Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 40-59)




  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 programme—Pension Credit and, beyond that, Income Support and Jobseeker Allowance—is 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 CSR[2] implementation.

Miss Begg

  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 turn.

  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 in March.

  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 there?
  (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 Agency—we 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 well—and 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 at all.
  (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 case.

  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.

Andrew Selous

  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 address—both his mother's address and his girlfriend's address—and 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 us—and I am sure other Members here will have many, many similar cases—a 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 comply.
  (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.

Miss Begg

  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 everyone—it 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.

Rob Marris

  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 400,000 cases.
  (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 have paid.
  (Mr Smith) On a case-by-case basis, yes.

  59. I am wondering what tha

  t figure is roughly for this financial year—300,000 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

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 1 July 2002