Social Security (National Insurance Credits) Amendment Regulations 2007

rose to move, That an humble Address be presented to Her Majesty praying that the regulations laid before the House on 7 September be annulled (SI 2007/2582). The noble Lord said: My Lords, I had little thought when I put down this Prayer that we would be debating a second failure by Her Majesty’s Revenue and Customs within a week. Rather than the loss of a disc of the financial records of 25 million people, this social security statutory instrument reveals a joint failure by HMRC and the Department for Work and Pensions, a department whose care and attention to detail has been slipping woefully under this Government. As recently as 25 October, I complained about this when we discussed the Housing Benefit (Loss of Benefit) (Pilot Scheme) (Supplementary) Regulations 2007, saying that the department’s predecessor department, that of social security, was considerably more efficient. These regulations, which came into effect on 1 October, have been made to correct the overpayment of benefits—jobseeker’s allowance, incapacity benefit, bereavement benefit and the state pension. As the Explanatory Memorandum states: "““The changes ensure that earnings ... which were erroneously awarded ... will still count towards the satisfaction of the contribution conditions””," for those benefits. They also mean that decisions will not be revised, and ensure that certain classes of contributions will be treated as being paid on time, whether they actually were or not. In other words, they provide an amnesty for benefit claimants who have been overpaid due to, we are told, a mismatch of data between two computer programs—the DWP’s pensions strategy computer system and the NIRS2 computer run by Her Majesty’s Revenue and Customs. There are, we are told, 90,000 such cases of overpayment. Lucky recipients; they are clearly doing rather well out of this exercise. Not only that, on the other side of the equation it is estimated that 30,000 claimants have been underpaid. The Explanatory Memorandum states: "““The decision has been made to make good the underpayments””." How gracious can you be? Were such sentiments to appear on a public paper over which I, as a Minister, had control, they would certainly not appear like that. The noble Lord must be heartily relieved that few, if any, benefit recipients will read the Explanatory Memorandum. Unsurprisingly, I would be much ruder if such a decision had not been made, and we certainly would not be debating this matter late on a Thursday. This mismatch of computer systems has been going on since 1998. While we are told that the period in question finished in 2006, the regulations are of a much wider scope, with a start date of the financial year 1993-94, ending in 2007-08. Why this very long period? How, too, can we be assured that this is the end of the matter? I observe from the 31st report of your Lordships’ estimable Merits of Statutory Instruments Committee that: "““The flaw in Her Majesty's Customs and Revenue NIRS 2 computer has been identified and is believed””—" I underline that word— "““to have been operating correctly since November 2005””." ““Believed”” is a very odd word in the circumstances. If it has been working correctly since then, there should be no new cases of overpayments since then or, indeed, of underpayments. Why then does this statutory instrument extend the amnesty for another 16 months until April 2008? That belief cannot be very strong. If it is ill founded, will we not find another order next year to do exactly the same job? Was that computer program, NIRS2, created by the same firm—EDS, I believe—that programmed the one dealing with the Treasury’s tax and pension credits? Are they perhaps even the same computer? I have never heard that there has been an amnesty for overpayments in the tax credits areas since the Government introduced it. We have heard screams of rage from people who have been overpaid and have had to pay the money back. It is hardly surprising when people on low incomes suffer very badly from an irregular income stream. It seems that there is a division of opinion between the DWP and the Treasury about what should happen in these cases. Did the DWP need Treasury approval before laying the regulations, or did it do so off its own bat? My party has decried this creeping control of social security by the Treasury on a number of occasions. Is it not high time that the Government sorted themselves out and the Treasury did what it is good at—collecting money—and the DWP paid out pensions and benefits, which is what it is good at? Then we would not have the nonsense of tax and pensions credits being overpaid and having to be clawed back. Although I do not like it, I have to accept that we are where we are and that this statutory instrument seeks to sort out yet another mess of the Government’s making. Why is it that every time the Government go out to tender on a computer program, it hardly ever delivers what is required and yet more taxpayers’ money needs to be thrown at consultants to sort it out? In the summer of 2005, we learnt that the Office of Government Commerce—ironically to be found in the Treasury—revealed that of 254 computer projects, one-third had skipped the first two stages of evaluation, which include an assessment of whether the new computer system is, "““feasible, affordable and likely to achieve value for money””." Furthermore, while 57 projects were awarded a green-light rating, 127 had amber warnings and 70 had red warnings, meaning respectively that the project could continue only provided certain alternations were made and that immediate remedial action was needed. Eight projects were given double red warnings that prompted letters to the relevant Permanent Secretaries stating that the project had very serious problems. I have a pet theory to put to the Minister. It is that the team in the department—any department—that arranged the original contract is not the one that receives the finished product, because big computer programs take longer to develop than civil servants remain in any particular job. Each new team will have its own ideas about what should go into the program, hence more delay and cost. My theory is backed up by a question I put to the noble and learned Lord, Lord Falconer of Thoroton, when, as Lord Chancellor, he was answering a Starred Question about a project being commissioned at the time for which his department was responsible. I asked him for a guarantee that there would be no changes to a contract under discussion before delivery of the finished product. He failed to give me that assurance. He said: "““We will do our level best to ensure that all the requirements are provided at the earliest possible stage. I cannot guarantee that we will get it absolutely right but, plainly, the noble Lord's point is a good one””.—[Official Report, 15/3/04; col. 7.]" How long did it take for NIRS2 to be developed? When was it delivered? How many civil servants who commissioned it were in post to run through it when it was finally delivered? The only way to mitigate the problem of computer failures is, as a Select Committee of another place so wisely suggested, to nominate a civil servant to oversee a computer project from the original specification to final delivery. Have Ministers in the Department for Work and Pensions had discussions on this with their Permanent Secretary? Indeed, does the Minister know of any department that has held such discussion? I hope that he will be able to answer the first question today; I should be more than happy to have an answer to the second question in writing. Your Lordships’ Merits Committee zeroed in on the waste of taxpayers’ money, which of course also concerns me. Up to £300 million, covering possibly 90,000 awards of benefit, is to be written off. I say ““up to”” as it appears that no one knows how many claims have been overpaid or to what value, and in the circumstances it appears that it is not worth the trouble and expense of finding out. Are discussions going on regarding the possible suing of the computer company, as they are about the program dealing with tax and pensions credits? Whichever, this £300 million is the beginning of the cost to the taxpayer. There is another £65 million or so of underpayments to be made good from the department’s administrative budget. This amount of money sloshing around in the administrative budget does not smack to me of tight fiscal control. Add those two unexpected sums together and you get £365 million, more or less. You would expect that that would solve the major part of the problem—unfortunately, not a bit of it. There is still the little matter of correcting the computer fault. Additional computer costs are believed to be £0.7 million, shared between the DWP and HMRC, with suggested HMRC staff costs of £1.3 million. Knowing that computer specialists command more in an hour than your Lordships’ expenses allowances command in a day, I am not surprised by the first figure, but what on earth are the enormous HMRC costs for? This has been yet another very sorry story, to which I would like the explanations for which I have asked. In essence, I am concerned at the Government’s very loose control over the public purse and their abject failure in anything to do with computers. I beg to move. Moved, That an humble Address be presented to Her Majesty praying that the regulations laid before the House on 7 September be annulled (SI 2007/2582). 31st Report from the Merits Committee, Session 2006-07.—(Lord Skelmersdale.)