Select Committee on Public Accounts Fourteenth Report


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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