Inland Revenue: IT Systems (Hansard, 10 November 2004)

§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)
My Lords, the Inland Revenue manages an extremely complex IT environment with more than 140 major business applications and 87,000 users. No large and complex environment can ever be free from error, but the Government are satisfied with the administrative procedures and integrity of the Inland Revenue's IT systems.

§ Baroness Noakes
My Lords, I thank the Minister for that Answer. Will he share with the House what Treasury Ministers said to the chairman of the Board of the Inland Revenue when it found that perhaps hundreds of thousands of taxpayers were losing out on refunds because the PAYE system had deleted their records? I am sure that the Minister will agree with me that that is a completely unacceptable state of affairs. What timetable has the Inland Revenue been given for dealing with it?

§ Lord McIntosh of Haringey
No, my Lords, I will not share what Treasury Ministers said to the Inland Revenue, because I do not know and it would not be my job to know. I recognise that there was a problem with deleted open cases for PAYE. It was found that housekeeping deletion procedures had taken place before rather than after the final review of cases of taxpayers who had stopped employment more than three years ago and not taken it up again. Inevitably, it was a small minority. That was announced in the Inland Revenue's annual report last month. A survey has been undertaken to find out who they are and how many there are. The results will be announced within the next three weeks.

§ Lord Barnett
My Lords, I declare an interest as someone who received an income tax refund. I think that it was on time, but if when the Inland Revenue reads this it finds out that it was late, perhaps it will send me the interest. Paragraph 116 of the annual report indicates that the Inland Revenue was aware of the error. It is perfectly understandable that there were errors in such a complex area. But the Inland Revenue understood and recognised the error as far back as autumn last year. When does my noble friend think it will be able to rectify the problem?

§ Lord McIntosh of Haringey
Indeed, my Lords, the Inland Revenue discovered the error in autumn 2003. It consulted the National Audit Office on how the announcement should be made. The National Audit Office agreed with the Revenue that it should be made in the Revenue's annual report. It will be scrutinised by the House of Commons Public Accounts Committee in early 2005. I have already said that the number of people affected will be announced within the next three weeks. The function has been corrected. Open cases are no longer deleted.

§ Lord Newby
My Lords, over the period between now and 2007–08 Her Majesty's Inland Revenue and Customs are due to lose 16,000 staff. According to their 893 own efficiency technical notes, that is to be achieved principally by realising the benefits of investment in ICT. Given the revenue's patchy track record on IT generally, what reassurance can the Minister give that customer service levels for taxpayers will not suffer during the process?

§ Lord McIntosh of Haringey
My Lords, I need only refer to my earlier Answer. There will inevitably be failings in an IT environment with 140 major business applications and 87,000 users, not to mention the number of taxpayers. The noble Baroness, Lady Noakes, has justifiably drawn attention to one of them. One need only look at the number of failings identified to see that they are a very small minority and that fundamentally the integrity of the IT systems is sound.

§ Lord Harris of Haringey
My Lords, is my noble friend satisfied with the security arrangements for the Inland Revenue's computers against hackers, viruses, worms and so on? Can he share with us statistics on the number of instances where that security has been breached in the past five years?

§ Lord McIntosh of Haringey
My Lords, I am aware of only one case where there was a failure of security due to hacking. It was a single information service provider; the issue has been corrected. If my noble friend has evidence of any more, I will be glad to pursue the matter.

§ The Earl of Northesk
My Lords, can the Minister confirm that in April and May last year software errors resulted in the overpayment of tax credits to some 455,000 households, amounting to some £94 million? What steps have been taken to address not only that but also a wider unease, apparent in the Auditor General's report, about the accuracy and reliability of the data used by the Inland Revenue?

§ Lord McIntosh of Haringey
My Lords, I can confirm that 455,000 households received incorrect payments—they were overpayments—but 373,000 of them were less than £300, an amount which, since taxpayers could not necessarily be expected to identify it from their own records, will be written off and not charged to them.

§ Lord Sheldon
My Lords, since there is to be a merger between the Inland Revenue and Customs and Excise, will there not be considerable difficulties with the integration of information technology? What consideration has been given to that in view of the undertakings to bring the two together?

§ Lord McIntosh of Haringey
My Lords, it is one of the issues that will arise during the project. I can assure the noble Lord that it will require the approval of 894 Parliament and it can be debated at that time. There ought to be a moratorium on the admission to this House of former Chief Secretaries to the Treasury.

§ Lord Roberts of Conwy
My Lords, is it not remarkable that the Inland Revenue did not have some form of back-up to avoid the sort of deletions that have taken place?

§ Lord McIntosh of Haringey
My Lords, records are normally kept until the final review. In one case, which the noble Baroness, Lady Noakes, has rightly identified, housekeeping deletions, which are necessary to ensure that databases do not become overloaded, were carried out too early. The Inland Revenue recognises that that was a failing, but it is not a general failing.