Clause 16 - Account providers

Childcare Payments Bill – in a Public Bill Committee at 12:00 pm on 23 October 2014.

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Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury) 12:00, 23 October 2014

I beg to move amendment 12, in clause 16, page 10, line 19, at end insert—

‘(5) The section shall not come into force except as specified in paragraph (a) below.

(a) The Chancellor of the Exchequer shall bring the section into force by order within three months of the passing of this Act.

(b) a statutory instrument containing an order under paragraph (a) shall be accompanied by a report from the Director and laid before the House of Commons by the Chancellor of the Exchequer which details—

(i) a timetable for delivering the new childcare account system;

(ii) progress to date in developing and preparing for the new system;

(iii) what provisions are in place to ensure the system is delivered on time and to budget;

(iv) what provisions are in place to assist persons without access to the internet;

(v) what provisions are in place to ensure financial support can still be provided in the event of system failures or setbacks; and

(vi) a package of measures to ensure the account provider, associated parties and their operations, are effectively monitored.’

Clause 16 sets out the rules for who may offer child care accounts for the providing of top-up payments to qualifying parents. As members of the Committee will be aware, the Government have chosen NS&I to administer child care accounts. Given the lack of information from the Government on NS&I’s role in providing child care accounts, and therefore the top-up payments to parents, we have tabled amendment 12 to extract some answers to the myriad questions we know stakeholders, parents and members of the Committee have.

We had a useful evidence session last week with the chief executive of NS&I, and I put on record our thanks to her. She deferred on a number of questions to Her Majesty’s Revenue and Customs, and I do not think they were fully answered in Thursday’s evidence session, so I will probe the Minister on some of them today.

Amendment 12 seeks information and updates on

“a timetable for delivering the new childcare account system…progress to date in developing and preparing for the new system…what provisions are in place to ensure the system is delivered on time and to budget…what provisions are in place to ensure financial support can still be provided in the event of system failures or setbacks; and…a package of measures to ensure the account provider, associated parties and their operations, are effectively monitored.”

We touched on a number of those issues in last week’s evidence sessions, but many questions remain unanswered. For example, we still do not have a clear timetable for the next 12 months on developing, delivering and rolling out child care accounts. We still do not know what the system will look like for parents or what the user experience will be. Crucially, we do not know what provisions or agreements there might be between HMRC and NS&I—or, pending resolution of the legal action, some other party—to ensure that performance is adequately monitored.

The reasons why we hold those concerns are probably obvious to many. The services that NS&I and its partners have provided to the Government have been the subject of some concern. In particular, NS&I and its delivery partner, Atos, will be delivering child care accounts to up to 2 million families.

I appreciate the history of NS&I, which was known as the Post Office Savings Bank until 1969. In 1996, it became an Executive agency of the Chancellor of the Exchequer. NS&I’s primary role is to raise cost-effective financing for the Government. It currently has about 25 million customers. In 2011, it began a formal retender on the contract for the day-to-day running of national savings. In February 2012, it shortlisted three suppliers: Atos, Capita and Hewlett-Packard. Atos was awarded the contract and will undertake that work, subject to contract, until 2021, as announced in May 2013.

Many Members will be aware from their postbags that Atos has been contracted to run a number of services for the Department for Work and Pensions, particularly the work capability assessments and employment and support allowance. More recently, it has taken on the personal independence payment. Those are a few of the number of contracts outsourced by the DWP, but they are perhaps the most high profile. [Interruption.] Does the hon. Member for Dover wish me to give way? No. Indeed, Atos is considered to be one of four major Government suppliers of outsourced services, along with Serco, Capita and G4S. Collectively, they were the subject of a Public Accounts Committee report in March 2014, the headline conclusion of which was that such companies have continually failed to live up to the standards expected and agreed to in negotiations, while there are clearly significant weaknesses in the Government’s ability to negotiate and manage such contracts, as illustrated in the high-profile cases involving all four companies.

In 2010, Atos began the £500 million, five-year contract for assessing, for the purposes of employment and support allowance claims, how a claimant’s illness or disability affects their ability to work. However, as has been widely reported, since then more than a third of Atos’s decisions have been overturned on appeal, and there is evidence that people with terminal cancer or other serious illnesses have been denied benefits as a result of its assessments.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover 12:15, 23 October 2014

I share many of the hon. Lady’s concerns. Does she recognise that we did not give Atos that contract, but we ended it, and that I pressed National Savings & Investments in the evidence sessions on its decision-making process, because of audits that the House has seen in other areas?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Indeed, I recognise what the hon. Gentleman is saying, and I am pleased that we agree on the caution that must be exercised in ensuring that the same fate does not await the top-up payments child care scheme. Ultimately, the amendment and the issues that we raise are intended to ensure that the Government do not end up in the same situation.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

My hon. Friend is right to highlight this area of concern, because it relates to people having confidence in a system. To be fair to NS&I, it recognised in its evidence that it has a strong brand that will eclipse that of Atos. My hon. Friend is right to tease out the details on this issue.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I am pleased that there is collective appreciation of the concerns. It is not about the Government’s reputation; it is about the importance of a scheme that is being rolled out to millions of parents and about ensuring confidence in it being delivered correctly and efficiently.

As has been pointed out, Atos announced in March that it had decided to end its contract for work capability assessments early—it was due to finish in August 2015—which was a decision that the then Minister with responsibility for disabled people, the hon. Member for Hemel Hempstead (Mike Penning), admitted was based on the fact that he had “lost faith” in the firm. That followed the Department for Work and Pensions identifying in summer 2013 “significant quality failures” in the written reports that Atos produced after tests and an improvement plan being put in place. In February, however, the DWP said that standards had declined unacceptably.

On the other hand, there is also the personal independence payment. In early 2013, Atos was also awarded the contract to carry out tests for PIP, the replacement for disability living allowance, which was rolled out nationally this year following pilot programmes last year. PIP includes a face-to-face assessment and regular reviews to ensure, in the Government’s words, that support goes to those who need it most. It forms part of their plan to cut the costs of DLA by 20% by 2015-16. Atos conducts PIP assessments in Scotland, the north of England, London and the south of England, and Capita conducts PIP tests in central England, Wales and Northern Ireland.

However, the latest figures for the programme suggest that only 40% of cases registered for PIP have been cleared in 16 months. PIP was the subject of a separate Public Accounts Committee report in June 2014, when its implementation was described as “rushed”, “shocking” and a “fiasco”. The report stated:

“The Department of Work and Pensions has let down some of the most vulnerable people in our society, many of whom have had to wait more than 6 months for their claims to be decided.”

It also suggested that Atos had misled the DWP during the tendering process on the number of facilities it had lined up to conduct assessments. That followed a National Audit Office report earlier this year, which found that PIP will cost almost three and a half times more to administer, therefore not achieving the savings expected, and take double the amount of time to process. That was largely due to an inadequate testing phase in the north of England that failed to assess the feasibility of carrying out large volumes of tests within the expected time frames and budgets. The report found that claimants were waiting an average of 107 days, and terminally ill patients an average of 28 days, for a decision on their cases, rather than the predicted processing times of 74 days and 10 days respectively.

That is the context for the clause. By way of NS&I’s contract, which is still in doubt, the clause effectively allows for Atos to become part of another major Government support scheme. Bearing in mind the relevant problems with other big public contracts, the amendment would put in place the proper processes to ensure that such a fiasco does not happen with top-up payments.

I would like to hear some reassurance from the Minister—as I am sure, would other Committee members and those following our proceedings—because the fact  is that previous problems have often centred on the ability of contractors to deliver on the commitments or promises that have they made during the tendering process, as the Public Accounts Committee found. Does the Minister recognise Atos’s track record and the fact that there are a number of concerns and reservations about its ability to provide millions of child care accounts for more than a million families? Indeed, if more parents incur qualifying child care costs, that number could jump to just under 2 million families, resulting in the need to provide a great deal more child care accounts.

What oversight provisions will the Minister’s Department put in place to ensure that NS&I and its associated parties deliver the scheme on time and to budget? What oversight measures will be in place to monitor the ongoing performance of child care accounts and top-up payments, which will be in the hands of NS&I and, by extension, Atos? What provisions does the Minister intend to put in place to ensure that we do not see a backlog of requests from parents for top-up payments, similar to those we have seen for the likes of PIP?

As I mentioned earlier, we have still not seen a timetable for the development and delivery of child care accounts. From the evidence given by Jane Platt last week, I understand that a timetable is difficult to provide, given the ongoing legal case. Notwithstanding that, Committee members and eligible parents will want to be reassured that a plan is in place and that we will see a smooth development and roll-out. It would be hugely reassuring if the Minister gave some idea of what the process will look like, so can she provide any details on the timetable for the next 12 months? If she can, the Opposition will be very grateful and there will be no need to press the amendment to a vote.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

I thank the hon. Lady for raising those concerns. It is all on the record: the Minister’s response will be on the record, and her officials and those who carry out the contract will know that it is all on the record. Everyone will know that those concerns have been raised. I echo much of what the hon. Lady said, particularly about Atos, which would perhaps be described more accurately for the record as “Don’t care Atos”.

Atos has to deliver where previously, on another contract, it failed. Every Member of Parliament is aware of its past failings, so we are looking to the Minister not only to give assurances but to ensure that everyone involved delivers. I want to repeat the point I made in an earlier sitting: should anyone have a child payment stopped, they must be notified immediately, unlike other benefit schemes where they do not find out until the money is not in their account. They must be notified at the very moment the payment is stopped so that they can make alternative arrangements or lodge an appeal or challenge.

Photo of Priti Patel Priti Patel The Exchequer Secretary

Clause 16 is the second clause in the Bill to deal with child care accounts; it sets out who can provide them. The scheme will be administered by HMRC, which will be responsible for managing the scheme, including confirming that a parent is eligible, ensuring compliance and dealing with interactions with parents—an area that the hon. Member for Colchester has just highlighted. It is a clear and transparent system, so parents will know the status of their account.

Amendment 12 would mean that clause 16 could not come into force unless a report was laid before Parliament within three months of the Bill receiving Royal Assent. The report would need to include the timetable for delivering child care accounts, the progress to date, the provisions in place to deliver accounts to time and budget, the assistance for those without internet access, and the provisions for dealing with systems failure and monitoring the account provider. The amendment is unnecessary, because the Government recognise that the design of the scheme should be simple and as responsive as possible. That was why, when designing the scheme, we rejected a model that used multiple account providers, as many suggested that parents and child care providers would find such a model complex and burdensome.

I recognise that the simplicity of the scheme is not the only consideration here. Delivering it successfully is critical. A smooth and simple implementation will help and encourage as many parents as possible to access the benefits of the scheme. Requiring a report, as the amendment proposes, is unnecessary as I and HMRC officials have already made it clear that we are going to be engaging with stakeholders throughout the development and implementation to ensure that the scheme is a success.

Regarding the timetable, we are focused on delivering the scheme as soon as possible. That was what I said when I gave evidence last week, and there is a lot of work taking place through HMRC and NS&I. The hon. Member for Newcastle upon Tyne North specifically mentioned the legal challenge. I cannot comment on that, but there are obviously implications of it. We have no idea what will happen with the court process and the timing of it, but I assure her that it is not preventing vital work from taking place now.

The advantages of having NS&I were touched on last week, and the hon. Lady mentioned them. It is a sister agency of the Exchequer and a recognised brand, and it has an incredible track record of securely holding millions of pounds of customers’ money. Seeing all its other accounts, systems and processing capabilities has given great confidence to parents, and it is, of course, a proper banking arm, with the technology and infrastructure that comes with that. There are therefore many advantages to parents of our using NS&I.

Amendment 12 makes a point about delivery on time and on budget. To help us with that, and to give the Committee complete assurance, we are working with the Cabinet Office and the major projects portfolio team. We are using their expertise in delivery mechanisms across Whitehall and in the private sector to ensure that we are asking the right questions and doing the right things so that the scheme is on track and will be delivered on time.

The hon. Lady also mentioned service standards—we heard a number of witnesses raise that issue last week, too. It is fair to say that NS&I is a responsive consumer brand, and we, as Government, understand that we have to be responsive to parents’ needs. She also mentioned other examples of schemes outside the Treasury, specifically in the Department for Work and Pensions. All schemes that involve benefits or welfare payments, whatever their guise, have to have that responsive element. Parents will want to know that they can rely on their payments,  including the top-ups, being made to providers clearly and accurately. That is why the scheme is being designed in that responsive way.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

The Minister is going through this issue in intricate detail, which is helpful. Does she recognise that in the other contracts that have been referred to, there were standards there that the contractor clearly failed to deliver? That is at the heart of people’s concerns in relation to this contract too. It is all very well having standards, but if they are not delivered, that does not help the consumer of the scheme.

Photo of Priti Patel Priti Patel The Exchequer Secretary 12:30, 23 October 2014

The hon. Gentleman has pre-empted what I was about to say regarding the company that has been named repeatedly both last week and in today’s discussions. The chief executive of NS&I said clearly last week—I have discussed it with her as well—that the services of Atos were procured through a very competitive process, as are other Government contracts. More importantly—I hope that this will reassure the Committee—NS&I will set key performance indicators and is absolutely on top of the delivery timetable, which comes with financial penalties, and the key clauses on delivery and performance. I think we all agree that we want the scheme to be successful. This is not about the failure of the scheme; this is about having a positive and welcoming scheme. It is about putting in place the right mechanisms to ensure that we hold to account those responsible for delivering various aspects of the service.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

The Minister mentioned the failure of contracts, but they often fail after successful bidders have undercut the competition, because the company then cuts staff, lowers morale among staff and does not actually deliver the required services. It then finds out that it cannot actually do the job, so it reneges on its contract, and the Government or Department are left to pick up the pieces. How can the Minister reassure us that, on this occasion, the provisions will be so robust that the providers will not have the wriggle room to fail and will have to provide the comprehensive service that is required?

Photo of Priti Patel Priti Patel The Exchequer Secretary

I would like to share an interesting observation on that. The chief executive of NS&I was clear when she said last week that there was an open and transparent procurement process. All the other companies that were involved in the process—I think there were two of them—said how positive it was. The process was not about driving down costs; the issue is standards and delivery, which is effectively what we have focused on throughout the design of the scheme and the process. I want to reassure the Committee that the scheme is not about the lowest common denominator—far from it; it is about quality, assurance and setting the right level of service standards. That is right and proper for this scheme—it is right for others, as well, but we are here to discuss the tax-free child care payments scheme.

I want to touch on two other points arising from the amendment, the first being assistance for households without internet access. Much of the discussion thus far  has focused on the online and digital channels. When I gave evidence last week, I touched on the fact that I had gone through the walkthrough process myself. It is a key priority for us to work with stakeholders—we are working with them constantly—to explore how best we can assist groups that do not have access to the internet. We are looking at how we can register them easily, support them and operate their accounts. That is another part of the ongoing dialogue.

Members have discussed information about the scheme. We will provide information on the scheme in Braille and large print, and we will look at a range of options, including telephone engagement and opportunities for learning, so that we can support other users—potentially families and households—to access online services and give them a bit more independence through access to services. We need to ensure that the service provider of tax-free child care not only has a good approach to online software approach but is accessible to wider audiences as well. We are incredibly focused on that. Of course, that will come through more dialogue and work with stakeholders, as well as through guidance.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

It is interesting that the Minister has raised that issue, because I was going to ask about it during our discussion of the next clause. However, that requirement would be dispensed with if she could reassure the Committee now that those without access to any digital device, which is a requirement because of how the scheme will be set up, will not be excluded and will be fully supported. Also, will the Minister comment on whether some form of app is being developed to ensure that those who do have access to electronic devices will have the easiest possible access to the scheme?

Photo of Priti Patel Priti Patel The Exchequer Secretary

That is a valid point, and I welcome the hon. Lady’s intervention. We will engage extensively with all stakeholders on how we best support those who will not have direct online access. That is paramount. It is about using stakeholders’ insight to develop the right kind of approach and working with them to look at the necessary points of intervention and at how we access information.

I cannot comment specifically on the app yet, because we are still in the early stages of developing the infrastructure itself—the walkthrough, the registration and things of that nature. That does not mean that it will not come. Technology is changing every minute of the day. We all have to be alive to the challenge of the positive changes in technology, which is not simply for those who are literate and able in social media. It is also about how we can use technology and apps for those who are not necessarily familiar with them.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

In the evaluation that has been done so far through stakeholder groups, how large a percentage of the potential customer group do not have access to the internet at the moment?

Photo of Priti Patel Priti Patel The Exchequer Secretary

I cannot be specific, because I do not have the numbers and data to hand. I will happily share those later, because I am sure we can provide such data. The point is that the dialogue is ongoing. I would not say that we are unusual, but we are keen to work with stakeholders and we see that as part of the evolution of  the scheme. On that note, I ask the hon. Member for Newcastle upon Tyne North to withdraw the amendment.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I thank the Minister for her reply and appreciate her thorough response, which was heartening. Inevitably, some concerns will remain. She is aware of that and they are on the record, although we would take no pleasure in saying, “We told you so.” That is not the approach that the Government are seeking to take with what I agree is a positive scheme, which we all want to see rolled out as widely and as efficiently as possible. We will continue to monitor the situation over the next 12 months, and we look forward to continuous updates on the roll-out of the scheme to ensure that it goes to timetable as promised. Having received some reassurances from the Minister, however, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.