Examination of Witnesses (Questions 40-59)|
WEDNESDAY 22 MAY 2002
40. The Committee's thumbscrews are not going
to be used this morning. I think you have been very helpful, and
I am tempted to lay a fiver
(Mr Smith) Outside the meeting.
41. Outside the meeting. A final question and
then we must move on, because it is not all about implementation,
and I appreciate you have been as helpful as you can. There is
a wider worry for us as a Committee because IT plays such a central
part of the roll-out of what is a very ambitious departmental
programme of reform. There is a worry this will run into the back-end
of the next thing. There is a welter of change going on. Can you
reassure us that this delay, however long it lasts, is not going
to compound the difficulty of rolling out programmes like getting
the Legacy systems out in JSA because of the demands it places
on the IT specialists, which are always a limited resource within
the Department? Can you give us any assurance about that at all?
(Mr Smith) I think I will put my hat on as member
of the departmental board now. There is little direct impact of
the delays in the system on to the other departmental systems.
The fact that this is continuing into space where we were hoping
to free people's minds to concentrate wholly on the next deliverables
within the programmePension Credit and, beyond that, Income
Support and Jobseeker Allowanceis an extra management burden
to people already hard-pressed on something we would have preferred,
in an ideal world, to have avoided. In a real sense April was
the optimum time, for a whole host of reasons, to go live with
42. What you have said this morning suggests
that there is a huge amount of uncertainty, and there must be
uncertainty for us, as Members of Parliament, for yourself and
your staff. How on earth can you do any kind of forward planning
if you will not give us a date this morning of when it is going
to go live? Does it not mean that your business plan for 2002-03
is now a work of fiction?
(Mr Smith) I think the business plan, at that level,
stands. What we have had to do at the level below the business
plan is, effectively, segment the year into two parts and say
"Right, let us do some really detailed planning on what we
are going to achieve from the period through to late summer against
the expectation that the system is not going to be available to
us in the short-term", and we have planned on that basis.
As we move into late summer we hope we will have a clearer view
of what the position in the second half of the year will be in
the light of the outcome from the system testing and a decision
that the Secretary of State may choose to make on that outcome
from system testing. So, effectively, we have had to break the
year into bite-sized chunks and address each of those chunks in
43. So all your planning assumptions must have
gone out of the window when the delay was introduced?
(Mr Smith) There was a significant amount of re-planning
44. The Chairman has already mentioned the fact
that there is obviously a large amount of reform going through
the internal workings of the Department, with The Pension Service
etc. Do you think it was realistic to embark on such a massive
programme of change simultaneously? Are there lessons to be learned
(Mr Smith) I am sorry?
45. The Department for Work and Pensions is
going through massive changes, and there are a number of very
major changes, most of which seem to depend on IT, which is what
we are finding as a Committee. There is the introduction of Jobcentre
Plus, the introduction of the new Pension Service, the introduction
of the new Child Support Agencywe had hoped. Do you think
it has been a mistake to try and get all these things up and running
within a year, 18 months, two years? Are there lessons to be learned
for future decisions made by Government around major reforms?
(Mr Smith) I think that many of the structural changes
we are making to address the Government's modernisation agenda
are working welland going exceptionally well in some circumstances.
The actual creation of a separate Pension Service and Jobcentre
Plus from the Benefits Agency has been a phenomenal success in
its own right. The changes we have made to the Child Support Agency
in the run-up to the implementation of the new IT arrangements
have gone phenomenally well and delivered really, really well.
I think the ability to make those sorts of changes is well-proven
in the public sector. We have got a good track record. The key
issue is how we develop the IT alongside those business changes.
Again, I think we have a period that spans five years to take
the various IT changes, again in bite-sized chunks, and to properly
implement them over an extended period. That is not to say that
from the implementation of CSR and the IT systems there are not
some lessons we need to learn from that, as we look forward to
the next major IT implementation, and we will pick that up.
46. Do you see that the delay in implementation
of the Child Support Agency is impacting on the other areas of
reform that the Government has in the pipeline?
(Mr Smith) Not directly because I think we are sufficiently
ring-fenced in terms of the IT development for Child Support Reform
not to have direct impact on the wider service system down the
track. As I explained to the Chairman, inevitably there is some
indirect impact because of the limited number of people at the
top of the organisation focusing across the modernisation programme.
It would be good to put some of this to bed.
47. Can I just give an example of how it is
working in practice? I have a constituent who is a lone parent
and trying to go back to work and benefit from the Working Families
Tax Credit. She has done the figures and in her case she would
be about £10-£20 a week better off because she does
not get any maintenance at all from her ex-husband. She was looking
to the reforms of the Child Support Agency to make it easier to
get maintenance from her ex-husband and, under the new reforms,
she gets to keep all of that. That particular example is working
against the Government's intention to get both parents into work
through Jobcentre Plus because the figures do not really quite
stand up yet because your reform has not come in. That is an example
of how it is happening. That is one, but I am sure there must
be more. So there is an impact across the different parts of the
work of the DWP and it is affecting individuals on the ground
who receive these benefits.
(Mr Smith) Yes, I accept that.
(Mr Neale) You are clearly right that there are policy
gains that are also being delayed because of the delay of the
Child Support Reforms, though I would pick up something that Doug
said right at the beginning, namely that the Agency has already
implemented some aspects of the reforms; it has changed its business
processes, it is using some of the sanctions available in the
2000 Act and there have been really significant improvements this
year, or the year just ended, in compliance rates and in accuracy
rates as a result. So there are real gains for people using the
service already, although clearly it is within the framework of
the existing scheme.
48. There is still no gain in relation to the
parent without care who does everything in their power to try
and avoid paying maintenance, particularly if they are self-employed.
In this case I think it took months for the CSA to chase up someone
who really was going out of their way. In a place like Aberdeen,
where I come from, there is a buoyant jobs market so they keep
changing jobs to get out of it as well. So that has not improved
(Mr Neale) You are quite right, it takes a long time
to chase up people because of the complexity of the existing scheme,
and until we have the new scheme in place that will remain the
49. You are confident that somebody who is self-employed
will be able to be tracked down much, much quicker under the new
scheme than under the old one?
(Mr Smith) In a real sense the new scheme does not
really directly touch on that, other than our ability to create
more resources to continue the compliance with enforcement work.
I am as aware as anybody of the issues associated with people
who, effectively, choose to ignore our existence. I visit offices
and I see customers regularly, and it is interesting, over the
past year, that when I look at the profile of complaints that
hit my desk, they have significantly moved from complaints about
error and delay to complaints about our ability to enforce them.
I have responded to that directly by trying as part of this year's
re-planned business plan to put more resources within my ability
into the enforcement area, so that we can actually get some quick
hits around enforcement. That is not to suggest that there is
a magic wand we can wave over that, this is seriously hard, staff-intensive
work, but we are aware of it and we are trying to push some of
the resource, as and when it is available, into that area.
50. Can I, perhaps, deal a bit more with that
point about enforcement? I have a case in my constituency at the
moment where the mother has notified the CSA of the father's addressboth
his mother's address and his girlfriend's addressand the
pub where he regularly drinks on a Friday night. She has really
given all the information, which she has had confirmed as accurate
among members of his family and so on. Yet, no attempt seems to
have been made by your staff to track this particular individual
down and to confront him. Can you tell usand I am sure
other Members here will have many, many similar casesa
little bit more about how this enforcement process is actually
going to work on the ground? There is a large part of this, it
seems to me, which is not actually the computer side, it is actually
getting hold of these errant fathers to make sure that they do
(Mr Smith) To answer that properly I do need to step
back a little from the question. Issues associated with compliance
are almost in-built into the way we operate Child Support at the
moment. We start off cases on the worst possible footing, often.
We get in touch with people several months after an application
is received and the conversation, inevitably, even at that stage,
involves an arrear of payment that has already been allowed to
build up. So people are already in debt, they are often facing
amounts which are almost beyond their ability to meet. We are
into a difficult compliance and enforcement situation and, unless
it is managed exceedingly well, that can drift into a regular
pattern of non-compliance and non-payment. The big thing that
Child Support Reform brings us and the big thing that the reorganisation
around that brings us is the ability to enter into discussion
with parents within days of receiving the application rather than
within months. You are not therefore talking to people before
the debt has built up. You are talking to people from the outset
around the payments which they can understand, a fixed percentage
of their earnings normally, and a payment which will go into place
very quickly indeed. The big thing which the child support reform
brings us for enforcements is the ability to nip this issue in
the bud and get people to be compliant from the word go rather
than attempt to get them compliant when they have already built
up debts which are difficult to discharge. That is a broad statement
of where we want to be for the future. On enforcement itself,
we do have enforcement teams in every one of our units whose role
it is to take referrals from the people who are processing the
basic application and where payment has not been made, but frankly
we have more work at the moment in that area than we are deploying
staff in that area, so we are planning to put more staff into
that particular working area this year. That is why we are not
picking up as many cases in the enforcement market, particularly
in the self-employed market, as we would wish to do.
51. Individual MPs would agree with you that
the number of complaints we are getting from the CSA has dramatically
dropped and it is most definitely the hard to track down errant
parent that is more difficult. However, we keep promising our
constituents that the new system will be coming in soon and it
will be better for everyoneit will be better for the parent
carer, it will be better for the parent without care; everybody
will be a winner. Everything you have said this morning keeps
putting those constituents, because they are already in the system,
further and further in the future. You said that the Chairman
was being pessimistic, that 2003 was too far in advance to get
the new system up and running. Would it be pessimistic or would
it be over-optimistic to say that the old cases will be starting
to come on to the new system by April 2003, the constituents we
have got coming to us every week? Can we say to them with a degree
of confidence that by April 2003 they will start to be integrated
into the new system?
(Mr Smith) I think we can say with a degree of confidence
that that will not be the case. Ministers have always made clear
that when the system is up and running for new clients they want
to take stock for a period of time before making a decision to
migrate the existing cases on to the new system. Inevitably there
will be a time span in which we migrate the old cases on to the
new computer system and then convert the assessments for the old
cases to the new assessments.
52. Can you give us a rough estimate of the
timescale we are looking at? Is this a year, two years?
(Mr Smith) Ministers have indicated that the period
is probably likely to be a year to 15 months following the implementation
of the arrangements for new cases.
53. The implications of delay on the IT side
are obviously not going to affect all areas. I just want to look
at the money side which has a knock-on effect on your compliance
and enforcement. Your budget, as I understand it from your submission,
has basically gone up for total spend in line with inflation from
£223 million to £227 million. That means that you are
going to be under pressure because of the IT obstacles on delivering
efficiencies. The longer you cannot get the IT sorted the harder
it is for you to make efficiencies. Where are you going to pick
up that slack?
(Mr Smith) This year is an odd year that we are still
fully working through in terms of answering that question. The
baseline funding for the Agency this year assumes that we will
make some efficiency savings as a result of implementing the child
support reform. Equally, it assumes that we are carrying more
staff within the Agency to support the activity that was associated
with child support reform implementation which will not now be
taking place because that was moved backwards in time. Additionally,
it assumes that we will start making payments to EDS for use of
the new IT system which we will not now be making until testing
has finished and we have the system available to us. At macro
level in terms of this year the sums just about balance out. The
question then comes in the next two or three years over the spending
review 2002 period as to how quickly we can assume that we take
the next tranches of efficiency savings and how that marries with
the resources that are available to us from the CSR and the funding
profile that we get from SR 2002.
54. Are you expecting to do less or more compliance
work this year in light of the current circumstances?
(Mr Smith) My intention is to put more resource into
enforcement activity this year in the light of current circumstances
and for those business units which achieved significant gains
in compliance last year to at least retain those gains, and to
push the business units who did not do as well in improving compliance
last year closer towards the figures of the best.
55. I imagine, and you will correct me if I
am wrong, that it is going to cost you more in terms of dealing
with cases because you are dealing with all of them now still
under the old system because the new system has not been brought
in. Is that correct and, if so, what sort of cost is it, the additional
cost of carrying on dealing with them under the old system?
(Mr Smith) Our expectation is that the cost of processing
new applications under the new arrangements should be about 20
per cent less than processing the applications under the existing
arrangements in the next year.
56. I am not trying to draw you on a date but,
assuming that the new system does not come in until at least next
April, it is going to be costing you roughly 20 per cent more
on any new cases which come in, which are between 300,000 and
(Mr Smith) We are not achieving the efficiency gain
that we are looking for in that area. That in turn is balanced
by the fact that we are carrying additional staff for work that
would otherwise have been done on child support reform implementation
that will not now be done because child support reform implementation
has been delayed.
57. So is there a net cost to you on that? It
seems to me there is because it is costing you roughly 20 per
cent more for each of the 400,000 cases this year.
(Mr Smith) We have not got the benefits of the IT
system in the short term.
58. But that is side-stepping if you will forgive
me. I know you are not paying EDS and we will come to that, but
you are paying more on a case-by-case basis than you would otherwise
(Mr Smith) On a case-by-case basis, yes.
59. I am wondering what tha
t figure is roughly for this financial year300,000
cases at 20 per cent extra, it seems to me.
(Mr Smith) Yes. I do not have that figure immediately
to hand but basically the calculation is broadly correct.
2 Child Support Reform. Back