Tax credits mess was a disaster waiting to happen, and it is not
over yet.
Nicholas Montague, chairman of Inland Revenue, has blamed the chaos
that accompanied the introduction of new tax credits in April on
EDS, the department's main supplier.
Montague told the House of Commons Public Accounts Committee
earlier this month, "One thing went wrong - the failure of the
systems."
The statement came a week before the Revenue announced that it
would replace EDS with Cap Gemini in a £4bn contract to run its
systems.
But Computer Weekly has learned that the cause of the problems went
far deeper than system failure. Our investigation into the causes
of the failure has uncovered the events the led to disaster.
It is, in many ways, a typical IT implementation story: business
case uncertainty, specification creep, implementation problems and
truncated testing. However, it also had an unmovable deadline and
the consequences of failure were highly visible.
November 1999
The government made the main announcement of new tax credits and
committed to their introduction from April 2003. The system was to
be built by Inland Revenue's main IT supplier, EDS.
January 2000
The IT programme was launched. The plan was to get the business
case approved by September 2000. The initial intention was for two
releases: development of release one to start in October 2000 and
go live in January 2003. Development of release two was to start in
April 2001 and go live in April 2003.
January - December 2000
There were major policy uncertainties about the way new tax credits
would be implemented. By January 2001, there still was not an IT
requirement fit for use in starting development.
April 2001
EDS started building release one but there were still uncertainties
about the design of the tax credits and about the business
processes to be used. Even so, EDS had to set a requirement and
make a start. But it was already six months late.
April 2002
Focusing on how to succeed with release one despite a compressed
timetable meant work on release two started in April 2002 - 12
months late. And the scope of release two increased by about 50% as
more complexity was added.
October 2002
Release one went live on schedule, allowing returned claim forms to
be entered on the system. Release one had taken more than 500
man-years of work to develop and implement.
November 2003
EDS was due to start end-to-end system testing of release two, but
could not because the Revenue had not finalised key requirements.
About 60 change requests were made after system testing was due to
start. A Gateway review by the Office of Government Commerce gave
the systems a green light to go live.
January 2003
Inland Revenue discovered more than 100,000 claims had the wrong
national insurance numbers. This was because clerks, presented with
someone's name on their screens, had arbitrarily selected the first
identity from a list of potential matches.
The Revenue stopped sending out award notices to claimants while
mismatches were rectified. The result was that millions of
claimants, having heard nothing about the progress of their claims,
called the Revenue's phone lines, which subsequently jammed up.
It was critical to rectify the mismatches before going live, so
officials and EDS decided to use their test system to do this. As a
result the system was held at release one and could not be used for
release two performance testing.
February 2003
Performance testing ran for only four weeks, instead of the planned
12, while the mismatches problem was rectified. Following this
testing, Inland Revenue resumed issuing award notices in small
volumes.
EDS warned that using the test system to resolve mismatches had
increased the chances of problems occurring when the system went
live but it did not advise the Revenue to put back the April
deadline; nor did the Revenue advise the chancellor to defer the
deadline.
March 2003
The race was on to meet the April deadline.
April 2003
Release two went live on 8 April. About 1.1 million claims had
incomplete information or some other problem that required
officials to contact claimants.
Helplines were swamped as people received award notices at the last
minute or found they were among the 1.1 million still to be
processed. This put extra pressure on the system and it soon
emerged that the system was not stable.
Bottlenecks in links between computers had not been identified
during testing and the system stopped several times a day. The
processing of the 1.1 million outstanding claims was severely
disrupted.
June 2003
Stability of the system was restored on 13 June.
November 2003
Release three went live without problems after nearly 200 further
man-years of effort.
April 2004
Release four of the tax credits system is due to go live. It is a
major release, critical to the renewals of tax credits - but there
is no contingency plan to defer the date if testing reveals major
flaws in the system or software.