Lords Hansard text for 31 Jan 200831 Jan 2008 (pt 0002)

2.30 pm

Will my noble friend mull over this matter, as I am sure he will want to, and see whether he can help us a bit? We all want the same outcomes; we want him to pay voluntarily and with grace. As a result, the kids will feel that their dad loves them because he is contributing and supporting them as they would wish, in a voluntary way. That is terrific, but I am simply not confident that that will apply for one-third or more of our client base

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who may go into the voluntary system. For many it will, but for far too many I fear that it will not. Will my noble friend use his experience and ingenuity to look at other ways of at least getting the entry point into maintenance firmed up, to give her greater strength?

Lord McKenzie of Luton: We should recognise that voluntary arrangements are not new to the UK system. What is new is that those people who are on benefits have the choice, as everyone else has had, to have a voluntary arrangement or use the statutory system. I am a little nervous about the underlying assumption here that poorer people who rely on benefits are innately more feckless in their arrangements. We need to be a little cautious in that regard.

Baroness Hollis of Heigham: The distinction applies because in a voluntary system, where the mothers are not on benefit, as opposed to where they or even both parents are on benefit, the couples are far more likely to come out of a divorce situation. When you come out of a divorce situation, questions of child maintenance are regulated by the courts and in the shadow of the CSA; there is often a long period of bonding with the children and he is anxious as a committed father to continue that relationship of parenting. The problem is, surely, that when she is on benefit and he is too, and being recycled between JSA and work, at best there may have been a fairly tenuous cohabitation and quite possibly they have never even lived under the same roof together. So there is a real distinction between the types of couple. We know that there is a 25 per cent overlap or churning between the two categories every year, but none the less there is a real distinction, in broad terms, between the commitments to their children of those fathers who have come out of a divorce.

Lord McKenzie of Luton: I was asked under what mechanism we will know whether the voluntary arrangements are secure and effective for those entering into them. We do that at a macro level, through the various surveys that take place routinely, but we also have the information and support service. Right at the start of these arrangements, we envisage that that service will explain to parents what the statutory system might produce and the sort of factors that they might take into account in a negotiation. A pro forma standard maintenance would be offered as part of that discussion and there would be reference to the need to comply with the arrangements.

Moreover, the information and support service is being designed so that when people enter the benefit system there is a clear link to align them so that the service can make contact with them. There is another route into that service for people who claim tax credits. Again, there will be an arrangement with HMRC of referrals into that information and support service, providing another link for those parents. If people are in and out of benefits and tax credits, and their lives are as my noble friend suggests, already loops are being built into that information and support service to enable them to be reached on an ongoing basis. So I think that there are protections.

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I would not for a moment suggest that there are not risks for the most vulnerable people in all of this, and we need to work very hard to make sure that the most vulnerable are protected and properly advised. I envisage that a significant number of them would and should use the statutory service, which is why we also need to make sure that it is effective and is delivering. There are a number of routes on an ongoing basis to keep contact with that group. It is an important issue, and the information support service, as it is being built, will particularly have to focus on that.

Lord Skelmersdale: I confess that when I first looked at the Bill and saw Clause 2 and realised the connotations of the voluntary maintenance arrangements system—which is not proposed in the Bill because you cannot propose a voluntary system in an Act of Parliament—which is in the Minister’s mind, my first reaction was that there is no way of policing this, so you do not know what is going on. The Minister says, “There is this wonderful new system up in Sheffield of advice and support, and we will know exactly what is going on because they will be giving advice”. Who will they be giving advice to? The person who is going to go to Ventura is almost certainly the parent with care on their own. The noble Baroness, Lady Hollis, would know better than me, having been responsible in this area. I imagine that where advice is being sought, it is very much applied for on one side or the other. Surely to goodness it is most likely to be the parent with care of the child or children who will want to seek advice.

There is a sort of self-policing mechanism in the Bill, because as the Minister has rightly said, if the parent with care fails to strike an agreement with the absent parent, or does so but the money is not forthcoming, they can always turn to the statutory system. We know that, on average, absent parents lose contact with their children after about three years. By the time the parent with care has gone to seek advice for moving to the statutory system, she will have been out of pocket on behalf of her children for a considerable length of time.

A registration of voluntary agreements looks to me to be a good idea, but it would only tell us in the broadest terms—like any of the statutory bodies that produce research and figures—whether the voluntary service is contributing to poverty among children, the reduction of which is, rightly, a stated aim of the Government. When the Minister talked about information flowing because of tax credits, I was very surprised because, yes, tax credits are applied for because of a level of income, but maintenance arrangements have a 100 per cent disregard in tax credits, whereas these arrangements go only to a maximum of £40 disregard. Unlike the noble Lord, I am no mathematician so I do not know the answer. However, there must be a difference in those two arrangements for the money which ultimately flows to the children.

Baroness Hollis of Heigham: A thought has just struck me as a result of the noble Lord’s thoughtful remarks about the non-resident parent. If the non-resident parent is on benefit, he is known to the CSA. Even if

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he moves away, it has a fair chance of tracking him through the previous employer, the this, the that and the other. Obviously, in theory, there is access to HMT records. However, let us suppose that there has been a two or three-year voluntary agreement during which time CMEC has had no contact with the non-resident parent, and that then he moves away and the mother comes to CMEC saying, “I now want to come into the statutory system”. How easy will it be for CMEC to get hold of him?

Lord Skelmersdale: That is an extremely useful adjunct to what I was saying. As usual, the noble Baroness, being rather more fluent than I normally am, has put flesh on the bones of my argument.

I do not think that we will get further with this proposal today. All sorts of inhibitions are built into the system preventing the voluntary arrangements working. I am all for them in theory, but I am doubtful about the practice.

Lord McKenzie of Luton: Perhaps the noble Lord will forgive me for interrupting, but I am trying to follow the line of his argument, specifically in relation to his example of someone having a voluntary arrangement that was not broken for three years, leaving a big gap. If that situation arose, there would be no reason why the parent with care must wait for three years. If a voluntary arrangement is not working, there can be immediate recourse to the statutory system.

The issue with regard to tax credits is not that they feature in the calculations, but that when it is clear that an applicant for tax credit is a parent with care, there is a route down which they can be referred to the information and support service on a direct or indirect basis. It is a means of capturing those individuals so that information and support can be provided.

Is the noble Lord suggesting that we should not allow everyone the choice of a voluntary arrangement, but that we should continue to have a category of people who will be forced to use the statutory system? Ultimately, that is the nub of the issue. If we are going to say that there is a category of people who must use the system, what are the criteria for that? Whatever the challenges of allowing people the choice—and I accept that there are some—if we do not do so, we in part stick with the current system. How would the noble Lord respond to that?

Lord Skelmersdale: I suggest that the noble Lord is putting words into my mouth. I have never suggested that I disagree with a voluntary system—provided that it works—sitting side by side with a statutory system. What I am suspicious of is those cases where violence might be involved, and those cases in which for some reason a much lower amount is struck in the voluntary system, even though, presumably, the advice and support service would say what the statutory-system amount was. But there might be all kinds of reasons, as the Minister predicated, why in a voluntary system the two parents might come to a much lower figure.

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Later, we will discuss what the courts might do, which is another complication in all this. I do not think that we shall get much further today, but if we all sit down and read what we have discussed, we might well come to a sensible agreement. It need not be a compromise, but a sensible agreement. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

2.45 pm

[Amendments Nos. 27 and 28 not moved.]

Lord Kirkwood of Kirkhope moved Amendment No. 29:

Clause 2, page 1, line 17, at end insert—

“( ) to promote an open competition to replace the Child Support Agency Information Technology System when the current contract ends”

The noble Lord said: We now turn to technology and Amendments Nos. 29 and 204. Amendment No. 29 requires an open competition to replace the Child Support Agency information system when the current contract ends. I wonder whether I could be allowed to start with a cheap shot at the Minister because his computer statistics do not add up. The noble Lord, Lord Skelmersdale, and I did not meet over breakfast, but no doubt, like me, he has looked at the quarterly statistics from the computer. Table 19.5 is wrong. How do I know that? Because the summary of the statistics shows that in December 2007 maintenance collected or arranged for the year ending 31 March was higher than the next year’s target by quite a margin—£5 million. That cannot be right because it is hard for a target to be reached, never mind for the next year’s target to be reached. Table 19.5 should read £741.7 million not £975 million, but maybe someone will check that. What I think has happened is that the period over which that maintenance has been collected has been misallocated not as April to December but as December 06 to December 07. Maybe someone will put me out of my misery about that. One would think that after spending that amount of money on a computer it would be able to add columns up right. No doubt someone will tell me whether that is right.

These two amendments are important. We have to look at the history and at the information technology relationship with EDS. On Tuesday, I referred to the National Audit Office report, which is an important precursor for understanding what has gone on in the past. I had it mind to go in some detail into how we came to be here, but I shall not as that would tax colleagues’ patience. Suffice it to say that in August 2000, the information technology services agency, which retained all the corporate knowledge within the department, was outsourced to EDS. EDS then got the contract, and the contract has never worked. It was fundamentally reworked in 2005, and it still has not been fully developed. It has two years to run and, as far as I am concerned, the development work is still ongoing. I think there are a number of important questions around it. A lot of them were raised in the National Audit Office report. Apart from anything else, we spent £91 million on external advice—

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consultants—and we have a negative net present cost outcome. The net present cost forecast for this new reformed computer when it was put in place in 2003 was a net asset of £71 million.

The Child Support Agency computer system may not be running after 1 April because the contract is due to run out in April 2008. If that is the case, I do not know who is going to be running the old cases after that date, unless there has been a roll-on of the contract. There are still 600 manual worker rounds. The computer is not producing management information that is fit for purpose. It is a contract with the department and I do not know how that will be transferred cleanly to the commission—I assume that the commission will be responsible for all the contracts that deal with technology in future—and how it will manage to disentangle the relationship that is already done through the Accord/EDS system of contracts without making it difficult for what is left of the department. I do not understand. I would like to be told a little more about that.

Obviously, there is a key decision to be made—and it is looming—by the commission when it is put into place. We have the prospect of the operational improvement plan being completed by March 2009. Only then will the National Audit Office be able to look at how effective the operational improvement plan has been in terms of its objectives. There will probably be a Public Accounts Committee report in 2010; there will probably be an election in 2010; and it will probably be around 2010 or 2011 before we really see how effective the operational improvement plan has been, by which time the new commission will have to decide what it will do next.

The new commission has two years to make a decision about what it does next in terms of sustaining the EDS contract. The EDS contract is a contract for services; it is worth £1 million per week. We do not have a big shiny Apache server with terabytes of memory in the Minister’s office; we have a service agreement. We can use the services of the contract. If the contract stopped for some reason on Monday, there would be nothing left that would be tangible by way of systems, software or anything else. It is a service-only contract. It is a very big ask to leave. The Minister regularly suggests to the committee that we should leave all this to the commission. I do not believe that we can.

The noble Baroness, Lady Hollis, used her best endeavours on the CS2 reform—and she tried hard. There are genuinely difficult questions about commercial confidentiality, which Ministers are protected from. I understand why that is important. Ministers for their own safety often cannot be told what is going on in case they go around to the pub and speak to somebody who is a competitor. Then you have a class action against you in the courts, and all that stuff. It is not easy. Ministers find it difficult to stay on top of what is happening in current circumstances. We went through the CS2 reform. The whole policy platform that was put together in 2003 suffered and has never really recovered from the fact that the computer is not fit for purpose.

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The two suggestions I make here are based on lessons—and I promise I can speak without hesitation and deviation and not even with repetition about all this for a much longer time—that we really need to learn in terms of what went wrong in 2003, and to make sure that we do not make the same mistakes again. The Commons Select Committee, which I had the privilege to chair, produced a report on this in 2003. One of its recommendations was that there should be a full-blown review of CS2 at the earliest possible time, as soon as it had settled down and become stable. We are not there yet, so we cannot do that. As I say, it will probably be 2009 or 2010 before we get the results of that. It would only then be safe for Parliament to make a decision about which route to take. We do not have that time. The commission that we are creating in the Bill does not have that time.

Therefore, we are faced with what Parliament is asking the commission to do. These two amendments in very simple terms say that it is not safe in 2010 merely to continue the contract without going back to the marketplace with an open tender for contracts, and all the rest of that. It is complicated. It may take time and cost money as you may have to encourage alternative contractors to take part in the competition because it may not be what they want because it is so troubled.

I do not see how else we can get any satisfaction in Parliament. We were kept in the dark last time around. The only way I can think of getting any kind of influence over what is happening with the decision the commission will have to take—and take very soon—is that it should engage in an open process of tendering before it makes that decision.

Amendment No. 204 simply seeks to get what comfort we can. The full OGC gateway reviews are now part of the established way of doing these things, partly as a result of the disastrous consequences of the EDS experience earlier with the IT for the CSA. There is now quite a lot of corporate knowledge within the Office of Government Commerce. It has got, if not full-blown gateways, health checks and access to Gartner which can do reviews and give assurance on some of the things and try to get a handle on what the risks really are before we actually get the commission to take the big decision that it will have to take about what platform it uses for technology in the future.

My personal suspicion is that it has no choice. I would be very surprised if it was not just tied, hook, line and sinker, into this contract. The people who entered into this contract in the department deserve to go to jail. It is a proprietary contract, which ties people to the suppliers with no room for manoeuvre. We may have to go with another version of an EDS contract. I hope that once it has finished being developed, it will be fully compliant and all the other bugs and defects will have been wrung out of it.

However, I say seriously to the Committee that, if Parliament does not have a method of getting assurance that we will not make the same mistake as in 2003, there must be something in the Bill. Otherwise, it will be left to whatever operational decisions force it to take decisions that have to be made very quickly.

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Parliament should be part of that process and these two amendments are designed to achieve that end. I beg to move.

Lord Skelmersdale: One thing is certain: no computer owned by CMEC or the CSA can take any account whatever of voluntary arrangements because no one knows what they are or what they will be. We spoke briefly of the trials and tribulations of the CSA computer problems, and the noble Lord, Lord Kirkwood, and I referred to them at Second Reading. For the noble Lord to accuse me then of the pot calling the kettle black—or, as the noble Baroness, Lady Finlay, might say, were she here, “du”—as he did on that occasion, was somewhat over the top. Neither I nor my party have had the 10-odd years to do anything about those undoubted problems that the Government have had.

On Tuesday, yet again we heard from the Minister that the EDS computer system is now expected by the end of the financial year—I think that he said the end of March, which would be about right. He keeps making these assurances. A few months ago, in a discussion on an order, the Minister assured me that proper contractual and tendering arrangements are now in place across government, which includes the CSA, the DWP, HM Revenue and Customs and so on. We have yet to have proof that that is correct. We will await the new computer at the CSA by the end of March with great interest. But I agree with the noble Lord, Lord Kirkwood, that the prognosis is far from good.

However, this Bill forces the promotion of an open competition to replace it, should it then need replacing because it is yet again defective, overdue, perhaps again over budget and either under or over specification, but until it is up and running none of us can make any judgment about it whatever.

Promoting an open competition is what should have happened throughout the past 10 years; it certainly happened under a Conservative Government. Sometimes, I freely admit, the open competition did not produce the results that one expected and desired. I cannot see that putting such a condition in the Bill will make the situation any better now. What is necessary is for the people with knowledge to take a grip on the situation.

3 pm

Amendment No. 204 is perhaps slightly different. I understand it to be a probing amendment asking the Minister to give us adequate assurance that inaccurate information will not be transferred or—as we have seen recently—be lost in an attempt at transfer when the various bits of information that will go between CMEC and HMRC, for example, travel backwards and forwards. It is essential that we are given confirmation of that.

Lord McKenzie of Luton: I thank the noble Lord for tabling the amendments, both of which suggest ways to ensure the standard of IT systems used by the commission. Before I get into my speaking note in some detail, perhaps I can specifically respond to the noble Lord, Lord Kirkwood, in relation to the QSS. I

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do not have the full pack in front of me, but we are looking at two different totals. There is a 12-month rolling total up to December 2007; I think that the figure of £975 million collected is right. Then there is a year-to-date figure, which is for nine months, which is £742 million collected. So we have not yet hit the target, but if we maintain performance for January to March 2008 as we did for January to March 2007, we are on track to meet that target.

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