WEDNESDAY 19 JANUARY 2000

MS FAITH BOARDMAN, MR VINCE GASKELL, MR MICHAEL DAVISON AND MR JOHN LUTTON

  160. I hope you do.
  (Mr Gaskell) There are a number of things we are doing and will be doing in preparation before we begin the movement of the existing cases on to the new system. First of all we need to make sure that the quality of data on those existing cases is as good as we can get it before we move them over. We are doing quite a bit of work at the moment to analyse the quality of that data and to look to see what strategies we can deploy to improve that quality before we begin to move the cases across. The last thing we want to do is to move those cases before the data is ready leading to problems in operating the new scheme for those people. There is quite a bit of work that the Agency will be doing over the next 12-18 months to improve that position. The next thing that we will be doing is we will be avoiding some of the errors of the past by avoiding the big bang situation where we will be implementing the new IT for all cases everywhere around the country, including the existing ones. We are going to make sure that the new IT is working efficiently and effectively before we begin the migration of existing cases or customers on to that system. Our strategy will be very much that. Indeed, they are the commitments and statements our ministers have made, that we will not move cases across until such time that we are satisfied the new scheme, the new system, is working effectively.

  161. Finally, can I just press you a little on the other objective of bringing in the new system which is to chase up all of those people who up until now, because you have been diverted with the difficulties of the current system, you have not been able to reach out to. What assurance can you give the Committee that while you are carrying on this transition phase there will still be the resources left to start that process of chasing up all of those people out there who are not paying currently?
  (Mr Gaskell) Clearly one of the key tasks and challenges that we face is to manage the ongoing business as we are implementing the new scheme, training our people to be ready for that. Clearly it is a major challenge to do that, to avoid the problems of the past, and that is something we are currently addressing in the detailed plans that we are preparing. One of the things that we will be doing to allow us to manage that successfully is part of the planning at the moment is to estimate the resourcing needs both to fill in for the staff who will be trained to handle the likely number of queries we are going to have with the new scheme both from new customers and existing ones in particular and to make sure those are reflected in our business case that will be going to the Treasury to make sure the Agency has got sufficient resources in place in advance and in train to be able to deal with the existing work as well as the new.

  162. I apologise for not being here throughout the hearing today. I want to concentrate primarily on the issue of compensation with the caveat, picking up the comments that Mr Griffiths made, that I accept fully you are operating within a system that you did not construct and with the benefit of hindsight if you had your way you would have defined it and constructed it in an entirely different manner. I want to pick up on a point that Mr Love spoke of and that is the table on page 95, compensation payments made by the Agency, figure three. I failed to fully understand the answers Mr Davison gave about how those figures were arrived at. Am I correct in making the assumption that you can take any of those values over each of the years and that is, in fact, taxpayer's money, it is not a financial compensation to the individual but a sum, perhaps up to 50 per cent of that, that has been the parent being refunded their own money? Is that what you were saying?
  (Mr Davison) Some of that will be cases where the non-resident parent has paid maintenance at a level higher than he should have done. That money will have been passed on to the parent with care so the refund does come from taxpayers' money.

  163. So there is no ability to return it from the parent who in error received it?
  (Mr Davison) As a matter of course we write to the parent with care who has received the money but in reality we very rarely get recompense.

  164. You also mentioned that there was a formula for deciding how much any individual person who had been wrongly assessed would be paid. Is that as complicated as everything else seems to me in terms of the formula at the CSA?
  (Mr Davison) It is a DSS publication which is in the public domain and it sets out the grounds for compensation payments and how they are calculated. The particular case I was referring to was one where someone should have received a sum of money at a particular point in time and because of an error on the Agency's behalf did not get that, so we deprived them of the use of that money and we compensated them for the lost use of that money, the lost interest, on a simple investment formula.

  165. By great coincidence I received a letter from the Child Support Agency Special Payments Officer, Peter Crump, regarding one of my constituents. I do not want to discuss the person's name or anything of that sort but would the formula and your understanding of how compensation payments work tally with the comment I received today which is that "compensatory payments for financial loss are intended to restore the person to the financial position that they would have held had it not been for the Agency's maladministration"?
  (Mr Davison) Yes.

  166. So there is a judgment made as part of this formula and your implementation of it that if it had not been for the Agency's mistake here is where this person would be in their life?
  (Mr Davison) Yes.

  167. I do not have any desire to raise an individual case. That should be through correspondence with yourself, Ms Boardman, which I have done. I fail to understand how a constituent—and it has happened to others I am sure—was wrongly assessed by yourself, had deduction orders, lost his job because of it, had a breakdown and very severe mental difficulties, lost his home, lost his second wife, and when the Independent Case Examiner finally took an interest and completed his findings he recommended "substantial financial payments". I take the Independent Case Examiner's statement in black and white which the CSA has of recommending substantial financial payment and that correspondence today about restoring the person to the financial position they would be in if it had not been for the CSA's mistakes. Would it surprise you if I told you that this individual received a "substantial financial payment" of £50? Would you be surprised? I ask you of course to accept my portrayal of the case, but if I am accurate, would that surprise you in light of the formula and the commitment given in the correspondence to me that suggested that substantial financial payment should be made? Is £50 substantial?
  (Mr Davison) I would not regard £50 as substantial.

  168. Again I am putting you in an awkward position and I will not hold you to this of course because you do not know the case and you have no reason to either believe or disbelieve me, but would you be surprised? Would that level of payment be commonplace for that type of circumstance?
  (Mr Davison) I obviously cannot comment in detail because I have only had the very brief overview of the case you have given me. As I said in my answer, I would not regard £50 as substantial if the Independent Case Examiner has recommended substantial recompense. I would have thought a payment considerably in excess of that would be appropriate.

  169. As I understand it, there is no appeal on compensation decisions, they can have a review, but not an appeal. So is the CSA under any obligation to implement the findings of the ICE in terms of compensation? Can you interpret "substantial" to be whatever you wish really?
  (Mr Davison) The decision on the levels of compensation payment has got to meet the guidelines laid down by the Department as agreed with the Treasury and they are administered at a central level. If it was a significant payment it would go to the DSS for approval.

  170. I will move away from the individual case for the purposes of this Committee although I am going to continue to push it, as I have for the last two years. To go back to Figure 3 on Page 95, the value of compensation has gone from £114,000 to £4.3 million but within that, as Mr Love said, if you break that down per case it has gone up on average from £618.16 to £795.90. Why has there been an increase in compensation paid in that period? What has been the biggest reason?
  (Mr Davison) The biggest reason is following detailed discussion with the Ombudsman and the Independent Case Examiner the grounds and conditions for special payments relating to child support cases were significantly reviewed and widened approximately two years ago and there are more areas where we pay compensation.

  171. About two years ago alterations took place that created a situation where cost per compensated individual increased, but looking at this table two years ago the average repayment went down to £515.59, a drop of over £150 on the year before despite you saying that one of the reasons for the increases was two years ago changes took place that created that scenario. In light of your answer there about changes two years ago that increased the cost to individuals, why did it drop two years ago?
  (Mr Davison) Obviously that is a composite figure made up of a number of different—

  172. Of course, but on Figure 3 you said two years ago things changed that created increased costs on average for each case but two years ago the value dropped. £1,101,313 divided by 2,136 cases is £515.59.
  (Mr Davison) It was during that year changes were made so there will be some of those changes before and after.

  173. Okay. What to your knowledge has been the single biggest compensation payment to any individual parent?
  (Mr Davison) One of the biggest ones I am aware of is a payment in excess of £10,000.

  174. That would be unusual?
  (Mr Davison) Yes.

  175. Can we have a point of clarification. When you say "in excess of £10,000" do you mean between £10,000 and £11,000?
  (Mr Davison) I cannot remember the exact amount but I believe it was about £11,500.

  176. Can we have the exact figure?
  (Mr Davison) Yes.

  Mr Steinberg: And why, bearing in mind my constituent got 200 quid for six years.

  177. That is 400 per cent more than mine did. None of us wants to be frivolous with public funds, we just want fairness for the people we represent. How is this £4.35 million divided up in terms of compensation in terms of the breakdown and errors that have been made? What has been the biggest cause in terms of error? What single error has contributed most to paying out £4.3 million of taxpayers' money?
  (Mr Davison) Overpayments.

  178. That is what happened but what has been the most common contributing cause to those overpayments. I know it is overpayment. 50 per cent of that 4.3 million has already been identified as overpayments but what is the biggest system failure?
  (Mr Davison) It is failure of the Agency to act at the correct time.

  179. I understand. What has been done? There is a trend there and the trend notwithstanding your comment about changes two years ago is probably upward in terms of cost per individual case. What has been done to cap that increase in individual cases based on the fact that it is the CSA failing to act?
  (Mr Davison) One of the things is we set targets to clear the bigger proportion of all reviews that there had been previously. We did achieve those targets.