Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 60-79)


12 OCTOBER 2005

  Q60  Susan Kramer: Is that true for 2003-04, not just 2004-05?

  Mr Gray: Yes.

  Q61  Susan Kramer: It is an estimate in both cases. You cannot tell me how much of that is small amounts automatically written off because it is below the level at which it is worth—

  Mr Gray: No, because it is not a write-off, it is a broad-brush provision.

  Mr Varney: I do not think we are doing justice to your question. I am sorry. We are focusing on the question you have asked, but so far for 2003-04 we have written off £123 million or remitted it. That is how much we have actually remitted. We then have £395 million which was recovered in 2004-05, and that was recovered over the system we have just been discussing. All that we know about the overpayments is that one-third by value, as I have said, was by families whose income for 2001-02 and 2003-04, over those two years, has increased by more than £10,000. So one-third of the value of the overpayments is people who have that change of economic circumstance.

  Q62  Susan Kramer: So two-thirds—

  Mr Varney: Who have not had more than £10,000. There is a table of what the overpayments is. If we can give you a better answer, I would like to try to do it.

  Q63  Mr Ruffley: Mr Varney, constituents, Mr and Mrs David Cawthorne of Bury St Edmonds—and I will not give the details of their underpayment—have had a catalogue of misfortune, and in their last telephone call made last night they were told by one of your officials, "People seem to have more success by going through their MPs." Why are your officials passing the buck in that way rather than getting your own house in order?

  Mr Varney: If that is what an official has said, that is not what we have asked people to do.

  Q64  Mr Ruffley: Are you aware of other complaints along those lines?

  Mr Varney: Yes.

  Q65  Mr Ruffley: You have heard of that?

  Mr Varney: Yes. After the last time we were in front of the Committee, we had some advice out to people who answered the phone that this was not an appropriate response.

  Q66  Mr Ruffley: But it is still going on. It may not be appropriate but it is still going on. It is no wonder the MPs who try to do their work are inundated in this way. If there is a tricky case that is not being resolved, your officials take the easy way out and say, "Get on to the MP" and that is presumably put on a fast track. That is no way to run an organisation, Mr Varney.

  Mr Varney: It is not. You have said one case and we will follow that up. If you have more cases, you can use the words that there have been a number of cases. My impression is that it is not because we have encouraged people to come to their MPs. As Ms Kramer was saying earlier, people see MPs as an important channel of communication if others are frustrated. But, if we have officers who are encouraging that, that is not what we want them to do and we have put out guidance not to do that. I agree, a good organisation does not do that, it tries to solve its own problems.

  Q67  Peter Viggers: You are currently reviewing the operation of the Code of Practice on overpayments. I think that is Code of Practice 26.

  Mr Varney: Yes.

  Q68  Peter Viggers: The present procedure is that if there is a case of genuine hardship where the recovery of overpayment is disputed, recovery can be suspended while the dispute is resolved, which really means the distress is lengthened. When do you anticipate that your review of Code of Practice 26 will be published? Do you anticipate there will be changes?

  Mr Varney: We are aiming to publish that by the end of this year and we are currently engaged in consultation arrangements with a number of voluntary sector and other bodies about the ways in which we might seek to clarify that code of practice. In particular—and it reflects some of the earlier questions—to bring a little more precision, clarity, objectivity to the particular ways in which the test of reasonableness will be applied.

  Q69  Peter Viggers: Are key areas still being debated? What you have just described is clarification rather than a change of policy.

  Mr Varney: We are looking at the detailed operation of Code of Practice 26 from an administrative viewpoint rather than a fundamental review of that policy.

  Q70  Peter Viggers: Our constituents would wish us to say to you and those responsible for decisions that, if overpayment is part of the system, and repayment is part of the system, then that does cause real distress and hardship, and we would ask for that to be considered.

  Miss Walker: Perhaps I could add, on the subject of hardship and Code of Practice 26 and hardship a lot of the points that have been put to us are concerning the fact that we need to make it clearer to people that they are able to come to us if they are experiencing hardship, so that we can give them the help that is already available rather than that the criteria we are using to identify hardship cases are not right. That comes back again to the improvement in communication and the clarification of the circumstances in which help is available in hardship cases, which is certainly what we are looking at.

  Q71  Mr Todd: Could I come back, having been frustrated by your responses on EDS. This project went through an OGC gateway process, did it not?

  Mr Varney: Yes, I would think so.

  Q72  Mr Todd: You sound uncertain. I know you were not there.

  Mr Varney: No, I was not there, and, to be honest—I stand admonished if I am incorrect—I believe in concentrating on what went wrong rather than the processes that went round it.

  Q73  Mr Todd: The Gateway process is supposed to identify risks of failure. That is what it is supposed to be about. Will you make available the reviews that went on in the lead-up to the delivery of this system?

  Mr Varney: I think I would be better advised, when we have reached a resolution of whether we can resolve this with EDS by agreement or by going to the courts, to write to the Committee and lay out the basis on which we have—

  Q74  Mr Todd: Because, if you take it to the courts, you will certainly have to disclose that information anyway.

  Mr Varney: Yes. I am keen not to do anything on the public record which—

  Q75  Mr Todd: It would be helpful if you would set out how you would address better communication about this, so that we can learn.

  Mr Varney: Yes. Absolutely. If it would be a helpful route, if I would undertake, once we have got to some solution or not with EDS, then to come back to the Committee with what we have learned.[4]

  Q76 Chairman: This dispute started a long time ago.

  Mr Varney: I am very conscious of that, but I want an outcome which is the best one for the public purse.

  Q77  Mr Mudie: I find you alarmingly complacent on this matter. I do not know if you understand the hardship it is causing out in the country. You keep referring to the May 26 statement. In that statement the Minister said that she was looking to you to agree your commitment to the Public Accounts Committee, made in January this year, regarding the suspension of overpayments where there is a dispute. She asked you about that. How did she ask you? Did she write to you? Or did she have a meeting and raise it with you verbally?

  Mr Varney: I see the Minister regularly.

  Q78  Mr Mudie: I am not asking you whether you see her regularly; I am asking you a specific question as to how that was put to you. Was it put to you verbally or in writing?

  Mr Varney: I think both.

  Q79  Mr Mudie: So you received it in writing from the Paymaster-General. Have you put back in writing your answer?

  Mr Varney: No. There are a series of regular presentations of issues, and on this one I think there was going backwards and forwards to the Minister, giving advice on where we had got to on some of the issues. The issue we have is: What can we do with the computer system? which is not—

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