Examination of Witness

Childcare Payments Bill – in a Public Bill Committee at 9:31 am on 14 October 2014.

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Jane Platt gave evidence.

Q 28

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

I remind colleagues that we have until 11 o’clock for this session. I ask the witness to introduce herself to the Committee.

Jane Platt: My name is Jane Platt. I am the chief executive of National Savings and Investments and the director of savings.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Hi. Do you mind if I call you Jane?

Jane Platt: Please do.

Q 29

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Could you set out your estimate of the number of child care accounts you expect to open under this scheme, once the Bill is rolled out?

Jane Platt: The estimations of the number of accounts have been made by HMRC in their work, and we have used their particular estimations. I do not have the figure to hand, although I would be happy to provide it in a written reply. I can say, however, that—given that NS&I pays out 1 million premium bond prizes every month—the figures involved are well, well within our operational capability.

Q 30

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Okay. The figure I understand we are working with is up to 1.9 million families. Obviously, the number of individual accounts is significantly more, given that the scheme will be dealt with on a child-by-child basis. You mentioned that the figures involved are well within your current capabilities, but there is likely to be a significant increase in a very short space of time as parents look to register for the scheme. Could you just outline what resources are in place to meet that demand?

Jane Platt: We are in the planning stages at the moment, because of the time before the scheme will be launched. What I can say is that, for example, this year in the Budget the Chancellor announced that the maximum amount that you can invest in premium bonds would be raised from £30,000 to £40,000, so in a period of three months we put in the resources to be able to cope with millions of people registering that, starting from midnight on a Sunday. We were able, in a period of three months, to put in place the IT requirements and the telephone requirements so that all that passed off completely seamlessly. This is the kind of thing that we do all the time.

Q 31

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

My understanding is that the new system will require the development of an entirely new IT system to manage the accounts. Could you confirm that that is the case? If so, what steps are being taken to develop that system so that it will be ready in time?

Jane Platt: That is not correct. NS&I’s business is all about taking money in at one end, processing it, administering it, making sure that we keep all the records and then paying it out. We do that for NS&I’s retail customers, for the Court Funds Office, for the Home Office and for Equitable Life. All the plumbing work in terms of administering, taking funds in and then paying them out is all there. What you need to do is to plug into the particular source of funds on one side and the new list of payees at the other end, but the infrastructure is all there.

Q 32

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Thank you. That is very helpful, because there has not been very much information available to date as to the processes and systems, or what the requirements will be of NS&I. In terms of manipulating the current systems to meet the demand for these new child care payments, you say that you are at the development stage. Could you elaborate on that in terms of the process that will be required between now and roll-out in 2015?

Jane Platt: The key pieces of work will be the interfaces with the other sister parts of Government who are involved in the process, so the links with HMRC and the links with the register and the people who are providing the validation of the child care providers who are eligible for payments to be made for them. Those are the key things in the user interface, and those sorts of things.

Q 33

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Under current proposals, parents will have to reconfirm their eligibility every three months, presumably through that interface that you will be developing. Could you elaborate on how that process will work for parents? How long do you estimate that it will take a parent to enrol initially and to re-enrol or reconfirm every three months? Will it simply be a tick box, or will there be many forms to fill in?

Jane Platt: We are working to make it as streamlined as possible. I cannot give you a definitive answer, but part of our role is to work with HMRC to make that as simple and as streamlined as possible with one interface, and to make it as easy and swift as possible. We recognise that working parents do not have a lot of time, and we need to make it as elegant and seamless as possible, with no passing off to HMRC or any other area—just seamless tax-free child care and straight-through processing.

Q 34

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

You say that, but obviously it is very much dependent on that interface with HMRC. Could you just elaborate on exactly how that interface will work? Will it log into the real time information system, for example? How will you monitor that eligibility? Parents are expected to reconfirm every three months, but obviously there need to be checks and balances at each stage of the process as well.

Jane Platt: The process will be that the details will be put in by the parent, and then the system will automatically contact the HMRC system, which will give a very swift answer back. That arrangement is currently being developed. Again, at this stage it is impossible for me to say “It will take exactly this number of minutes” or whatever it will be. We need to work through the detail of that.

Q 35

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Just to clarify, if it is linking in with the HMRC system, and presumably if it is linking in with the RTI system, which is a real-time information check on the information that parents are providing, why is there a requirement for parents to reconfirm every three months? That is one of the big concerns; that this is going to be administratively burdensome for parents accessing child care, who we know are already pretty hard-pressed for time.

Jane Platt: The answers that I have been giving are all from an operational mandate point of view. I am afraid you would need to talk to HMRC about the policy, because it is effectively leading on the policy and we are implementing what we are being asked to do.

Q 36

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Are you suggesting that it may not be necessary within the system that you are devising if there is a constant check anyway?

Jane Platt: I cannot comment on that. You would need to speak to them about policy, I am afraid.

Q 37

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Okay. I have one or two more questions. You mentioned the number of systems that NS&I is currently in the process of managing, so could you give an overview of what your current relationship is with Atos and how the relationship with Atos will work in terms of the delivery of the child care payments?

Jane Platt: Certainly. A few years ago we had a major retender of our back-office operations contract, because for the past 15 years NS&I was outsourced—all of our back office and front office—to a company that was formerly known as Siemens, but was then bought by Atos. We went through a very rigorous retender process, at which exactly the sort of work envisaged with tax-free child care was specified in the tender. We went through an open-market process. I think we had 80 expressions of interest at the beginning, and it was whittled down to three potential contenders for the work: Capita, Hewlett-Packard and Atos. Atos scored the most highly and was awarded the contract.

Q 38

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

You will be aware of the concerns that have been expressed around some of the more high-profile projects that Atos has been involved in delivering, such as the work capability assessments and personal independence payments. What steps are being taken to ensure that we do not see similar concerns coming to light in relation to the delivery of this project and the child care payments?

Jane Platt: I cannot comment on other contracts, but what I can say about NS&I’s contract is, first, that the contract has a large number of key performance indicators and the work that would be done for tax-free child care would have the same rigour that we have right across the business. If those key performance indicators are not met, there is a financial penalty.

The second thing is that they have delivered consistently for NS&I’s business. If you look back through our annual report and accounts you will see that the strategic delivery measures that we publish have all been met, and that in addition to that we are one of the most trusted brands in the financial services market. That is not just because we have a 100% Treasury guarantee; it is because we have very high levels of customer services.  I can evidence that by the very small number of complaints against us that are upheld by the Financial Ombudsman system.

I cannot comment on Atos’s work for other people, but we have a really strong, tight contract, which the Treasury and the Cabinet Office crawled all over. They agreed that the financials are really tight, and that tax-free child care will get the benefit of that and of the rigorous management we have in place.

Q 39

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

So you are confident that in contracting with Atos, NS&I will be able to deliver the child care payments plan on time as expected in 2015?

Jane Platt: Atos will be able to deliver what is specified to us by HMRC.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

Perhaps the question on HMRC could be answered by a Minister at a later date.

Q 40

Photo of Maria Miller Maria Miller Conservative, Basingstoke

Jane, thank you so much for the information you have given us, and it is reassuring to hear about the experience that you have in delivering these sorts of projects. Is this project a little different though? Some 80% of the organisations providing child care, which will be at the other end of the flow of money that you talked about, are small businesses—providers that are running on incredibly tight margins. Therefore, cash flow is going to be an incredibly important issue for them. To what extent can you be confident that you can deliver that money into their hands, speedily?

Jane Platt: This is one area that I have a great deal of confidence in, because the current arrangement is that there is a multiplicity of different vouchers, whereas now there will be just one method of transmitting that money. Once a company is registered on one of the registers of eligible child care providers—the Ofsted register or that of one of the other bodies that hold the registers—there will be a seamless way of transferring that money very quickly. In our last report and accounts you can see that NS&I generally pays bills within seven days. We have a very good track record of speedy payments, so I hope this will make a real difference.

Q 41

Photo of Maria Miller Maria Miller Conservative, Basingstoke

As we have heard from previous individuals giving evidence, the schemes will be running concurrently, so there will be voucher schemes running concurrently with the new tax-free scheme. Do you see that posing any problems to your organisation?

Jane Platt: We will just ensure that the new system runs as efficiently as possible. We want to work with the child care providers to ensure that we do whatever we can to make the transition seamless.

Q 42

Photo of Maria Miller Maria Miller Conservative, Basingstoke

On that point, we were talking to the NDNA, which, in its evidence, suggested perhaps considering a code of conduct—a set of rules or an agreement on the way that you might be interacting with the sector, much in the same way as the child care voucher providers set up a code of conduct for their relationship with the sector. Is that something that you would welcome?

Jane Platt: I would be very happy to talk about that. It is not something that has been suggested to me but, again, HMRC is running the scheme, so it is something that we need to work on in partnership.

Q 43

Photo of Maria Miller Maria Miller Conservative, Basingstoke

So it is something that the Minister should perhaps consider.

At the risk of incurring your wrath, Mr Sheridan, I have a final point. Based on the evidence that we have been given previously, enabling parents to make good choices is going to be quite important, whether they are going for tax-free child care or other subsidies that the Government make available to parents in support of child care. Is the supply of information to parents to help them make that choice something that your organisation could get involved in? I know that it would be up to HMRC but, practically, is that something in which you may have a role to play, or is that more difficult for reasons you might want to explain?

Jane Platt: It is a matter for HMRC. The only thing I would say is that NS&I, in its retail business, has a straightforward, simple range of products and prides itself in its brochures and collateral in pointing out when a particular product is right or wrong for a person. We have experience of informing people in a balanced way, but that is a matter for the Minister and HMRC.

Q 44

Photo of Maria Miller Maria Miller Conservative, Basingstoke

But it may be something, from what you have said, that we could press the Minister and HMRC on. It sounds like you would have a lot to bring to the table.

Jane Platt: We would be happy to discuss it, but it is a matter for them.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

Just a reminder that we are due to finish at 11 o’clock. Three Members are indicating that they wish to speak, so brevity would be appreciated.

Q 45

Photo of Lucy Powell Lucy Powell Shadow Minister (Education)

Thank you for coming, Jane. Before it was announced that NS&I would be the single contractor, we had some concerns about there being lots of different providers so it is welcome that there is only going to be one and that it will be NS&I; as you say, you come with a great deal of credibility in the area. Given that, and as we have less than a year to go before this becomes live, are you worried about your credibility and reputation? There are so many other players in the mix who you are going to be reliant upon to offer that speedy service—HMRC at the input point, Atos at the middle point, and Ofsted and others at the output point. We have less than a year to go. How confident are you that that whole pipeline is going to work?

Jane Platt: The management of any large project is all about relationships and making sure that the interfaces work. This is something that we do all the time, and we have done it for the Court Funds Office, on which not only are we liaising with the Ministry of Justice, with which we are working in partnership, but we are working with the courts and various other institutions to ensure that it works as seamlessly as possible. That is an area to which we are very sensitised, and we are working with HMRC, and increasingly with other agencies, to make it work.

Q 46

Photo of Lucy Powell Lucy Powell Shadow Minister (Education)

In reply to a previous question, you said, “This is an area I am very confident about.” That suggests to me that there may be some areas about which you are less confident. I wonder whether part of that is the signing-off bit, if you like, on the HMRC end of things—families proving that they are a qualifying family. How detailed are those discussions at this stage? How confident are you that that is going to be as speedy as your customers will expect? They will expect it to be almost instantaneous—they fill in a form and within, say, a 24-hour period their account is set up. How confident are you about that at the moment?

Jane Platt: I am very confident that it will be resolved. The issue is that there is a legal challenge on this work at the moment, and we have to work within the constraints of that legal challenge until it is resolved. We are very confident that it will be resolved, and we have an extremely strong case. My only reservation is not about the technicalities but about getting through the legal challenge.

Q 47

Photo of David Heath David Heath Liberal Democrat, Somerton and Frome

A point was raised earlier about how the payments are critical to both the parent and the supplier. The supplier is often working hand to mouth, with disastrous results when payments are discontinued, although less so at the beginning. The original assessment is not the problem; the problem is when payments suddenly stop in the middle. Is it possible to design your system so that it is failsafe in supporting the parent and the provider, rather than failsafe in supporting the Treasury? There seems to be a capacity for HMRC to screw up your system by not providing the information that you need, which in turn will have a disastrous effect on the individual.

Jane Platt: That is a matter for HMRC and the Minister to comment on, but I understand the issue.

Q 48

Photo of David Heath David Heath Liberal Democrat, Somerton and Frome

I understand that, which is why I phrased my question in that way. Is it possible for you to produce a system that is failsafe in the direction of the consumer?

Jane Platt: Anything is possible, but whether it is required or desired is another matter.

Q 49

Photo of David Heath David Heath Liberal Democrat, Somerton and Frome

I don’t remember ever being told by my Department that anything is possible. The other key issue, following on from Ms Miller’s question, is that you said you have experience of providing explanatory material. Have you been asked to do so?

Jane Platt: Not at this point, as far as I am aware.

Q 50

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

Jane, you may recall that, some years ago, the previous Government set up things called individual learning accounts, which did not work very well and, frankly, went horribly wrong. Are there any lessons from that experience, which had certain parallels with this kind of mechanism? Have you drawn on any lessons learned from other things that went wrong in IT-land for Governments in previous times to ensure that this system will be delivered effectively and work well?

Jane Platt: The team has looked at those areas. Again, we have tried to draw some lessons learned from that process into the way in which we are developing the systems.

Q 51

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

Was it the decision of your organisation to appoint Atos?

Jane Platt: We went through a tender process, which was extremely rigorous, and they met the criteria better than any other people. The decision was taken as the result of an 18-month due diligence process; they came out the best.

Q 52

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

It was a fair, free and open tendering process?

Jane Platt: It was, and neither of the other two contenders at the end, Capita and Hewlett-Packard, raised any objections to the process.

Q 53

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

I want to follow up on the point made by my colleague David Heath. Whose responsibility will it be to inform folk that their payment has been stopped?

Jane Platt: I will need to double-check that. The statement that the parents will be able to view online instantaneously will show that it has stopped, but I need to double-check. It will be the system that does that, but we are not at the stage of me being able to say exactly.

Q 54

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

I would ask for that clarity because, with respect, not everybody will have online access. I suspect that every MP here today will be aware of constituents who suddenly find when they try to buy something that benefits have stopped and nobody has told them. Following on from the point that Mr Heath made, I can see issues arising with payments being stopped and nobody knowing until some while later.

Jane Platt: That is a very helpful comment. Thank you.

Q 55

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

In your evidence, for which we thank you, you sound pretty confident about taking this forward, but constrained a bit with reference to the legal challenge. Will you give us the factual information about what the legal challenge is?

Jane Platt: The legal challenge comes from Edenred and the Childcare Voucher Providers Association, and it surrounds the allocation of this work to NS&I.

Q 56

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

Thank you for that. We heard evidence from the NDNA earlier that there will be a need to develop sound standards around how this system operates. They seem to believe that you ought to have a role in developing those standards; is that something that you are taking on board?

Jane Platt: HMRC are leading on the policy on this, and we will support them in any way we are asked to.

Q 57

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

Do you see standards as an issue in taking this work forward?

Jane Platt: We work on the basis of key performance indicators, so if standards means the length of time it takes to do something, how often and that kind of thing, then that is what we do.

Q 58

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

This is a follow-up to your previous answer about the legal challenge. What stage in the process is it at, and is it having an impact, as you alluded to, on your ability to plan properly at this stage for 2015?

Jane Platt: We are very confident about the result of the legal challenge, but until that result is known and we have worked through the legal process it is impossible to know exactly what effect it will have. However, I know that the Government are absolutely committed to delivering this as fast as possible.

Q 59

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Do you have a time frame, or a date when you anticipate the legal challenge will be resolved?

Jane Platt: The resolution of it, unfortunately, is down to the timing by which courts can give a view on things, so it is not possible to give a date at this point.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

There are no further questions, so I thank our witness for giving us that evidence; I am sure that it will help us in our further deliberations.

Ordered, That further consideration be now adjourned. —(Gavin Barwell.)

Adjourned till this day at Two o’clock.