This seems to be becoming such a regular feature that I abbreviated the title. I’ve just been sent a link to HM Revenue and Customs’ evidence to the Public Accounts Committee (No! Come back! I promise you it’s fascinating!) on the tax credits fiasco that has so far cost us around £2bn.

There are several contributory factors, including the famously insecure website that allowed a £50m fraud to be perpetrated, and a catalogue of software problems, as this excerpt from the evidence explains:

Q72 Mr Williams: … I switch again to the software errors. We are told that 199 software errors are still not remedied. That sounds to me like a lot. Who supplied the software?

Mr Gray: The majority of the software would have been supplied under the Inland Revenue’s former contract with EDS—

[ ]

Q74 Mr Williams: How long have the software errors been identified but not remedied?

Mr Gray: They were progressively identified over the first two or three years of the operation of Tax Credits.

Q75 Mr Williams: So how many were in total there originally, then?

Mr Gray: There were significantly more than that originally, but I am afraid I do not—

Q76 Mr Williams: There must have been, if it took three or four years, but how many? You know that there are 199 outstanding; how many have been dealt with?

Mr Gray: Quite a large number—

Mr Williams: No, not “quite a large number”. “Quite a large number” is an insignificant answer. How many errors have been addressed?

Mr Gray: I cannot give you a precise figure. I can certainly let you have that figure separately. What we have done very deliberately in the early years of the system is to seek to address those errors that were having the biggest impact in the system. That might have been a relatively small number of errors but they were having the most significant impact on the operation of the system.

Q77 Mr Williams: I would like a note off you giving a precise indication of what errors have been dealt with, in addition to those that have not been. Having identified them all—you do not remember a grand total at all—was any penalty clause invoked against the supplier?

Mr Gray: Well, I think—

Mr Williams: Other than saying, “Come and put it right”?

Mr Gray: As you are aware from an earlier hearing, Mr Williams, we have reached a settlement with EDS in relation to errors in the initial building of the Tax Credits computer system and it is in the process of paying us total compensation of £71.25 million.

Mr Williams: £71 million.

Mr Gray: £71.25 million.

Q78 Mr Williams: Out of a total contract price of?

Mr Gray: Sorry. Again, I do not have that figure, but I can let you have it.

In answer to that last question, a footnote adds:

The EDS contract ran for 10 years and the total revenues under it were of the order of £2,500 million as was explained at the Committee’s hearing in December 2005 (Q212-213) in the 15 months to 30 June 2004 EDS earned revenue of £504.6 million from the contract and this gave rise to a profit of £121.3 million.

Still on the subject of Tax Credits, there’s also this from a few days ago:

HM Revenue and Customs (HMRC) has apologised to 8,000 tax credit claimants for sending their bank details to other claimants.

They do seem to be having trouble with this new-fangled IT malarkey.


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