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4.11 pm
Mr. Tim Smith (Beaconsfield): I congratulate the hon. Member for Birkenhead (Mr. Field), who is the Chairman of the Select Committee on Social Security, and all the members of the Committee on their work. In many ways, the Select Committee on Social Security is a model Select Committee. It oversees the Department of Social Security's work thoroughly and conscientiously. I have read the Committee's fifth report, entitled "The Work of the Department of Social Security and its Agencies", and believe that it is an excellent report.
I was interested in what the hon. Member for Birkenhead had to say about housing benefit fraud. If one grosses up the percentages that he mentioned--the examples of fraud that he cited varied from 15 per cent. to 67 per cent.--it would appear that the average fraud is around 30 per cent. If the level of housing benefit fraud is anywhere near that figure, there are substantial gains to be made from devoting resources to dealing with that aspect of fraud.
I agree that it is right to devote a finite amount of resources to aspects of social security likely to produce the greatest rewards. Clearly, we should consider landlords claiming large sums every week. The hon. Gentleman cited the case of one landlord who was receiving £19,000 a week in housing benefit, or £1 million a year. That is a substantial sum of taxpayers' money, by any measure. Such cases should be investigated as a matter of urgency. The House debated benefit fraud last week, and there is no doubt that the extra resources that the Department is rightly devoting to it have yielded substantial results. I believe that extra resources would produce further successes.
I was also interested in the hon. Gentleman's idea for an annual statement of contributions for everyone who contributes to the national insurance fund. Last year we
improved considerably the rights of members of private occupational pension schemes. As we are talking about millions of people, a substantial cost would be attached to such a statement, but there must be a case for providing regular information to national insurance contributors.An annual statement could usefully include someone's total contributions in a year, the total benefits that people had drawn in that time if they had had the misfortune to be unemployed or sick, and their prospective benefits, about which people start to worry as they approach retirement. They want to be sure that they have the maximum credits and that they will be able to draw a full pension. They want to know what their entitlement to the state earnings-related pension scheme will be. A statement on total prospective benefits would also be useful. People would welcome it.
I am sure that the hon. Member for Birkenhead is right that the total cost of the statement might easily be offset by the gains that would be made through exposing fraud. Obviously, that is impossible to measure, but the amount saved could easily cover the statement's cost. It could be a profitable exercise for taxpayers.
I was struck by one item of information revealed by the Select Committee when it investigated the Child Support Agency, as it has on a number of occasions. I think that I am right in saying that, after the first letter was sent to mothers or fathers on income support and they were asked to respond within eight weeks, many of them went off benefit immediately. That was one of the largest gains from the exercise. There has been much debate about the CSA's costs and benefits, but that substantial benefit to the taxpayer was a by-product of the system. It suggests that, if we communicate with beneficiaries regularly and ask them one or two awkward questions, they may quickly disappear off the map.
Mr. Frank Field:
I am grateful to the hon. Gentleman for his contribution, but the question of fraud is even more serious than he suggests. The enormous sums that taxpayers have got back as a result of that first envelope going out are merely the tip of the iceberg, because that does not cover people who are slightly more streetwise and know that the agency's administration is not as we would wish it to be and that, if they merely ignore the letter, the agency probably will not follow it up. I know that the agency would not want to use this language, but it has given an amnesty to parents who, in effect, put two fingers up to taxpayers by not replying to its letters. Those people are slightly more streetwise and know that the agency will never be able to get round to them.
In the first, I think, 18 months, £360 million-worth of books were returned--a substantial sum--but that is a small sum compared with what could be gained if we could only get the agency working effectively, if the amnesty for parents who are refusing to answer questions were withdrawn and if the agency could tackle those people effectively. The gains to taxpayers would be massive.
The hon. Member for Rochdale (Ms Lynne) is here. She piles in questions, the answers to which all put question marks over how well the agency works. The one sector where we never thought the agency would be a
success, where it has turned out to be a major success, but where it could be an even bigger success, is in countering fraud.
Mr. Smith:
That suggests that, if additional resources were available to the agency and it was able to follow up some of the people who did not reply to its letters, further huge gains could be made. Some people do not receive letters in the first place. Admittedly, they are nothing to do with the CSA, but the implication must be that, if they were written to from time to time, they too might not claim. I agree with the hon. Gentleman. Obviously, it is hard, by definition, to measure fraud, but the taxpayer would probably gain greatly if more resources were devoted to it.
In its fifth report, the Committee looked at the operation of the executive agencies of the Department of Social Security. The DSS is unusual in that almost all its work is carried out through agencies, which means that almost all the money that it spends is spent through agencies. It is a useful case study, and the Department covers the largest agency, the Benefits Agency. I was interested in a comment on that issue by Sir Michael Partridge, who retired recently from the post of permanent secretary at the DSS.
It has always seemed to me that one of the principal advantages of establishing the executive agency system was that for the first time there would be a clear distinction within the civil service between policy advice and policy execution. In that context, what Sir Michael Partridge told the Committee was interesting. He said:
Of course, the permanent secretary in any Department, most of whose service delivery is carried out through the agencies, is able to concentrate on policy advice to Ministers, because other people--the chief executives of the agencies, who are also accounting officers--can be held to account by the House and are regularly summoned by Select Committees. That has been a great success, because it has started to change the culture of the civil service.
At one time, those who wanted to get on in the civil service had to be good at advising Ministers--the key was policy advice--and although most of the Department's money was spent on services, delivering them took second place. That has changed a great deal.
In paragraph 75, the Committee reported:
That is good, because some people are coming in from outside. An example is Michael Bichard who, I think, was chief executive of Gloucester city council. He is now the permanent secretary in the Department and he got there by first becoming chief executive of the Benefits Agency. At present, there is as much emphasis on policy execution and on being good at making sure that the Government's customers get a good service as there used to be on policy advice. That is a great improvement, and the DSS has led the field in that respect.
Mr. Corbyn:
Has the hon. Gentleman ever thought of the irony of a market developing in highly paid chief executives of these agencies, who force market testing down the throats of low-paid employees in their Departments, make large numbers redundant and try to worsen their working conditions? Apparently, incentives are required for chief executives, but sticks are needed for low-paid people, many of whom have given a lifetime of service to the civil service. They feel outraged and alienated because of the way in which they have been treated.
Mr. Smith:
Those people do not need to be upset because chief executives are well paid. If good people are wanted, one must pay a reasonable price and compare it with the price paid in the private sector. I agree that a better performance will not be had from an employee by reducing his remuneration or worsening his working conditions. Better performance can be had by adopting the opposite approach--by offering incentives, measuring performance and improving job satisfaction. That is the right way to do it, and to that extent I agree with the hon. Gentleman.
The agencies have been a success. For example, a three-year evaluation in the Contributions Agency
That refers to the Contributions Agency, but I would say the same about the Benefits Agency.
The concept of customer service did not operate in the administration of social security benefits in local offices, say, 10 years ago, before the Benefits Agency was established. My local office in High Wycombe, which provides a service to my constituents, has been transformed over that time. A huge effort is made to help and advise people, some of whom are the most vulnerable in our society. It tries to provide a decent service.The system is complex and there is a range of benefits, but the service has improved.
"In the past I used to sit there with these enormous piles of paper . . . This was a tremendous waste of time. I now have virtually no paper. So my role has changed much more to thinking about the future, getting my staff to run the Department in a proper way and to be much more accountable to me, much more quickly, and to Ministers, for their performance. I feel I have much more handle on what is happening in the Department and what is going wrong, than I did from trying to spend hours and hours looking at minutiae."
"A kind of transfer league is developing in Chief Executives."
"concluded that in each year efficiency savings had been exceeded and the milestone targets had been achieved and that 'Agency status has therefore clearly resulted in improved performance, accountability and value for money'".
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