HC Deb 20 March 2002 vol 382 cc315-24

4.8 pm

The Secretary of State for Work and Pensions (Mr. Alistair Darling)

With permission, Mr. Speaker, I would like to make a short statement on the implementation of the child support reforms. As the House will know, the Government are reforming the system of child support and the Child Support Agency itself to ensure that more children see the benefit of regular maintenance.

We consulted widely in 1998 and I announced our proposals in July 1999. I undertook to keep the House informed on progress towards the implementation of these important reforms. I have made it clear on many occasions that we would not implement the reforms until I was confident that the new system would work effectively.

On 1 July 1999, I reminded the House that the present system had collapsed under its own weight in 1993 because the reforms were introduced too quickly and with too little thought. That approach has been endorsed by Members on both sides of the House and by the then departmental Select Committee. Its report of November 1999 recommended that the new child support scheme should not be implemented until the new computer system is fully operational". I said then—and it remains the position—that we would not repeat the mistakes made in 1993 when the Child Support Agency was introduced. The timetable then was rushed: the organisation was not ready and some key aspects of the information technology system were not finally delivered until two months after the start date. So the IT, critical to the system, was simply not there. We know the consequences—the system descended into chaos within weeks.

Let me tell the House what progress has been made since 1999 to reform the existing system. First, we have put in place the necessary legislation. The primary legislation received Royal Assent in July 2000 and the regulations are in place, with some minor provisions currently before the House.

Secondly, the Child Support Agency has been substantially reorganised to give a far better customer focus. As hon. Members will know, this has already made a difference. Levels of compliance have increased and complaints have fallen considerably.

The third issue, which is fundamental to the delivery of these reforms, is getting the IT right. We face a major task in building a new IT system that can handle upwards of 13 million payments each year. It also needs to link up with other IT systems in the Department, which are based on 1980s technology.

The new child support computer system being built by EDS is near completion. Testing has been under way for some weeks, in advance of the planned start date at the end of April. Those tests are continuing, but they are not yet complete.

I want to see the new system in place as soon as possible. We know that any new IT system will inevitably have teething problems on introduction, but we will proceed only when I am satisfied that it is working to the standards that we expect.

In my view, until the testing process is complete, I will not have the assurance that I need to authorise the start of the new system. I have therefore decided for that reason to defer the planned start date. The new system will be implemented only when the supporting IT is operating effectively.

I have a clear responsibility to Members of this House and the staff who have to operate the new system. Above all, I have a clear duty to parents and children to make sure that the system works effectively.

The delay is frustrating and regrettable. There was a choice: I could have taken a chance, but that would have meant taking a chance on support for children, and for parents. In my judgment, it is better to take the time needed to get it right, rather than repeat the mistakes of 1993.

The new system will continue to be thoroughly tested. I will keep the House updated on progress. I undertake to give the House sufficient notice of the date the new system will start and to confirm how we intend to bring on new and existing cases.

The House will want to know the cost implications of the delay. Inevitably, there are some, but the contract with EDS specified that the Department will not pay for the computer system until it meets the standard required, and that remains the position.

We know about the problems of the past. They arose in part because the rules were too complicated, but also because the decision was taken in the early days to press ahead when there was real doubt about whether all the necessary systems were in place. I will not let that happen again.

This was a difficult decision. I know that many Members—and parents—are anxious to see the changes introduced as soon as possible, but I judged that the risk of proceeding before testing was complete was unacceptable. I therefore took the view that it was right to tell the House the current position as soon as possible, and I will continue to report to the House on progress towards implementation of these much needed reforms.

Mr. David Willetts (Havant)

It is usual to welcome a statement from a Minister, especially from this Secretary of State who has made only one oral statement to the House in the past 15 months. At least today's statement has a certain rarity value.

Will the right hon. Gentleman confirm that his statement announces no new policy? Instead, it announces further IT problems at the CSA which are, sadly, not new. They are, indeed, regrettable. They are serious for the families who will be left in limbo. We need more information on the new timetable for the implementation of the changes, on which his statement was completely silent. We hope that a debate can take place when we can scrutinise those matters in Government time.

The changes were originally to be introduced in October 2001. Then the Secretary of State announced in a written answer that the scheme would be introduced by April 2002, saying by which time successful introduction can be achieved without unacceptable risks."—[Official Report, 31 January 2000; Vol. 343, c. 466W.] I presume that he regrets saying that now.

Having announced a delay in that written answer, the right hon. Gentleman now rushes to the House to make an oral statement on further delays. It would be far more significant and newsworthy if he had come to the House to announce an IT project that had been successfully delivered on time and on budget. That would be a statement that we would all enjoy hearing.

Why have we suddenly had a statement on IT in the CSA after 15 months of almost complete silence? Why not make a statement on the Government's redefinition of their poverty target for children so that they can appear to meet it? Why not make a statement on the crisis in funded pensions, on which the Secretary of State refused to comment?

The explanation for this statement is that the right hon. Gentleman knows that later this afternoon the House will have a desperately important debate on the commitment of our troops in Afghanistan. The Prime Minister, the Secretary of State and his Cabinet colleagues ought to be present for that debate, but the longer the gap between Prime Minister's questions and the debate, the easier it will be for them to stay away. That is what this statement is all about.

Mr. Speaker

Order. The hon. Gentleman must speak to the statement, not tell us what it is all about.

Mr. Willetts

Thank you, Mr. Speaker. I simply wish to record that the House gave a clear expression of its will yesterday under Standing Order No. 24. I do not wish to stand between the will of the House and the important debate that awaits us soon.

Mr. Darling

I am really very sorry that the hon. Gentleman has taken that stance. He knows a lot about this subject and the House often listens with respect to what he has to say. His response today was a little petulant.

First, I would have liked to make the statement yesterday, but I was told that I could not do so because it was an Opposition Supply day. I was left with no alternative but to make it today. Secondly, the hon. Gentleman and his hon. Friends have said on many occasions that Ministers ought to come to the House and be answerable to the House. Here I am.

The Child Support Agency is a matter of real interest to just about every hon. Member. I took the view that rather than use a written answer or a press briefing, or putting the story in the newspapers, it would be better to come to the House and say that, because of the difficulties I described, it would be necessary to defer the implementation of changes that many hon. Members as well as, of course—and, in many ways, more importantly—many of our constituents want to be implemented as quickly as possible.

Yes, there have been IT problems in the past. There were problems when the CSA was introduced in 1993. The IT did not arrive until two months after the then scheme was introduced. The hon. Gentleman is no doubt also thinking about NIRS—a contract that was signed in 1995, had to be renegotiated in 1996, and was a year late by the time the system was switched on, by which time the old system had been decommissioned, causing all sorts of problems with national insurance records. Perhaps he is also thinking about the benefits payment card. The contract for that was signed in 1996. It had to be renegotiated in February 1997 and, by the time we took over, it was running three years late and the costs had almost doubled. Yes, it was it a mess. Yes, it had to be looked at.

I have another example, and this time the Conservative Government deserve some credit. The jobseeker's allowance was supposed to be introduced in April 1996. The Government of the day were advised by consultants that introduction would not be possible then because of all sorts of difficulties. To their credit, they decided to let it slip for about six months and then it was implemented satisfactorily.

We know that there are problems with large IT systems. As I have described, our problem at the moment is that the vital testing necessary to be sure that the new computer system to back the CSA changes works has not yet been completed. I have taken the view that until that testing is complete I am not prepared to authorise its commissioning. I take full responsibility and I think that I am right to come to the House to explain the position. Members can hold me to account for the decision that I have taken. I am sorry that, out of sheer opportunism, the hon. Gentleman has taken a completely different position.

Mr. Tam Dalyell (Linlithgow)

May I offer the strongest support for the Secretary of States's attitude? Is he aware that the staff of the Child Support Agency have some of the most difficult and certainly the most harassing jobs in the civil service? Anything that adds to this harassment—and, often, ill temper and bitterness—would be a disaster. He has taken absolutely the right attitude of caution. It would be much better to wait until these teething problems are sorted out. Given the expertise that is now concentrated in the system, is there any chance of it being available to other countries that might regard it as an export proposition? Britain is a leading figure in this field.

Mr. Darling

I am very grateful for my hon. Friend's comments. Given the present position, I would be hesitant about going into the export market just yet. Perhaps one day the system will be resold in different parts of the world. Of course, it is owned by EDS, which supplies it.

In response to my hon. Friend, it is worth bearing in mind the fact that the Child Support Agency has to deal with 400,000 new applications every year, which works out at about 1,000 new applications every day. Therefore, had there been any problems with the IT system—I believe that there is sufficient risk that there might have been—it would not be long before thousands of cases built up in a backlog. That is why I am taking a cautious approach, and I make no apology for that whatever. However, I am glad that my hon. Friend the Father of the House appreciates that Ministers should come to the House to explain these positions so that we can be held to account for our decisions.

Mr. Steve Webb (Northavon)

I entirely agree with the Secretary of State; he is absolutely right not to introduce the system if it is not ready. However, that sidesteps the issue of who is responsible for its not being ready. Does he recall that two years ago I warned his Department in oral questions in the House that if it did not get a grip on this process and monitor it tightly this is just the sort of thing that would happen? He has already failed to mention in his statement the six-month slippage from October to the coming April, and he still cannot say when the system will be introduced. He said that it is near completion. If so, why cannot he say whether it is months or years away?

The key point is that this is not the first computer botch in the Secretary of State's Department. He mentioned NIRS2, and I understand that the pension credit system is not all it might be. The CSA computer system is now behind schedule. Does someone in his Department monitor these projects or does he take responsibility? If not, weeks before a project is due to be up and running, someone comes along to say, "We've only been testing a few weeks. Sorry, guv'nor, it doesn't work." Is it not time that he took responsibility for projects in his Department and made sure that they were ready on time? Instead, he comes to us just a few weeks before the project is due to be ready, wrings his hands and says, "We'll let you know but we can't tell you when."

Mr. Darling

In answer to the hon. Gentleman's final point, I have said on many occasions that I take full responsibility for everything that happens in my Department. That is my job as Secretary of State. It is my responsibility to make sure that we deliver an effective working system.

It might help the hon. Gentleman and other hon. Members to know that I and my officials became concerned at the turn of the year that the testing was not proceeding as fast as we thought it should. We approached EDS, which is supplying the equipment, and it increased the resources devoted to testing the system. I was anxious to introduce the system, if at all possible, in the second part of April as originally planned. I thought that it was worth testing the system and making sure that it was completely installed to deliver. However, I came to the view towards the end of last week that, on the information I had, it would be irresponsible to authorise the commissioning of the system. Therefore, the Department is aware of the slippage that has taken place on testing, and we have taken that up with EDS.

As the hon. Gentleman should know—perhaps he does not—we intend to run the pension credit system on the Department's existing computer systems for the first two years, because we think it better to do that than to build a system.

On the hon. Gentleman's first point, he asserted that he had warned us about this problem two years ago, but his policy then was to transfer the CSA back to the courts at a cost of about £1 billion. However, I will give him credit. I read in The Guardian today—this may come as a surprise to some of his Liberal colleagues—that his policy has changed and that he now wants to transfer everything to the Inland Revenue. I would have thought that anyone in the Inland Revenue would think long and hard about saying, "Yes, let's have the CSA imposed on top of the tax system." I say this in the nicest possible way to the professor, but he should think beyond the next press release before he begins making policy on this issue.

Mr. Terry Rooney (Bradford, North)

Many of us went through the turbulent years from 1993 onwards when we faced five years of chaos, two-year delays in assessments and thousands of children not receiving the payments to which they were entitled. The Conservatives had to set up a special MPs' hotline with 50 staff to deal just with the complaints coming from the House. May I congratulate my right hon. Friend on an intelligent and sensitive decision that means that the 2.5 million children and the 2 million parents who are in the CSA system will have a decent system and not a cock-up like we had in the past?

Mr. Darling

I am grateful to my hon. Friend. It is worth bearing it in mind that, when the new system is introduced, it will benefit many people. The formula for calculating the maintenance due will be far simpler. Rather than the hundreds of pieces of information now required to make a calculation, only three or four will be needed. That means that we can get the maintenance paid within a matter of days. At the moment, nearly a third of new applications take more than six months to process. The new system will make a big difference and it is also fairer to people who have second families, a point that many hon. Members have pressed for some time. I am disappointed that we are not able to introduce the system at the end of April as I had intended, but the risks are such that it is better to take time to ensure that we complete the testing satisfactorily before we introduce the new system.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

It is commendable that the Secretary of State saw fit to make this statement to the House. I concur with the view that, faced with the options before him, he had no alternative. If he had done anything else, he would clearly have been in breach of an undertaking that the Under-Secretary in the other place gave to a Select Committee that the new system would not be introduced until the IT was robust. To that extent, I agree with the Secretary of State's decision.

I wish to press the Secretary of State on the testing that is necessary. Is he facing hardware, software or systems problems? It seems to me that it will take weeks to get the problems ironed out and, if he is to be fair to everyone, he will have to give at least three months' notice of a new date for implementation. My working assumption is that it will be at least six months from April before the new system is introduced. Surely the sooner we can end the period of uncertainty, the better for all concerned.

Mr. Darling

I agree with the hon. Gentleman's final point about the importance of completing the testing and fixing a date for implementation. It is important to remember that new cases will be dealt with first. That was always our intention. We will deal with existing cases after that. It is important to get the system right and then fix a date rather than do things the other way around.

I appreciate what the hon. Gentleman said in the first part of his remarks. On his second point, I point out that several features need to be tested. There are problems inherent in any attempt to rebuild a Department's IT systems, and I have told the House on many occasions that that is what we are having to do because of years of lack of investment. The new system will have to operate alongside the Department's existing systems and the technology built in 2001–02 is different from the technology that was designed in the 1970s. The current CSA computer was built in the 1970s. It is an off-the-shelf model that was bought from someone in Florida; it has never been entirely satisfactory.

Miss Anne Begg (Aberdeen, South)

I have been struggling with British Airways' new booking system in which a nice voice says, "Thank you for your patience, but we have a new system that will speed up your booking." However, four weeks later, booking takes longer than it did before. I therefore appreciate why my right hon. Friend could not proceed with the introduction of the CSA system until it was up and running. There is nothing worse than a system that is not fail-safe and that has not been fully tested.

However, some of my constituents who expected to be on the new system by 1 April may be dismayed to discover that their contributions will be calculated under the old system. Can the Secretary of State assure us that—once we begin processing existing claimants—those who will perhaps miss out between 1 April and whenever the new system is fully up and running will be the first to go on to it, provided that it works as intended?

Mr. Darling

Like a number of Members, I am familiar with the notice that greets passengers at the British Airways check-in desk, explaining the wonders of its new computer system. That system is not quite fixed, and I have some sympathy with British Airways in that regard at least.

On my hon. Friend's substantive point, as I said in my statement, once I am satisfied that the system is working, I intend to inform the House as to how we will take on new cases. The key to success, however, is to try to keep the system as simple as possible. Indeed, it was the complexity of the existing system that crippled it. I intend that we will bring on new cases once the system starts up, and when they are settled in we will bring on the existing ones. It would not be wise to undertake a backdating exercise, because that would inevitably lead to the stockpiling of cases and a lot of confusion. It would be better to proceed according to the original plans that many people signed up to, and I know that my hon. Friend participated in the Select Committee that considered the issue on several occasions.

The more complex we make the system, the worse it becomes. The hon. Member for Northavon (Mr. Webb) said yesterday that he wanted a simple system but with more complications. I strongly urge my hon. Friend to give that proposal a very wide berth, and I am sure that she will.

Rev. Martin Smyth (Belfast, South)

I welcome the statement because it is important that we be kept informed. The Secretary of State said that there might be some increase in costs, but that the bill for the system will not be paid until it is delivered. Is the change to the new system attributable to a particular attitude of mind in the Department, to a particular view on how information should be delivered, or was there a problem with suppliers who did not measure up to demands?

I welcome the fact that the Secretary of State will confirm in a further statement how new and existing cases will be brought on. I have already been approached by people who are on the list and waiting for back-payments. They have been told that they will not be dealt with until the new system is up and running. Surely that is wrong, given that the relevant details are known. I would imagine that they could be fed into the computer system fairly quickly. Why should payments to people who have already wasted a lot of time, and spent a lot of money looking after their children, be held back?

Mr. Darling

On the last point, the new system is not yet operational. It has not been fully tested, so it would not be safe to feed information into it. The hon. Gentleman is right: the Department has written to people—as it was duty bound to do—telling them about the plan to introduce the new system at the end of April. We will write to them again, as it is clear that we cannot in fact bring them on to the new system at the end of April. As I have said, the situation is deeply regrettable and I am very sorry for those people who will suffer some degree of inconvenience. However, it would have been far worse to plough on in a manner that presented unjustifiable risks.

On the information technology system itself, as I said in my statement, the contract is so structured that we will not pay for it until we accept it as operational. That may seem obvious, but not all contracts have been structured in that way. I made it clear that, given the history of IT projects—to which the hon. Member for Havant (Mr. Willetts) referred—we should not pay for the computer system until it works. The difficulty is that testing has yet to be completed. It is clearly in our interests—and in the interests of EDS, which will not get paid until the system works as I described—that testing be completed as quickly as possible. As soon as I am satisfied that we can proceed, I undertake to return to the House—despite opposition from the Conservative Front Bench—and explain the position. I have to say that this is the first time in 15 years as a Member of this House that I have encountered an Opposition who do not want to hold Ministers to account.

Mr. Chris Pond (Gravesham)

Does my right hon. Friend agree that the impact of the delay is to some extent mitigated by the additional resources provided and the administrative changes implemented by the Government for the existing system? Can he assure us that CSA staff will be encouraged to continue to improve that service, even under the existing system? Does he agree that because that system was introduced in haste by the previous Government, it has left hundreds of thousands of families to repent in anguish and that the main victims of that have been the children? Will he strengthen his resolve not to introduce the new system, which I think is much better, in haste, as he has been encouraged to do by the cynicism and sneering from the Opposition?

Mr. Darling

My hon. Friend is right to draw attention to the fact that the CSA has been significantly reformed in the past three years. That was necessary for the new system, but was desirable anyway. The chief executive, Doug Smith, has made huge changes in management and in structures. It is a tribute to the staff—as my hon. Friend the Member for Linlithgow (Mr. Dalyell) mentioned earlier—that so much hard work has been put into making substantial changes, including more face-to-face interviews and more time being taken to explain how calculations are made. As a result, compliance rates have increased. Most of our staff wanted to get ahead with the new system, but my hon. Friend is right to say that the worst thing to do would have been to press ahead with the system, especially when the information I had suggested that Members of Parliament would have had cause for complaint had I done so. As I said to the hon. Member for Northavon, I accept full responsibility for the matter and the decision was, right.

Mr. Andrew Lansley (South Cambridgeshire)

Does the Secretary of State realise that his claim of accepting responsibility for the matter might ring more true if he had spent more time talking about what is happening in 2002 and his efforts to introduce the new system, rather than spending most of his statement talking about the events of 1993? Given that he has deferred the introduction of the new system, I put it to him that—as a member of a Government for whom management by targets is the order of the day—he should set a new target, even if it is not a definite commitment, to bring the new system into operation on a given date, so that he can be held to account as the responsible Minister for his performance against that target. The Secretary of State has twice been asked to set a further target date for implementation of the new system and has signally failed to do so. Why will he not give a target date?

Mr. Darling

The hon. Gentleman will remember from his previous job as an adviser to the previous Government that Governments get into awful difficulties if they fix targets, sometimes plucked out of the air, and may have cause to regret doing so afterwards. It is important to ensure that the testing process is completed. Once that is done, I intend to fix a date for starting on new cases. As I have said, I will come to the House to spell out how we propose to take on those new cases. I am very sorry if my mentioning 1993 brings back bad memories for the hon. Gentleman, although I full) understand why that might he the case.

Mrs. Joan Humble (Blackpool, North and Fleetwood)

May I applaud my right hon. Friend for his determination to ensure that the new system for the CSA will succeed? We all agree with that aim. May I also reinforce the concerns of existing clients about the announcement that the introduction will be deferred? Many of my constituents who are absent parents are suffering real financial hardship. They come to see me regularly and look forward to the implementation of the new system, but are already concerned that they have no clear idea of when they will be brought on to it. When my right hon. Friend returns to the House with a timetable for implementation, as soon as he is reassured about the efficacy of the new computers, will he consider especially the needs of existing clients, many of whom are in serious difficulties?

Mr. Darling

I have a great deal of sympathy with what my hon. Friend has said. I am aware that it is felt that the present system does not take sufficient account of the circumstances of many people, especially those who now have second families. Obviously it is too soon for me to say at this stage what the precise impact will be on existing cases in terms of the time taken.

I simply repeat the following point, which I think my hon. Friend accepts. In 1993, there was cross-party support for the CSA and my recollection is that the then Opposition agreed with the then Government on introducing the thing quickly, but that proved utterly disastrous. As I have told the House on several occasions, the situation is regrettable, but it is better that we spend time getting the arrangements right, because in the long term that is the better way of helping both new and existing cases.

We should remember that the agency now deals with about 1.4 million children—we project that in four years' time it will be 1.7 million. It is very sad that that is the case, but it gives the House an idea of the number of individuals involved. We should remember that we are talking about individuals about whose well-being we need to be concerned.

Rob Marris (Wolverhampton, South-West)

I congratulate my right hon. Friend on having the courage to make the announcement and to withdraw the system before it came in at half-cock and did not work. I also congratulate him on making his statement to the House first, rather than to the press, as has sometimes been done. I agree with my right hon. Friend that it would be wrong to implement a new system for the CSA until the IT is sorted out. After all, the Government are addressing years of underinvestment in his Department.

However, can my right hon. Friend assure the House that there are no other untoward delays in IT implementation elsewhere in his Department, whether in benefits or in pensions, or particularly in the Employment Service, where I believe that EDS is the lead contractor, as it is with the CSA?

Mr. Darling

In the Employment Service, as I believe my hon. Friend knows because he is a member of the departmental Select Committee, the jobpoints, which are now all successfully in place, are one example of quite a big IT project. That project was started under the Conservative Government—I say that to show that I, at least, am bipartisan—and has now been delivered successfully. There are other examples.

The Department for Work and Pensions has some of the biggest computer systems in the western world. The systems deal with 7 billion transactions every year. It is inevitable, therefore, that anything that the Department does will take time. It takes an awful lot of investment. But one thing on which I strongly agree with my hon. Friend is the need for that investment—every penny of which, to conclude on a very partisan note, has been opposed by the Conservative party.