[Relevant documents: Seventh Report of the Work and Pensions Committee, Session 2006-07, HC 463-I on Benefits Simplification, and the Government’s response, Third Special Report, Session 2006-07, HC 1054; Eighth Report of the Communities and Local Government Committee, Session 2006-07, HC 718, on Local Government Finance: Council Tax Benefit, and the Government’s response, First Special Report, Session 2006-07, HC 1037.]
Motion made, and Question proposed,
That, for the year ending with 31st March 2008, for expenditure by the Department for Work and Pensions—
(1) further resources, not exceeding £627,101,000, be authorised for use as set out in HC 29,
(2) a further sum, not exceeding £1,147,101,000, be granted to Her Majesty out of the Consolidated Fund, to meet the costs as so set out, and
(3) limits as so set out be set on appropriations in aid.—[Diana R. Johnson.]
I welcome my hon. Friend the Minister for Employment and Welfare Reform to the debate. I was expecting the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), but she is far better looking.
Some would say that it was ironic that the Select Committee published a report on benefits simplification that ran to 116 pages and contained no end of jargon, numerous unintelligible tables and various other obstructions to general understanding, but I would not say that.
Why did we undertake the inquiry? Last year the Committee conducted a short inquiry into the efficiency savings programme in the Department for Work and Pensions, and it became apparent to us that part of the problem for the staff was the enormous complexity of the benefits system, which was compounded by the job reductions that were taking place and the IT problems being experienced. That is why we decided to undertake an inquiry into potential benefits simplification.
It is worth pointing out that the Department administers about 40 different benefits. In addition, there are benefits such as child benefit and child tax credit, which are dealt with by HM Revenue and Customs. Many of the benefits administered in the Department are passports to other benefits such as Warm Front grants, eye treatment, dental treatment and so on. In total, the Department’s budget is about £120 billion; excluding state pensions, it is about £70 billion. There are 17 million claimants, and about 25 million people are affected. Obviously, the Department has a major influence and impact on people’s lives.
Furthermore, for about 17 years the Department’s accounts have not been signed off. That used to be because of customer error and customer fraud. However, the Department has been effective in dealing with those problems, and the problem now is increasingly official error. The total loss due to fraud and official error is estimated at about £2.6 billion. Although, taken against the overall budget, that is fairly tiny, it is still an exceedingly significant amount. No doubt the level of official error in particular has come about largely because of the complexity of the benefits system that staff have to administer. I do not think that anybody deliberately makes errors, but they are the almost inevitable consequence of where we are.
Throughout the 1980s I was a welfare rights adviser. In those days, we had two bibles. One was the Child Poverty Action Group handbook, which in those days ran to about 250 pages, but now has 1,600 pages. The other was known as the Yellow Book—a single volume containing all the Acts of Parliament and the regulations. That is now the Blue Book, which runs to 32 volumes; the “Decision Makers’ Guide”, the instructions on how to implement the legislation, runs to 14 volumes. That is meant to help, although I do not know whether there are examinations on those 14 volumes.
How did we get to where we are today? To a large extent, social security started with Beveridge; there were things previously, but they were minuscule. Essentially, Beveridge established a system of benefits, based on national insurance contributions, around the principle that men worked and women stayed at home. At that time, it appears that nobody was sick or disabled. For those who fell outside national insurance contributions, there was a fairly brutal system called national assistance.
By the ’60s, society at large had decided that national assistance was not a nice thing and we got supplementary benefit, which gave a series of entitlements but had a lot of discretion within it. By the mid-80s, that discretion was deemed not to be good. It was thought that it was being abused. It was impossible to budget for, so we got the Social Security Act 1986, which introduced income support. That had the benefit of formalising things—everybody knew where they stood—but it created an awful lot of losers. However, that new system came in.
By the mid-90s, it was decided that we needed a new regime for claimants who were seeking work, so we got the jobseeker’s allowance. The old invalidity benefit became incapacity benefit. Those are the main income replacement benefits, but along the way, for various reasons, we got other benefits such as disability living allowance and carer’s allowance. Every time a benefit is brought in, a new layer of legislation and complexity is added, but seldom is anything taken away.
There is also the problem of legacy. It has always been a principle of the social security system that nobody should be a cash loser at the point of change. Some would say that that is equitable and is the right thing to do—but we are now running five separate systems for those incapable of work due to illness or disability. We have legacy claimants from the various different systems going back a long way. That has an administrative cost, because it is cheaper to administer a current benefit than one that is 30 years old. It also puts a serious strain on departmental staff who were there when it happened and know about the rules relative to the benefit that is still in operation. I make no judgment in this debate about efficiency savings, but it is fair to say that when 30,000 staff were taken out of the organisation, an awful lot of them were at the older end of the spectrum and had that knowledge. That creates the further risk of official error.
Complexity in the benefits system comes from a variety of sources. We are guilty, because this House is one of the worst places for introducing it. Somebody stands up, cites a case and says that something must be done, a campaign starts, and before we know it there is more complexity. That person goes home happy and 2,000 civil servants scratch their heads and say, “Why on earth did we do that?” Public pressure sometimes arises out of topical incidents. Those of us of more mature years remember the 1960s documentary “Cathy Come Home”. People relate that to housing and homelessness, but it also led to wholesale changes in the benefits system, particularly the introduction of rent allowances. Change sometimes happens because it is decided that a budget is running out of control and savings are needed.
As I said, there are about 40 different benefits, which were all created at different levels. It is not the case now, but for many years in the ’80s and ’90s it was touch and go each year whether the rate of the state retirement pension was above or below the level of income support for people over 60. In some years they qualified for income support, or supplementary benefit before that, while in other years they did not—often by only 5p. That was because of the different formulae that applied.
Straightforward policy objectives also have an effect. The one that I would highlight, because it is in the news a lot, is child poverty. The Government’s declared intention to deal with that has led to all sorts of policy initiatives. Things can go spectacularly wrong. I have a couple of examples, although hon. Members will probably have nightmares if I mention them. The first is that of the Child Support Agency. In the late ’80s and early ’90s, it became apparent, particularly to the public, that far too many fathers were abandoning their financial responsibilities and, in effect, leaving them to the taxpayer, because in those days about 1.5 million lone parents were not working and on benefits. The so-called liable relatives division of the old Department of Social Security, which was responsible for collecting maintenance, was always the lowest priority for staffing, and whenever there were staff shortages the people there were moved somewhere else. Frankly, it was useless at collecting maintenance. Court orders gave maintenance only for a fixed amount—there was no facility for the payment to be uprated. If the person failed to pay, it was up to the potential beneficiary to take follow-up action to get the money. The system had collapsed.
There was all-party support in this House for the original legislation, the Child Support Act 1991; I do not think that a single person spoke or voted against it. Closer examination, with the wonderful benefit of hindsight, shows that the formula calculation for the basic maintenance payment ran to three pages—a bit different from E=MC2. One of the big steps forward, which started with the Jobseekers Act 1995, has meant that Committees reviewing social security legislation now have draft regulations before them. In those days we never did, and it was pot luck whether the intention translated into the regulations. It was a big step forward when Committees actually saw the draft regulations, and that process has improved even more.
Many of us who were in the House at the time remember the absolute chaos when the disability living allowance was introduced by a wonderful Minister, Nicholas Scott. He was a super Minister for the disabled, and was widely praised, but the administrative chaos that took place because the scheme had not been geared up properly was horrendous. People were waiting for up to two years for their initial claim to be paid. The intention was good, but the practice and operation was different.
One example of a policy objective not being carried out relates to a benefit that my hon. Friend has not mentioned yet: council tax benefit. It was introduced to try to make council tax fairer. Does my hon. Friend agree with the argument made by the Select Committee on Communities and Local Government, which I chair, that it should not be considered as a benefit, but as a rebate? It should be decoupled from the thresholds and rules relating to other benefits so that it serves better its original purpose of making council tax fairer.
I would hate to venture on to the territory of trying to make council tax fair, but my hon. Friend is absolutely right. It is a rebate because no cash ever enters an individual’s pocket. It is a credit against their council tax liability. I would have no qualms at all about changing its name to council tax rebate because that is what it is. There is no cash payment.
For reasons that are beyond me, and I defy anyone to explain it, in 1983, the system of housing support moved away from the Department of Health and Social Security into local authorities, and was called housing benefit. Again, for about two years there was absolute chaos. No end of people were evicted, and tens of thousands more were threatened with eviction, because of the inability of local authorities to gear up for that big change. At the time, my authority of Bradford—the fourth biggest authority in the country; I will just stick that in—had a small department dealing with the old rent allowance. It was informed by the Department of Social Security that it would need an extra six staff to deal with the new legislation. At its peak, it had an extra 130 staff, and it is now down to about 100. It never staffed up for that change because it was not told it would need to, and by the time it had the right number of staff, incredible backlogs had occurred.
With regard to housing benefit, my hon. Friend will also be aware of the chaos caused by the introduction of the verification framework. It was introduced for perfectly good reasons: to reduce fraud and to ensure that benefit was given in the right way. Does he agree that that, too, caused huge chaos for local authorities, for individuals who should have been receiving support for their rent and for landlords, who often did not get their rent paid?
My hon. Friend is absolutely right. It is not my place to defend the verification process, but I shall make a case for its defence. The process threw up an incredible amount of fraud in the housing benefit system. One of my bugbears about social security legislation is that an awful lot of it is aimed at the 0.2 per cent. who wish to defraud the system, which inconveniences the 99.8 per cent. who find themselves in difficult circumstances, want a bit of help while they sort themselves out and then move on. An awful lot of regulation could simply be deleted from the statute book. Let us not forget that such complexity impacts on customers, staff and advisers such as citizens advice bureaux and whatnot. I shall just make a little observation at this point—anyone who claims to be an expert in social security legislation is either a liar, or leads a very sad life.
Are you an expert?
I am not an expert, but I do lead a sad life.
That cannot be good or right. Social Security Advisory Committee people tear their hair out at proposals that are always well intentioned but frequently work to the detriment of everybody.
The Department has been tremendously successful at driving down client fraud and error. However, most client fraud begins as innocent omission and failure to declare something. Suddenly, clients realise two years down the track, because they have talked to somebody else, “Oh, I should have told them that, but nobody’s noticed, so I’ll carry on.”
There are seven different earnings disregards, depending on the benefit someone receives—for example, whether someone is a lone parent or part of a couple and so on. If people are told that they can earn £20 without telling anybody, they think that that is correct. The figure is, indeed, £20 for lone parents. Strangely, it is £20 for income support, but £25 for housing benefit. The same individual could receive two different benefits, with two different levels of disregard. It is therefore easy to understand how omission starts.
However, at some point, omission translates into serious client error/fraud, which gets extremely expensive over time for the Department. It always generates overpayment, most of which, in the big cases, the Department never recovers. I have experienced cases of overpayment of £40,000 and £50,000. The individual’s financial circumstances mean that it is repaid at a rate of £5 a week. When that person dies about 30 years later, £20,000 is still owed. It is in nobody’s interest to reach that stage.
Changes of circumstance make an impact on individuals, and there is no single point of contact where people can give information and everything is done. The four major changes of circumstances are: change of address; acquiring a partner; losing a partner; getting a job, and having a child. A highly successful joint pilot between the Department, Her Majesty’s Revenue and Customs and others has taken place in Wallsend—I am sure that the Minister for Employment and Welfare Reform will comment on it later—whereby an individual tells one person about a change of circumstances and all the relevant people are notified. In this day and age, we should be able to do that for everybody. I understand that the pilot is being rolled out in other places, but the sooner it happens nationally, the better.
It is ironic that one of the difficulties is data protection legislation. With the best intentions, successive Governments have passed legislation that prevents one Department from sharing data with another. Much of that difficulty has been removed, but some of it remains. The general public think that that is stupid. To them, the Government are not a series of separate Departments but a single entity—the Government are the Government.
I am grateful to the hon. Gentleman, who is the distinguished Chairman of our Select Committee, for giving way. He is making an excellent speech and his last point strikes at the heart of many issues in the Select Committee’s report—for example, the unnecessary duplication of basic information, such as name, address and other contact details. I concur with his remarks that the system needs to be simplified to minimise error and inadvertent fraud.
I endorse the comments of my hon. Friend from the Select Committee. He makes a useful and telling contribution.
I believe that the Department’s primary function is to receive claimants who are in distressed circumstances, minimise the period for which those circumstances apply and get those people back into work in the shortest possible time. Sadly, the complexity of the benefits system discourages some people from the latter. For example, there is a genuine problem with lone parents in London. Of especial concern are individuals in the private rented sector, with its high housing costs, and what happens when they move into work.
We have heard innumerable examples of people who prefer a low income, with the security of knowing that it is there every week, to earning a higher income in the world of work, but with the insecurity of not knowing when a new claim will be set up, because, it has to be said, lots of authorities in London are pretty poor at administering housing benefit. In many cases people accept a much lower level of income with the security of knowing that it is there. I take no offence at a lone parent with two or three young children who says, “Blow that, I’ll stick where I am—at least I know what I’ve got. I can budget for that and I can manage it.” That is an unintended consequence of the complexities in the system.
Another wonderful progressive change by the Government was to abolish the horrendous therapeutic earnings and introduce permitted working for those with disabilities. [Interruption.] There are a load of notes coming in from the officials—I have not said that much. The Government introduced permitted working, which was a major step forward, particularly in terms of the dignity of people with disabilities. Unfortunately, there are four sets of rules for permitted working under four different types of circumstance. If we introduced one rule and allowed everyone on incapacity benefit the highest level of earnings, of about £89 a week, the notional loss to the Exchequer would be minimal, but the ease and comfort for disabled people would be enormous. As a side point, there might also be some political kudos to be gained. Again—I have already mentioned the various earnings disregards—good intentions have been somewhat tarnished by the complexity.
We are victims of the age that we live in, and among all this, Departments such as the Department for Work and Pensions, sadly, cannot operate without IT systems—well, they could if there were about 1 million civil servants instead of 80,000 or 90,000, but I do not think that anybody wants to go to those lengths. It is fair to say that the Department has been let down by contractors—I would not put it any more strongly than that.
Indeed. Over the years, failure or inadequacy of performance in IT systems has caused horrendous heartache and serious disruption in the Department’s ability to function. That has been a major issue in the Child Support Agency over the past few years. For many years, what was known as NIRS2—the national insurance recording system—could not tell people who were due to retire how much they were entitled to. A number of projects have also been abandoned. Interestingly, at least the contracting basis for the CSA system was changed, with the Department contracting to rent a system that worked. When the system did not work, the Department did not pay anything and since it never worked the Department never paid anything. Previously when Departments bought systems, they had to fork out for people to come and put them right when they did not work. Departments have got a bit smarter with how they deal with IT systems. The IT systems have never before worked as well as they do now—but that is not a difficult achievement, given the history.
In this day and age, some 60 per cent. of the population have performed a transaction online. That figure is increasing all the time, and it is totally erroneous to say that claimants are incapable of using the internet. They might have a financial inability to acquire it, but then we need to consider other access points. Telecommunications, the internet and online transactions are the future, and it is nonsense to say otherwise. However, that brings additional hazards and consequences, which I hope the Minister will pick up, although I will leave it at that—I am conscious of time and others want to speak.
The Department has had a number of successes. They have all been relatively small-scale, but the creation of the benefit simplification unit nevertheless indicates a change of focus. Its staff is still too small, but at least the issue is back on the agenda. I understand that announcements about significant further work on simplification will be made in the new year, which is welcome. Much of the work done by the Pension Service on pension credit has been great. A single point of contact to deal with council tax benefit, housing benefit and other matters has been established. Some of the deregulation in relation to occupational pension schemes, which was proposed by the benefit simplification unit, is good. The local housing allowance is a major simplification. Sadly—returning to the legacy issue—people move on to the new system only when their circumstances change. Two systems will therefore be running for who knows how long, but there we are.
It has escaped public notice that from next April people will not be required to produce their final wage slip when they leave work and move on to benefit. Trying to track down the final salary payment is a horrendous task for those who deal with claimants. Benefit used to be held up until that payment appeared. Whatever the cause, such as reluctant employers, it created enormous difficulty out of all proportion. I am glad that the Government have abandoned that requirement.
The Select Committee had a lot of discussion about whether complexity is inevitable in a world in which individuals have different circumstances and lives. It is fair to say that there was some disagreement. I think that it is inevitable. There is an eternal tension between universal and means-tested, and contributory and non-contributory benefits, and in finding the right balance. Norway has a relatively uniform system, but my goodness what a cost of living it has—it is extortionate. There are always pluses and minuses.
We put forward two additional recommendations for consideration. One is the concept mentioned by Fraud—sorry, Freud; a Freudian slip—of a single working-age benefit. There is an air of utopia about that—the hon. Member for Weston-super-Mare (John Penrose) will probably say a lot about it. But there is potential, and the embryo of an idea, which might give us the simplicity that we want. There are all sorts of problems with introducing it—there will be arguments about winners and losers and so on—but it is an idea.
As to the other recommendation for consideration, we reflected on the success—first in analysis, then in presentation of solutions and then in public acceptance—of the Turner commission on pensions, and suggested that perhaps it was time for a welfare commission. Beveridge assessed what sort of society we would have post-war, and what sort of social security system we wanted for that society. There has been no real consideration of the fundamentals since 1945—it is 60-odd years since Beveridge published his report. There are serious grounds for going back to basic principles, and saying, “This is the society, labour market and mobility—or lack of it—that we have. What sort of benefit system do we need that allows that society to function but that also removes all barriers and disincentives to people to work?”
We are firmly of the view—I evangelise about this—that this country has enough people with sufficient credibility, academic rigour and intelligence to staff a commission such as the Turner commission. They could take two, three or four years—I am not bothered—but they would present for public debate and to Parliament a possible model for where we will be in 10, 15 or 20 years’ time.
I repeat: this Department affects about 25 million people and has a £120 billion budget, which represents the largest slice of Government expenditure. We are duty bound to try to simplify it as much as possible.
On a point of order, Mr. Deputy Speaker. You will be aware of an important written statement made today on the reorganisation of local government within England. Further to that statement, have you had any indication from the Prime Minister whether he intends to come to the Dispatch Box to answer the serious allegation that he summoned the chairman of the boundary committee to him this week and instructed him to find a solution for Norfolk and Suffolk together? That goes against the express wish of his own Secretary of State, so we would like to know whether the Prime Minister is running the country to further the best interests of its people or on the basis of satisfying his mates.
I hear what the hon. Gentleman says. I have no knowledge at all that any such statement to the House has already been organised, but the Government Front Benchers will have heard the hon. Gentleman’s remarks, which are now clearly on the record.
I congratulate the Chairman of the Select Committee first on an extremely useful, clear and well thought through report on an absolutely critical issue facing the benefit system; and secondly, on the characteristically strong and clear way in which he explained the Committee’s recommendations, providing the historical context to show how the benefits system has become so complicated. He closed with a reference to Beveridge, which is a very good place to start. If we read the original Beveridge report, we find that his objectives for the welfare system included a degree of simplicity—not complexity—in order that the principle of incentive be clearly embodied within the benefit system. That is one important issue addressed in the report’s extremely wide-ranging recommendations.
The hon. Member for Bradford, North (Mr. Rooney) asked whether complexity was an inevitable consequence of having a welfare and benefits system in the modern age. He was right to highlight the wide range of different circumstances in which people live, which the Minister will no doubt want to talk about. None the less, it is certainly possible to have a benefits system that is a great deal less complex than the current one, which has been characterised by some as the most complex welfare and benefits system in the developed world. Our system includes 51 different benefits with 250 different rates and numerous additional components—disregards, rules and so on. It is fiendishly complicated. The Chairman of the Select Committee seems to have reached an understanding of the system; it takes the amount of time and effort that he has put in to understand the full range of its complexity.
It comes through very clearly in the report that it is nigh-on impossible for a claimant even to attempt to understand the complexity of the particular part of the system with which he is trying to interact. I shall come on to that in more detail later, but one of the key points that emerged from the report was the need to put the interests of the claimant at the centre of an understanding of how the system can be simplified and reformed.
I quite understand the need to put the claimant at the centre, but it is clear from the hon. Gentleman’s own argument that people live their lives in quite different ways. I was a member of the Select Committee in the last Parliament and I well remember the not very successful Doug Smith, chief executive of the Child Support Agency at the time, saying words to the effect that one of the reasons why the system was not working very well in the CSA was that it had not realised what complex lives people led. Fortunately he resigned, but that presents a real difficulty. Because of the complexity of people’s lives, if we try to make a system claimant-centred, it will either be complex or very expensive.
I do not entirely agree with the hon. Gentleman. I shall be identifying some areas, many of which the Committee’s report also identifies, in which the system can be simplified in a way that is in the interests of the claimant and does not necessarily involve the enormous costs that the hon. Gentleman seems to fear.
One of the points raised in the report concerns the equation between means-testing and complexity. It is an important point, to which we shall doubtless return during the debate. We discussed it earlier today in the context of the statement on pensions. Even given the Government’s planned pension reforms, the Pensions Policy Institute forecasts that in 2050, 45 per cent. of pensioners will still be receiving a certain amount of means-tested benefit in retirement. That is an area in which the issue of means-testing and complexity is critically important.
The report also gives examples of circumstances in which people must undergo multiple different assessments in order to secure multiple different benefits. That too could be rationalised. It was interesting to hear the sensible proposals of the Minister for Pensions Reform today. He spoke of linking pension credit applications with applications for other benefits, including housing benefit, by means of a single telephone call. If such improvements can be achieved in that relatively small but important section of the claimant population, surely they can be achieved throughout the benefits system.
Complexity obviously gives rise to issues related to data sharing and the way in which data are transferred, highlighted recently by the loss of data and concern about data security. During the passage of the Bill that became the Welfare Reform Act 2007, considerable new information-sharing powers were agreed between the DWP and local authorities with a view to both providing better anti-fraud measures—which is important—and allowing, potentially, a more joined-up system for processing claims. All such practices carry risks related to data sharing, and the Minister may wish to say something to reassure claimants about the Department’s data-sharing practices. A raft of questions on the subject that I tabled a couple of weeks ago still have not been answered. I look forward to receiving, in due course, a bit more information about the way in which those systems currently work.
The report also refers to complexity at the point of receipt of benefits, and to the electronic benefit payment system that is used in California. I believe the Committee visited California.
Such trips are beyond the purview of the Scottish Affairs Committee, on which I serve, but it seems to have been a very useful visit. In their response to the report, the Government describe the Post Office card account as having been modelled on the Californian system. It would be interesting to hear from the Minister what stage has been reached in the process of awarding a new contract for the Post Office card account, which has been going on for some time.
The degree of complexity in the system clearly has the potential to cause worrying and damaging consequences, which are highlighted in the report. The first involves benefit take-up. I believe that there is considerable evidence that it is partly because of that complexity, the confusion that arises from it, and a sense that the system is highly intrusive, that many older people who are entitled to pension credit do not claim their entitlement. Last week the National Society for the Prevention of Cruelty to Children warned that, as well as worries about information sharing and the security of data, a sense of being at the margins—particularly among the most vulnerable claimants—might affect decisions on whether to claim benefits.
The hon. Member for Bradford, North dealt effectively with issues of fraud and error. There is clearly a relationship between complexity and fraud, and the detection of fraud, but it is important to bear in mind that what is described as fraud often starts as a straightforward misunderstanding caused by the complexity of the system, which can build up over time.
It is interesting to note that although the fraud figures have been falling, which is welcome, the figures for official error have not; in fact, they have been going up. One wonders to what degree that is a consequence of either the complexity of the system or the fact that there are significant ongoing staff reductions and changes within the administration of benefits which then cause official errors to increase. If we have a system where fraud has been cracked down on but official errors are increasing, there is an element of taking with one hand and giving away with the other.
The Government must ensure that there are proper systems in place, particularly as in the end it is claimants who suffer from official errors, especially when they result in benefits not being paid or benefit payments being delayed. I have certainly noticed an increase in such cases in my constituency; they might involve the time taken to pay benefits, paperwork getting lost, or the centralisation of benefit claims in large call centres causing problems in terms not only of getting through, but of information being recorded accurately and processed in a timely way. All those problems are, at least in part, consequences of the complexity of the system, which needs to be ironed out.
The report also highlights the important area of work incentives. Particularly in relation to high marginal deduction rates, work incentives can suffer as a result of a highly complex benefit system, especially one that is so hard to understand. It is now almost always the case that someone would be better off in work—we might talk about that further—but many people do not understand that they would be better off in work because the system is so fiendishly complicated. Reference has also been made to the impact that this entire process has on staff—on staff morale and staff understanding of the system. That is an important point, and the Minister must address it.
The report addresses in particular the question of the better-off calculation. It is almost impossible for any ordinary mortal to calculate for themselves, starting from whatever their circumstances happen to be, whether they would be better off in work. The Government have recently proposed that everyone who goes into work will be at least £25 better off—a better-off guarantee, so to speak. However, I was worried to note that that guarantee does not, as I understand it, take into account the impact on passported benefits, such as free school meals and prescription charges. Although the Government might well be able to make that guarantee in terms of the basics of benefits and tax credits, account must also be taken of the wider impact that that extra income will have in other areas of people’s lives. Travel costs must also be taken into account. I noticed that the Government statement referred to the concept of reasonable travel costs, but there might be quite a difference between what are considered reasonable travel costs by a constituent of mine in the highlands and by someone using the bus system in a big city—or by people in other rural parts of the country. A great deal more needs to be done in understanding what truly is a reasonable travel cost. That must be done, if that better-off issue is to be properly addressed.
My next point is that a complex benefits system leaves many claimants confused and having difficulty in understanding how the amount of money they receive is calculated—how those calculations are arrived at, and why they might or might not be entitled to different benefits at different times. That is made worse by the often lengthy form-filling processes people have to go through. Recently, a constituent came to my office asking for help in filling in the housing benefit application form, which was a lengthy document with an even lengthier set of explanatory notes. I think I was just about able to help, but it is an extremely complex and difficult process. Such processes can often lead to frustration, as information that is recorded on a form might be entered—perhaps inaccurately—into a computer system, and there is the “computer says no” phenomenon, in which people get a letter saying, “Your benefit application has been refused” and they then need to go through a lengthy process to put things right.
The Select Committee report also addressed the important question of costs, particularly in terms of telephone systems. It rightly identified the use of 0845 and 0870 numbers for helplines and in call centres. They are proliferating in the benefits system now that face-to-face contact appears to be a thing of the past in the Department for Work and Pensions. Those costs are enormous. Although the assumption is often made that people have a landline, so the rates are relatively cheap, the social fund’s evidence is that up to half of the calls it receives are made from a mobile phone. Depending on the network operator, when someone calls an 0845 number, or even an 0800 one, from a mobile phone it can cost up to 40p a minute. They might end up being on the phone for anything from 10 to 50 minutes, depending on the helpline that they are calling and the reason for doing so. That soon adds up to a substantial sum that people are being asked to pay simply to get what most would say is their entitlement under the welfare system, which is supposed to be available to all.
I entirely agree with the hon. Gentleman. Does he agree that paragraph 15 of the Government’s response, on the 0845 numbers, is rather a weak response and that it is based on a misunderstanding? I understand that calls to 0845 numbers cost four or five times the cost of a regular landline call, so a local call on the regular landline might be 1p a minute whereas an 0845 call might be 5p a minute. We all know how long people may have to wait on the phone, and these interviews can be lengthy. Is he also aware that last December Lord Warner, who was then a Minister in the Department of Health, put out a circular specifically discouraging general practitioners’ surgeries from using 0845 numbers? These numbers are another proliferation of back-door charging, but they are particularly distressing in respect of the Department for Work and Pensions, which deals with some of the most vulnerable and poorest people in our society.
I could not agree more. The hon. Gentleman rightly points out that these calls are more expensive even from a landline, and they can be massively expensive from a mobile phone. The Government often respond by saying that they do not obtain any financial benefit from these numbers, but that is not the point, because our constituents pay that money. It does not matter who the money is going to. We are talking about people who might be seeking to claim benefits amounting to £40 or £50 a week, so if they spend 50 minutes on their mobile phone calling a helpline that charges 40p a minute, I believe that that adds up to £20—the hon. Gentleman is better at maths than I am—and a significant chunk of the money that they hope to claim.
The Government need to do two things. They must make 0800 numbers standard throughout from landlines, and they must work with mobile phone operators to get the costs as close to nil as makes no difference.
Or 03 numbers.
Or 03 numbers, as the hon. Gentleman says. It is a consequence of a situation that I described earlier that these systems appear to be set up in the interests of the system and not in the interests of the claimant. It is crucial in the development and simplification of the benefits system that the claimant’s interests come first. This could be a quick win for the Minister, because the sort of instruction that was issued to GPs could equally be issued across the DWP, and I am sure that new phone systems could be put in place so that people calling the social fund helpline before Christmas do not have to pay huge sums. I hope that she will explain what she will do to make that happen. This situation is a consequence of what my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) and I have described as the faceless state. The DWP is at the forefront of an increasingly faceless and bureaucratic system, where the system’s interests are put far ahead of the claimant’s.
I have been asked what can be done to promote the simplification of the benefits system. The first and crucial point, which the Committee makes in its report, is the need for drive and vision at a high level behind this process. The report is striking, and the language that it uses is strong for a Select Committee report. I did not mean to scare the hon. Member for Bradford, North, who is its Chair, but it came across powerfully to me that the Committee’s analysis was that there is not a great deal of drive or vision at a high level behind the benefits simplification process.
Even in the hon. Gentleman’s attempt at the close of his remarks to be kind to the Government in this area, he damned them with faint praise. He mentioned one or two small-scale improvements, but the report makes it clear that that drive at the high level does not exist, that the benefit simplification unit is simply not able, on its own, to deliver and develop this agenda, and that without the high-level commitment this agenda will not progress as it should. That is particularly the case in respect of another point on which I strongly echo the Committee; there is a need for a joined-up approach between the DWP and Her Majesty’s Revenue and Customs, and between the benefits system and the tax credits system. The tax credits system is part of the benefits system and should be seen as such, and there needs to be a much more joined-up approach.
We have talked about the idea that the DWP should be responsible for tax credits as well. The programmes are trying to do the same thing. The Chairman frowns; perhaps he thinks that the DWP is not up to it. It certainly seems clear from its performance that HMRC is not up to it, which prompts the question of who would be up to it under this Government. That question may be outwith the scope of this debate.
One area that could provide that joined-upness is the Social Security Advisory Committee. I am deeply disappointed that the Treasury is still unwilling to give it the same remit on tax credits as it has on the benefits system.
The “tell us once” initiative and the shared application process is another area where simplification could proceed. Today’s announcement for pensioners was an example of what can—and should more often—be done.
Another area that causes people to suffer is benefit assessments. A constituent of mine was being assessed for incapacity benefit, industrial injuries disablement benefit and disability living allowance. Those three medical assessments took place in the same centre with the same doctor, each separated by a week. Over a three-week period, that person had to go back and forwards three times. I went to the centre to ask for an explanation, and I was told that the problem was that the benefits were handled in different areas. The systems did not talk to each other and they could approach the claimant only once they received the message that he needed an assessment. The idea that someone should have three separate assessments for three separate benefits in the same place three weeks in a row is absurd. In relation to disability benefits at least, the Government should consider developing a core assessment, so that it can be shared between the different systems to try to make the process easier.
The Committee rightly refers to the idea of a single working-age benefit and sets out a model for that in annex A of the report. The Institute for Public Policy Research has also made recommendations along those lines and my party adopted it as a policy objective at our recent conference. David Freud’s important report refers to it as a key aspiration. The Chairman of the Committee is right to highlight the complexity of making a change on that scale and the associated difficulties, but the idea has important advantages in principle and in practice. There would be a clearer difference between a benefit designed to replace lost income and those benefits that are there to meet the extra costs that people may have, for example, through disability. Eligibility for those extra cost benefits would not depend on whether someone was out of work, as incapacity benefit does, or employment and support allowance will.
On pensions policy, I know that the Liberals want a universal citizen’s pension. Would they also like to see the end of the contributory principle when it comes to welfare payments?
The contributory principle is important, and it was addressed in the report, which makes it clear that there are real difficulties, not least in terms of people’s understanding of the benefits system. We have not proposed the abolition of the contributory principle across the board, but the Committee’s report makes interesting reading for anyone who might want to further that agenda. The contributory principle certainly has implications for the complexity of the system and thus for people’s understanding of it, so the hon. Lady makes an interesting and important point.
The single working-age benefit would also have advantages in terms of incentives to work. As identified in the report, drive, vision and leadership are needed to set that high-level objective and make progress towards it over time, in the way in which the Government of New Zealand have done. I had the chance to discuss that with some of the officials in the department working on the issue in that country, and they recognised the complexity of the transition, including grandfathering existing claimants and so on. Nevertheless, it would be a clear objective. I think that is the right direction for our benefits system.
Does the hon. Gentleman agree that the next logical step might be to have a guaranteed minimum annual income, depending on an individual’s circumstances?
That is not my party’s policy, but I noted with interest what the Committee proposed in its report. The suggestion in Government’s response had many of the characteristics of a minimum income, and it is certainly worth further debate. The objective is the right one, and the main questions are to do with implementation.
The simplification of benefits is crucial for the system’s future, especially given that millions of people rely on the money that they claim to stay out of poverty. I therefore hope that the Minister will take careful note of what the report says, and of the points made in this debate. The simplification agenda needs a good kick from someone at ministerial level to replace the lack of vision and drive that the Committee has rightly—and sadly—identified.
It is a great pleasure for me, as a member of the Work and Pensions Committee, to contribute to this important debate, and to follow on from what our Chair said earlier. He outlined in detail the Committee’s recommendations, and set the historical context for the simplification of benefits payments. The system has been growing in complexity over 30 years, not just the past two or three, and it is about time that we looked at the wider picture.
I shall begin by running through some of the problems identified by the Committee. We noted that people frequently encounter problems with computer-generated letters and with long waiting times at the end of a telephone, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) reported. In addition, difficulties are caused by contact centre staff who follow their scripts in a rigid way that means that they do not respond flexibly to those who ring them up. Problems also arise out of the complex interaction between benefits and tax credits, and people find it hard to acquire and understand the “better-off” calculations. In addition, the legacy benefits system to which my hon. Friend the Member for Bradford, North (Mr. Rooney) referred is both costly and complex.
I shall return to some of those matters in more detail later, but first I refer the House to the third recommendation in the Committee’s report. It is important, because we want the Government to take a wider view of benefits simplification and of the system that they want to have in place, rather than adopting a piecemeal approach that merely involves dealing with individual benefits. We therefore ask whether all existing benefits are necessary, or whether some might be merged. We also urge the Government to examine the way in which the interaction between benefits and qualifying arrangements can differ, and to look at the overall purpose of the benefits system. That last idea sounds easy, but the world of work and society has changed since the system was first introduced. Our approach offers a new perspective, and it is one that I hope the Minister will take into consideration.
Why do we need to simplify the existing benefits system? One answer is that we need to make life easier for both claimants and staff. For instance, how many times have we, as Members of Parliament, had constituents come to us to complain about computer-generated letters? Such people may have received three letters from the same department—very often the Child Support Agency, it must be said—on one day, and another three on another day, but can they always work out what money they should get and when? No, they cannot.
Computers can do wonderful things, but someone has to give them instructions. Sadly, letters that can be generated at the push of a button do not always serve the interests of human beings, and that is a problem that I hope that the Minister will look at.
The point about long telephone delays has already been raised. Not only are such delays expensive for many clients, they are hugely frustrating. By the time the client speaks to the person at the end of the phone they are angry and may raise their voice, so the member of staff has to calm down a frustrated and angry client before they can talk to the client about their benefit entitlement. Furthermore, if the person at the end of the phone rigidly follows their script, they cannot deal with the complexity of people’s lives, especially people who are entitled to a variety of benefits. A script can be of help to staff in contact centres, but they need to be trained to go beyond the script sometimes, so that they do not have to refer the client to many other people for an answer.
How can clients be expected to understand the complex interaction between benefits and tax credits? That complexity leads to non-take-up. As we are all aware, many people do not take up benefits because they do not understand how they work. Complexity leads to both claimant error and official error. The Chairman of the Committee outlined some of the tremendously complex aspects of the benefits system: for example, there are four sets of rules about backdated benefits.
The appeals system shows that the Government’s intention to get things right at first contact with a client does not always work. All too often, the client appeals and their case is upheld. We need to make sure that the right decisions are made at the first contact.
Our report referred to the “better-off” calculations. If we are to convince people to come off benefits and go into work we need to get those calculations right, because people need to know whether they will genuinely be better off in work. It is important that we look at passported benefits such as free school meals and prescriptions. If a lone parent with three or four children gets a job, she will have to take into account the fact that in future she will be paying for school meals, which add up to a substantial amount each week, and she will have to pay for prescriptions for herself. If we do not give her full and comprehensive advice she will not be able to make up her mind whether she would be better off, so the calculations must be an honest assessment of all the financial implications of moving off benefit and into work.
Some complexity in the system may be not only necessary but desirable. I agree with the Chairman of the Committee that we cannot make the system so simple that there are only one or two benefits, with no add-ons. If we fail to recognise the complexity of people’s lives we shall let down some vulnerable people. It was put to us that individual claimants and members of staff might have different definitions of complexity.
My hon. Friend has done a lot of work with the organisation Every Disabled Child Matters, whose evidence to the Committee made it clear that in some cases complexity in the system is a good thing, if it means that vulnerable families or families with disabled children get more money than if the benefit had been universal. Does she agree?
I agree entirely with my hon. Friend, who has anticipated what I am going to say next. The evidence that we received from the Every Disabled Child Matters campaign and the Child Poverty Action Group highlighted the fact that some complexity, to reflect the special circumstances of some people’s lives, is desirable. However, it is undesirable for those people to have to go through a hugely complex system themselves. They ought to be able to access the information easily. I will return to that point in a minute.
The Every Disabled Child Matters submission to the Select Committee listed the many benefits, credits and grants that a family with a disabled child might be claiming at any given time. It is a long list, but I am going to read it out. Such a family might receive
“Child Tax Credit from HMRC, Working Tax Credit from HMRC if working or Income Support from DWP if not, Child Benefit from HMRC, Disability Living Allowance from DWP, Carers Allowance from DWP, Housing Benefit from the Local Authority, Council Tax Benefit from the Local Authority, Disabled Facilities Grant from the Local Authority, Help with Health costs including fares to hospital from the Department of Health, Grants from the Family Fund”.
It is not just that such families have to deal with Her Majesty’s Revenue and Customs for the tax credit system and the Department for Work and Pensions for benefits. They may also be dealing with the Department of Health and voluntary organisations that support them. They want a system that makes life easy for them.
In the evidence to the Committee, there was reference to the one-stop shop, which in many ways has been the holy grail of the benefits system for many years. In recommendation 23, we ask the Government to look at the feasibility of Jobcentre Plus offices becoming one-stop shops for a range of Government agencies, and we say that in the meantime, the DWP should ensure that its links with other agencies are strengthened. That will help not only those with very complex family circumstances, but those with far less complex circumstances, because they too will avoid having to go to a variety of agencies to get the answers that they want.
The Committee identified some areas of good practice. I do not want the Minister to think that we are here simply to criticise. We received a lot of evidence about complexity and how it affects people’s lives, but we were heartened by the fact that the Government have—through various pilots and through joint working, especially with HMRC and local authorities—delivered more integrated patterns of working. I hope that they will spread those examples of good practice so that the needy and vulnerable people whom the system is designed to look after will get the support that they need. The Government have set up a simplification unit in the Department, and I know that the disability and carers service is looking at its computer-generated letters.
Finally—because I know that colleagues want to speak—I want to make a point in support of the Chairman’s remarks about the importance of our role in Westminster. In 1998, I spoke in a debate in the Chamber on the then Social Security Committee report on what was called the benefits integrity project. BIP was set up in the last few weeks of the Conservative Administration, and the Labour Government inherited it. If any scheme caused more chaos than BIP— [Interruption.] Well, perhaps the Child Support Agency did. However, BIP certainly caused administrative chaos and chaos among claimants.
In that debate, one or two Members of Parliament said, “It’s disgraceful that decision makers for disability living allowance are causing so much panic among DLA recipients by their implementation of the benefits integrity project.” I pointed out to Members on both sides of the House that the decision makers dealing with BIP were my constituents in Warbreck house in Blackpool. I said that we Members of Parliament had given them that job; we had determined the rules. They were working hard to implement the rules that we had set. If they were failing, it had to do with the task that we set them.
We in the House have a responsibility to make sure that benefits are as simple as possible to administer, and are complex only where that is vital to meet the special needs of the most vulnerable groups. We have to ensure that there are sufficient well-trained staff to deliver that service. Above all, we must put the claimant first and make the system as simple as possible for them. I know from my visits to Warbreck house and the disability living allowance headquarters that our staff do their best. They work very hard, but sadly, the benefits arrangements system is still too complex. Work still needs to be done, and I look forward to further progress.
It is a pleasure to follow the Chairman of the Select Committee on Work and Pensions, and my fellow Committee colleague, the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble), on this particularly important subject. I agree with both speakers’ initial comments: we have one of the most overcomplicated benefit systems in the world. That point was also made by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander). We have an unacceptably complicated system. One need only look at the extent to which the advisory guidelines for the benefit experts have multiplied to understand that we are well past the point of being helpful, and well into the territory of nightmares. I think that the Chairman mentioned that one book has gone from 250 pages to 1,600, and the other has gone from one volume to 32.
Hon. Members on both sides of the House have given facts and figures from a technical point of view. It might help if I illustrated the problems that the complexity causes with a couple of real-life examples. The first example was first given to the House by my hon. Friend the Member for South-West Surrey (Mr. Hunt) in debate on a ten-minute Bill that he presented in the Chamber on 20 June this year, which I had the honour to co-sponsor. He mentioned a gentlemen who had been hit by a runaway car while walking along the road. My hon. Friend said that
“he ended up in a coma and when he came round he had an acquired brain injury. As a result, he was unable to continue with his job. Someone in that situation is eligible for up to eight different benefits. If he were to apply for them all, he would have to answer a total of 1,275 questions over 352 pages.
Let me put that in context. An A-level student doing maths, physics and chemistry has to answer 510 questions. Someone applying to do a masters in law at Harvard has to answer 54 questions. So, our welfare state, which is supposed to be the pinnacle of a civilised society, makes a man with an acquired brain injury answer more questions than our brightest A-level students or our most ambitious lawyers. That cannot be right. I wondered whether, because disabilities are complicated, we needed to ask all those questions, but in fact 80 per cent. of the questions are repeated. A third of the questions are repeated twice and a quarter are repeated four times. Think not about the waste of employing Department for Work and Pensions officials to process the same information over and over again. Think not about how that money could be put to much better use. Think instead of the man with an acquired brain injury and the signal that this sends to him about our willingness as a society to help him piece his life together. Think also of those parents who discover that they have a child with severe disabilities and the signal it sends to them that we ask them to answer more questions than if they were applying for a mortgage, a credit card or a bank account.”—[Official Report, 20 June 2007; Vol. 461, c. 1379-1380.]
That is the human cost of what we are trying to deal with. It is small wonder that we all agree that the situation is unacceptably complex.
The second example is in the written evidence given to the Select Committee inquiry by Hertfordshire county council, which is quoted on page 16 of the Committee’s report. The council gave the example of two clients, a disabled pensioner and their partner. The written evidence states:
“They each have a full retirement pension. With the small occupational pensions that they have, they are just above the threshold for getting Pension Credit but they get partial help with rent and council tax. The disabled person claims Attendance Allowance which is successfully awarded.”
This is where it gets horrible:
“The carer is then told about Carer’s Allowance and makes a claim. It then has to be explained to the carer that they will get a letter disallowing their claim, as their retirement pension is higher than the Carer’s Allowance. Armed with that letter, they then have to reapply for Pension Credit and may now qualify because of the inclusion of a carer premium in the calculation.”
I hope the House is following this carefully. The written evidence continues:
“If Pension Credit is awarded, they will get additional Housing and Council Tax Benefit. If Pension Credit is not awarded, the carer should still get some additional Housing Benefit and Council Tax Benefit on application.”
Hertfordshire county council goes on to say:
“It is almost impossible to explain this sequence of events to a lay person. Advisers are telling them that, if their income goes up, by virtue of the attendance allowance, they have to claim an additional benefit that we know in advance they will not get, in order to get fresh or higher entitlement to other benefits that were previously refused or reduced because their income was too high!”
In his correspondence with the Government on the subject, has my hon. Friend noticed that clients, as our constituents are called, are supposed to understand these systems and take some sort of responsibility for something that it is almost impossible to explain to them?
I thank my hon. Friend for that intervention. I shall come to the problems of unintentional error by claimants, caused by precisely the situation that he describes.
We have had a series of examples and analyses of the kinds of complexity that we are dealing with. The causes of that complexity can be boiled down to six pathologies—six underlying problems that we must address—which I shall deal with in no particular order of importance. First, there is means-testing, up front or once a benefit has been granted and we are into the territory of benefit withdrawal rates.
Secondly, anything that requires people to fill out a long and complicated form to explain their financial situation, and then to fill out yet more forms every time their finances change, is a huge layer of complexity—problems arising from changes of circumstances. Anything that requires people to update bureaucrats about changes of circumstances, such as changes in family circumstances caused because they have got divorced, left their partner or got married, as well as the financial alterations that I have just described, creates horrendous layers of complexity.
The best example, perhaps, is people who are likely to take temporary jobs and cycle in and out of work frequently during the year. They have to go on and off benefits, and on and off tax credits. By and large, the delays in processing those applications mean that they are always behind and out of date, and just as the administrative arrangements are becoming organised for a person’s current situation, life changes again and they have to go back to square one. Small wonder, therefore, that getting a job is not only difficult for those people, but discouraging.
Thirdly, we have far too many tightly drawn small-scale benefits. We have already heard two different figures during the debate. One was 51 different benefits, but the Chairman of the Committee counted 40. I suspect that if we included all the passported benefits, we could probably come up with a third figure. All those narrowly drawn benefits have narrowly drawn eligibility rules, which are all different. That means that if people have to apply for multiple benefits or move off one benefit and on to another, there are yet more forms to fill in. The first example that I gave of the gentleman who could have applied for eight different incapacity benefits illustrated that nicely.
Fourthly, the linking rules are probably more complicated than the benefits. Every time people move off one benefit and on to another, then back again on to a third, there are linking rules about backdating and the interacting effects. If claimants thought they were confused when they looked at the benefits, the linking rules would drive them to drink when they tried to understand them.
Fifthly, as the Chairman of the Select Committee mentioned, Members of the House have a propensity to introduce regular amendments and initiatives. We all think that we can improve things and make the system better, but every time we lay yet another bright idea on top of the already toppling complex system, it just makes things worse. We need to understand that if we are to introduce amendments, they must reduce the total amount of legislation and the total complexity, rather than add to them.
Finally, another area of terrible complexity is straightforward administrative inefficiency; we have heard examples of that from both sides of the House. The hon. Member for Inverness, Nairn, Badenoch and Strathspey mentioned someone who had to turn up three times, roughly a week apart, to the same centre to have the same medical assessment for three different benefits. That is a classic example of administrative inefficiency, and I am sure that Members on both sides could come up with dozens and dozens more.
Those are the underlying causes of the symptoms, examples of which we have all been exchanging, but we also need to bear in mind that making things tidier is not just an academic exercise; there are also serious and vital advantages to having a simplified benefits system, and it is worth reminding ourselves about them because they are the prize at which this debate is aiming. They are simple, and there are far fewer of them than the causes of complexity—there are three or four at most.
First, we can reduce error. We can do that on behalf of staff. They need a PhD to understand most of what is going on in the system at the moment; it is therefore understandable that mistakes are made—and that is before we move on to the problems caused by computer systems, which my Committee colleague, the hon. Member for Blackpool, North and Fleetwood, mentioned. The complexity is also a problem for claimants, because as we have just heard, they cannot be expected to understand the entire system. They are even less likely to understand it than the people who work as benefits experts within the system. Inevitably, claimants will make mistakes. That makes life hard for them and potentially exposes them to accusations of fraud even if they make a mistake in good faith.
The second advantage to simplification is that we can improve take-up. It is striking that child benefit, one of the simplest benefits, has one of the highest levels of take-up of any of them. It is one of the most successful, and the impact on poverty and on reaching the Government’s stated objectives for the benefits system would be profound if we could improve the take-up of other benefits in the same way. That might cost more, but I understand that the Government have reserves in their financial estimates.
The hon. Gentleman has made an important point. Is he aware that, taking unclaimed tax credits and unclaimed benefits together, about £10 billion was not taken up last year?
There are numerous different estimates of the size of the problem, but I completely agree that there is a significant problem with low take-up. The Government have admitted that too; they have put aside a reserve for improvements in take-up if that can be achieved. They also aim to deal with the problem and they appreciate that it has a financial impact.
The third and perhaps most important advantage of simplification is the potential improvement in work incentives. During this debate, we have heard about the better-off calculation. It might help if we pause to understand what that involves: a half-hour interview with a benefits expert in a benefits office. The expert has the advantage of a large and complicated piece of software to do the calculation. I am sure that everybody here will agree that that is not a work incentive. Even if the better-off calculation comes out positive, as it does in most cases nowadays, the person has to go to somebody else’s office, sit down with them for half an hour and have a complicated and intrusive conversation to work out that they would be better off. That is the very opposite of a work incentive, which has real force only if the job offer or job advertisement in the jobcentre or anywhere else makes a person think, “Aha! If I take that job, it will pay me.”
Waiting for three weeks for an appointment and going through the process that I have just described is not a work incentive in any meaningful way, although it might be arithmetically correct that the person would be better off after the calculation. Simplification and making the point abundantly clear to everybody when they make the personal decision about whether they should go for a job, rather than later on, is essential and will be a vital and significant advantage of simplification if it can be achieved.
What are the Government doing to move towards that agenda? To be fair, the Committee noticed significant signs of progress in some respects. We were particularly impressed by the Lean pathfinders, which are an attempt to produce an almost Toyota-like continuous improvement cycle by asking staff who are involved in benefits processing how to improve what they are doing, then taking their ideas, getting them into the system fast and putting them into practice. That struck all of us as a wholly admirable initiative that should be rolled out quickly. Secondly, there is “My DWP”—an attempt to solve some of the problems of multiple different application forms, with a pilot in Wallsend. That could also be tremendously valuable. Thirdly, let us not forget the efforts of the benefit simplification unit, which is small but none the less has a role to play and has had some success in preventing the problem whereby successive waves of improvements stemming from suggestions in this House add to complexity. The unit provides a valuable service in spotting which proposed improvements will add to complexity and which will reduce it. That is an essential service that has been long neglected.
The problem with all three of those Government initiatives, important as they are, is that they are essentially bottom-up. They try to create improvements in administrative efficiency and better processing in the existing system but make no attempt to address some fundamental problems of benefit design. Four of the six causes of complexity that I mentioned relate to means-testing, changes in circumstances, having too many small benefits with too many tightly drawn eligibility rules, and the linking rules. None of the initiatives addresses the fundamental design problems that cause those difficulties. They address two of the six causes of complexity—regular amendments and initiatives and administrative inefficiency—but not the four most difficult and fundamental causes. The Government’s approach is rather like that of the man who was found in the middle of the night searching for something under a street light. When a passer-by asked him what he was doing, he said, “I’m looking for my keys.” The passer-by, trying to be helpful said, “Where did you lose them?” The man replied, “I lost them about 100 yards down the road, but there’s no street light down there so I’m looking for them over here instead.” The Government are not looking where the real problem is. They must face up to the fact that if they are to make significant progress on these fundamental design issues, they will have to try an awful lot harder and face up to some much more knotty problems than they are currently willing to address.
It would be perfectly reasonable to say, “This is hard, and we haven’t got all the answers.” Nobody has all the answers. However, the Committee’s criticism, which was echoed by the hon. Member for Inverness, Nairn, Badenoch and Strathspey, was that we do not see sufficient evidence of vision and drive in addressing the four, admittedly difficult, fundamental problems in our benefits system. I am hoping to hear from the Minister about that. In our report, we attempt to start a national debate. As the Chairman of the Committee said, a commission on benefits reform may be necessary.
The Committee’s proposal is not perfect or complete —we all admit that it has plenty of flaws—but we all signed up to it as a thought-starter: a way of getting the debate under way and trying to tickle from the Government some sort of statement about their vision in terms of creating a drive towards the kind of simplified benefits system that we describe. We are saying to the Government: “Here is a starting point for this debate. Please will you either come up with a better vision or tell why this one is wrong, so that we can at least start to create the sort of national conversation that will be needed to create the democratic consensus across the political spectrum and get this solved?” It has been done already; the Government had the courage to do it on pensions reform, and a similar sort of initiative is required in this case.
We came up with such an idea. It is in annex A to the report, and I am pleased to hear that the hon. Member for Inverness, Nairn, Badenoch and Strathspey has taken the trouble to read it. That probably makes three of us who have actually got through the thing. [Interruption.] Three of us outside the Committee, I should point out. We had high hopes on the Committee that the Government would use that idea as a starting point, and as a springboard. We hoped that we would see some sort of attempt to engage with it in the debate.
The idea has flaws, but there are at least two things that are seriously worthy for consideration as a thought starter, which might lead to the building of a consensus. One is the idea that we should combine working age tax credits, jobseeker’s allowance, income support and the new employment support allowance in one overall benefit, with the condition placed on it that a person would have to be willing and able to work before it was paid to them. That may or may not be a good idea, but it is seriously simpler than what we have at the moment, and it avoids an enormous amount of the problems related to change of circumstances and to the cycle of people going in and out of work that I described before. It also avoids the problems relating to the linking rules.
We proposed a marginal deduction rate as a clawback mechanism to avoid the problems of means-testing, where anyone who went into work would have their benefit withdrawn at a particular rate to be decided by the Government. Such a system would be an awful lot faster and simpler to administer than the current tax credit system, because it would simply require the Department for Work and Pensions to inform Her Majesty’s Revenue and Customs of a single number for every person earning a wage, which would then be withdrawn through their tax code. Again, that may be a good idea or it may not, but all we wanted was a constructive and considered response from the Government. I am sad to say that that is not what we got. On page 18 of the Government’s response, they afforded the entire idea only this:
“The Committee’s model is more radical—a form of Citizens Income”—
incidentally, it is not. Then went on to say:
“As described it appears, at least at first sight, to carry a risk of both very high expenditure and reduced work incentives.”
Full stop, end of response.
As an attempt to start a debate, that is absolutely pathetic. I am sad to say that it is not just pathetic, but also intellectually lazy, complacent, arrogant and weak, and I believe that it shows that the Government are scared. I know that we need to do better, and I sincerely hope that the Minister will say how the Government propose to do better.
I intend to speak for only a few moments because I do not want to repeat all of the points already made by other hon. Members. We all agree that the benefits system in this country is extremely complicated. We all agree that it should be simplified, and I suspect that we all agree that we are not quite sure how that might be achieved. Achieving that end will probably be a lot more complex that it first appears. The hon. Member for Weston-super-Mare (John Penrose) was perhaps slightly modest in not explaining that most of the ideas in annex A, which he has just outlined, were his own, but he is right to say that the rest of the Committee bought into them.
I have been attracted to the concept of a single working-age benefit since I joined the Select Committee on Work and Pensions in 2001. However, the longer I have looked at how it might work in practice, the more I have realised that a single working-age benefit would be much more complex than some of those who propose it lead us to believe. It is superficially attractive because it seems simple and clear, but we need to ensure that those who lead complex lives or have complex needs continue to get the support that they do under the present system, despite its complexities and all the forms that individuals have to fill in. As a country, we need to decide a way forward, and work out the best way to simplify the benefit system in order to get the son of Beveridge; 60 years on, our country is a different place, and we need a very different benefit system.
The proposal in the Select Committee report for a welfare or benefits commission along the same lines as the Turner commission on pensions is the right way forward. There has been a unified voice in the Chamber this afternoon, saying that that would allow the Government to take time, stock and even a step back and begin to consider the benefits system as a whole rather than its individual pieces, and instead of tinkering with improvements and reforms here and there. We all know that reforming one part of the benefits system often has unintended consequences and knock-on effects on other parts. Therein lies the problem and the complexity.
Often, for the best of reasons, attempts have been made to simplify benefits, but we have ended up with historic rights, which the Chairman of the Select Committee mentioned this afternoon. For all the reasons to which he referred, and because we still operate systems to ensure that individual claimants are not worse off in cash terms, we have a complex system.
The Government now have an ideal opportunity to act because, for the first time in several years, a brand new benefit is being introduced—the employment and support allowance. The basis for that allowance could be the basis on which a single working age benefit could work. Some of the groundwork has already been done, but we need a much broader investigation into what a benefits system in the 21st century should be and how the different elements should interact.
I honestly believe that a commission, led by someone of the stature of Lord Turner—I do not think that he would necessarily take it on—could build political consensus. In the same way as we needed political consensus for a pensions system that would last not for 10 or 20 but for 50 years, we need to build a welfare system today that will, like that of Beveridge, last for 60 years. We cannot do that without all-party support, or without engaging with not only people in this place but those who depend on the welfare system, and wider society.
I genuinely encourage the Minister to consider seriously the proposal to set up some sort of welfare or benefits commission to ascertain whether we can progress and have holistic change, which makes sense. That would ensure that we were not back here in five years—
I hope we are back here in five years.
Yes, I, too, hope that we are back in five years, but talking about the commission, not still discussing how awful and complex the benefits system is and how it continues to fail the most vulnerable people in society. I hope that the Minister will take our comments and the proposal for a commission seriously.
I, too, will try to be brief because I support the comments of my colleagues on the Work and Pensions Committee, who made good speeches, and I endorse the report, to which I contributed and was happy to sign up.
Before I came here, I was in discussions with my caseworker. The Minister will receive a bit of an angry letter about my constituent, Mr. Brandon of Leyton. He is suffering from cancer and has survived two attacks of C. difficile. I do not say that the Benefits Agency was not trying to be helpful—it was, initially. It offered him benefits for which he might have been eligible. However, in the end, the position was too complex for it and for him. He has written a sad letter saying, “I now withdraw my claim.” Yet I can look at the case and say that I am sure that he is eligible for other benefits. That is an example of the complexity of the benefits system.
We have a high level of poverty in this country. Indeed, reducing child poverty is one of the Government’s targets. There are two main reasons for that: the fact that benefit levels are too low—I want to make a quick point about that while I have the chance—and the complexity in the system. There is a high level of unclaimed benefits, which just go back to the Treasury coffers and are not redistributed to alleviate poverty. Although that money is allocated initially, it makes no impact, which is a great shame.
Benefit levels are too low. The Child Poverty Action Group has given as an example of that the category of families with disabled members. Under the heading “Adequacy”, the group says:
“The poverty line for a couple with children aged 5 and 14 years is £306, but the out of work safety net income is £204.44—just 67 per cent. of the poverty line income. DWP’s own research suggests that DLA is insufficient to meet the extra needs of disability.”
Only yesterday the Royal National Institute of Blind People lobbied for higher levels of disability living allowance for blind people. I agree with that and with the point that the hon. Member for Weston-super-Mare (John Penrose) made about child benefit being effective and about its big take-up. That could have an impact on meeting our child poverty targets. I argue—I have the floor, so I have the chance to argue—for a higher level for second and subsequent children, which is also part of an ongoing campaign.
On complexity, the main point in my speech is about the case for co-ordinating the criteria, so that organisations such as Citizens Advice can make applications that then link up with each other, and so that if someone is eligible for a benefit, they receive the other benefits for which they are also eligible. When we were in the United States as part of our investigation for the report, we saw that in operation. One particular charity group—the equivalent, almost, of Citizens Advice—had a form on the stocks that could be taken forward and applications made. We are long way from that in this country, which is a great shame. We need to combine a number of the benefits or link the criteria for them.
That relates to the other points made by the Child Poverty Action Group, about a rights-based ethos, which would enable decisions to be challenged where they were thought to be wrong and act as
“a powerful lever to improve decision making.”
The group’s briefing continues:
“Claimants should have access to the information and advocacy that will help them understand and access their welfare rights.”
I have two more brief points to make, about Help the Aged’s representations to us. First, the charity says that there should be more automatic payments of benefits, saying that they should be
“driven forward urgently in order to tackle the problem of low take ups. If implemented well over 500,000 pensioners could be taken out of poverty.”
Help the Aged’s other point is that the Pension Service should have
“the investment it needs to offer Pension Credit, Housing Benefit and Council Tax Benefit to all pensioners over the phone rather than just offering these three benefits to those eligible for Pension Credit.”
The Pension Service currently just has to send out a 28-page form if it thinks that a pensioner could be eligible for those other benefits. We can do a lot more in that field.
A lot more can and should be done. The Committee was right to draw attention to the need for a vision and the drive to implement it. I urge the Minister to that end.
I congratulate the hon. Member for Bradford, North (Mr. Rooney) on securing this debate and on chairing the Committee, and the members of the Committee, many of whom are here today, on their diligence and hard work in holding the Department and its Ministers to account, as is their proper role.
Interestingly, at the beginning of the debate, the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) spoke about the purpose of the benefit system. There are many different analyses of that. A report by the social justice policy group chaired by my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) contained a particularly pithy definition:
“The benefits system plays a crucial role in tackling economic dependency on the state.”
However, it also highlighted the tensions:
“It is necessary to ensure that the most vulnerable people in society are protected against the ravages of poverty, while at the same time avoiding traps for those who could otherwise be earning a living.”
That is important, because most people agree that there is lots of evidence that the best route out of poverty is work. It is important to note, however, that some people are genuinely unable to work, and the benefits system must provide them with the level of support that allows them to live in dignity.
There is general consensus, reflected in the Committee’s report, that the UK’s benefits system is hampered in achieving that by complexity. The Committee’s Chairman highlighted the hugely increased complexity of documentation since his time as a welfare rights adviser. The Committee’s report concluded that, while a welfare system trying to cater for millions of people with many different needs will never be simple, the UK’s benefit system has an,
“unacceptable amount of dysfunctional complexity”.
Therefore, there is a fair amount of work to do.
One underlying theme of the Committee’s report is that the simplification process needs to focus on people—both the experience of those who claim benefits and, as several Members mentioned, the experience of those who run the system, whether in a front-line Jobcentre Plus or in a headquarters, to which the hon. Lady referred. That is why we are considering approaches that have more involvement from charities, voluntary bodies and private companies that already have a great deal of expertise in the area—in particular, an understanding of the personal, emotional needs of people and of how to make the system ever more responsive.
The Committee Chairman acknowledged that good intentions, which are prevalent in this area, often fail to deliver good outcomes. I am happy to acknowledge that the Government and the Prime Minister have a desire to combat poverty, although a number of indicators suggest that they have not been entirely successful. Five million people are on out-of-work benefits, and nearly 1.5 million have been on incapacity benefit for more than five years—up by nearly 250,000 since 2001. The number of young people out of work is rising—1.25 million young people between 16 and 24 are not in work or full-time education, which is almost 20 per cent. more than in 1997. The number of children in workless households is the highest in the EU. Obviously, those issues need to be tackled, and many would be improved were the benefits system less complex.
Part of the complexity comes from having different parts of Government dealing with the system. One or two Members mentioned that tax credits are delivered by Her Majesty’s Revenue and Customs, while many other benefits are delivered by the Department for Work and Pensions. In its recommendation 14, the Committee concluded that
“any attempt to simplify the benefits system must take tax credits into account.”
The Government’s response referred to a number of joint working arrangements between the two Departments. If the DWP and HMRC are to work closely together, it is essential that data are protected. We all know the problems that there have been with HMRC, and it would be interesting if the Minister set out the arrangements that the DWP has in place. I tabled a number of questions due for answer last week about exactly what procedures the DWP had in place for protecting personal data. I am still waiting for answers to those. If all those procedures are in place and well understood, answering those questions ought to be relatively straightforward. The fact that they have not been answered suggests that there might be gaps.
One of the other problems of complexity is error, which several Members have mentioned. I am perfectly happy to accept that some progress has been made, but it is still the case that in 2005-06 there was almost £1 billion of official error and £1 billion of customer error. In fact, error is now a much bigger problem than fraud, as I think the Chairman of the Select Committee acknowledged. That should clearly remain an important focus.
Another problem with complexity is the impact on personal behaviour of means-testing. One or two Members mentioned that up to 40 per cent. of pensioners entitled to the pension credit do not claim it. Proposals in a statement earlier today to make some of the claiming processes more straightforward were welcome. Indeed, the hon. Member for Milton Keynes, South-West (Dr. Starkey), the Chairman of the Communities and Local Government Committee, referred specifically to council tax benefit take-up. A range of issues about data transfer between Departments are relevant to making that more straightforward. That problem clearly needs to be tackled.
Another issue that has not been mentioned was the focus of a report by the right hon. Member for Birkenhead (Mr. Field). As is made clear in that excellent recent report, the tax credit system brutally discriminates against two-parent households because it does not correctly reflect the cost of the second adult in the family. The report specifically concluded that the Government should take the “single immediate step” of ensuring that any new money for the tax credit system
“should be used to lessen and then abolish the system’s discrimination against two parent households.”
That would help towards targeting help
“towards the largest group of poor children”,
which would make a big impact on the Government’s child poverty targets. I am very pleased that at our recent party conference, my right hon. Friend the Leader of the Opposition committed us to removing the couples penalty and moving the working tax credit that couples receive to bring them into line with the rest of the benefits system. According to the Institute for Fiscal Studies, that would mean 1.8 million of the poorest couples with children gaining on average £32 a week.
For purposes of clarity and honesty, what we have had from the hon. Gentleman is a statement, but with no commitment to putting in the money to match the promise.
I thank the Chairman of the Select Committee for the opportunity to say what I was just coming on to in my remarks. The source of the funding for that promise will come out of our reforms to the welfare system and our getting more people back to work. One of the first calls on those resources will be removing the couples penalty.
Will the hon. Gentleman give way?
Will the hon. Gentleman list what the reforms are? He referred to the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), but it is interesting to note that not a single reform to the benefit system was included in his 600-page social justice commission report. It concluded at the end that the issue should be handed over to another commission. Ideas seem to be thin on the ground, unless the hon. Gentleman is going to mention one or two more.
It is very clear that we can save money by moving more people back into work—an objective that the Government share. There are 5 million people on out-of-work benefits and the Government accept that 4 million of them are capable of working. If we make a significant amount of progress towards that objective, we will clearly save a great deal of money.
That is just an aspiration.
It is indeed an aspiration. I am pleased to be accompanied on the Front Bench by my hon. Friend the Member for Hertsmere (Mr. Clappison), who is working on our policy in this area. We have had our recommendations from the social justice policy group, which is continuing with further work, and my hon. Friend will take those measures forward to produce our policy proposals for the next general election—unlikely to be upon us very quickly, giving us more time to flesh out some comprehensive and well- developed proposals.
The Chairman of the Select Committee raised the question whether complexity was indeed inevitable. He suggested that a certain amount of it was. The hon. Member for Aberdeen, South (Miss Begg) said that she had examined our proposals, largely put together by my hon. Friend the Member for Weston-super-Mare (John Penrose), for a single working-age benefit. She said that the more she studied them, the more she was struck—particularly on the basis of evidence put to the Committee by the Every Disabled Child Matters group—by the fact that a very simple benefits system may not be able to deal with people who have more complex needs. Some of the evidence submitted to the Committee referred to the tension between a simple system and one that ensured that help reached those who were most in need. That is clearly an issue with which the Government will grapple.
I want to say something about the benefits that may be claimed by disabled people, although I shall be able to spend slightly less time doing so than I expected. The hon. Member for Blackpool, North and Fleetwood read out a long list of such benefits, and my hon. Friend the Member for Weston-super-Mare mentioned the ten-minute Bill introduced by my predecessor in this job and gave a very good illustration of the human impact.
If Members were to look at all the questions that a disabled person applying for a range of benefits might have to answer, they would be looking at well over 1,000 questions covering hundreds of pages. The tragedy is that fewer than a fifth of those questions are unique. Forty per cent. are repeated on at least three forms and 16 per cent. are repeated on half the forms, which is certainly complex.
I should be grateful if the Minister would consider whether, at least at an initial stage, a single benefit such as disability living allowance could serve as a gateway benefit. Perhaps, with the claimant’s permission, the data provided could be shared and could act as a gateway for other benefits. I think that a Labour Member mentioned that idea earlier. It is not simple, in that it would involve the development of IT systems, with which the Government have not had a huge amount of success so far—although, to be fair, that is a problem with which all Governments grapple—but I think that it would be a positive step.
That may have been suggested by the Conservative party, but the Government like taking ideas away, and we would congratulate them if they took this one away and shared it. In fact, the Select Committee considered a similar idea in some detail during its trip to California: the one-stop application system mentioned by the hon. Members for Leyton and Wanstead (Harry Cohen) and for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander). I commend it to the Minister.
The hon. Member for Leyton and Wanstead mentioned, in the context of a constituency case, people who suffer from ill health and who feel that the last thing with which they want to deal is benefits. Back in 2006, my hon. Friend the Member for St. Albans (Anne Main) presented the Attendance Allowance and Disability Living Allowance (Information) Bill. It dealt specifically with people who, having been diagnosed with a terminal illness, are entitled to claim a range of benefits and find that there is no effective gateway between the diagnosis and the benefits system. That is another issue that the Government could consider.
The hon. Member for Wolverhampton, South-West (Rob Marris) seemed to criticise the Government’s weak response to recommendation 11. That was particularly interesting, given that he is Parliamentary Private Secretary to the Secretary of State for Northern Ireland. It is unusual for someone in that position to be brave enough to criticise the Government, and I hope that it does not cause the hon. Gentleman any disadvantage.
I can think of no better way of ending my speech than quoting the Committee’s own words:
“We conclude in this report that whilst efforts are being made to simplify benefits, the piecemeal approach that the Government has taken so far is ‘nibbling at the edges’ of our vast and hugely complex social security system. We do not deny that tackling dysfunctional complexity is an epic task but we are disappointed that the Government has not set out a clear vision of a simplified system.”
The words “clear vision” probably resonate with the Minister. The Prime Minister, of course, has told us that he will set out a clear vision of the future of his Government. We are still waiting, but perhaps the Minister will nudge us towards that vision when she winds up the debate.
The report continues:
“If simplification is indeed a priority, the Government should outline what a simpler system might look like, steps to reach this goal and set out a timetable to achieve it.”
I hope that the Minister will make some progress towards addressing the Committee’s conclusions.
This has been an informative debate, and I congratulate hon. Friends and other Members on their constructive contributions. In all parts of the House there has been an acknowledgment that for decades, Administrations of all persuasions have been caught in a cycle of constantly adding to the system without necessarily trying to get hold of it in a way that enables us to look forward to change. I shall try to address that subject, as well as the individual points raised by Members.
I congratulate my hon. Friend the Member for Bradford, North (Mr. Rooney), the Chair of the Work and Pensions Committee, on securing the debate and on ably opening the discussion. He has also brought to bear his experience as a welfare rights adviser.
I have done a quick count, and I think that the Department for Work and Pensions provides 22 benefits, five of which are no longer open to new claims; local authorities pay two benefits; Her Majesty’s Revenue and Customs pays four benefits if we include tax credits; and four statutory payments are made by employers, making a total of 32. Therefore, this matter clearly raises challenges for us, but I must add that it is also about the complexities of needs, and that raises a lot of issues in terms of whether we should have a blanket approach. That could be hugely costly to the taxpayer, and having just a single approach across the piece might not be fair in terms of addressing the requirements of those with complex needs. However, we have heard enough evidence this afternoon that there is undoubtedly more to be done in trying to reduce the complexity in the system and in having some analysis of the way forward. The approach must be not only for next year or the next five years, but, as my hon. Friend the Member for Aberdeen, South (Miss Begg) indicated, there must be a generational change for the future, so that we can at least take some steps on a journey towards a destination that—I hope we can achieve a consensus on this—is better than where we are today.
We have set up in the Department a dedicated benefit simplification unit. Every submission I get has a little note from the unit attached to the bottom on whether or not this is helping the system. I hope the House will accept my assurance that I have not had too many disagreements with it on that front, and it is pleasing to see the notes attached to the submissions because they act as triggers for thought. A number of changes have been made in the first year, such as aligning the treatment of charitable, voluntary and personal injury income across all benefits, consolidating more than 200 statutory instruments introduced since the start of the housing benefit scheme way back in 1988, and aligning the capital limits across the working-age benefits.
Further simplifications were included in the Department’s 2007 budget settlement, such as ignoring all final earnings, including holiday pay and pay in lieu of notice, on new claims to benefit. That removed the need for about 1.7 million inquiries to employers each year. My hon. Friend the Member for Bradford, North made that point. I am pleased to be able to say on that front that although the original proposal was that we would do that from April 2008, we actually introduced it from October this year. Again, we met our aspiration of making greater progress in the timing and delivery of that change.
Another simplification was to pay all Jobcentre Plus working-age benefits a minimum of two weeks in arrears on a common pay day. That will remove the current mix of different pay periods and the confusion caused when customers change from one benefit to another. Yet another simplification is aligning the treatment of income from sub-tenants across the benefits system by introducing a flat-rate £20 disregard. Today Members will have heard the uprating statement which announced a further substantial package of measures to simplify the state pension system, including process improvements to enable housing benefit and council tax benefit to be claimed over the telephone at the same time as state pension and pension credit. I think we would all agree that that is the right way forward, and it sets an example of what might be achievable in other areas. Due credit has been given to the way that, particularly in the Pension Service, the opportunity has been taken to look more innovatively at practices and how to carry them out.
We are also simplifying the structure of income support and jobseeker’s allowance by removing the lower rate for 16 and 17-year-olds so that from April of next year single 16 to 24-year-olds will all be paid the same rate. That is another way in which we have removed complexity from the system.
We are redesigning our benefits services. It is the ambition of us all that customers should not have to go from one place to another to get the help that they need. The Department’s change programme will bring in a no-wrong-door approach, which aims to meet the majority of our customers’ needs through a single contact. I appreciate the comments about how we are looking at the Lean ideas and how they can be applied within the Department for Work and Pensions—I was interested in how they could be used in the national health service when I was a public health Minister. Our staff who have been engaged in that work have found it satisfying. They sense that they can have an input that will be listened to, because they are on the front line and know where things work and where they do not.
We are trying to improve our self-service channels. From next spring, customers will be able to access a secure online account via Directgov. As has been said, the future is online. This is about examining people’s need to access these sorts of services. The work that we have done to provide them in community settings for those who could not necessarily afford to have the technology in their own home is one of the ways in which we provide a more inclusive service for people, rather than a service that is exclusive. I shall touch on the important issue of data protection later.
Part of the reason for having that online service is the fact that it will be able to answer a few simple questions in the initial stages. It will then advise customers what benefits they might be entitled to, and work out how much they might be entitled to receive. Importantly, our ambition is that it will signpost them towards other services of which they might not be aware, such as pension forecasts or our internet job bank. We are examining how we can group and package products together to meet the needs of specific groups.
We are again working with others. Mention has been made of our work with Her Majesty’s Revenue and Customs and local authorities to see how we can pull together the areas of benefits, tax credits and housing benefit, which are often seen as separate. We have had success with the initial pilot in the north-east, and the scheme is now operating in seven other areas. It has reduced the amount of time taken to process those different parts of someone’s financial package. In addition, when someone is making the transition from being on benefits to being in work, their knowing that that process and its financial meaning will be worked out quickly is an important incentive. I agree with the hon. Member for Weston-super-Mare (John Penrose) that better-off calculations are useful at any stage, but they are most useful where there is a job for someone to go to, and where people can see joined-up thinking and what things will mean for themselves and their family.
We are working on collecting information once and sharing it more accurately and quickly to make it easier for customers to get the financial support that they need if they lose their job. That enables them to focus their attention on getting back to work. A working group across Jobcentre Plus, the Pension Service and the disability and carers service has been set up to make improvements in how we deal with customers who need access to disability services and working-age or pensions support, and customers making the transition from working-age to pensions support.
A number of contributions were made in this debate. My hon. Friend the Member for Bradford, North talked about error, and I acknowledge that that is an important factor to which we must attend. Initially we looked at reducing fraud, because we saw that as a priority. I think that the loss of resources through fraud is at two thirds of its 1997 level. We are now focusing on the problem of error. In January, the Department launched a comprehensive and ambitious strategy for reducing official and customer error across all benefits, entitled “Getting welfare right”. We aim to deliver estimated savings of about £1 billion over the next five years to 2012. I agree with the comments made about the fact that some of this is helped by simplification, and as has been rightly pointed out, some customers make mistakes because the system is too complex for them to navigate.
My hon. Friend talked about transitional protection, which, again, is one of those legacy issues that we inherited. We heard comments this afternoon about how everybody complains about the system, but there is no shortage of people wanting to add on to the system. We have to be more disciplined about our approach. My final comments will draw attention to the debate that we must have following on from the Select Committee report on how the benefits system of the future might operate.
My hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) made an intervention about council tax benefit. It is a rebate. People’s council tax accounts are rebated at source by the local authority. Renaming it as a rebate may encourage more people to claim, and we will consider renaming it as part of our wider consideration of future delivery.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) made several points. He mentioned the cost of phone calls, and that was picked up by my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble). Concerns have been addressed and we try to keep the cost as low as possible. We are encouraging our staff to make the point that they can ring people back. It is an area that we are keeping under close attention, but people want to be able to ring in to access the services. There has been no reduction in the numbers coming forward and, although it may not be the answer for everybody, phones are available in Jobcentre Plus offices free of charge.
Several hon. Members mentioned data handling, including a couple who said that I had not replied to their questions. They will receive answers to those questions. The Department is conducting a rigorous review of all data handling procedures to ensure that data security is paramount. We have consistently given this issue high priority and we have been praised by the former data protection commissioner for that work. However, nobody in government should be complacent. Whatever procedures are in place, they are only as good as the people who implement them and understand them, and we all need to take responsibility for making them a success.
The issue of the Post Office card account was raised. It has been confirmed that there will be a POCA2. The tendering process is under way and the successful contractor will be announced in the summer of 2008.
Members have rightly pointed out that some disabled people undergo different assessments for different benefits. Not all disabled people claim more than one benefit and clearly we need to be careful in those circumstances not to ask unnecessary and potentially intrusive questions, but we are considering the feasibility of building into the employment and support allowance claims process a way of automatically identifying some cases with potential entitlement to DLA, for example. We are trying to deal with the issues in a more efficient and productive way.
The better-off in work guarantee, which was announced by the Prime Minister and which we are following through in our Department, offers an exciting opportunity to make the chance to move from benefits to work a reality for people. Some potential issues have been raised this afternoon, and we are considering how the scheme might be trialled next year. We will need to see how successful the new guarantee is, but it is an important step forward that will enable us to do much more than at present to convince people that they will have a higher income in work than on benefits.
My hon. Friend the Member for Blackpool, North and Fleetwood talked about the four different sets of backdating rules for different benefits. She was right to draw attention to that issue. From October next year, pension credit backdating rules will be aligned with working-age benefits to make the maximum period three months. At the same time, to maintain alignment, backdating of housing and council tax benefit for pensioners and working-age customers will be reduced to three months. That aligns with the other income-related benefits—income support, jobseeker’s allowance and tax credits. We have a lot of work in progress that will meet the concerns expressed by hon. Members.
My hon. Friend also talked about letters, and we have a review in progress of that area. Any ideas will be gratefully received.
On the question of a single system, I accept that the present system is not perfect. I am not even sure that there is a perfect system, because a single system could be a very blunt instrument under which some people could lose out in a way that none of us would want to see. As with anything, good intentions do not always produce the outcomes that would make a difference. The Committee, the IPPR and others have made several helpful suggestions as to what a better system might look like, and we are on record as saying that there may be advantages in moving to a single system of working-age benefits. I can confirm that we are very interested in the issue. Simplification could make the system more effective, but I warn hon. Members that it is not an end in itself.
The benefits system should be a powerful force for social justice. It should help people when they are in need, ensure that they are not condemned to poverty and recognise the contributions that they make to society, such as caring for others. It should also encourage them to build a better future for themselves and their families. For the vast majority of people, work is the way to achieve all that.
We must promote work as the best route out of poverty, provide value for money for the taxpayer and set clear obligations so that customers understand their responsibilities. We must also ensure that the rules are straightforward and provide fair and consistent treatment. That is the way ahead.
It being Seven o’clock, Mr. Speaker proceeded to put forthwith the deferred Questions relating to Estimates, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates).
SUPPLEMENTARY ESTIMATES, 2007-08
That, for the year ending with 31st March 2008, for expenditure by the Cabinet Office—
(1) the resources authorised for use be reduced by £10,596,000, as set out in HC 29,
(2) the sum authorised for issue out of the Consolidated Fund be reduced by £2,938,000 as so set out, and
(3) limits as so set out be set on appropriations in aid.
Department for Work and Pensions
That, for the year ending with 31st March 2008, for expenditure by the Department for Work and Pensions—
(1) further resources, not exceeding £627,101,000, be authorised for use as set out in HC 29,
(2) a further sum, not exceeding £1,147,101,000, be granted to Her Majesty out of the Consolidated Fund, to meet the costs as so set out, and
(3) limits as so set out be set on appropriations in aid.
Mr. Speaker then proceeded to put forthwith the Questions required to be put, pursuant to Standing Order No. 55 (Questions on voting of estimates, &c.)