Tax credit failure a bolt from the blue

The computer failures that disrupted the Family Tax Credit system were a disaster that came like 'a bolt from the blue', according to a highly critical Commons report.

Treasury Sub-Committee Chairman Michael Fallon said there had been 'a catalogue of significant administrative failures which ministers must address as a matter of urgency.'

IT errors meant that 220,000 claims were left unresolved more than 10 months after they were submitted, and 400,000 claimants received their money late.

The blame for a catastrophe that came without warning lies in two areas, says the report.

Committee deputy chairman David Hartnett said IT supplier EDS had not picked up the potential for the 'arterial sclerosis' that eventually blocked up the flow of information through the Revenue systems.

As Computing reported two weeks ago, EDS now faces a hefty compensation claim.

But the committee also says Inland Revenue chief Sir Nicholas Montagu and Paymaster General Dawn Primarolo must also shoulder responsibility.

'The real thrust of our report is a failure of leadership by the chairman and the minister,' said Fallon.

'We are extremely concerned that problems on the scale encountered arose at the last minute and did so without any warning.'

The report calls for managerial changes to ensure that the disaster is not repeated.

Fallon said it was 'crucial that the necessary lessons are passed on to the Department of Work and Pensions before pension credits which will use an IT system being implemented by a consortium including EDS - the IR's partners who designed the tax credit system - starts this autumn.'