggests. Let me use the Child Support Reform issue
as a way of illustrating it. The expenditure which was incurred
ahead of Royal Assent came from funding which was already provided
as part of the 2000-01 main Estimate and that was finalised at
the start of the financial year. In the end the Section 82 report
for the Child Support Reform was not approved by the House until
11 April 2000 and under these procedures we cannot commit ourselves
to preparatory expenditure ahead of the House approving Section
82 expenditure. So we could not have included it in the main Estimate
for that year because that was already finalised six months before
the House approved Section 82 expenditure. It is perfectly clear
if you think about it.
Mr Efford: It is as clear as mud.
Sir Paul Beresford
37. It is a factual system that slips through
each of the systems that the House has set up to look at it.
(Angela Eagle) Again, I would say that the focus on
it makes it transparent and the House approves it in its context,
or it does not approve it in the context in which we bring the
report to the House. So the House still has a way of approving
or throwing out this expenditure. Had Section 82 expenditure not
been approved in this case, what would have happened is we would
have had a four month delay in the event but it could have been
an eight month delay in taking forward our plans.
Chairman
38. Really following that up, because David
Davis, the Chairman of PAC, has also recommended that "each
proposal to use Section 82 powers should be supported by a well-reasoned
case, which should set out the consequences, in terms of value
for money likely to be foregone, of alternative courses of action
(such as a paving bill; awaiting Royal Assent; delaying implementation)".
I think that is a very clear statement from the Chairman of the
Public Accounts Committee. Can I ask you, Minister, whether you
agree with him?
(Angela Eagle) I think that we should be as open and
transparent about this as we possibly can at the time. When Mr
Judge and his colleagues gave evidence to the Social Security
Select Committee, they were giving evidence in the context of
that time. We have been able to update this Committee on what
happened with Section 82 because events have now gone, we know
when Royal Assent was given, we know when we signed the contracts.
When Mr Judge and his colleagues were giving evidence to the Select
Committee we did not know when we would be able to sign the contract
with Affinity, we did not know when Royal Assent would be. So
within the context of those uncertainties in any process, we certainly
would not try to hide from Parliament our thinking or our estimation
of the consequences of delay or other methods of not, for example,
getting Section 82 approval.
39. As you know, I personally wrote to Mr Darling
in April, I think it was the 19th, and I asked does the Government
see any reason why a range of information should not be routinely
supplied in respect of future draft reports? Do you think that
that letter and its contents and my suggestion of the information
that might be required—a detailed breakdown of the proposed
expenditure together with the expected timing of the expenditure
and the reasons why it is desirable to incur that expenditure,
the amount, nature and timing of any financial liabilities to
be accrued—that it is reasonable for the House to have that
information in any Section 82?
(Angela Eagle) To the extent that it is available
to us. As I was trying to say, you are in a very fluid situation
when you are in negotiations with an IT supplier, you do not know
when Royal Assent is going to be. The nature of Section 82 expenditure
does rely on when Royal Assent happens and that is a moveable
feast in any parliamentary process. Within reason we would want
to share our thoughts on all of those things. In February we did
not know as much about what we were going to spend when as we
know now because certain other things have happened, such as the
signing of the contract. Simon has been involved in all of this
and I think he has got some insights he might wish to share.
2 Note by witness: This information will be
provided via a Written Answer to a Parliamentary Question shortly. Back
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