Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  60. Who is primarily responsible for the delay? We are now six months into it, we appreciate that you were not there then, but is it Affinity and EDS or is it the DWP?
  (Mr Smith) It is delays in the IT system being ready. Of course, the responsibility for the delay and the costs of that are something which we are in negotiation with our suppliers about. I am not at liberty to expose those negotiations here. It was principally the vulnerability of the IT system, as my predecessor explained to the House of Commons, that made it sensible to delay things as we have done. Whilst I very well understand and share people's impatience to want to see the new system up and running, I am absolutely convinced that it is right to ensure that this is tested properly and operating properly before it is exposed to handling real cases, especially in such a sensitive and often contentious area such as this.

  61. I want to refer to an issue that is not commercially confidential because it was given in open evidence to us by Doug Smith of the Child Support Agency when he came. He said "Our expectation is that the cost of processing new applications under the new arrangements should be about 20 per cent less"[7], ie cheaper when the IT comes in. He also said that the structure of the contract does not provide for EDS to pay for those extra costs. Leaving aside whether it is EDS's fault and looking at the minutiae of the contract, who negotiates your contract? Is it done by in-house people or external legal advisers?

  (Mr Smith) I think it is probably best if I supply more information separately on these points.[8] It obviously will be an in-house responsibility because ultimately these are the sorts of responsibilities which you cannot delegate. I am sure that we will be involving advisers and consultants as well as frankly is sensible given the complexity of some of the technical and commercial negotiations you get into on these things.

  62. Is that part of your IT strategy, that is who has input such as those advisers, whether internal or external?
  (Mr Smith) It is certainly an aspect of the IT review. The main objective of the review is not so much that, it is really—

  63. I appreciate that but it is one aspect of it.
  (Mr Smith) It is an aspect, of course. I would not want to give the impression that is why we have got the review. The reason we have got the review is to ensure that our systems as a whole and our strategic approach are fit for the purpose given the changes that there have been in the sorts of products which are available. Obviously with the rapid developments in IT capacity as well as the big changes we have had in the Department and our agencies it did seem sensible for the new group director with responsibility for IT to take stock and frankly to see whether the approach from the past, which had rather been geared to very big systems or interlocking bits to an overall monolithic system and bespoke approach, whether in the light of the changing needs of the organisation and the changing nature of the IT systems available it did not make sense to have something that was more incremental, more flexible, taking advantage of the flexibility and quality of some of the off-the-shelf products which are now available that were not available a few years ago. That is why we have got the review and I am expecting it to report by the end of this year.

  64. You are still on target for that?
  (Mr Smith) Yes.

  65. Have you any idea when its findings might start to be implemented?
  (Mr Smith) As soon as possible after that I would expect.

  66. Within three months?
  (Mr Smith) I would expect the findings to have a bearing on the way we carry forward our strategy pretty much straight away. Within three months, yes.

  67. That strategy might involve looking at the suitability or otherwise of your IT partners?
  (Mr Smith) We have commitments, contractual commitments, with our IT partners and these are long-term relationships. Whilst as in any long-term relationship and as in any commercial relationship there are some hard negotiations along the way, I do believe that a partnership approach makes sense. Of course we examine the opportunity, limited though it sometimes is in this area given the scale of the systems we are talking about, to engage different partners. It may well be that the conclusions of the review that I have yet to see might have a bearing on that balance. The review is really rather more about our strategic approach on the IT systems rather than on our overall strategy for the procurement or the management of contracts. That is something that has to be the subject of ongoing attention as well.

  68. Surely the two go hand in hand.
  (Mr Smith) As I said, the one has implications for the other.

  69. You probably will not be drawn on this but if your Department determined whether by litigation or otherwise that Affinity and EDS had let you down very badly on the CSA contract, would you consider dumping them or are you so locked in that you cannot?
  (Mr Smith) I think it would be fair as well to give credit where EDS and Affinity have done a good job. I say that because the pace, for example, with which the desktop PCs have been rolled out across the Department, including in some periods breaking the world record for the installation of this sort of equipment, is a case in point. We need to manage effectively our ongoing relationship with EDS. We do that within a spirit of partnership but, yes, with hard ball negotiation where that is necessary. Of course we develop and build on our relationships with other partners as well. I do not think it would be sensible for me to be drawn further than that.

Mrs Humble

  70. Can I just clarify the nature of the testing that you are undertaking at the moment. Is it theoretical? In other words, are you looking at existing cases and continuing to pay those people out or doing the assessments of people receiving benefits in the way that they should under the existing formula and simply doing a theoretical analysis of how that would work under the new system and is it working properly? Are you actually paying out those people who are part of your testing under the new formula?
  (Mr Smith) There are certainly elements of the latter, so some real cases are being handled by the new system. One of the reasons that I thought it was timely to write to MPs was obviously a number of months had passed and I know people were asking questions about it. It was also round about then that letters would have been going out to some clients in some parts of the country actually generated on the new system and it is possible that people might have noticed a difference and I thought if MPs had a query about this they ought to know that the testing had got to that point and that is why it was.

  71. How did you pick these cases? How were they chosen? Was it at random or not?
  (Mr Smith) It would be, I imagine, on an area basis of which particular cases were going through that centre at the time.
  (Mr Couling) I think it is important to emphasise that they are not under the new rules.
  (Mr Smith) It is back to the point that I was making in answer to the earlier questioning. This is existing cases on the existing Child Support rules on the new IT system. It is not under the new rules, I think you understood that point.

  72. I am sure that you are aware of the enormous frustration and anger at these continued delays because a lot of people were waiting with eager anticipation for these new rules to come in and originally they were going to come in in 2001 and then April 2002 and now it is some dim and distant date. Do you have a fallback position on this? Will there come a point when you say "we are going to have to do something and this wretched new computer system is not working"? If you do come to that decision what are you going to do about it? Parliament has made its mind up. Parliament has changed the law. We have decided that this is what we want and the overwhelming majority of our constituents want it as well. What are you going to do if this drags on and on and on? The new system is a very simple percentage analysis. In the dim and distant past when I worked in the Civil Service we did these things manually and we are now coping with computers that cannot do the job. What is the fallback? How long are you going to let it go on?
  (Mr Smith) I fear that I might be drawn back into speculating about dates and when we are expected to be up and running. I just do not think it would be sensible.

Rob Marris

  73. Feel free.
  (Mr Smith) Until I know that this thing can work I think it would be pretty unwise for me to start trailing dates. I do of course understand the importance of this, I share people's impatience and frustration that it has taken longer than we wanted. I am absolutely determined to get it up just as soon as possible once we have got the assurance from the testing. Were the worst to happen and the thing not to work at all and somebody to say "Very sorry, we got all this way through the testing but this system just is not going to work" then of course we would have to do something else and do it as quickly as possible, but I hope that we will not be in that situation, I really do.

  74. Finally, what message can I give my constituents and colleagues give theirs, especially those absent parents, parents without care of the children, who have found themselves in dreadful financial circumstances because of the way that the existing formula affects them who were in any case concerned because they were going to be phased in and for some of them the difference between their current payments and the payments under the new system are quite substantial, so they also know that even when it comes on-stream for them it will be phased in? I get people coming to me who say that given the existing delays, given the phasing in of the process, their children are going to be grown up by the time it comes in and in the meantime they are paying out under what they see as being an absolutely iniquitous system that is causing them real financial hardship. I am emphasising the same point in a different way.
  (Mr Smith) You are. I agree that it is really important. The message you can give back is there are a lot of people who are working very, very hard to get it up and running just as soon as we can but it would not be wise to do so until we had tested it properly.

  Mrs Humble: Pencil and paper!


  75. Did you see in July the press release, which is rare for EDS, when EDS was actually alleging that the reason for the delay was that ministers were changing the system requirements. That is a bit cheeky, is it not?
  (Mr Smith) I did see it.

Andrew Selous

  76. I would like to continue on with the CSA. I have a very real concern that the CSA is not taking the issue of enforcement now nearly seriously enough because of all these ongoing computer problems that we have heard about. If I may I would just like to quote briefly from the 2001-02 report of the Independent Case Examiner on enforcement where she says as follows: "It has been disappointing to find that the CSA has rarely tackled enforcement in a systematic and consistent manner. The CSA has the means of doing this by employing penalty actions along an escalating scale. However, the CSA's response has often been sporadic and piecemeal. We frequently find that the powers now available for the CSA have not been deployed or, if they have, their effectiveness has been minimised by flawed implementation of established procedures". I find that really concerning. It is my experience week in, week out at my constituency surgeries, and I am sure that of other colleagues here, that this is a very real issue to a large number of mothers, particularly in cases where the absent parent does not have regular paid employment. It seems the CSA more or less throw up their hands and are not prepared to be really imaginative and liaise with the Inland Revenue, visit these people where they are living. What about applying some of the sanctions that are available? I understand only one driving licence has been taken away. There are large, large numbers of absent fathers who seem to think that they can just put up two fingers metaphorically to the CSA and have no care and concern for the mothers and children they have left behind. I do not think it is just about the computer system. You could run an effective enforcement system out of a filing cabinet if you really put your mind to it. I am concerned about what is happening now.
  (Mr Smith) First of all I share your objective, people ought to pay, they ought to meet their responsibilities, and there are far too many who have just been walking away from them, which is why we need the CSA and we do need some good enforcement activity. It is worth stressing I am not blaming this on the computers. This is a feature of the system. There is no doubt there is a general consensus now that the original system was bound to consume far too many resources in calculating people's liability and you were going to have an imbalance between the effort going in there. We all know about the problems in that as well because we all get problems in our constituencies arising from the calculation of the liability. With such a complicated liability assessment that was bound, relatively speaking, to detract from the enforcement effort. This is the great gain of moving to the simpler system and the easier calculation of liability will release many more resources for enforcement. That having been said, there are a lot of people working very hard on enforcement in what are often very difficult circumstances where you are dealing with people who are using every trick in the book to avoid meeting their responsibilities. I want to praise the staff who are working hard on this. You referred to using all the penalties available and I agree with you that we should. I think with something like the withdrawal of driving licences, and when I ask about it this is the report back I get back from the staff concerned, the measure is not simply a case of how many have had their licences withdrawn nor even have had it actively threatened to be withdrawn, but the mere fact that in conversation it can be mentioned that you can lose your driving licence is a useful lever to secure greater compliance. Nobody is disputing that we need to be more effective at collecting the liabilities of those who owe the money. As I say, that would be the great prize of getting the new system in place.

  77. Those liabilities are huge, are they not? They are nearly £2 billion now of uncollected CSA debt, a massive amount of money. How serious is the CSA about really trying to recover that backlog of unpaid money?
  (Mr Smith) It is a very serious amount of money and it is unpaid debt, not just to the government but to the families who should have received the money. What the agency has to do is to make some overall estimate of what proportion of that debt is definitely collectable, what is possibly collectable. Some of it is deferred debt that has been held back as a carrot to induce compliance. With the passage of time that that has been outstanding longest is more likely to be in that category and there is some that it is going to be very difficult to collect. It does not make sense for them to evaluate it in that way. I do not hide the fact that this is a very large sum of outstanding money and it is a very serious challenge to ensure that collection is improved.

Mr Goodman

  78. In June Alexis Cleveland of the new Pension Service came to the Committee and obviously she was questioned about the roll-out timetable for The Pension Service. At that point the direct local service was meant to be up and running now in October but she said to the Committee "We are a bit behind. It will not be October, it will be December." Will it still be December?
  (Mr Smith) Yes, I believe it will. I want to stress the progress that has been made since you had that conversation with Alexis Cleveland. I am assured that by the end of this month there will be more than 200 local service teams in place and they will be developing further the existing information and advice services available in local communities.

  79. In June we had a supplementary memorandum saying that at that point seven per cent of the staff necessary to run the service had been recruited. If you are confident of being able to go ahead in December can you tell us what percentage have been recruited now?
  (Mr Smith) I am not sure that I have got a figure immediately to hand. I can certainly get you one. If you have had a supplementary memorandum, I will get you another one.[9]

7   Minutes of Evidence from the one-off evidence session examining the Child Support Agency, 22 May 2002, Ev 12, Q 55. Back

8   Please refer to the supplementary memorandum from the Secretary of State to the Chairman of the Committee, paras 4 to 6, Ev 19. Back

9   Please refer to the supplementary memorandum from the Secretary of State to the Chairman of the Committee, paras 7 and 8, Ev 19. Back

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