House of Commons - Work and Pensions

Select Committee on Work and Pensions Third Report

5 Child Support Reform (CSR)

136. The first part of this report focused on elements of best practice and how compliance could be improved. That analysis has allowed us to set some benchmarks for comparing the way in which DWP administers its IT programmes. As a special case study, we decided to examine in detail the IT programme that underpins the Government's Child Support Reform. The Child Support Agency's (CSA's) IT programme is the obvious IT programme for us to consider in detail: it is crucially important, not least because it is a significant element of the DWP's modernisation programme and has received a large amount of critical attention inside and outside Parliament. As constituency Members, we have received numerous letters from CSA clients complaining about the poor service provided by the CSA over the years, with many complaints linked to problems with the Agency's IT programme. We have also heard from Citizens Advice of the sorts of problems being presented by CSA's clients that are caused by CSA's defective IT programme.[266] Our inquiry will also serve as a platform for the Committee's inquiry into child support policy generally which was announced in May.[267]

Background

137. The Child Support Agency (CSA), which is an agency of the DWP, is responsible for running the child support system. CSA's "business is to assess, collect and pay child support maintenance, ensuring that parents who live apart meet their financial responsibilities to their children."[268] The CSA employs over 12,000 staff and has a budget of £258 million for 2003/4. The CSA delivers its service through six main centres, 30 smaller offices dealing primarily with new applications and 71 local services bases supplying a face-to-face service. The CSA was established in 1993 and has had a troubled history.[269]

138. The Government announced the Child Support Reform programme in its White Paper "A new contract for welfare: Children's rights and Parents' responsibilities, " which was published in July 1999.[270] Child Support Reform (CSR) was intended to implement simplified rules relating to maintenance calculation, modernise the operational processes and introduce a new computer system in order to promote more accurate and timely maintenance assessments with improved payment compliance. The CSR programme is clearly an important part of the Government's strategy to reduce and eliminate child poverty and is very ambitious; it is intended to produce a "transformation of the existing CSA business processes and structures."[271] In its totality, the CSR programme includes the political decisions, legislative changes, the way the CSA is re-organised, and its links with other agencies, such as Jobcentre Plus and the Inland Revenue. One simple example of this proposed transformation is that the CSA moves from relying on a letter-based system to an IT and telephone-based system. A successful transformation depends upon a reliable and stable IT system, a sharper focus on serving the needs of customers, a changed work culture and a multi-skilled workforce that is supported by proper training.

139. The new computer, an end-to-end IT system known as CS2, and the accompanying new telephony system were intended to enable and support this transformation so that applications for calculating child maintenance could be more easily and speedily handled. CS2 involves "something like 60 million lines of computer code."[272] The CS2 contract was organised as a Private Finance Initiative (PFI) deal and, like the majority of large DWP's IT contracts, was won by EDS.[273] Under the deal, the necessary information technology and telephony support is supplied by the private sector partner. Outline financial details of the CSR project are set out in the following table.

Table 2

Department for Work and Pensions Modernisation Programme

Project Start
Date
Due End
Date
Expected
End Date
Planned
Costs to date £m
Current Authorised Expenditure
to date £m
Achievements
To date

Child Support Reform Sept 1999 March '04 Currently
Under review
400 400 Since 3 March 2003, new Child Support claims have been calculated using the new rules and new IT.

Source: Work and Pensions, Departmental Report, 2004.

140. The total cost of the contract with EDS for the CS2 project, across its whole life, has been revised upwards and is currently estimated at £456 million.[274] On 27 January 2003,the Secretary of State told the House that the Department had agreed an increase of around 7 per cent. in the value of the original contract, over the term of the project, bringing the total cost to some £456 million.[275] Mr Chris Pond MP, Parliamentary Under-Secretary at DWP, added that the increase in the cost of the CS2 contract was agreed because the IT system had proved to be more complex than had been thought at the outset, something not uncommon in large scale IT projects.[276]

Problems of the CSA's IT programme

141. According to DWP, the child support reforms were intended to put the needs of children first by creating a system of child support that was easier to understand, administer and enforce; that would be more comprehensible to parents; and that would process maintenance calculations more quickly. The IT programme was based around simplified rules for calculating maintenance payments and the modernisation of operational processes. In the event, child support reform has failed to perform as planned and this has meant that thousands of CSA's customers and their children have suffered. According to Citizens Advice, the problems include:

people who are still on the old rules suffering from problems receiving payments, women in particular moving off income support having problems as well, delays in transferring people from the old rules to the new system and the problem when contacting the CSA the person at the other end of the phone (if the bureau can get through in the first place) claims not to have access to the necessary information and can only give general advice.[277]

142. DWP acknowledges that the CSA's IT programme is defective. According to DWP:

Child Support Reform went live on 3 March 2003. Maintenance is now being calculated under the new rules for new cases and some old scheme cases that are linked to a new application. This was a large and very complex IT project and consequently there were a number of acknowledged defects when the system began to be used in earnest. Work is being taken forward to address these defects and ensure the stability of Child Support Reform to allow the transfer of old scheme cases to new rules.[278]

143. During the course of our inquiry, we have received evidence on a range of problems relating to the IT programme. For convenience, we have classified them into five groups:

delay in the planned commencement of the new scheme of calculating child maintenance;
delay in transferring onto the new arrangements cases already in the system or where child maintenance payments had been determined on the basis of the old scheme;
the slow pace of processing new cases for calculating child maintenance;
the problem of cases "stuck" in the CS2 system that are not being progressed; and
a defective new telephony system that causes calls to be re-routed around the country.

The delay in the planned start of the system

144. Although the new scheme was introduced on 3 March 2003, its introduction was delayed for some two years. Our predecessor Committee reported on this in November 1999.[279] The table below shows the missed deadlines for the commencement of the new scheme.

Table 3: Changes to the planned commencement date of the new scheme[280]

Date of announcement Form of announcement Proposed start date of the new scheme for new clients

July 1998 Green Paper "unlikely to be introduced before 2001"

July 1999 White Paper "towards the end of 2001"

31 January 2000 Written Answer April 2002

20 March 2002 Statement to the House Indefinite postponement

27 January 2003 Statement to the House 3 March 2003

145. DWP told us that the implementation date of April 2002 was decided initially on the basis of an external review. But during late 2001, the CSA became increasingly concerned about EDS's ability to deliver to the announced timetable. Ministers finally took the decision to delay implementation indefinitely. In January 2003, the Secretary of State finally announced that the system would go live in March 2003, but on going live, the system failed to work satisfactorily. For going live, it was decided to let the computer system take on only new applications for fear that it might be overloaded if old cases - where maintenance payments had been calculated using the old formula - were processed at the same time. PCS told us that:

If CSA's original timetable for child support reforms (CSR) had gone according to plan, all existing CSA customers would have been migrated on to CS2 and had their cases converted onto the new, simpler formula by April 2003. The reason that this has not happened is entirely down to the shortcomings of CS2. If migration and conversion were now attempted, CS2 would not be able to sustain it.[281]

Delay in converting old cases onto the new scheme

146. As a result of the decision not to transfer old cases onto the new scheme when the system went live in March 2003, 1,230,000 cases were left on CSCS for calculating child maintenance. In most of these cases, this means that non-resident parents are making larger payments compared with how they would have been assessed under the new rules. Conversely, once cases are on the new scheme, parents with care will receive less money, although the new scheme is expected to result in more children overall getting some maintenance, and more quickly than compared with the old scheme. The CSA has not managed to find a permanent solution to this problem, so migrating cases onto the new scheme cases requires a large amount of manual work to be performed, which represents a large drain on staff time. As at 31 March 2004, the Agency's caseload on CSCS was about 890,800. In addition there were over 427,000 cases registered on the new computer system, which comprised of approximately 235,000 new scheme and 192,000 old scheme cases. The CSA currently estimates that the migrated load may have generated around 120,000 work items or tasks.[282] The migration to the new scheme was expected to take place by April 2004, a year after going live, but in the event, that deadline has been missed. In written evidence to the Committee in July 2003, the CSA stated:

The Department's Ministers have always said that no cases would be moved on to the new scheme from the old scheme until they were satisfied that it is working well. Accordingly no date has been set for conversion, and clients have been told they will transfer to the new scheme when the Government is sure it is working well. The Agency continues to work towards achieving successful conversion for the majority of old scheme cases as soon as possible. The software required to facilitate bulk migration of cases from the old computer system to the new is not expected to be available until the end of the year. The software required to facilitate bulk conversion of the migrated cases from the old child support scheme to the new is not expected to be available until next spring.[283]

147. In oral evidence, the Secretary of State told us:

We can all see the importance for those who are on the old system of being converted to the new system and plenty of pressure for us to get the child maintenance premium in payment for those when they will convert. I have said all along, like my predecessor, that conversion will not happen until we are absolutely certain that the new system is working properly. It seems to me that strikes the right balance. It is not always going to be a comfortable one, because yes, we should like to get on with it and the public would like us to get on with it and parents with care and non-resident parents would like us to get on with it. We maintain the maximum pressure to achieve progress as effectively as we can, but we do not allow ourselves to be seduced into giving a date which might, for the sorts of reasons you have been talking about, turn out to be undeliverable.[284]

148. We asked EDS for information on its plan for transferring old cases onto the new scheme. EDS told us that their current plan is to have all the IT improvements on CS2 ready by October 2004 and thereafter to start the migration of old cases and that the transfer should be completed by early in 2005.[285] Mr Doug Smith told us that he welcomed EDS's commitment to complete recovery of the system by October, but added that he had not formally agreed the detail that lies behind the plan.[286] Mr Charles Law (PCS) told us:

The latest that we have been told - and we had one of our regular meetings with the Chief Executive last week - is that EDS have produced this recovery plan in the light of a report called the Feld Report that was commissioned by an outside company to come in and have a root and branch look and ask questions like, "Should they pull the plug on CS2 or not?" I think the conclusion was: no, they should not. Although there are big problems, they are not big enough to warrant that, and it is recoverable. That is the overarching view. In the light of that, EDS were told to go away and produce a recovery pan, which they have just done. As I understand it, that has several releases timetabled for the next few months, with an anticipation that, for example, those "stuck" cases that are referred to, which is probably the main problem at the moment, should be cleared by September of this year. That is what we have been told is in the plan. Whether it happens or not of course remains to be seen.[287]

Slow progress in processing new claims

149. The third serious problem arising from the defective IT programme is that, despite being two years late and now estimated to cost £456 million, the computer system is still not working satisfactorily on processing new claims. The figures in table two show that for its first year, the CSA cleared only 47% of all new cases received since March 2003.[288] By the end of the first year of the new scheme, the CSA had cleared some 153,000 cases, which left a backlog of some 170,000 cases. The system is processing new claims so slowly that the backlog of (new) work is increasing by some 30,000 per quarter. Taking the first year as a whole, only 28% of new cases resulted in a calculation being made, with only 10% of all new cases resulting in any payment being made. The figures show that even where a calculation of child maintenance had been made, an actual payment had been made in only 34% of these cases. Moreover, the clearance rate of 47% of new cases depended upon a surprisingly high closure rate, accounting for 19% of all new cases.[289] Indeed, there are some obvious parallels between the current problems at CSA and the state of operations when the CSA was first established: the complicated IT system not ready, staff spending all their time making calculations, and payments not made for months, years, or not at all.

150. The slow pace of making first payments is very worrying. Doug Smith told us that only a "a very small proportion" of the new cases are having their initial payment made within the government's six-week target because the average time it takes to bring cases from first application to the point at which calculations are made is approximately 12 to 15 weeks at the moment. Doug Smith told us that while this was half the time it took under the old scheme last year, "it is nowhere near the endgame target on this, which is to move the cases quickly towards payment within an average of six weeks."[290]

"Stuck" cases

151. One of the most bizarre aspects of the defective IT programme is the phenomenon of cases being "stuck" in the system, not progressing, often for lengthy periods. In oral evidence, Charles Law (PCS) characterised the problems as follows:

It can take several months, possibly even indefinitely because some of those ["stuck"] cases have been there for a long time and we do not know when they are going to be released. So you have the customer who wants their maintenance to be assessed or further maintenance to be paid and the Agency is literally unable to do it without setting up a clerical team. That creates enormous pressure on the customer because they keep ringing up and keep being batted off being told, "We are awfully sorry, but there are teething problems with the computer system" and things like that. You can only hold that line for so long before they get extremely frustrated and then start writing to Members of Parliament and people like that to try and speed the matter along. That is a good example of what is happening at the moment.[291]

152. We heard that customers frequently needed to complain to the CSA's chief executive, the independent case examiner, or their MP in order for their case to be progressed. According to the CSA there are up to 75,000 "stuck cases" or "unprogressable cases." We asked EDS about these cases and whether the lost cases would de-bugged and proceeding successfully by October 2004. Tom Warsop told us that:

"It is important to note that those cases are not all "stuck", which is the word that we tend to use, because of information technology issues. Some of them are certainly but some of them are also difficult because of data issues, information gathering difficulties and some other causes."

He confirmed that those cases that are not being progressed now should be progressed by October 2004."[292]

Defective telephony system

153. In addition to the problems associated with the CS2 system, CSA's customers and staff are also inconvenienced by a defective telephony system. The new telephony system, which is supplied by BT Syntegra, was designed to link with the CS2 computer. However, the linking of the telephony system and CS2 seems to have brought many problems, including customers' calls being routed to the wrong place and cases disappearing (often at crucial stages) from the caseworker's screen as staff try to answer a telephone inquiry.[293] We heard that there was a particular problem with the new telephony system of queued calls being re-routed around the country to call centres that happen to become free with the inevitable consequence that callers are unlikely to contact anyone that had any previous knowledge of their case. PCS told us that CSA's new telephony system had actually made it harder for a customer to contact the Agency and to talk to the caseworker dealing with their case.[294] PCS illustrated the plight of one customer who had 49 calls to the Agency listed on her quarterly telephone bill.[295] The problems with the telephony system have also been a particular cause of staff frustration. PCS told us that its survey evidence indicated that only 24% of the CSA staff believed that the introduction of the new IT system had improved the service they provided to the public. In one business unit, a staggering 67% of staff believed that the new IT had not improved CSA's customer service at all.[296] We heard that the failings of the new telephony system are similar to those of the old system, which paradoxically the new system was intended to remedy. As the Secretary of State explained, the new telephony system was intended to put callers through to the case worker. He said that where the telephony worked properly, it was great.[297] Doug Smith said that:

The telephony system is intended to route incoming calls to the case worker for the case being actioned. A set of rules is built into it which then provides for that call to be overflowed to elsewhere in the team and then elsewhere in the office and then ultimately to the national helpline system. So the call is handled somewhere. The core of the system is accurately designed and constructed. The difficulty is that the system is not working as planned and therefore, from time to time, those calls are not going to the appropriate place and the software enhancements to the telephony system are progressively removing those difficulties.[298]

Summary of CSA's performance over its first year

154. The new scheme for child support, which was delayed by two years, completed its first year in March 2004. On the positive side, despite the defects, the CSA has managed to process over 150,000 new cases, with over 31,100 cases of child maintenance payments being calculated and paid under the new rules. For convenience, it may be useful to identify some of the main features of the current performance to March 2004.[299] For the first year of the new scheme, the CSA had received 321,500 applications, of which some 91,500 calculations were made under the new system, with 61,000 cases being closed. In addition to the 30,000 cases receiving their first payment, 17,000 parents with care received first Child Maintenance Premium payments. The figures for the first year show that the quarterly clearance rate, as expressed as a percentage of quarterly new cases, has increased over the year from 17% (Q1) to 62% (Q4). On the basis of the last three quarters of the first year, new applications have been arriving at an average figure of around 80,000 per quarter with the CSA managing to clear about 50,000 cases each quarter. Although the high closure rate somewhat flatters the clearance rate for the year, it should be noted that the closure rate has been lower under the new scheme than for the old scheme. The CSA noted that "in clearing cases so far, the ratio of those reaching calculation to those that have been closed in the new scheme remained 6:4, compared with the ratio of 4:6 in the old scheme".

Table 4 - Summary of Agency Performance to March 2004

Agency Performance Quarter 1
Mar - Jun 2003
Quarter 2
Jul - Sep 2003
Quarter 3
Oct - Dec 2003
Quarter4
Jan - Mar 2004
Scheme to
Mar 2004

Applications received 73,582 78,982 85,306 83,652 321,522

Applications cleared 12,648 38,583 49,453 51,876 152,560

of which:
Maintenance Calculations

Closures

6,671

5,977

23,857

14,726

29,672

19,781

31,229

20,647

91,429

61,131

First payments made through the Agency 461 5,164 11,473 14,017 31,115

First Child Maintenance Premium payments made 77 3,314 6,173 7,484 17,048

155. The Secretary of State, in his written statement to the House on the quarterly Progress Report, accepted that progress had been slower than anticipated. He said:

The new arrangements for child support came into operation for new cases and some linked old scheme cases from 3 March 2003. Progress has been slower than anticipated, chiefly due to problems with the new computer and telephony systems. However, over the course of the first year of operation of the new scheme, progress in performance has grown steadily. For example, more than a third of all maintenance calculations and over 45 per cent. of all first payments were made in the latest quarter. Further improvement is expected.

The number of cases cleared in the final quarter rose above 50,000 taking the total number of clearances (calculations and closures) to over 150,000. The ratio of cases reaching calculation compared to those that closed continued to be 6:4 to the year's end, comparing favourably with the ratio of 4:6 under the old scheme.

Technical issues continue to preclude reliable figures on compliance and throughput for the latest quarter. The Department continues to retain around 15-20 per cent. of each monthly payment due to EDS, the service provider, due to the continuing problems with the computer and telephony systems. A special exercise is being undertaken to test accuracy to the year-end."[300]

156. Doug Smith (CSA) told us that the EDS-commissioned review into CS2 had indicated that the CS2 system was "fundamentally sound, but needed some significant work to remedy what was clearly a large number of defects in the way the system was operating."[301] He added that after DWP had validated the EDS commissioned review, it gave the green light to EDS to move ahead with the remediation of the system, which he said was likely to take a place through to the autumn of this year.[302] He added that software releases that had already taken place had remedied 70% of the defects which related to the interface with JobCentre Plus and around 60% of the defects which were causing difficulties in cases progressing from one stage to another in the system. Further software releases planned for June, July and September should stabilise the system at the level that was expected when the system went live and should provide a platform for further migration of cases onto the new system. Overall:

The position is starting to look better for cases coming into the system for the future. There is a series of further enhancement releases, one scheduled for early June and then beyond that probably in July and September, which will bring the system broadly to the level of resilience and robustness that we expected at go-live and should provide a platform then for further migration of cases onto the new system.[303]

157. The DWP's annual report, which was published in April 2004, attempted to put the problems of the IT system into context. The DWP stated:

It is … easy to dwell on the difficulties caused by the new computer service. Despite them, many clients have been receiving a better service than before. In the last months of the year, the agency converted more applications into maintenance calculations than previously. The time taken to handle applications is falling, and the agency is paying the child maintenance premium on a regular basis to Income Support claimants.[304]

266 Q 430 Back

267 Work and Pensions Committee, press release, 5 May 2004. Back

268 The CSA website: http://www.csa.gov.uk/aboutus.asp Back

269 For example, see 'Child Support in Action' by G Davies and N Wikeley Back

270 The Child Support, Pensions and Social Security Act 2000 sets out the basic structure for the new scheme Back

271 See annex three Back

272 Q 376 Back

273 CS2 was the first contract awarded for new application development and operations under the ACcess to CORporate Data (ACCORD) Framework. Back

274 The planned and authorised resource cost of the CSR project mentioned in the Table 1 includes all costs, including CS2, associated with the Reform programme to March 2004. The figure of £456 million was given in Work and Pensions Committee, Minutes of Evidence, 2 July 2003, Q 15, and covers the EDS contract for CS2, which is payable from January 2003 until August 2010. Back

275 HC Deb 27 Jan 2003, col 569 Back

276 HC Deb 20 Jan 2004, col 1177W Back

277 Q 430 Back