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Contracting Out (Functions In Relationto The Welfare Food Scheme) Order 1996

Volume 570: debated on Thursday 14 March 1996

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9.6 p.m.

rose to move, That the draft order laid before the House on 19th February be approved [11th Report from the Joint Committee].

The noble Baroness said: My Lords, this order is made under the powers at Section 69 of the Deregulation and Contracting Out Act 1994. Its purpose is to streamline and improve procedures for the reimbursement of milk suppliers under the GB health departments' welfare food scheme by allowing the departments' contractor to undertake the whole reimbursement process. Beneficiaries themselves will not be affected in any way.

The welfare food scheme provides a nutritional benefit in kind rather than in cash. One of its main provisions is that families in receipt of income support receive a milk token each week for each child under the age of five. That can be exchanged for seven pints of cows' milk. The token can he exchanged for milk with any milk retailer who chooses to take part in the scheme. Having accepted the token in "payment" for the milk supplied, the supplier gets reimbursed for the token by sending it to the Welfare Food Reimbursement Unit. Until 1993, that reimbursement work was carried out by civil servants in two separate locations.

During 1989–1991, a value-for-money initiative focused on the welfare food scheme. One key recommendation was for reimbursement to be centralised at one site. As part of the Government's Competing for Quality initiative it was also decided to market test the reimbursement function in 1993 so as to improve value for money through competition and private section involvement.

The contract was awarded in 1994 to NCH (Nielsen's Clearing House Ltd). NCH has been successfully running the reimbursement operation on behalf of G13 health departments since then. It runs an efficient operation using modern technology. But we have not been able to gain full advantage of the contractor's services. We are limited by the requirements of the Social Security Act 1988 which reserves the reimbursement function for the Secretary of State or his officials. It cannot be carried out solely by a private contractor. As a result, contracting out of reimbursement has been less efficient than it could be. DH officials have had formally to approve and authorise around 1,000 claims daily as well as requesting any proof necessary.

Section 69 of the Deregulation and Contracting out Act enables a Minister to make an order contracting out the reimbursement functions, subject to the assent of Parliament. That is the purpose of this order. Once the order has come into effect, a Minister may then issue an authorisation to the department's contractor. This will enable the contractor to carry out the reimbursement. It will also allow us to authorise the contractor to ask for the necessary documentary advice to support the claims.

The use of this procedure will enable us to gain the maximum benefits. It will speed up the reimbursement process providing a more efficient service to milk suppliers. It will also avoid duplication of effort and release officials' time to devote to core health business.

I should like to reassure your Lordships that this will not affect the benefit delivered or welfare food beneficiaries themselves in any way. It is purely an administrative matter. There will be no dilution of standards being applied to welfare food reimbursement claims. We have ensured that the contractor's systems offer robust safeguards for the reimbursement process and for the public purse. Checks by the DH staff, by the DH's internal auditors and by the National Audit Office will continue to subject the system to regular scrutiny.

The order before the House is therefore a straightforward provision enabling us to improve the efficiency of the administration of the welfare food scheme with no detriment to beneficiaries. I commend the order to the House.

Moved, That the draft order laid before the House on 19th February be approved [ 11th Report from the Joint Committee].—( Baroness Cumberlege.)

9.15 p.m.

My Lords, I thank the noble Baroness for explaining the order. It authorises the claims by retailers for reimbursement under the scheme to be handled by Nielsen's Clearing House Limited through the whole process, part of which until now has occupied the equivalent of one member of the administrative staff of the Department of Health. If the order is passed—I have no intention of opposing it—that function will be left entirely in the hands of the contractor. What I feel we should be sure about is whether the department will still have sufficient evidence to ensure that the process is being carried out to acceptable standards. After all, the taxpayer foots the Bill. Can we be sure that a contractor will not be able at some time in the future to falsify claims?

The welfare food scheme is still, sadly, very necessary, as became clear during exchanges on the Starred Question in the name of the noble Earl, Lord Russell, earlier this afternoon. Children from low-income families often do not get adequate quantities of some nutrients and get too much of others which are less desirable—fat and sugar—so that welfare foods, which in this case consist of liquid milk, are still very important. I hope the noble Baroness can reaffirm that the smooth operation of the scheme will in no way be adversely affected by the order.

My Lords, I can give the noble Lord all the reassurances that he seeks. There will still be weekly checks in the system, the internal auditors and the National Audit Office will still be involved, but we think that under the new system we will get speedier payments. The noble Lord is right to say that there will be savings—of one person's time—but the job is a fairly mindless and soul-destroying job in that it involves checking all the returns that are made—1,000 a day. It is a huge and boring task.

It is right that the House should pass the order. I can assure the noble Lord that we are satisfied that there will be no dilution of standards being applied to the claims and that the contractor system offers robust safeguards for the reimbursement process.

On Question, Motion agreed to.