The Public Accounts Committee has concluded that reforms of the troubled Child Support Agency (CSA) have been "one of the greatest public administration disasters of recent times".
Despite £539m of taxpayers' money spent on a new IT system, and a further £91m on external advisers, the agency continued to underperform, said the committee. To date, some £3.5bn of maintenance has not been collected and 60% is considered uncollectable.
IT problems have resulted in a backlog of 239,000 cases, with an additional 36,000 new cases stuck in the system.
Commenting as the committee published its report on 5 July, 2007, chair Edward Leigh said: "The agency threw huge sums of money at a new IT system which was intended to underpin the reforms."
"The Department for Work and Pensions never really knew what it was doing in dealing with the contractors EDS and the system was a turkey from day one."
"Three years after it was introduced, it still had 500 defects and staff confidence has been seriously damaged."
The CSA was introduced in 1993 to collect child maintenance payments from absent parents. From the outset, its complex administration procedures and inadequate IT system resulted in poor performance and enormous backlogs of unprocessed cases.
In 2000 the Department for Work and Pensions (DWP) tried to remedy the situation by signing a £427m private finance initiative contract with EDS to deliver a new IT system. But technical faults and delays to delivery led to a lengthy commercial dispute. The DWP agreed to contract changes which increased the overall price to £457m.
Some of this was eventually clawed back, including a £53m penalty for EDS's failure to meet the contract terms. The company also agreed to provide the CSA's original IT system — still in use alongside the new system — free of charge. This avoided £24m of costs to the agency.
In 2004 the DWP had an opportunity to terminate its deal with EDS, but decided against this, despite warnings that the IT system was two years behind schedule.
A key problem identified in the report is the agency's lack of in-house IT expertise, which left it unable to challenge EDS or remedy the numerous technical defects which emerged as the system was rolled out. Some 500 defects still existed three years after the system went live.
"It took 13 years of failure for the department to reach the conclusion that the agency was not fit for purpose. During this time, thousands of children suffered, as thousands of absent parents have neglected their duties," said Leigh.
"It is hard to think of a body in which the public has less confidence: in 2005-06 alone, there were 55,000 complaints about the CSA."
VIDEO
Dialogue Box 7.4: The expanding digital universe
How much data will be created and stored in 50 years' time? Rupert and Charles make some extrapolations and come to a startling conclusion
From 2008, the CSA will be replaced by a new Child Maintenance and Enforcement Commission. The decision was taken following a root and branch review of the agency by Sir David Henshaw, a former chief executive of Liverpool City Council. Henshaw was instrumental in pushing through Liverpool's e-government programme.
The committee, however, remains sceptical about the potential for success. "It is by no means clear how this will benefit citizens or regain the confidence of those the agency was intended to help," said Leigh.
"The government must keep an iron grip on this new organisation to ensure that the lessons have been learned from the CSA debacle."
Civil service union, the PCS, which represents many CSA staff, echoed the committee's criticisms of the massive failure of the IT system.
Mark Serwotka, PCS general secretary, said: "There is a real danger that child support reforms will be undermined from the start if there are insufficient resources and if the historical problems of failing IT that created backlogs and pushed staff to the point of breakdown aren't addressed."
The report emphasises that the new commission will have to make a break from the past, with a simpler, more enforceable system incorporating good practice from other countries.
Examples of successes are New Zealand and Australia, where compliance is higher and costs are lower. The Australian child support agency is able to make immediate checks on the tax status of the absent parents because of links with the taxation office.
