A
committee of MPs has urged the government to demand compensation
from its IT supplier EDS after hundreds of thousands of people did
not receive their tax credits on time.
The Labour-dominated House of Commons Treasury select committee
also warned the IT services company to get its house in order as it
is part of a consortium working for the Department of Work and
Pensions developing the IT system for the new pension credits which
start this autumn.
The all-party group also highlighted IT failures with the
contributions agency - which was transferred from the DWP to the
Inland Revenue - to inform people of deficiencies in their National
Insurance Contributions that affected their state pensions.
In an effort to prevent similar problems happening in other
government departments, the Treasury committee said the Office of
Government Commerce should review how contracts and specifications
for IT systems are drawn up and then monitored.
In its
wide-ranging report on the Revenue, which is charged with making
sure tax credits are distributed, the committee said departmental
staff had experienced system failures of up to fours hours a
day.
Inland Revenue chief Sir Nicholas Montague and paymaster general
Dawn Primarolo told the MPs they would look at the possibility of
making EDS pay the unknown extra costs to put the system
right.
However, the
Labour-dominated committee said the Inland Revenue and Treasury
have a "clear duty to pursue vigorously a compensation claim from
EDS".
"We do not expect
the additional costs that have been incurred as a result of failure
by EDS to be borne by the British taxpayer," the committee
said.
The report demands
that the 400,000 applicants for tax credit who received late
payments - and in 220,000 cases have received no payment - be
compensated "swiftly and in full".
The hard-hitting
report placed a clear question mark over the future Revenue chief
Sir Nicholas, saying that the committee enquiry, which discovered
"a catalogue of significant administrative failures'' had "raised
questions about how the department has been led''.
It also raised
questions about Chancellor Gordon Brown's role and, in particular,
that of Primarolo, who failed to speak to Sir Nicholas for six
months while the tax credit crisis mounted, criticising
communications failures between ministers and Revenue officials for
making the problems worse.
The problems over
tax credits came like "a bolt from the blue'' to ministers who had
no prior knowledge of the problems with the IT system designed and
implemented by EDS, the report added.