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Mr. Laws: I agree that we need answers on these points. I suggest that the hon. Gentleman might add a further question to the Economic Secretary. Given the vagueness about the figure of 3,200 job losses, perhaps the Economic Secretary can let us know whether, in his discussions with the unions, he will be clarifying with them whether the Government will seek 3,200 staff cuts or a figure close to that, or whether that is, as the Paymaster General indicated earlier, just a broad assessment or guesstimate of what the savings might turn out to be.

Mr. Francois: That seems a pertinent point. Rather than repeat it for form's sake, I am sure that the Economic Secretary has heard it and will do his best to respond to it.
 
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My hon. Friend the Member for Sevenoaks (Mr. Fallon) chairs the Treasury Sub-Committee. We should pay tribute to the thorough and detailed job that that Committee did. On the basis of that work, he spoke knowledgeably about the proposed merger. He, too, argued for more specific information on the likely savings and how they are expected to be realised in practice. I hope that the Minister, having heard the Chairman of the Sub-Committee, has now well and truly got the message and that we will hear clear answers from him.

My hon. Friend the Member for Hexham (Mr. Atkinson) has had something of a grin on his face ever since the result of the north-east referendum. I think that he still has that grin today, particularly when he was contemplating the taxpayer experience as some permanent exhibition. I do not know whether that will ever be established in practice, but if it were, I fear that it is the sort of thing that would have to be propped up with lottery money. The ticket sales might not meet the original estimates.

My hon. Friend also talked about problems arising from the maladministration of tax credits. He made some pertinent points on the basis of the real experiences of real individuals. I shall return to that subject in more detail.

We also heard from the hon. Member for Torridge and West Devon (Mr. Burnett). He brings to the House his experience as a tax practitioner over 25 years, I think. If I heard him correctly, he also said that, over those 25 years, he never had cause to lodge a material complaint about the Inland Revenue. I am not certain whether all our constituents could provide such a blanket guarantee but I echo what my hon. Friend the Member for Chichester said from the Opposition Front Bench, which is that we pay tribute to the sometimes difficult work that members of the Inland Revenue and Customs and Excise undertake. I emphasise that some of the criticisms that I shall come on to relate to their senior managers and to Ministers rather than to staff at the coal face who are doing the job from day to day.

Mr. Burnett: I thank the hon. Gentleman for what he said. I think that I said that I had not had cause over 25 years to complain about the conduct of the Inland Revenue. I specifically said "Inland Revenue". I had many disagreements with it, but its conduct was, in my view, beyond reproach.

Mr. Francois: I am sure that the hon. Gentleman spent a lively 25 years in dealing with the gentlemen of the Inland Revenue. I am sure also that the House knew what he was driving at, and I wanted to acknowledge the point that he made.

We then heard briefly from the hon. Member for Hayes and Harlington (John McDonnell), who raised the staffing implications of the merger. He made an important point on what is now becoming, in some respects, the impersonal nature of the system and the remoteness that many of our constituents feel when they have to deal with a call centre, especially when they cannot get through to the same person more than once. He introduced an important point and it is one to which I will return.
 
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We also heard from my hon. Friend the Member for Rochford and Southend, East (Sir Teddy Taylor), who is my parliamentary neighbour. He raised particular concern about the staffing implications of the merger. I can well understand that because Customs and Excise has a major facility in Southend. I already know from our informal discussions that he has made representations on this matter on several occasions, as I believe has my hon. Friend the Member for Southend, West (Mr. Amess). The issue affects Southend as a whole. The House will have heard what my hon. Friend the Member for Rochford and Southend, East said this evening on behalf of people in Southend. I hope that his points will be taken carefully into consideration as the merger proceeds.

I also wish to refer to the remarks made by my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley). He served with distinction on the Treasury Committee and was often a thorn in the side of Ministers. To a degree, he has achieved that in this debate. He spoke with particular force about the problems of information technology and how they cause difficulties for our constituents. I now turn to that subject.

Given recent events, we have a strong concern about the risks that might arise from the IT aspects of the proposed merger. Between them, the Inland Revenue and Customs and Excise have about 250 different legacy computer systems and deal with 13 million customers, including 3.75 million businesses of varying sizes and complexity. The departments already experience more than 250 million contacts a year, ranging from tax returns, letters and telephone calls to e-mails. The scale of the merger in IT terms alone is therefore huge, as is the potential risk to the Government's revenue stream if it all went wrong.

Unfortunately, even a brief examination of the Government's track record in managing major IT programmes is very far from encouraging. There are already serious problems at the Inland Revenue itself even before the merger commences and several hon. Members have touched on that issue already. The Revenue is now responsible for the administration of the Chancellor's complicated system of tax credits. The computer system designed for that purpose has been exposed as being prone to error, including a particularly unhelpful tendency to overpay tax credits to people in one year and then try to claw them back in the next. My hon. Friend the Members for Hexham and for North Wiltshire (Mr. Gray) made that point.

The Public Accounts Committee, which examined the performance of the Inland Revenue in this respect, came to a damning conclusion. In a press release of 22 April 2004, the Committee's Chairman, my hon. Friend the Member for Gainsborough (Mr. Leigh), commented:

"The problems that arose when the Inland Revenue introduced the New Tax Credits scheme are well known. It was nothing short of disastrous, with hundreds of thousands of claimants not paid on time, inevitable hardship for some, inconvenience to employers, and disruption to other parts of the Revenue's business. The Revenue should have been more realistic in setting the timetable and have put in place better contingency arrangements."

That is a sword of Damocles to hold over the Government's head.
 
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In facilitating the proposed merger, it will also be important to learn lessons from the recent problems—some of them very serious—at the Child Support Agency. By way of comparison, several years ago the Government decided to transfer CSA cases on to a new bespoke computer system known as CS2. The new computer cost almost £500 million of taxpayers' money but, according to an article on the BBC News website entitled appropriately, "Basically, it doesn't work", operators could be working on the system when it would suddenly lock them out without warning. It would take weeks before the case file could be electronically reactivated and properly dealt with. According to a briefing note from the Library, up to 150,000 cases are now stuck in the CSA system in this way and are effectively unable to proceed.

Ministers are still wrestling with whether to try to fix the existing system or write off a great deal of public money and start again with an alternative. This has been a fiasco, and it led to the resignation of the chief executive of the CSA. Such events must be avoided in the merger that we are discussing, particularly as the merged entity would have to deal not just with individuals but with companies.

It is important to remember that we are not just dealing with statistics, even though some of the numbers for the problem cases involved are very large. I say in all sincerity to the Economic Secretary that these are real people, many of whom rely on receiving money for which they have budgeted in all good faith, but which fails to reach them through no fault of theirs.

Commenting on the syndrome of Government computer failures, the National Audit Office, in its November report on improving IT procurement, a copy of which I have, concluded that the failure of public sector IT contracts is due to a number of key factors, including a lack of a clear link between the project and the organisation's key priorities, a lack of effective engagement with stakeholders who will need to use the system, and a lack of clear senior management and ministerial ownership and leadership. That is a damning indictment from the NAO, in addition to the previous one from the PAC.

As the merger is implemented, it will be important to try to avert what might be described as ordeal by Government call centre. Too many of our constituents experience a substandard service because the Government switch work into call centres backed up by inefficient or unreliable computer systems. The syndrome, which is all too familiar to many CSA and Inland Revenue tax credit customers, can be summarised as follows.

The Department's computer generates a letter that is incorrect on an account that was previously operating well. The aggrieved constituent telephones the number on the letter and is put through to a departmental call centre. After the electronic rendition of "Greensleeves" or whatever the music happens to be, they get the inevitable menu of options. Having fought their way through that, they are eventually put through to a member of staff. They give their reference number and the details, and attempt to explain the specifics of their case. That is all taken down and the caller is told something like, "I will send an e-mail to our computing department and have it sorted out for you. Don't worry."
 
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Two or three weeks later the constituent receives another letter showing that nothing has happened and nothing has changed. Frustrated, they ring up the call centre again, are put through to a different person and go through the whole saga a second time, only to discover a fortnight or so later that again the problem has not been put right. The problems with tax credits and overpayments are a perfect example of the syndrome. Eventually, in a state of high dudgeon, the constituent arrives at their Member of Parliament's constituency surgery to vent their wrath. I am sure a number of hon. Members have had that wonderful experience already.

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