Child Support Maintenance Calculation Regulations 2012

Lord Kirkwood of Kirkhope Excerpts

Monday 15th October 2012 Grand Committee

Obviously to the advantage of PWCs is the increase in maintenance where NRPs are on low incomes or benefits, although doubling the liability of the poorest is a bit steep. As is clear from the impact assessment, the new calculation rules will lead to considerable changes to current outcomes for a variety of reasons. The regulations are likely to change the amounts due for hundreds of thousands of existing parents. What advice and information is to be made available to help parents make appropriate decisions under these new regulations? However, I conclude by reiterating that we are supportive of their thrust.

[Lord Kirkwood of Kirkhope]

My Lords, perhaps I may make a brief intervention in this important debate. I am opposed to charging, and I hope that we will be able to get rid of it. I understand that there are deficit reduction problems, but an important state-run service should be available to single parents who are struggling to raise children, sometimes with little or no help from non-resident parents. That is what we should be aiming for in the long run and as a matter of principle.

The current plans underestimate the extent to which winners and losers will become a big issue when the plans are eventually rolled out in full. The extent of this change has not properly been taken into account, and there will be big swings in both money in and money out of the hands of non-resident parents and parents with care.

However, I want to concentrate on the National Audit Office’s concerns expressed in February 2012 after it started to look at whether implementation of phase one and phase two of the plans may or may not be delayed. I remind colleagues that at that stage the commission planned to introduce the new scheme in two phases. In phase one, the commission would be able to enter applications to the new scheme from new clients from October 2012. That was the plan in February, and we are now into October. Phase two was to be started six months later, with an indicative start date of July 2013. That would involve the launch of the whole statutory gateway service, introduce charges and transfer the caseload.

I read the NAO report with great interest, and I read page 37 with particular interest. It was headed,

“Figure 17 … Commission risks repeating past mistakes”.

Some of us have been following this saga since 1991. The NAO rightly said that if this policy is to have any chance of success, the new maintenance system needs to be properly worked through and, importantly, it needs a new IT system that works. I understand, although I may be corrected if I am wrong, that the new IT system commissioned from Tata Consultancy Services—TCS—is a mixture of agile computing, which is an iterative way of developing programmes, and more conventional ways of delivering government IT systems.

The February NAO report is concerning as, among other things, it says at page 38:

“The Commission reported to the audit committee in October 2011 on the high risk that the change programme may not deliver phase two functionality within agreed timescales, to realise the benefits outlined in the business case”.

Therefore, there was an early risk. People understood that this was a challenge and that the system might not be delivered on time. The next paragraph of the report—paragraph 3.27—expresses the worry that:

“The Commission has not built any contingency into delivering the new scheme”.

This worrying NAO report was produced in February. The NAO was right to mention both those points about the functionality of the computer and the lack of contingency plans.

The next iteration of the development of the IT issue and the possibility of delay in the IT system occurred when the Permanent Secretary and the then chief executive of the Child Maintenance and Enforcement Commission, Mr Shanahan, appeared before the Public Accounts Committee. At that stage, the Permanent Secretary and the CEO of CMEC were bullish about the fact that the NAO report was out of date. They said that phase one on its own merits had,

“a delivery confidence assessment of amber/green”,

from the Office of Government Commerce, and that that office’s review described the whole project, including phase one and phase two, as,

“having substantial risks, which the programme is taking sensible steps to manage, meaning that the delivery confidence overall is amber”.

Therefore, the NAO report, which adverted to real concerns, was batted back by the Permanent Secretary and Mr Shanahan when they made those remarks in March 2012.

The last annual report of the Child Maintenance and Enforcement Commission, which was produced just before it was taken back into the department in July 2012, revealed that,

“over the last 6 months of the financial year, slippage occurred around testing”.

It went on to refer to,

“a number of required actions to improve delivery confidence”.

We were also told that a pathfinder would be used to introduce the new scheme. Therefore, phase one was no longer where it was supposed to be; it is now a pathfinder. The annual report goes on to say:

“This, and improved testing velocity, mean that the Executive Team has strong confidence in a successful October introduction”.

However, I do not know what “testing velocity” means. That report was issued in July 2012. The Minister tells us today that the pathfinder seems to have changed. Before I continue with that point, I should say that my good friend, Professor Steve Webb, said on 11 September that the pathfinder group would be extremely small and would consist of parents with main care who had four or more children, where at least four of the children had the same non-resident parent. That is hundreds or it might be thousands—these are new applicants—so this pathfinder for phase one is nearly invisible as far as I can see. It has not started yet. If that was not bad enough, my good friend, Professor Webb, when answering questions about this in the other place on 11 September, said that,

“we are now in the final stage of testing, with new system staff training to start in a few weeks”.

That was the position on 11 September. We have been here before. We deserve some assurances about the implementation schedule for all this.

Obviously, the delay is of great concern to the NAO because the business case means that savings of £117 million need to be made between now and 2014-15. In this delay in implementation, the full phase one/phase two configuration costs the taxpayer £3 million a month. These are big sums of money.

--- Later in debate ---

[Lord Freud]

My Lords, the debate has strayed somewhat from these regulations, most substantially into the readiness of IT. I shall try to deal with that issue full on, because it is a fair question.

The concern is that the new system is late and will not work, and the normal things that people get concerned about with IT were raised. There is clearly a balance here to be struck as regards making sure that you deliver what you are intending to deliver in terms of savings and product, and making sure that it works. You fine-tune that as you get closer and closer and you know more. Regarding the timing, as my noble friend said, we were planning to start in October. It will be a few weeks after that when we will really go in on phase one, but in the scheme of things, it is a few weeks late but will come in safely because we are currently testing to make sure that when we start the system is working. The general point I was asked was: will we go ahead before we are confident that the system works? I can give an absolute assurance, and repeat what the Permanent Secretary said, that we will not go ahead until we are confident that the system will deliver for both the client base and the taxpayer.

The first phase will go ahead in a matter of weeks. As regards the numbers that my noble friend was interested in, we will begin incrementally. In the first phase, we will start off with literally 100 or 200 cases a month for the first, say, four months. We then move up rapidly in the next couple of months to 3,000 or 4,000 cases a month. After six months, when we take over all the new intakes, we will be dealing with 10,000 cases a month. That is the planned progression. Again, as regards the question of the noble Baroness, Lady Sherlock, on when we will press the button, I should make it absolutely clear that we will not do so unless we are confident that this works. Everyone here knows the history, and we are as conscious of that as anyone.

I take the question of personal assurance very seriously. For a lot of the computer systems that we are introducing, and universal credit in particular, I will give personal assurance. This system is not actually part of my personal portfolio. Although I am dealing with it for the House, the reality is that I am not sitting on this particular computer system with quite the same ferocity—

[Lord Kirkwood of Kirkhope]

My Lord, that is what worries me. Is it still the case that the target date for the introduction of phase two is July 2013, with a few weeks’ slippage?

[Lord Freud]

We are still on that timetable, absolutely. But we will be flexible as a department. The one piece of advice that the Public Accounts Committee has given to us as a Government, and to the last Government, is to feel our way into these things, to be flexible, pathfind the way and build from there. So we are taking that advice. We cannot have it both ways. This means that there is not a date on which we must press the button, and if we do not press the button on that day we are late, it is a delay and a fiasco. I believe it is wrong of us as politicians to play with computer systems in that way. It is not the right way to do it. We must go in steadily and introduce these systems in a smart, incremental way. That is the lesson that we have learnt from some superhumungous tragedies. When it comes to computer systems, the Government get a lot of the stick for bad computer system introduction. This is because Government computer systems are publically known. The private sector has just as many snafus with computers as the public sector, it is just that they do not make them public.

This ties in neatly to the point about four schemes in parallel, from the noble Baroness, Lady Sherlock. We already have three systems running in parallel, and this new system will be more automated and more efficient than those. By using the pathfinder approach that I have described, the new system will be working well before we introduce it full tilt. If the new system is working and sustainable with the kind of volumes that I described, then we will be able to manage the four systems that we will have under our hand at any one time.