Examination of Witnesses (Questions 20-39)
DAWN PRIMAROLO
MP, MR TONY
ORHNIAL AND
MS SARAH
WALKER
14 MARCH 2007
Q20 Mr Gauke: Okay, let us move on
to the IT solution to one of the problems. In your written ministerial
statement of 6 December 2006 you stated that: "....and from
April 2007 I have instructed HMRC to introduce an IT solution
to ensure that claimants will benefit from reduced rates of recovery
without them having to ask for this service." That has now
slipped to June 2007 as I understand it. Can we be sure that it
will be happening in June or will there be further slippage?
Dawn Primarolo: I can say to the
Committee that all the information I have is that it will happen
in June. Of course it is regrettable that it has slipped but I
am sure you would agree, Mr Gauke, that it is important in implementing
the change that we make sure that it is actually working in the
way that we are intending it to, so I share your disappointment
but it will be implemented in June.
Q21 Mr Gauke: Just a quick question
of fact: what proportion of eligible claimants have contacted
HMRC to request an adjustment of their payments? Do you have those
figures?
Dawn Primarolo: We have in place
a manual process for adjustments in-year and although greater
resource is needed for it that means that from January claimants
did not have to ask for the adjustment, it automatically happens
on a manual basis in order to deliver that outcome. So there is
a manual process at the moment that will be superseded by—
Q22 Mr Gauke: But do we have the
proportion for whom this is relevant?
Dawn Primarolo: I believe I have
the figure for how many people have been in January and February
automatically given that and I think the figure is 22,000 who
have automatically had the adjustment made for in-year adjustments.
I will double check that. It is in all these papers somewhere
but that is correct, I am sure.
Q23 Mr Gauke: Also in December you
announced that remaining families receiving income support or
jobseeker's allowance would not be migrated to child tax credit
in 2007. Originally they were going to be migrated in 2004. How
many families are affected by this and what is the target date
when this migration is finally going to happen?
Dawn Primarolo: There are approximately
600,000 migrations happening automatically as well as people moving
into work.[2]
The reason why I have delayed it again is because there is rather
a lot of work going on with the releases and changes to the system
and I want to be sure before I transfer this last tranche of claimants
that the releases on the playback and all of the IT changes that
we have talked about in this Committee are actually in place.
It does not make any difference to them, they are still receiving
their full entitlement, but we have got another two specified
releases and then further releases to be completed on IT and I
want those in—and working.
Q24 Mr Gauke: But does it not concern
you, given that we are talking about the most vulnerable families,
that you do not have confidence about the tax credits system as
it is currently set up which for administrative reasons is not
appropriate for these families?
Dawn Primarolo: With respect,
it is not about whether I have confidence in the system itself;
what I am trying to do is make a practical assessment on advice
from my officials, and given the scope of change that we are managing
in the tax credits system, and from all the recommendations that
have been made to us and the changes that we have made, and I
judged that we needed to make sure that that was done before we
added further workload to ensure that the Department stayed focused
on that delivery. That is the reason why there is no compulsion
or pressure to move those people. This completes the system.
Q25 Mr Gauke: Do you see it as a
litmus test? Do you see it as an important, almost symbolic thing
for tax credits that this finally happens at some point?
Dawn Primarolo: I see the litmus
test for tax credits as its phenomenal take-up and the fact that
there are something like 700,000 or 800,000 people a year who
as a result of this flexible system are better off than they would
have been under a fixed or any other system, so I judge tax credits
on that basis and I think it is prudent to make judgments about
how much change I can expect the Department to manage at any one
point successfully, and that is what I have done and announced
it to Parliament.
Q26 Jim Cousins: Paymaster, you just
now referred to take-up rates and you did give the Committee just
a while back a figure of a take-up rate of 97% for people earning
under £10,000 a year. I wonder if you could fill that out,
either verbally or, if it is quicker, by circulating it to the
Committee?
Dawn Primarolo: I can certainly
provide the Committee with the statistics which were published
at the beginning of March which give take-up of the credits by
income, by total amount available, by population, and you will
be able to scrutinise that. It is available publicly and it shows
that it was increased from 93% to 97% for that range, which is
the lowest income range.
Q27 Jim Cousins: Is that child tax
credits or working tax credits?
Dawn Primarolo: That is child
tax credits.
Q28 Jim Cousins: What about working
tax credits?
Dawn Primarolo: I do not have
the figure for the working tax credits in front of me but all
that information is available.
Q29 Jim Cousins: Perhaps you would
make that available.
Dawn Primarolo: And the childcare
element and the various elements that make it up, yes.
Q30 Jim Cousins: I am grateful to
you. I wonder if I could ask Sarah Walker what the limitations
are of the IT system that you are working with at the present
moment?
Ms Walker: The IT system is working
well. Generally it is—
Q31 Jim Cousins: What does it not
allow you to do?
Ms Walker: There are the problems
with introducing the restricted recovery of overpayments, which
the Paymaster mentioned in her statement. As we said, we are dealing
with that with a semi-manual process at the moment. In June we
will bring in a fully automatic system to do that. Generally there
are still more day-to-day problems than we would like which affect
individual cases but as a general rule the system is stable, it
is available—
Q32 Jim Cousins: What is the scale
of those day-to-day problems?
Ms Walker: I would have to give
you a note on that.
Q33 Jim Cousins: You will give us
a note on that?
Ms Walker: That will be fine.
Q34 Jim Cousins: Sarah, the Minister
gave us a figure of 22,000 automatic manual adjustments in January
and February. What is the total figure for manual adjustments
in January and February?
Ms Walker: The 22,000 is the number
where we were using a system where people had to come and ask
us to implement the restriction.[3]
Q35 Jim Cousins: Indeed, I am asking
you for the total.
Ms Walker: I do not have that
figure but I can get it for you. I think the important thing is
that since January the effect for customers has been the same
as it would have been if we had had an automatic process in place.
It is costing us more to operate it because we have manual steps
in that process but as far as the customer is concerned since
January they will have had exactly the same service as if the
automatic system had been in place.
Q36 Jim Cousins: And you will send
the Committee the figure for the total number of adjustments in
January and February?
Ms Walker: Yes.
Q37 Jim Cousins: Paymaster, the Department
for Work and Pensions does publish estimates of fraud and error
for each category of benefits. When are you going to be able to
do the same for tax credits?
Dawn Primarolo: We have started
with a small sample which is now going to take us forward—and
I will ask Sarah to expand on that—where we looked at disputed
overpayments and then worked through to see what percentage of
those were as a result of official or IT error as opposed to any
other cause. The information from that pilot means that from April
there will be a tracking of those cases so that we can try to
get to the position of identifying exactly what you say. But perhaps
as Sarah has been working on the detail she can answer.
Ms Walker: The figures for fraud
and error as measured in the standard report are based on a random
inquiry process that we are doing. We published figures for total
fraud and error in finalised awards last summer—
Q38 Jim Cousins: Do forgive me, I
have just pointed out to you that the Department for Work and
Pensions is able to publish for every category of benefits an
estimate of fraud and error broken down into fraud, customer error
and official error. When are you going to be able to do the same
for tax credits?
Ms Walker: For fraud and customer
error we published the first set of figures last summer which
relate to 2003-04. The 2004-05 figures will be published next
summer. On official error and IT error, as the Paymaster General
has said, we have started to measure the proportion of cases that
are disputed which actually represent genuine, official errors.
That is about 5%. We have done that on a pilot basis—
Q39 Jim Cousins: 5%?
Ms Walker: 5%. We did that on
a pilot basis as a sample. We have now put in place processes
so that we will collect those on a systemic basis starting this
April.
2 Note by witness: If migration were to happen
now, around ½ million families receiving the child premium
in income support or job seeker's allowance would be automatically
migrated to receive Child Tax Credit. Back
3
Note by witness: 22,000 is the total number of adjustments.
HMRC identify cases where a restriction was appropriate and apply
the restricted rate of recovery without the claimant having to
ask for this. Back
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