Conclusions and recommendations
1. The Department should have been more cautious
and realistic in fixing the timetable and assessing the resources
needed for setting up and testing New Tax Credit assessment and
payment procedures and checking claims.
Their failure to do so has had serious financial consequences
for many thousands of citizens and caused disruption for other
areas of work for the Department. To the extent that these large
complex systems were intrinsically not capable of testing sufficiently
to eliminate such problems, the Department should have devised
more comprehensive contingency arrangements.
2. New Tax Credits is one of a series of major
IT systems that have caused serious problems, other notable cases
being the National Insurance Recording System (NIRS2) and the
Passport Office system. Since the Committee's
hearing, the Office of Government Commerce have updated their
Gateway review guidelines. The Office of Government Commerce should
analyse the weaknesses of IT partnering arrangements that have
run into problems and draw together experience, best practice
and guidance with the aim of helping departments to understand
better how to manage the problems inherent in such partnering
relationships.
3. The level of errors in tax credit payments
is unacceptable at 10% to 14% by value. The
Department said that they expected an immediate halving of error
rates with the introduction of New Tax Credits. They should take
all necessary steps to achieve this predicted reduction, including
comprehensive cross checking to other departmental information
sources, set quantified targets and timescales for further reductions
and report their performance against these targets.
4. The Department preferred not to launch
a campaign to draw attention to compensation available for claimants
who suffered as a result of the system problems.
They saw their compensation arrangements for claimants as being
voluntary and spontaneous. The Department should monitor the effectiveness
of their arrangements and, if the number being compensated in
this way is unrealistically low, target such a campaign at those
likely to have been most disadvantaged.
5. The Inland Revenue should explain to those
affected how recovery and non-recovery of overpayments of tax
credits will take account of implications for other benefits.
They should clarify the main interdependencies of tax credits
and other benefits, such as Housing Benefit, which are the responsibility
of the Department for Work and Pensions. Both Departments should
operate to a coherent and consistent policy that is equitable
for those who were affected by New Tax Credit delays and errors
in 2003 and those who are affected in the future.
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