Examination of Witnesses (Questions 280
- 299)
WEDNESDAY 25 JANUARY 2006
MR IAN
LAWRENCE AND
MS LYNNE
WALLACE
Q280 Mr Mudie: You can surely stop
the system in six months?
Mr Lawrence: I guess they had
to make a judgment as to how much of that was acceptable. I think
David Varney has reported that he believed the system was under
attack from day one, and he might be right, but we certainly picked
stuff up from members from round about spring last year and started
to try and get those views across.
Q281 Mr Love: Can I press you a little
bit on the questions you have just answered because in your memorandum
to this Committee you describe the design of the computer system
as the provider of "low-hanging fruit" for the activities
of organised criminals? What did you mean by that and where do
you think the changes need to be made? Clearly, the portal is
an issue and is the most-talked about. Where are the other changes
that need to take place?
Mr Lawrence: As I indicated, Chairman,
I would be quite happy to try and amplify that in a bit more detail
rather than try and give you specifics.[3]
The four areas I did highlight to you are pretty much in the public
domain. One area of weakness is what is known as pre-award checking
where a claim is put in, and the decision-maker will have a clear
choice: do they fast-track that through to help someone in need
or do they add it to a work list requiring further investigation?
If it is the latter, of course, that adds to the potential delay
for the claimant, and you know the rest: you get the letter through
the post.
Q282 Mr Love: So this is the origin
of your comment, "pay first and check later", or do
you think there should be a different emphasis?
Mr Lawrence: I think we have the
resources in place. If we have the skilled staff in place that
I have been constantly referring to there is a better chance that
fraudulent claims will not get through the net. With the pressure
that is obviously inherent for people to clear cases and the pressure
our staff are under, and I am hearing stories about targets to
be introduced in the Tax Credits Office and I am waiting for confirmation
of that, I have to tell you we take a very dim view of that. As
if they have not got enough to deal with, the idea of league tables
and leader boards for these people is unacceptable and is another
example of the pressure they are under. I would be happy to amplify
a bit more on what we perceive to be the weaknesses in the system
if that is okay.[4]
Q283 Mr Love: The two estimates that
we have had, as has already been mentioned, are that there was
early estimate of £15 million for organised fraud and then,
when the DWP case came to light, the estimate there was £30
million. If you add the two of those together it only comes to
10% of the early estimate of £460 million claimant error
and fraud. All the evidence that this Committee has received,
and indeed the Treasury have received, is that the final total
of claimant error and fraud will be higher than that £460
million. The question then arises is that by far the greatest
proportion is either claimant error fraud. Does the union have
a view about the balance between those two and what steps do you
think we can take to deal with that type of problem within the
system?
Mr Lawrence: I would need to take
that away under advisement. I could not comment on that exactly,
Chairman. I have seen speculation even higher than that. It depends
just who you believe. Given the investigation going on as well,
it would be wrong for me to speculate but I will consider that
question if I may and see how we can wrap that up in the response
that we have offered to give you.
Q284 Mr Newmark: With respect to
IT systems, there is clearly a problem with the input side for
those putting in the information, there is clearly a problem with
the output and there is clearly a problem with resolving those
IT issues that are before us. Focusing on your staff, what are
the problems with using IT systems from the point of view of your
staff in administrating tax credits, what are the limitations
of the system and what tends to go wrong?
Mr Lawrence: I think I touched
upon this in an earlier answer on the lack of information and
the whole case approach, if you like, being available on the screen
at any one time. We have written in our report that at the time
of writing there were continuing problems of availability of the
IT. To give credit where it is due, that in itself has improved.
What also has improved is the identification of flaws in the system
and what we call trouble tickets created to send to the specialists
to resolve them. What has not improved is the time it takes to
do so, again, because of the sheer weight of numbers and the capacity
of the contractor to do it. It is probably wrong to comment on
the performance of the previous contractor; they have been brought
to book. We had hoped that it was going to be better from this
particular contractor and that is a constant theme among our members.
One thing is clear though: all the IT in the world will not replace
the real benefit of face-to-face contact and effective point of
contact. We see millions of pounds of taxpayers' money continually
spent on IT contracts that do not work, not just on tax credits.
Q285 Mr Newmark: I hasten to add
that that happens in the private sector as well.
Mr Lawrence: Exactly. I could
cite any number of millions spent on consultants—
Q286 Mr Newmark: That happens in
the private sector too.
Mr Lawrence:— at a time
when we have been told that consultants are going to be eased
out in favour of an in-house approach. It happens across both
sectors. It is a lot of money. The problems of IT have led to
David Varney's suggestion that it is going to take some 18 months
to manually put right some of the inherent flaws. Clearly we want
better IT, clearly we want better investment but, in terms of
the manual approach in getting it right, Frank Field talked about
stability. That is what we need. We do not need radical change;
we need stability, and if something comes out of this Committee's
deliberations to that effect I shall be delighted.
Q287 Mr Newmark: There was one particular
thing that caught my eye, which was that Citizens Advice told
us that there were problems where a lot of clients drop off the
system, particularly around the beginning of October. Can you
tell us any more about this, why does this happen, and how many
people does it affect?
Mr Lawrence: That is the renewal
period, where typically they renew their claim or drop off.
Q288 Mr Newmark: Does it tend to
affect a lot of people? I am sure it does.
Mr Lawrence: I have no numbers.
We can do some research on it.[5]
Mr Newmark: That would be helpful.
Q289 Chairman: Frank Field referred
to a target the Revenue had set itself of suspending all overpayments
within five days of a dispute being made and then a decision to
be made on the recoverability within four weeks. How is that new
target working?
Mr Lawrence: I listened carefully
to what Mr Field had to say. We take a cautious approach to that.
One of the problems we have is not seeing measures brought in
that are going to add more bureaucracy to the system. Of course
we support the concept of independent appeals and fairness, we
do that in terms of personal business taxation, but I want to
be sure that that would not make matters worse. We will take that
away and consider it. I go back to an answer I gave earlier. It
can take as long to deal with two or three overpayment cases by
a specialist as it can to clear 18. All the appeals systems in
the world might not hasten that particular aspect.
Q290 Chairman: He also suggested
that suspending recovery involves your staff in manually tricking
the computer in carrying out some 22 separate tasks which adds
around 40 minutes to each case. Is that accurate?
Mr Lawrence: His latter assertion
about 40 minutes I could not possibly comment on. I have no empirical
evidence of that in front of me here but if what he says is correct
our analysis is that that is because they are under pressure to
work around it and find solutions; in other words, fast-track
the system to clear a case. Anyone with a knowledge of IT can
press hot keys and all the rest of it. I guess that is what he
is alluding to. Equally, Chairman, I am quite happy to take that
away and see if our local people can do some research on that.[6]
Q291 Chairman: Do you have any advice
to give us yourself on the reasonableness test as to how your
members interpret the word "reasonableness"?
Mr Lawrence: I have got a long
screed on that. I am satisfied that our members would try to apply
the same principles as they would to any element of taxation:
treating the customer fairly, ascertaining the facts and tackling
the case in line with existing procedures. I must sit here and
defend my members in saying that I am sure they make every effort
to apply that test reasonably. I would have to be equally candid
and say that I have no doubt they make mistakes. We all do.
Q292 Chairman: But is there a management
system that tries to ensure some consistency of application of
that test?
Mr Lawrence: Yes, there is. Colleagues
who work in debt management and banking have a process for recovering
overpayments which is being developed at the moment. There is
guidance on that for them. They I know, from colleagues that have
spoken to me before, will be doing their best to apply that, but
they too suffer the same problems that we have been talking about
for the last half hour or so, which is lack of access to a whole
joined-up case. Quite simply, it has been found by consultants
that staff do not use the guidance notes in front of them because
they themselves may be too complex. Typically, if you are in a
situation where you are under pressure, you are going to work
around it, the Frank Field solution, or whatever solution you
can. I have no doubt that in those circumstances it may be that
the test of reasonableness is not properly applied and we would
be saying that if that is the case we need to look at that. We
would also be saying give our people better training, give them
better support and we will see a much more coherent approach on
that.
Q293 Ms Keeble: In your written evidence
you said that the Government proposal to change the income disregard
threshold from £2,500 to £25,000 would lead to unfairness
in terms of the relative need between claimants with vastly different
incomes, especially given what is happening to people who underpay.
Does this mean that you disagree with the change?
Mr Lawrence: No, we do not. We
understand why the disregard has been introduced. Broadly we welcome
it as a short term means of alleviating the overpayments issue.
Our problem arises, I guess, around the equity of that arrangement.
If someone's income does rise dramatically to circa £25,000
why should they get tax credits to the same tune as they did before?
That is a moral issue for your good selves to work through. We
have a view about that. It would work fine if we could be satisfied
that that person's change of circumstances would be captured at
the appropriate time in time for the next tax credit year, because
if the current rate of problems continues then that person who
does have an income increase to that effect might still get tax
credits paid into the next year. If everything is there and can
arrest that, fair enough. I am not satisfied at the minute that
we are able to do that.
Q294 Ms Keeble: How about the child
care or children element, the one that we have been talking about?
Do you think that that there should be some protection around
that? Do you have any information as to whether this is causing
a real problem with overpayments?
Mr Lawrence: From the standpoint
of making sure that the most vulnerable people in society are
protected the answer to your first question is most definitely
yes. I would need to think more about the second question if I
may and come back to you.[7]
Q295 Ms Keeble: That would be quite
helpful if you have got any information from research that you
have done. How about the point that has been made by two people,
including Frank [Field], about the family element being rolled
up into child benefit?
Mr Lawrence: As a concept we broadly
welcome it. As a real do-able thing we are talking in our view
about the possible redesign of the whole benefit system.
Q296 Ms Keeble: Oh really?
Mr Lawrence: That is our view.
Given that the Child Benefit 2 computer project was scrapped a
week or two back purely on the grounds of sheer cost and weight
of work, we have doubts whether that is do-able in the immediate
future. It would be ideal if it could be done.
Q297 Ms Keeble: How about having
a more fixed award system like the old working families' tax credit?
Mr Lawrence: Our view would be
that tax credits have indeed delivered two of the main things
it was designed to: to help people out of the poverty trap and
to enable people to get back to work, and a reversion back, if
you like, to a flat rate system is not something that finds favour
among our members. I have to say we have never done a straw poll
on it but we do not think so from the stuff we have been getting.
Q298 Ms Keeble: Have your members
expressed a view on whether they support the new system over previous
systems because they have had to administer generations of these
things, have they not? What do they think about the present one
as compared with the previous ones?
Mr Lawrence: I can say without
fear of contradiction that our members support tax credits. We
have 325,000 members within the Civil Service. They must be in
some shape or form related somehow to 6.3 million tax credit claimants.
I do not have one letter of complaint from any member that the
system itself is wrong and that it should be scrapped in favour
of something else. You might think, "They would say that,
wouldn't they?", but actually our members are among the most
fierce critics of any system if it does not work and I think is
quite a telling point, Chairman. There is not one letter in my
postbag suggesting that the tax credits system is flawed and should
be scrapped.
Q299 Jim Cousins: If I can just come
back to an earlier point about the fixed term awards, you were
very clear that you did not approve of that. I am not clear whether
your reason for disapproval is, so to speak, a political reason,
that you do not think it would be fair, or one based upon working
conditions, stress on people and the impact on the work situation.
I would just like to be clear about that.
Mr Lawrence: I must on this one
effectively revert to what PCS's national policy is. It has a
policy of supporting tax credits in its present form and it has
a policy of looking open-mindedly at anything that would improve
the system. I will try and report back to you but the current
census among our members, as I understand it, is that they do
not favour reverting to a fixed rate system.[8]
3 Ev 178 Back
4
Ev 178 Back
5
Ev 178 Back
6
Ev 177 Back
7
Ev 177 Back
8
Ev 182 Back
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