Examination of Witnesses (Questions 200-219)
RT HON
ALAN JOHNSON
AND MR
DOUG SMITH
17 NOVEMBER 2004
Q200 Vera Baird: I suppose I should ask
you why, after 18 months, only 61,000 people have had even one
payment of the 478,000 who have applied, and why the figures that
you have described are as they are?
Mr Smith: As I have indicated,
I do not think the comparison is a fair comparison between the
61,000 that have paid and the 478,000 that have applied—for
the reasons I have explained. I think a much fairer comparison,
and an equally compelling statistic, is the comparison between
the number of payments which have been made and the number of
calculations which have been made—which indicates a complaints
rate of significantly less than we expected to achieve.
Q201 Vera Baird: Mr Smith, I am sure
you are very pleased at that. Can I just move on to something
else?
Mr Smith: I am sorry, can I say
that I am far from pleased at that.
Q202 Vera Baird: I am very puzzled as
to why, when you have only done 104,000 calculations, you are
particularly pleased that a higher number of people proportionately
have paid up on those calculations. The fact is that you have
not got enough cases to the calculation stage, have you? That
is your failure.
Mr Smith: Two points. We have
moved 140,000, not 104,000, through to calculation stage and made
the calculation. Two, I am far from pleased that the figure of
first payments is 61,000. We do need to do better, and the Agency
is doing better because we have put a focus in recent months specifically
on the area of first payments and achieving, not just first payments
from non-resident parents, but first payments using a method that
is sustainable into the future. So we are not looking for first
payments as simply, "Let's get the cash" or "Let's
get the cheque", but let us get a first payment that is based
on a direct debit or a standing order, so that we have a higher
certainty that, looking to the future, we will get the second,
third and fourth payments.
Q203 Vera Baird: I do not think you have
used your own words to say how you would yourself describe the
performance of the Agency under the new scheme. Can I press you—for,
I think, a third time—to say how you yourself would describe
it? Is it a failure? Is it total failure?
Mr Smith: It is not a failure.
To use my own words, I am seriously disappointed in the operation
of the new arrangements over the first 18 months. As the Chairman
indicated, we went into the new arrangements with a huge amount
of commitment, and indeed enthusiasm, that both the new policy
arrangements, the new legislative arrangements, the new IT arrangements,
would herald a new future for the Agency. What we have found over
the last 18 months is that the policy changes have gone well and
clients, by and large, welcome the simplicity and the straightforwardness
of the policy changes. The implementation of that policy has not
gone well. But at the heart of the issues on implementation of
the policy have been the difficulties we have faced over 18 months
with the computer system. I really do not wish this to be simply
a touchstone to which we return on every question, but none the
less it is not possible to operate a large, complex business in
today's world without having a sophisticated level of computer
support, both for the processing activity, the client contact
activity, and the management information needed to run the business.
So if you wanted a summary of how I feel, it is that I am seriously
disappointed over the last 18 months.
Q204 Vera Baird: Mr Smith, in July 2003
you told this Committee that the Agency was in control of its
workload. Can you honestly say that today?
Mr Smith: I believe the Agency
is in control of its workload. We have never lost control of the
workload, and we have put a significant amount of management attention,
management resource, into doing our level best to protect our
clients from the worst impacts of the difficulties with the IT
and telephony system. If you ask me have we succeeded in every
instance in shielding our clients from those worst impacts, clearly
we have not. There are too many individuals I have met personally,
and who I know you have met as Members of Parliament, who will
tell me directly how we have not shielded them from the worst
impacts over the last 18 months. However, I am satisfied that,
equally, there are a large number of clients that we have been
successful in, in having put payment arrangements in place in
very difficult and trying circumstances.
Q205 Vera Baird: The Government's response
to the IT report agreed by this Committee talked about regular
progress reports on the new scheme, the most recent including
figures up to September 2004. These reports have very little information
in them, compared to the reports produced under the old scheme.
When do you propose to produce more statistics and why is less
information currently being made available?
Mr Smith: The management information
available for the new scheme is limited. We are currently producing
as much information as we have available. The main gap at the
moment is in relation to throughput. As soon as that information
is available in a robust form, then we will certainly make it
available to you.
Q206 Vera Baird: So the information that
you are putting out in these reports is all you know?
Mr Smith: I would not say it is
all we know, but it is certainly the best we have for this form
of report, yes.
Q207 Chairman: We do need to pick up
the momentum a little. We have seven or eight important areas
and I want to try to cover them all before we finish at half-past
11. It was a series of very important questions that Vera was
asking. It is very difficult orally to understand these numbers
easily. The Committee report, I am determined, will be an accurate
reflection, which lay people can understand, about what is a stuck
case and what is a backlog. If we do not get that agreed—and
Vera is right to raise queries about the doubts and uncertainties
on some of these figures—can we get a commitment that between
us we will make sure that whatever our report says is accurate
so far as you are concerned?
Mr Smith: I will attempt, in so
far as it is possible, to provide you with a better analysis of
the gap between the applications received and those which have
been cleared.
Q208 Mr Goodman: In our report, we recommended
the DWP provide a list of change requests and dates that it has
issued for CS2, the computer program, the reasons for the requests,
and an assessment of the effect on the program, in terms of DWP
staff time, cost, delays, reliability, and functionality. We did
not get an answer. We were then given additional information.
The answer we had related only to costs. So can you now tell us,
have you quantified how much staff time has been lost due to problems
on IT?
Mr Smith: Can I come back to the
issue of change requests and deal with the issue of staff time
lost due to problems on IT as a separate point?
Q209 Mr Goodman: Can we just deal with
the staff time for the moment, please?
Mr Smith: The issue of staff time
lost because of defects in the IT system is a wide-ranging one—and,
no, I have not attempted to make a specific calculation of the
amount of time which has been lost as a result of IT problems.
Q210 Mr Goodman: You still have no figure?
Mr Smith: For that, no. Forgive
me, Mr Goodman, but I thought the Committee request was for the
cost to the Agency of handling and dealing with change requests.
Q211 Mr Goodman: We asked how much staff
time has been lost and we have not had an answer. So I would like
to move on. Can you confirm that the software recovery programme
has been completed? Earlier this year, the Secretary of State
said that the recovery programme would be completed by the autumn.
Is it complete? If not, when will it be complete?
Mr Smith: The software recovery
programme is not complete yet. It is worth—if I may, Chairman—just
recapping a little of the history round this.
Q212 Chairman: Briefly.
Mr Smith: Very briefly. It is
a long history.
Q213 Chairman: It is a long history!
Mr Smith: As we went through the
autumn of last year, it became self-evident to us that the IT
system, telephony system, the support that we had, contained significantly
more defects than we expected to be in place. We commissioned
an independent review in the autumn last year, or EDS commissioned
an independent review, which set out a programme of recovery that
ran from January through to September. Following that, it emerged
fairly swiftly that the recovery process was likely to be more
complex and difficult than EDS had envisaged at the start of that
recovery. The recovery process needed to embrace more defects
than they expected at the start of that recovery process. We have
agreed with EDS that the recovery timetable will be extended,
to reflect that additional level of complexity and technical difficulty
of achieving the recovery. My current expectation—and it
is an expectation rather than a detailed plan—is that we
will have completed the recovery of the system by spring of next
year. I say that with the proviso that it will have dealt with
the most serious defects in the system that were identified at
the time of the review which was conducted last autumn, and the
most serious defects with the system that have been identified
during the course of this year. So I hold open the question. There
may be further changes or defects to be dealt with within the
system, to bring it to the stage at which we have total confidence
in it for live running on a sustained basis.
Q214 Mr Goodman: You have missed your
autumn target. You are now setting, as I understand it, a spring
target. You appear to be saying even that spring target is not
reliable. Given the fact that the Secretary of State, acting on
the advice of the Agency, did say that the programme will be completed
by this autumn, how can we have any confidence in any timetable
that you give us—given that you keep giving us timetables
and they are not met?
Mr Smith: I do try, as you would
expect, to be as open with the Committee as possible. The timetable
that was set at the start of the year was EDS's best judgment
at that stage of what would be needed to complete recovery of
their system. As we have gone through the year, that recovery
has proved more complex and difficult than we expected. We have
engaged with them and agreed that they should extend that timetable.
In a sense, that is a positive engagement, because we could simply
stamp our foot and say, "Hey, you said completed by the end
of September. We insist that it is completed by the end of September".
The upshot of that, as with any IT delivery programme, is that
the quality will suffer. You have only three components to play
with here: timescale, quality, or functionality. If we need this
functionality in place and we need it delivered to a high quality,
then the timetable will flow from what needs to be done. There
is very little we can do as an agency, looking externally to EDS,
to influence that. I am more interested in ensuring that we do
properly recover this system, and that it is recovered to a high
quality of operation—
Q215 Mr Goodman: We are interested in
whether or not you can give us a timetable. I suppose my question
is rhetorical, because we do not expect you to provide an answer
in which we can have confidence; but clearly we cannot have confidence,
on the basis of experience, that any timetable that you offer
to us will be met. Now, can I move on? We recommended that the
new IT system should be fully operational for new cases by 1 September
and that, if it was not, contingency plans, including the possible
abandonment of the programme, should be made public by 1 February
2005. Can you explain why we received no response to that in the
response that we received from the Government to our report?
Mr Smith: The response is a departmental
response rather than an Agency response, of course. Our current
judgment is that the system is being recovered successfully; that
EDS have shown the right level of commitment to that recovery,
in terms of senior management commitment and proper resourcing
at ground level; that they are delivering the changes which are
needed successfully to recover it; that that is showing through
in our ability to operate the system in our offices; and we do
expect to have a fully recovered, fully delivered system during
the next year.
Q216 Mr Goodman: Not by 1 December this
year?
Mr Smith: Not by 1 December.
Q217 Mr Goodman: In that case, are you
willing to accept our recommendation that you should publish contingency
plans by 1 February 2005?
Mr Smith: I think that, in a real
sense, there is a very limited option for contingency available
to us. This system is EDS's system. We effectively purchase a
service from them on a monthly basis. We currently have half a
million cases residing on it, and we have a high expectation that
it will be recovered to permit activity on those cases to be undertaken.
So there is no real need to devote what would be a significant
management effort and significant time cost to fully explore a
contingency. In a sense, we know what the contingency is. The
contingency is to go back to the start: re-require, redesign,
re-specify, re-procure a system, and rebuild it. That is looking
at possibly a three, four, five-year time horizon. I suppose I
could write that down as a response to the Committee, but I do
not think that would be seen as contingency in the sense that
the Committee were looking for contingency.
Q218 Mr Goodman: You are saying you are
not prepared to publish a contingency plan; that the software
recovery programme has not been completed; you cannot quantify
the staff time—but you are not even prepared to publish
a contingency plan because, as I understand it, you do not have
a full contingency plan. Is that correct?
Mr Smith: The issue of whether
we should provide a contingency plan is a departmental issue rather
than an Agency issue. My view is that, from an Agency perspective,
we do not at the moment have a realistic contingency on a system
on which around half a million cases are currently residing, but
that there are clear signs of month-on-month improvement in delivery
of the service by EDS.
Q219 Mr Goodman: But we have no software
recovery programme date, we have no contingency plan, and presumably
you are about to tell us that you still have no date for migrating
the old cases on to the new scheme. Yes?
Mr Smith: It would be inappropriate
to think of bulk migration until we have completed the first phase
of the recovery plan and demonstrated that as operating effectively
in live use.
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