 House of Commons |
Session 2006 - 07 Publications on the internet General Committee Debates Planning-gain Supplement (Preparations) Bill |
Planning-gain Supplement (Preparations) Bill |
The Committee consisted of the following Members:Hannah
Weston, Committee
Clerk
†
attended the Committee
Public Bill CommitteeTuesday 30 January 2007(Afternoon)[Mr. Jimmy Hood in the Chair]Planning-gain Supplement (Preparations) Bill4.34
pm
Clause 3
ordered to stand part of the Bill.
New Clause 1Report
on computer systems
‘A person
who incurs expenditure by virtue of section 1(2) on a computer system
must make a report on the progress of that system to the Committee of
Public Accounts of the House of Commons six months after the passing of
this Act and every six months
thereafter.’.—[Mr.
Francois.]
Brought
up, and read the First
time.
I welcome you to
the Chair, Mr. Hood. We now come to the
information-technology related aspects of the Bill. The aim is to
establish a reporting system on the progress of any new computer system
that might result from the Bill’s provisions and specifically to
ensure that the Public Accounts Committee is kept appraised of
progress—or otherwise—twice a year. That is important, as
the explanatory notes make it plain that one of the Bill’s
objectives is to permit expenditure specifically on computer systems to
assist with the introduction of the planning gain supplement.
Indeed, under the
heading “Financial effects of the Bill”, the notes point
out that
“The
financial effects of this Bill will be to authorise expenditure
principally on designing and building an administrative system to
administer the PGS, including the necessary business processes and in
particular an IT system.”
The Government estimate the cost at some
£40 million. However, their overall record on managing IT
programmes, such as the one envisaged in the Bill, is unfortunately far
from encouraging. There are myriad examples of IT programmes that have
gone badly wrong under the present Administration, but in the interests
of time, I shall illustrate the point with only three.
The Department for Work and
Pensions’s Child Support Agency famously spent almost
£500 million on a new computer system known as CS2. It was
eventually launched in April 2003, about two years late and £56
million over budget. The system was unable to migrate the backlog of
CSA pages on to its mainframe, and it is generally accepted that the
system will never work as originally intended.
I turn briefly to the Home
Office’s IT record. Where should one start? I shall pick one
example. The new database for the Criminal Records Bureau, which
achieved notoriety for other reasons—I shall not dwell on them
now—was introduced in 2004, but the costs had doubled from the
original budget of £200 million.
We then have what I
might call the mother of all Government IT projects—the new
national health service computer system, including the link between GPs
and hospitals and incorporating the so-called choose and book system.
That massive project was due to be fully installed by 2012, at
a total cost of £6.2 billion, but it is running late in
many parts of the country. According to the National Audit Office,
which reports to the Public Accounts Committee, the cost has now
spiralled to about £12.4 billion—double the original
estimate.
We might be
reassured if the Treasury, which is supposed to be the guardian of
public finances, had a better record in IT procurement. However, the
Treasury and its agencies are not a great deal better. I remember
speaking for the Opposition in the debates on the Commissioners for
Revenue and Customs Bill, under which the Inland Revenue and Customs
and Excise were merged. That merger involved some 250 IT systems being
brought together in one organisation—a major challenge for Her
Majesty’s Revenue and Customs.
One example that springs to
mind is the tax credits computer system. I shall not dwell at length on
the problems, but suffice it to say that the system has suffered a
large number of technical problems. One used to be able to file online
through the e-portal, but that had to be closed by HMRC because of a
systematic attempt to defraud it of millions of pounds. Meanwhile EDS,
the IT contractor employed to operate the system on behalf of
HMRC—yes, HMRC—made such a hash of it that it had to give
up. It was replaced by an alternative IT contractor, Capgemini, but not
before the Treasury had sued EDS for £77 million for
underperforming. In fact, the Treasury’s record of managing IT
programmes is somewhat lamentable. In answer to a series of written
questions last year, it was revealed that the Treasury’s IT
programmes were running at a combined total of 17 years
late.
What is the
proposed procurement strategy for the new computer system that the Bill
envisages? Specifically, which organisation mentioned in clause 1 or in
the accompanying notes will have overall responsibility for the design
and introduction of the system? Will it be the Secretary of State, HMRC
or the Valuation Office Agency, or will the system in effect be
designed by committee? If it is the latter, the warnings of
HMRC’s own information officer, Mr. Steve Lamey, at
the time of its merger will have been apposite. In 2005, he said of the
lack of accountability in Government IT procurement:
“So much decision making
is done in committees with huge matrix overlays that accountabilities
tend to be very
unclear.”
Perhaps that is
one reason why the Treasury’s IT programmes, when combined, are
running 17 years late.
From what basis is the
£40 million estimate derived? The figure seems specific,
although the explanatory notes say that there may be wiggle room for it
to increase. Nevertheless, we have been given a broad figure of
£40 million today, and I should like to know how it was arrived
at.
I should like to question the
Minister about the proposed system’s security and the related
issue of data protection. Much of the information on the system would
be commercially confidential among businesses that operate in the
property market, and they would want to be reassured when filling in
their returns that the information, which is important to them, was
held securely and treated appropriately by the Valuation Office Agency
and by HMRC.
In
another series of written answers that I obtained from the Treasury, it
was revealed that some 1,600 Government computers have been lost or
stolen since 1997. The worst culprit was the Ministry of Defence, and
the second worst was the Home Office. The Treasury—to be
fair—was further down that league table of shame, but 53 of its
computers have been lost or stolen.
In summary,
under new clause 1, given this Administration’s poor record of
managing IT programmes—including, specifically and
unfortunately, those in the Treasury itself—we seek to establish
a regular reporting system that would apply to any planning gain
supplement-related IT system, with the report having to be submitted to
the Public Accounts Committee twice a year. That would help to
concentrate the minds of those involved in the project, thus helping to
reduce the risk that the taxpayer would effectively bear if and when
such work were commenced. On that basis, I commend our new clause to
the Committee.
Mr.
Colin Breed (South-East Cornwall) (LD): I apologise for
not being present this morning, but I was attending a sitting of the
Treasury Committee, questioning one of the Minister’s colleagues
on, among other things, cost-effectiveness and value for
money.
Looking at the
Bill, I somehow doubt that the taxpayer has ever been asked to fund so
little of substance for so much money with so poor a chance of a
positive outcome. Its value for money must be difficult to demonstrate.
The Committee has had opportunities to consider the ways in which costs
can be mitigated and to try to improve the chances of achieving value
for money, but without success.
There are occasions when paving
legislation is appropriate, but this is not one of them. Much more
information about the exact proposals and their chances of success must
be made available to us if we are to consider spending what is a large
sum of taxpayers’ money. There are many obvious
flaws—some technical, some practical and some
political—but it is worth going ahead only if we can set up a
tightly controlled, cost-effective and value-for-money system for those
of us, or our colleagues, who have to consider whether to go further
with
it.
4.45
pm
The Government
have rejected a sensible course of action, so any restriction on how
the system will be funded, any way of controlling costs and any way of
deciding how to keep a proper eye on how costs, particularly those
relating to computer systems, can be controlled over this short period
is to be welcomed. The new clause might be the sort of measure on
computer system costings that we should include in most Government
Bills.
As the hon. Member for Rayleigh
has demonstrated, a clear picture has emerged. Although I am sure that
the Government undertake computer contracts in good faith and genuinely
believe that these things can be achieved in a given time frame and
costing, their track record has been poor. We should actively support
the idea of a regular report to demonstrate that things are on
time and within budget and to show that £40 million-odd
is being spent for some real purpose.
The
Financial Secretary to the Treasury (John Healey):
May I
welcome you and the other members of the Committee back to our
proceedings, Mr.
Hood?
My
reservation about the new clause is simple: it is unnecessary and would
bring no advantage, principally because the development of the IT
system for a planning gain supplement will be subject to the normal
intense scrutiny provided through the usual Government and
parliamentary procedures—[Hon. Members:
“What?”]—particularly if the Opposition are doing
their job on Select Committees.
[Interruption.]
Let me deal with some of the
irrelevant comparators that the hon. Member for Rayleigh introduced
into the debate: the systems in the Child Support Agency, Home Office
and national health service. Those much more complex systems deal with
millions of people in a way that a planning gain supplement system, if
we were to develop and introduce one, simply would not.
Furthermore, the planning gain
supplement is different from tax credits. A much smaller customer base
is involved and many fewer interactions will be needed between Her
Majesty’s Revenue and Customs and the developers, not least
because the proposed planning gain supplement, as we are designing it,
will be simple and easy to comply with and to
administer.
The hon.
Gentleman will know that there were problems in the early stages of the
implementation of the tax credit system, and HMRC agreed compensation
of more than £70 million with the supplier following the launch
of that system. Although he did not mention this, he may also know
that, since then, HMRC has changed its IT supplier and implemented
exemplary IT programmes, such as the child trust fund and pension
simplification programmes.
Mr.
Francois:
I do not want to cause a delay on this point. If
the Minister reads the Hansard record of our proceedings, he
will notice that, while I mentioned that transaction and EDS being sued
for £77 million, I also said that Capgemini took over the
contract.
John
Healey:
I do not think that the hon. Gentleman mentioned
the implementation of the IT systems for child trust funds or pension
simplification, both of which have been smooth, well planned and well
implemented.
We and
HMRC are clear that it will be HMRC's’s responsibility to oversee
our approach to procurement. I should be clear with the hon. Gentleman
about that. A period of comprehensive testing will be built into
any design for the implementation of a planning gain supplement in the
run-up its introduction. One of the reasons for a relatively long lead
time between designing and introducing the IT system is to ensure that
the systems will work. One of the reasons for seeking the authority
under the Bill is that, once the Government make their decision to go
ahead with a planning gain supplement, there must be no delay with the
necessary work for starting to design and commission the system that
will be required.
Mr.
Breed:
I am grateful to the Minister for explaining the
situation prior to the introduction of the planning gain supplement.
However, in light of the Government’s experience with other
computer contracts, will they monitor the costs of the contract under
discussion? If so, why will not they share with us their monitoring and
provide us with the figures? There will be no additional costs,
because—I hope—they are monitoring the costs, so in the
spirit of transparency, I see no reason why they should not provide us
with those figures to demonstrate that the contract is being properly
managed.
John
Healey:
Of course the costs will be monitored, and I
expect HMRC, through its annual and spring reports, to report regularly
on progress with the system’s development and implementation.
The House has established procedures: it can, for example, draw heavily
on the National Audit Office and its regular reviews of major
programmes and departmental activity, and it can draw on the Public
Accounts Committee and its ability to consider which NAO reports it
wishes to take evidence on and debate. Those are the mechanisms by
which regular progress and spending updates can be secured and
scrutinised specifically by the House.
I understand and appreciate the
concern behind the new clause, but I find it hard to understand its
specific purpose, other than to increase the bureaucracy and to create
a new and wholly unnecessary paper chase. On that basis, I hope that
the hon. Member for Rayleigh will not press the motion on the new
clause to a vote.
Mr.
Francois:
If my hon. Friend wants to intervene on me, I
shall do my best to answer her question.
Anne
Main:
I thank my hon. Friend for his courtesy. I should
have liked the Minister to clarify how many IT systems will be involved
in the provisions. Given the Treasury’s scrutiny, assessment and
valuation roles, will the IT role cover all Departments that have an
input and that might have to liaise or work with the IT department in
charge of the planning gain supplement? Perhaps my hon. Friend can
explore that point
further.
Mr.
Francois:
As I understand the Minister, the Government
will nominate HMRC to take the lead in
procuring the computer system. It will be responsible, although I expect
that it will liaise with Departments. However, we could get into
trouble if we try to design the system by committee, because all
previous experience, including that which HMRC’s chief
information officer relayed, has shown that, when the Government have
tried to do so, the strategy has not worked. That brings me back to my
response to the Minister’s speech.
The Minister trotted out the
usual platitudes about regular reporting, close scrutiny and keeping a
tight eye on how public money is spent, but if the procedures
throughout Government are as robust as he would have us believe, how do
we explain the fiascos of the CS2 system, the doubling of the cost of
the NHS IT programme and the Criminal Records Bureau computer at the
Home Office? If those procedures, on which the Minister seeks to rely
in lieu of our new clause, are so robust, we must simply ask why on
earth they keep going wrong, and why does the taxpayer keep losing
billions—not millions—as a result?
It is true that, since
computers were invented, Governments of all colours have had problems
with information technology. I do not deny that. However, it is also
true that, under this Administration, the problems have escalated to an
extent never seen before. That is one reason why we are worried about
the more modest system under discussion and why we want to know that it
will operate effectively, on time and to budget.
The Minister did not quite
answer my question about how the estimate of £40 million had
been arrived at. If he wants to intervene again, I shall gladly let
him. I do not want to misrepresent him, but I do not think that he
explained to the Committee how the Government came to a figure of that
magnitude. If he feels he answered the question, I shall not get bogged
down; however, I do not think I heard him do
so.
I have already
established that, because of the merger, there are 250 legacy computer
systems within HMRC alone. Could we not have modified one of those? I
am sure that it could get by with one of the remaining 249. Could we
not have converted one of the existing computer systems to take on the
task, thus saving the taxpayer a fair bit of
money?
Mr.
Francois:
I suspect that, if the planning gain
supplement goes ahead, we will need something a bit more complicated
than a spare abacus. Bearing in mind that a lot of computer systems are
knocking around in the Treasury and HMRC, would it be cost-effective to
modify one? I do not know the answer, but I should like to know that
that option had been explored before the Government ask the House of
Commons to commit up to £40 million for a new computer system
that, as we heard this morning, we may never need if the tax does not
go ahead.
I thank the hon. Member for
South-East Cornwall for his kind words of support. Perhaps they will
still be forthcoming if we come back to this issue on Report, but as we
have explored it in some depth, I beg to ask leave to withdraw the
motion.
Motion and
clause, by leave, withdrawn.
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