CSA overhaul goes £29m over budget

The long-delayed overhaul of the Child Support Agency will finally begin, 17 months late and having gone £29m over-budget, Andrew Smith, the Work and Pensions Secretary, announced yesterday.

A new system of payments will come into force in March after a catalogue of problems developing the computer technology that will administer it.

The CSA is switching over to a new, streamlined system of payments, arguing it will make them simpler and fairer. But the original start date of October 2001 was delayed to last April and then postponed again.

In a Commons statement, Mr Smith said that after further tests on the system, developed by the American company EDS, the Government had concluded it would "deliver a level of service that is acceptable". But he added: 'With any system of this size, even after exhaustive testing, there will be some bugs to be sorted out."

Mr Smith told MPs that because of the delay the bill for setting up and running the system had risen by 7 per cent, from £427m to £456m. "The system has proved to be more complex than had been originally thought and we have reached a negotiated agreement with EDS to share these costs, with them meeting their share under the contract," he said.

"While any extra costs are unwelcome, an increase on this scale is not at all unusual for a complex project, whether in the private or public sector, and is justified to deliver this important reform."

Initially the system will handle about 30,000 new CSA claims a month. The 1.1 million existing cases will be gradually transferred.

Under the reforms, absent parents with net incomes between £200 and £2,000 per week will pay 15 per cent of their income for one child, 20 per cent for two children and 25 per cent for three or more children. For those on less than £100 a week, maintenance will be set at £5 a week, and there will be a sliding scale for those on between £100 and £200 a week.

Mr Smith said: "The new scheme will be more transparent, easier for parents to understand, easier for the agency to calculate maintenance and enforce payment, so children get the support they need."

Rounding on Tory criticism of the hold-up, he said: "It was right to delay rather than rush in with an incomplete system.

"Let us remember why we are having to modernise the system. It was the Tories who rushed this in 10 years ago. They had goodwill on all sides of the House. It collapsed under its own weight because it was overly complex."

David Willetts, the shadow Work and Pensions Secretary, called for more details of reasons for the over-run. He said EDS had blamed it on ministerial interference, adding: "The announcement only affects new cases, so over a million families on the existing system are still in the dark. When will they start to be moved on to the new formula?"