Social Security (National Insurance Credits) Amendment Regulations 2007

My Lords, the House should be grateful to the noble Lord, Lord Skelmersdale, for moving this Motion. It involves a series of very important points. The noble Lord made a very effective speech and I concur with much, if not all, of what he said. I shall ask some questions. If the Minister cannot answer them this afternoon, perhaps we could share correspondence which might shed light on some of these matters to the benefit of everyone involved. On 15 November, Mr James Plaskitt announced in the House of Commons that there were 4,000 duplicate payments in the Pensions Service and the Disability and Carers Service as well as ex gratia payments. Is that part of the same problem, or is it something else altogether that is embedded in the Disability and Carers Service? Is it part of the pattern? The noble Lord, Lord Skelmersdale, made the important point that the national insurance recording system is the basis on which contributory benefits are calculated. If they are wrong, everything downstream of that is, almost by definition, likely to become wrong. So the integrity of the whole contributory system requires that the 70 million records currently held on NIRS2, as it is known by acronym, are an essential part of the integrity of payments of benefits of a contributory kind. There are 152 or more incoming streams of data into NIRS2. That is not an easy project. It enjoyed a very troubled birth. I think that Andersen Consulting went bankrupt as a result of putting the thing into place, EDS tried to take it over, and it is now in the hands of the Aspire Group of contractors. Perhaps the Minister can confirm that that is indeed the case. It is a process that is very difficult to amend because it is live all the time. You cannot switch it off overnight to clean up data. An important question to which the House needs an answer is: what mismatch went wrong? A mismatch of data is a description of a symptom of a mistake in the process. What we want to know is: what was the mistake in the process? Are the data corrupt on both platforms? Are the data identified as being corrupt on one or other of the two systems? They are entirely different bases of software. They were not designed to run together, so they could both have problems unique to themselves, or it could be a problem of the integration of the two. It is important to understand precisely what went wrong so that we can understand whether the process has been rectified. Further, although the scanning was obviously necessary to pick up the problem, will the fix be a software fix or will some of it need to be done manually? Some recipients of overpayment or underpayment will have to be contacted individually, so there is obviously going to be an element of manual handling, but will the debugging of the interface between the two different bits of software be done electronically, or will members of staff in the DWP have to turn their hands to some of the record cleaning by themselves as a desktop exercise? One thing that has a direct bearing on that is the very, very tight departmental expenditure limit for the next three years just announced in the Comprehensive Spending Review. That will put great pressure on the head count, because the head count is separate and distinct and will have to fall, never mind the fact that the money in the DEL is being reduced over the next three years. To what extent has the overpayment been provoked by the fact that the department may not even have the staff to do that in any other way? Of course the overpayments are welcome, because it is no fault of the claimants of those benefits that the mistake has been made. To what extent has the tight envelope that the Department for Work and Pensions been facing been a contributory factor in working out how to fix the problem? What has the National Audit Office and the Comptroller and Auditor-General to say about all that? This is one of the principal reasons that the department’s accounts have been qualified endlessly for the past seven, eight or more years. Until we get the reconciliation of data streams organised in a way with which the Comptroller and Auditor-General is satisfied, the department's accounts will continue to be qualified. To any kind of business outside the public service, that would be an almost fatal blow to its credibility in the marketplace. That is a serious issue and a key element in why the accounts continue to be qualified. What exactly were the communications between the Social Security Advisory Committee and the department? We are told in the Explanatory Memorandum that, at the end of the day, the SSAC was satisfied with the instrument and let it proceed, but because the Inland Revenue—the HMRC—is involved, we cannot see, as we could if it were an entirely DWP issue, exactly what the SSAC had to say. It would publish memoranda, reports and everything that involved it directly if the instrument were referenced by the department to the Social Security Advisory Committee. I am prepared to believe that, at the end of the day, it was content to let the instrument proceed, but were there communications between the committee and the department that we cannot see because of the involvement of HMRC, the Inland Revenue, that would cast some light on any concerns that the committee originally had? This is a very technical business, and I for one would have been a lot more content if any communications between the department and the SSAC, and indeed between the department and the Comptroller and Auditor-General, about these matters, had been published. I would certainly have been an awful lot more confident that the thing was being done in the best way possible. Finally, I am very uneasy. I know that we have to do this and I understand the need to protect the claimants, but the regulations are creating a unique class of 130,000 claimants at law. Apart from anything else, that does not help to deal with the complexity; it simply creates extra layers of things that people have to pay attention to when implementing the rules as they stand. It is a worrying precedent to find that there has been an error in the department. It is good that the department has owned up to it. This has been going on for a long while. One might have thought it possible to fix it earlier, but we are where we are, as the noble Lord, Lord Skelmersdale, says, and we must accept that no one is suffering financially as a result. However, creating a completely separate class of people at law is a worrying precedent. Indeed, is it a precedent? I believe that the regulations are time-limited, but having been through this procedure, can we take it as read that, if there are mismatches between NIRS2 and the pension service computer system in future and it goes wrong again, there is something to which we can resort in the future? This is the first time to my knowledge that the regulations have been changed to protect the claimants in the way in which the Government have sought to protect them. The noble Lord, Lord Skelmersdale, is absolutely right that there is much at stake in the regulations. This is not only about the lack of competence and the complexity but about the difficulty in trying to use the meagre resources available to the department to handle some of these very sophisticated IT systems in a way that guarantees that no one suffers at the end of the day. Although these people have been picked up, others in the system might not and might be suffering as a direct result of the complexity of the IT systems.