Examination of Witnesses (Questions 180-199)
RT HON
ALAN JOHNSON
AND MR
DOUG SMITH
17 NOVEMBER 2004
Q180 Chairman: Good morning, ladies and
gentlemen. May I call the Committee to order and welcome Alan
Johnson and Doug Smith? We are coming to the end of an inquiry
into the Child Support Agency. We have a series of questions,
but I think the best way of proceeding would perhaps be for the
Secretary of State to say a word. He is in a new position, taking
on responsibilities, realising the length, breadth and extent
of the work, and some of the difficulties in the Department. A
fresh mind is always an opportunity. We are pleased that he is
taking personal responsibility and we are pleased that he is here
this morning. Obviously, Doug, as the leader of the Child Support
Agency, has been battling his way through some pretty difficult
territory in the last few weeks and months. All I want to say
by way of a preface is that we, as a Committee, take pretty seriously
our duty to keep the House of Commons advised of the work of the
Department. This is the most difficult area for us, and it has
been for a number of years. I think that the House of Commons
has continuing, and I would say increasing, concerns about where
we are on this subject. You would only have needed to be at the
last session of oral questions to see that the Parliamentary Under-Secretary
was under a lot of pressure, grown-up pressure—not daft
pressure, not political pressure—serious pressure from Members
from all sides, whose constituents continue to suffer because
of the failings of the Agency. I have never before, as Chair of
this Committee, been in a position where the evidence presented
to it has been so unanimous. "Unanimous" is the only
word. Nobody has anything constructive to say about the set-up
that they are facing, either as pressure groups, as advisers,
as academics, or as clients. The most compelling piece of evidence
this Committee has had for a long time came from a young, very
resourceful woman who is a client of the CSA. She said three things,
basically. She said she had been trying to phone twice a week
for 14 months, to try to get through to the Agency. When she had
got through, she had been told by 10 different people that she
was not eligible for a claim. When she fought her way through
that and successfully got an accurate assessment, she was then
told that the non-resident parent was not paying—when she
knew he was. They admitted eventually that he was paying but that
the system could not recognise the payment, and then they did
that to her twice. There is a young woman whose life is already
in difficult circumstances, put into a position where the work
of the Agency is actually exacerbating her domestic situation
considerably. This, after 18 months, when the Committee and indeed
Parliament had been told that the new system, with a ready reckoner,
would sort all this out. Four or five years on, we have 60 million
lines of bespoke computer code, which clearly is not working.
There are two reasons why I use that story. First, she was another
of the witnesses who was unanimous and, second, this is not just
about computers either. It is a systemic, chronic failure of management
right across the whole territory of the Agency. That is how I
see the evidence at the moment. We have to try to work together.
The Committee is not interested in blame allocation or pointing
fingers. We are interested in getting this thing to work. We are
interested in getting payments into the hands of the clients in
the shortest possible time. I think that if we spend our time
this morning addressing that constructively together, we will
make the best use of the time available to us. That is where I
see it. Alan, could you just say a few words about how you see
the thing, now that you have had a look at it since you joined
the Department?
Alan Johnson: Thank you very much,
Chairman. I was very pleased to come here today because I take
ultimate responsibility. I know why you are having this hearing
now, but you will understand that, eight weeks into this, it means
that it is good news or bad news—and bad news for the Committee,
I think. First of all, I am still gauging the extent of this problem.
I do not have any rabbits to pull out of any hats, which may mean
that I am even more boring than usual in seeking to reply cautiously
to some of the very serious points that you will be raising with
me. The other side of it though is that I think that the work
of the Select Committee will be invaluable in helping me to gauge
the problem, and your report will be even more closely scrutinised
than usual in the Department. One other point: you mentioned unanimity.
I hope that this is not the only area where we are all together
here, but I want once again to re-emphasise the hard work and
dedication of the staff in the CSA. You must have seen, as I have
seen, these fairly young, sometimes very junior staff dealing
with horrendous problems. This Agency is unlike any other, in
that it is not simply a processing or an enforcement agency. This
is an agency where people have to intervene in the most emotional,
delicate circumstances, ie a breakdown in relationships between
human beings. I think that it is worth my reiterating my respect
for the way that the staff are dealing with this—and dealing
with it with a computer system that is problematic and unstable.
I know that is not the only issue you want to talk about, but
it is worth mentioning that the EDS system has caused huge problems.
The other point I would make is that, of course, many of the problems
that the Agency faces we face because non-resident parents do
not always take their responsibilities for their children as seriously
as they should. We should be a building society instead of a debt
collection agency in the CSA, and I think that is another point
worth mentioning. Doug Smith is with me. I should tell you that
Doug has decided that now is the time to stand aside and to allow
a new chief executive to tackle the challenges ahead. Doug has
exceeded the four years that senior civil servants are now expected
to remain in a particular post. So Doug believes that we have
reached the natural breakpoint at which he can hand over the reins.
I respect Doug's decision and I would like publicly to thank him
for his work during what has been a terribly difficult time.
Chairman: Picking up that point, the
young lady I referred to, when she made her very effective plea
for help, prefaced it by saying that the treatment she got from
the individual members of the staff she found faultless. It is
true too that, if Mr Smith has taken that decision in his own
interests and in his own way, then we wish him well. This is not
about individuals. If it is about anything, it is about difficulties
with interface as well as management systems. It is not about
individuals. That is therefore very helpful to know. Let us move
on to the questions.
Q181 Vera Baird: I would like to ask
Mr Smith some questions. First, would you help me with a description
of how the new scheme was intended to be an improvement on the
old one?
Mr Smith: The new scheme was intended
to deliver a more straightforward mechanism for calculating child
support, based round an easy-to-understand formula: 15% for one
child; 20% for two children; 25% for more than one child. On the
back of that more straightforward formula, we were hoping to deploy
more resource away from information gathering and calculating
of maintenance into ensuring that non-resident parents complied
with their maintenance calculations. Alongside that, the intention
was to provide better and more sophisticated computer support
for case workers, particularly round the presentation of work
to them and the presentation of telephone calls inbound from clients
to them.
Q182 Vera Baird: In essence, the point
was to refocus on making sure the money got through, and to make
the calculation easier, the collection process of information
easier, to send the money through?
Mr Smith: Indeed.
Q183 Vera Baird: So you really have to
test the new scheme on how many people are getting the money?
Mr Smith: The intention of the
new scheme was to drive up compliance and make the process more
straightforward for clients.
Q184 Vera Baird: It started, as I understand
it, in April 2003.
Mr Smith: 3 March 2003.
Q185 Vera Baird: Our figures—and
I am sure they come from you—show that, on the new scheme,
of 478,000 applications, 61,000 non-resident parents have made
a first payment in all of that time since April 2003. Those figures
are correct?
Mr Smith: That is correct, yes.
Q186 Vera Baird: That is, I think, less
than 12% who have made a single payment. Could I ask you, in your
own words, how you would describe the performance of an agency
with results like that?
Mr Smith: First of all, I do not
think the results can be presented in quite as straightforward
a way as you suggest. I do not hide the fact that the rates at
which non-resident parents are complying with calculations that
are made are less than we expect and less than we plan to achieve.
I will come back to that point I am sure, in a moment. The key
point is that we have received to the end of September 478,000
applications; we have processed through, either to calculation
or to the point at which cases should be closed, around 238,000
of those. Of the balance, we would normally, with the current
throughput of work, expect to be carrying around 120,000 to 150,000
cases, as we go through the process of information gathering,
determining where the non-resident parent lives, and so on. There
is, within the balance of that, a residue of cases which are stuck
because of problems experienced in the past, or which have been
recently unstuck, as we have cured those problems but are still
awaiting clerical intervention to move them along. Of the cases
which we have presented for calculation, as I say, we have cleared
around 238,000. Of those, around 140,000 have resulted in a calculation—which
is a far higher percentage of cases moving to calculation than
the old scheme.
Q187 Vera Baird: Are you talking about
the new scheme? Our information suggests that only 140,612 have
received a calculation at all.
Mr Smith: Have moved through to
calculation—that is right. Around 97,000 have closed. The
proportion of cases which have been brought to that point of clearance,
either make a calculation or close the case, is significantly
higher than the proportion we were achieving under the old scheme—which
is one of the benefits of the new scheme. One of the intentions
of the new scheme was to drive up the percentage of cases that
result in a positive outcome for the parent with care and the
applicant. We have shifted the rate at which we are achieving
positive outcomes, in line with the policy intent, from around
30% to just short of 60%. So that is a positive flow from the
new scheme. But I accept that, of the 140,000 cases where we have
made a calculation, only 61,000 at the end of September had at
that stage resulted in a payment. That is not good enough. I accept
that.
Q188 Vera Baird: My question was, granted
that the test for the new system is money going into the hands
of parents with care and only an eighth of the people who have
applied now have even had a first payment, and you have only done
calculations in 140,000 out of 478,000 cases, how would you describe
the performance of an agency with results like that?
Mr Smith: As I tried to explain,
I do not think the comparators that you are making are reasonable
comparators, because we would not at this stage in the game, under
any system, have expected to have processed the entirety of the
478,000 applications which have been received. We would always
carry a work-on-hand, for two reasons: one, that there is always
a time lag in relation to gathering information from the parent
with care and from the non-resident parent, and there is always
a time lag in too many cases in trying to trace where the non-resident
parent is; two, we would always carry a weight of work, because
our job is not to move cases through to closure where there is
a reasonable prospect, at some stage, of gaining a payment. So
we will keep cases on our books in that initial stage, before
we move to closure or calculation, even though we cannot immediately
track down the non-resident parent but we think that there is
some prospect at some stage in the coming years of being able
to track down the non-resident parent. So simply making a comparison
between the number of cases received or on hand and the number
of cases worked is not a reasonable or a fair comparison. I accept
that, of the cases we have received, we should have processed
more of them—in an ideal world. Clearly, there are 40,000
cases embedded in there that we would have processed, had we not
hit significant incidents on the computer system. So we would
have processed more of them, but the comparator that you are seeking
to make, between the number of cases cleared and the number of
cases received, is not a reasonable comparator.
Q189 Vera Baird: The number of complaints
that the independent case examiner has received has gone up by
30% since 2003. It is now 50-50 between the new system and the
old system. That again causes a little concern—do you think?
Mr Smith: It causes me significant
concern that complaints are increasing, not just to the independent
case examiner—which is the very pinnacle of the complaints
hierarchy—the number of complaints we are receiving from
clients has increased significantly. I know, because I respond
to most of them, that the number of complaints I am receiving
from Members of Parliament has increased significantly, and the
number of complaints going to the independent case examiner has
increased significantly. However, I think that we do need to place
the independent case examiner's numbers in context. Despite all
the problems—and I do not want to minimise the problems,
I do want to engage constructively around the problems, as the
Chairman suggested—it is still a relatively small proportion
of our caseload that is moving through to that level of serious
complaint. By and large, complaints that we receive earlier in
the complaints process can and are resolved by our case workers
at the frontline.
Q190 Vera Baird: You are asserting, I
think, and this seems to be self-evident—let me understand
this so that I can be clearer—that you would normally expect
to carry a body of cases because they would be in process of being
done. But how many of these seven-eighths of the applications
that have come in in the last 18 months would you expect to be
simply in process? How long would you expect it to take to do
something? How long would you expect it to take from an application
to somebody getting their calculation?
Mr Smith: The scheme started off
with an aspiration that, once the system had bedded down, we would
be moving to a basis where, on average, we could move the case
from first contact with the parent with care, through to having
payment arrangements in place, in around six weeks.
Q191 Vera Baird: Six weeks.
Mr Smith: On average. I suspect
the follow-up question is, what is the average at the moment?
The short answer is that, with precision, I do not know, because
our management information is not yet sufficiently robust to allow
us to indicate that figure—or we would have done on the
quarterly reports that we submit to Parliament.
Q192 Vera Baird: Have you, with respect,
got any idea?
Mr Smith: My best guess at the
moment—
Q193 Vera Baird: Best guess?
Mr Smith: —is that the figure
is probably somewhere between 15 and 22 weeks.
Q194 Chairman: Average?
Mr Smith: Average, yes, given
the backlog. If that is the case, you would expect to be carrying
a work-on-hand of around 120,000 to 150,000, plus a number of
cases that you would wish to park on one side because you do not
want to move them to closure too quickly, because there may be
some realistic prospect in the future of identifying where the
non-resident parent is and bringing cases in. I have already referred
to the number of cases which are stuck in the system.
Q195 Vera Baird: I am just, again, trying
to understand the depths of it. You say you carry a work caseload
on hand of about 120,000; you have done calculations in 104,000
cases. That is 220,000-odd. So where are the rest of the 478,000
who have applied since April 2003?
Mr Smith: And we have closed around
100,000.
Q196 Vera Baird: Where are the rest of
them then? Supposing you are right that we have closed 100,000.
Where are the other 100,000?
Mr Smith: The remaining 100,000
will either be cases which are stuck in the system, which I indicated
at the end of September was around 40,000 to 45,000; cases which
have been stuck in the system in the past which require clerical
intervention to move them along; or cases where we are genuinely
putting them on one side for the moment because we think that,
at some stage in the future, there is a realistic prospect of
identifying where the non-resident parent resides, and therefore
reopening the dialogue with them to move the case to a conclusion.
I will say, along the path on this, that of the cases where we
have been able to identify the non-resident parent—and the
case may be stuck for computer reasons or may have been freed
up but not yet capable of being worked—we do have processes,
which work in a reasonable number of cases, to put in place what
we call an informal arrangement with the non-resident parent.
We can use the new formula to be able to engage with the two parties
and to say, "Look, we can't formally make your maintenance
calculation at this stage, but we can indicate that you should
be paying £40, £50, £60 a week". Those informal
arrangements are often welcomed by both parties. If we cannot
move to create informal arrangements between the two parties and
the parent with care is naturally anxious and wants her case moving
on, if it cannot be dealt with within the computer system we have,
then we move it out for clerical handling so that the case is
worked clerically. I know that, in relation to many of the cases
referred to by Members of Parliament which they have in their
postbags, the response contains a reference to the fact that,
yes, this case has been stuck for whatever reason, and we are
now moving it out of the mainstream computer system and starting
to work it clerically for them.
Q197 Vera Baird: Mr Smith, you will have
to forgive me, I do not understand. Again, I come back to my figure
of 104,000 where you have had a calculation, and you say you would
expect to carry 120,000, so that is 200,000; but in fact you are
carrying three times as many as that, and I do not understand
where you are saying those are. Are these the ones that are, frankly,
parked in the system?
Mr Smith: I think that you are
excluding in your calculation the 100,000 which have been closed
along the way. So there is a lesser number of cases which, as
I say, fall into one of the number of categories. One is cases
which are stuck because of known IT problems; the other is cases
which are stuck and are awaiting clerical intervention to move
them along, having been freed up as we have sorted out the IT
problems that have given rise to it; and, thirdly, cases which
we have parked, awaiting contact with a non-resident parent.
Q198 Vera Baird: Those cases in the three
categories you have described, which are not normal caseload being
carried, have not arrived at a calculation, and are not the 100,000
who have been closed, must amount then to—what? 150,000
cases?
Mr Smith: I have not done the
maths precisely, but I would guess somewhere around 100,000, yes.
Q199 Vera Baird: Cases?
Mr Smith: Yes.
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