Report by the Secretary of State for Work and Pensions under Section 82 of the Welfare Reform and Pensions Act 1999

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Mr. Hunt: No. That is why I mentioned the limits of commercial confidentiality. However, given that the particular supplier that I mentioned has been involved in so many IT failures, I seek comfort from the Minister that the Government have absorbed the lessons of those mistakes.
I am sure that the Minister would agree with my final point, which is that when such mistakes happen the question is not just one of value for money for the taxpayer. When the systems go wrong, there is an enormous human cost as well. In the case of the CSA, there is a backlog of more than 500,000 families, many in poverty, who are not getting the support to which they were entitled. The new employment and support allowance aims to get 1 million people back into work who would otherwise have been trapped on benefits, and probably in poverty. For the sake of those people, I look forward to hearing how the Minister has learned from the issues that have arisen during the last nine years.
The Chairman: Thank you for your reasonable presentation. The questions were fair, I felt.
4.49 pm
Greg Mulholland (Leeds, North-West) (LD): I shall be brief, not least because at the conclusion of the sitting I shall be joining the hon. Member for Bradford, North for drinks with my Select Committee colleagues. I thank the Minister for his expression of appreciation to the Committee—I was very pleased to play a small part in the inquiry.
I am sure that the Minister will understand why there is a certain amount of nervousness about this whole process, and that he would be the first to acknowledge it. The simple fact is that the Committee’s conclusion can be summarised as: “Oh, all right then.” The conclusion said:
“The jury is still out on the use of the Section 82 procedure”
and I think that that will remain the case.
I was very pleased to join some of my Select Committee colleagues on a very productive trip to New Zealand last week. Most notable was seeing an IT system that appeared to be working extremely well. Perhaps we saw only the best of it, but it seemed to be delivering in the very areas that we are discussing here. We hope that that will be the case for the system that the Government propose.
I have three questions to put to the Minister. First, why is this being done? Is the power being used for the legitimate reasons set out, or is it a matter of Government timing? The Work and Pensions Committee report states:
“On this occasion, therefore, Section 82 is being used solely to meet a Government timing commitment, rather than as a measure to enable additional work to be done to maximise the chance of the project’s success.”
Clearly, there is an issue as to why we are going through this process now. We would like reassurance on that.
Secondly, on finance, are the figures credible? Can we be confident that they will be accurate? Is there a danger that finances will spiral out of control?
Thirdly, also on finance, is the spending on IT coming from the overall pathways to work budget? We are concerned that that money is there to help get people get back to work. The Committee has seen the success of the pathways to work pilot schemes, and we would like some reassurance that the money for the section 82 procedure is not from the same overall budget and therefore will not impact on getting people back to work.
The Chairman: In the absence of anyone else rising to their feet, I call the Minister.
4.52 pm
The Minister for Employment and Welfare Reform (Mr. Jim Murphy): Thank you, Mr. Hancock. In the hour and 10 minutes that I have available—[Interruption.] I think it would take me longer to respond to all the points raised by the hon. Member for South-West Surrey (Mr. Hunt). If I do not respond to every detail, I hope that the Committee will allow me to follow matters up in correspondence with hon. Members, including the hon. Gentleman. [Interruption.] I note from sedentary interventions that my hon. Friends wish me to take that course of action. I do not know whether that is a general point or whether it is to do with the fact that drinks with the Work and Pensions Committee start shortly.
The hon. Member for Leeds, North-West (Greg Mulholland) raised some specific points. Our deliberations are about achieving a timetable so that we can deliver a robust system on time, to fit in with the ambition of the Welfare Reform Bill. We want to provide the support essential to enable the ambitions of that Bill to be achieved. A cross-party consensus has belatedly developed on the Bill, which will ensure that 1 million people are supported in getting off incapacity benefit over a decade. That is why we are using section 82.
The hon. Gentleman colloquially spoke of costs spiralling out of control. We are today seeking authority for a maximum spend of £31.25 million. That is the limit of our requests to the Committee and to Parliament. On the wider point of budgets, the money will come out of the DWP budget, but we are confident that we will put in place the necessary funding to enable the successful roll-out of pathways and to achieve our wider welfare reform ambitions, as we have made clear in Standing Committees and elsewhere.
The hon. Member for South-West Surrey raised a catalogue of points, so maybe I should send him my notes. However, that would be impolite, so I shall respond quickly. He said that it is important to learn the lessons of past failings, both in terms of policy and on IT. As we know—I put this to him gently—the failure of policy in previous years and decades was that many folk were simply abandoned; left to a life on benefit with no support and no pathways. We know that once someone has been on incapacity benefit for one year, they stay on it for an average of nine years. That is an important lesson to learn and we will do so.
We will also learn the lesson that it is a thing of the past that the employment statistics are implicitly or explicitly massaged. Formerly, people were placed on incapacity benefit who should not have been.
It is important for us to learn from the experiences of other IT projects. It is not fashionable to say so, but most public sector IT projects are a success. That is not a complacent statement, it is a statement of fact. The Public Accounts Committee recently held hearings into successful IT projects, which is a relatively new experience for a Select Committee. However, it is a fact that most public sector IT systems and investments are successful, as in the private sector. Failings are not the preserve of either the public or the private sector. Ways in which we are seeking to address the all too many failings that there have been include the transformational Government strategy that the Cabinet Office published earlier this year and our efforts to ensure that there is a career in the public sector for those with IT skills, so that people do not have to leave the public service in order to enhance their IT career. It is not a one-way street down which people in the public sector are leaving for enhanced opportunities in the private sector. Indeed, we have in the DWP recruited IT management capability through external recruitment.
The hon. Gentleman mentioned the intricate nature of the ESA and the section 82 requests that we are discussing. He makes the point for us. It is an intricate system and we have to get it right. That is why we need to provide investment now—we want to enable the timetable to hit our ambition of 2008.
It is correct to say that the NAO figures were changed. The calculations were based on assumptions, businesses processes, in August 2006. The difference was of a quarter of 1 percentage point. I am certain that we said at that time that the figures were going to change. We stated on page 5, paragraph 12, of the report, that they would change, and they did.
With regard to the CSA, the general feeling is that there should be a plague on both our houses. I hope that the hon. Gentleman would acknowledge that, although important work is now being done by the Secretary of State to improve and entirely restructure the way in which support is provided to parents with care and their children. We will see that support being provided much more quickly and much more fairly, and that will have a real impact on child poverty
On the points that were made about accountability, we have said that we will in future try to build in more time so that there is greater opportunity for formal input from the NAO, the Select Committee and elsewhere on requests under section 82. It is important to note that we have agreed to update departmental guidance to give more time in future, as well as providing bi-monthly updates to the Select Committee.
Contracting has been mentioned. We are going to contract but it would not be sensible to say now with whom, when and for how much. We will take a staged approach, committing money only for relatively short periods at a time. Having said that, Mr. Hancock, if you or any member of the Committee feel that I have not done justice to the questions that have been posed, I will of course enter into correspondence.
Finally, let me thank all hon. Members, my hon. Friends in particular, the NAO and the Select Committee for the way in which they have examined the detail of our proposals and suggested concrete improvements, on which I hope that they feel we have acted.
Mr. Hunt: Very briefly, I am grateful to the Minister for agreeing that any points that he has not covered he will address in correspondence. If he is willing to take from Hansard a copy of my speech and ask his officials to draft a reply that responds in more detail to some of my points, that will be helpful.
I am pleased to hear him say that his Government are trying to do something to improve the IT career structure in the public sector. Taking party politics right out of the equation, the crucial failing in IT contracts has been in the skills to manage them. That is not the Minister’s direct responsibility. Indeed, the most important managers in the Department will focus on the Minister, so it is necessary for it to have a team of officials who are highly skilled in managing large, outsourced IT contracts. When the Minister responds in writing, would he address the question of whether the Department is taking steps to ensure the early involvement of users in the specification and testing processes? By users, I mean not customers of the ESA but people who will operate the IT system on behalf of customers, because a huge number of changes always takes place at the user acceptance testing point. I am grateful to the Minister for his comments. We do not seek to press the matter to a vote, but I should be grateful if he would respond in writing to the more detailed points that I have made.
Mr. Murphy: It is a fair point about the general issue of IT capability in the public services, although that is improving and the transformational Government strategy contains detailed proposals on it. The difficulty about writing is that the definition of a suitable answer is in the ear of the listener and the poser of the question. Rather than my second guessing which of the hon. Gentleman’s questions I think I have not quite answered, it would be helpful, if he feels that there are gaps in some of my responses, for him to raise them in correspondence. Then I will, of course, respond.
The Chairman: We are in the pantomime season, but I am sure that the Minister said—his colleagues might say “Oh no he did not”, but I am sure that he did—that he would willingly respond to any points that were raised. It is a fair question, and the hon. Gentlemen need to work out between them how it will happen.
Question put and agreed to.
That the Committee has considered the Report by the Secretary of State for Work and Pensions under Section 82 of the Welfare Reform and Pensions Act 1999.
Committee rose at one minute past Five o’clock.
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