Skip to main content

Departmental Public Expenditure

Volume 479: debated on Monday 29 September 2008

To ask the Secretary of State for Work and Pensions what the (a) forecast cost in (i) real and (ii) net present value terms and (b) most recent estimated cost was of (1) the pension transformation programme, (2) the customer information system, (3) the employment and support allowance computer system and (4) the central payment system. (211146)

£ millionOriginally planned costsProjectPurposeRealNPVLatest estimated costsPensions Project Transformation1The programme will transform the Pension Service, bringing together business and IT change in ways that improve customer service and deliver efficiencies.429350598Customer Information System2This project will deliver a database of key citizen information to be shared across DWP. The database will complement information currently available in the Department’s key customer information systems, i.e. Personal Details Computer System and Departmental Central Index, and become their replacement. Consideration is being given for wider use of CIS by other Government Departments.404289Employment and Support AllowanceThe project delivers the system and processes to implement the new ESA allowance.295282295 Central Payments System (formerly part of Payment Modernisation)3A modern integrated central payment engine and accounts payable system to improve accounting for benefit/pension payments, reduce risks of service failure, increased speed and efficiency, and information for improved customer service and reduced fraud and error.90154169 1 Pension Transformation Project (PTP):The apparent increase over the original stated costs can be attributed to a fundamental change in delivery approach.When PTP started in April 2002, costs were early high level estimates based on delivery via a private supplier (who would recover development costs of the system through an operating contract).Policy later changed and it was decided DWP would fund the capital costs of PTP itself.As a result, development costs went up but operating costs went down.Overall, this actually means an improved return* on the total investment, although development costs appear higher than the very early estimate provided in 2002.* Net present value of the programme has increased by 40 per cent. to £585 million, compared to £350 million in the initial business case. HM Treasury guidance states the NPV is the primary criteria for deciding whether government action can be taken. This is arrived at by converting all costs and benefits to present values so that they can be compared.2 Customer Information System (CIS):The original cost estimate of £40 million was based on the original scope of the project. There has subsequently been significant extension of the scope as the CIS Programme has responded to changes in the Departmental Modernisation Programme.The costs originally submitted for CIS in July 2003 assumed that CIS would be developed as a back-end system supporting the Customer Account Managements (CAM) systems intended for deployment in each of the Client Groups. It also assumed that the Standard Enquiry Function (SEF) would be developed to support a very small number of users who would not have access to CAM.Plans evolved with the result that the only Client Group to deliver a CAM system in line with this earlier specification was the Pension Service.The additional costs result from requirements to service both the ‘old’ Legacy applications and the ‘new’ PTP CAM, as well as developing and implementing architectural changes in a seamless way. In addition, the absence of CAM functionality meant that the SEF has been rolled out to in excess of 124,000 users.CIS scope was increased to deliver desktop access to approximately 19,000 staff in 408 local authorities for the administration of housing benefit and council tax benefit replacing remote access terminals, which were provided to only a very limited number of users in each of these local authorities.The increased investment together with the delivery of enhanced requirements has resulted in CIS benefits increasing from £155 million to £533 million which includes direct benefits of £130 million and enabled benefits of £403 million. During this period, the introduction of CIS has led to the decommissioning of two major benefit systems (the Departmental Central Index and Personal Details Computer System) as CIS is now the master of personal details across all of DWP.Additional work has also been carried out with other Government Departments and further work is planned in this area.3 Central Payments System (CPS):The figure of £90 million relates to the outline business case produced during the feasibility phase in 2004. This related to a scope that is significantly smaller than the current programme. The original scope was for the replacement of existing payment processing software and excluded an integrated accounting solution. Furthermore, the integration scope of CPS has increased from four entitlement management systems to nine.The NPV figure of £154 million relates to the full business case approved in March 2006. The figure of £169 million relates to the latest outline business case approved in May 2008.Note:The costs in the table represent the investment costs of implementing the particular project and programme. Costs of running the solutions implemented by the projects and programmes are not included in the table as in the vast majority of cases, they are more than compensated for by the financial and non-financial benefits they generate. These savings are demonstrated in the NAO report “The Efficiency programme: A Second Review of Progress”.