Original URL: http://www.theregister.co.uk/2006/02/01/tax_credit_scheme_criticism/

MPs hit out at Tax Credit Scheme

IT system at the 'root' of the problem

By eGov Monitor Weekly

Posted in Policy, 1st February 2006 11:43 GMT

A new House of Commons Public Administration Committee report heaps further criticism on the much maligned Tax Credit Scheme.

This report follows the one published by the Parliamentary Commissioner for Administration in June last year, which was critical of the administrative practices, which "marred" an otherwise well-intentioned government scheme.

MPs were critical of a number of aspects of the scheme, but reserved their main comments for the IT system. The delivery of the tax credits system was designed to be wholly IT-based, but over-reliance on technology and software errors were believed to be at the heart of the problems. They were "concerned that the IT system which is supposed to enable an efficient delivery of the scheme has in fact been a root cause"."

The report also notes that the fully automated nature of the IT system, meant that HM Revenue and Customs was "unable to respond effectively" when problems occurred, nor was it sufficiently flexible to "take proper account of the particular needs of individual customers"."

Not only was the system "creating some of the problems", which led to a high level of criticism and complaints about the scheme, it was also "acting as a barrier to resolving them quickly".

Both reports said there could be no quick fixes in resolving the problems, but making changes cannot be done without risking the stability of the IT system. One potential solution suggested by the Parliamentary Commissioner for Administration, that a pause between the notification of an overpayment and its recovery, could not be introduced "until some time next year" to ensure all the functionality was included and the system remained stable.

The report also noted that a more detailed examination of some of the IT issues was not possible, following the £71.25m compensation settlement between HM Revenue and Customs and EDS, the company responsible for implementing the system in November 2005. The settlement included requirements for "significant confidentiality" that restrict the HMRC chairman from giving full answers to the committee.

The report concludes by suggesting that the design of future government IT-enabled schemes must be given "careful consideration" and that the "needs of the customer" are "paramount" rather than the "limitations of the technology".

Read the report here

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