Examination of witnesses
(Questions 320 - 339)
WEDNESDAY 29 JULY 1998
DAME ANN
BOWTELL, DCB
and MR STUART
LORD
320. I have always wondered where does the
buck stop—with you or with the Chief Executive of the Benefits
Agency—on these and other issues?
(Dame Ann Bowtell) The buck stops with me ultimately.
I set the Benefits Agency Chief Executive's objectives and the
administration budget is divided up on my advice, so I would regard
in the end the buck as stopping with me.
321. So it is an independent agency, but
some agencies are more independent than others?
(Dame Ann Bowtell) Well, it is not independent
in the sense that they are still civil servants and they are working
to ministers. The agency chief executives are agency accounting
officers, so they are directly accountable for their administration
spend, but I think in the end I am obviously accountable for what
happens across the whole Department and what happens to the whole
Department spend and I am responsible for seeing that they have
a system to run their organisations effectively.
Chairman
322. May I ask Stuart Lord if the Department
fully spent its administration budget for staff last year?
(Mr Lord) It did not fully spend its budget last
year.
323. Why not and by how much?
(Mr Lord) The underspend was about £180 million
which is really quite substantial. The principal reason was that
our expenditure plans did provide for us to have a particularly
steep decline in our provision in this current year and, therefore——
324. This current year?
(Mr Lord) The current year that we are now in
and, therefore, we made clear to managers throughout the Department
near the beginning of last year that it was very important that
they did all that they could to generate what we call end-of-year
flexibility—an underspend last year to enable to help cushion
the movement into this year. Therefore, there was a deliberate
pursuit of that underspend, although the scale of it was greater
than we had anticipated.
325. I am very worried because I think it
has had an effect on morale. I can perfectly well understand the
point, which was well made, that you need to have a structure
which has promotional prospects for middle-ranking managers, but
I think there has been a huge corporate loss of very experienced
hands and most of them have been in the business for most of their
working lives and they are all now at the door, so they were biting
your hands off to take the packages that you were offering, and
I think that the service actually has been diminished as a result.
Now, I am sure that that was not planned, but what are you going
to do to try and redress that?
(Mr Lord) There is now a greater funding stability
and we are not facing a challenge this year and next that is equivalent
to what we were to be facing last year and expecting to face this
year.
326. Does that mean that the change programme
is now at an end, this 25 per cent cut over three years which
was always going to be a hard task? Has change ended or is active
modern service change in a new guise, if you get my drift?
(Mr Lord) Can we break the answer into two parts
and perhaps I should talk about the financial dimension of it
and then Ann will probably wish to pick up on active modern service
and the transition. The 23 per cent cut or squeeze that you have
referred to—Peter Mathison explained in May that that was
not a 23 per cent reduction in cash. There was a component of
cash reduction, but it was largely about us having to absorb extra
pressures, so that is, as it were, the origin of that figure.
Subsequently, there have in effect been some easements on that
position. To start with, the spend, which is the basis of that
comparison, turned out to be a little lower than anticipated which
in turn made a reduction in the percentage decline required. Secondly,
the CSR settlement does actually provide us with a level of funding
above that which came out of that 23 per cent squeeze scenario.
Thirdly, in the interim there is the fact of this end-of-year
flexibility from last year which is cushioning the position, so
our funding now is relatively steady for the next few years. So
there is a change. The climate of getting ready to cope with and
actually coping with a squeeze of the sort that you talked about
is broadly behind us. Resources will stay tight and there will
be pressures of workload and pay and prices, but it is looking
like a rather different picture now.
327. I just find it difficult to know how
you are going to go for all these things. The publications that
I have seen have some very ambitious plans and I think everybody
would support the objectives the Department is getting towards
of caseworkers, personal advisers, gateways, the multi-disciplinary
approach, but I do not see how you can do that with the money
which is available to you.
(Mr Lord) Well, the funding that we have should
be sufficient to cope with all that the Government is committed
to doing. It will cover the cost of the piloting work, for example,
and a range of other changes. Looking further out, the pilots
will actually help us to fix the scale of the costs associated
with that change. The nature of those activities which are being
piloted is actually to bring together what are currently separate
activities. It is being driven largely for customer services purposes,
but there is actually a chance that it ought to bring an efficiency
as well in that if one person is dealing with a large part of
a child support claim, an income support claim and a housing benefit
claim, instead of three parallel transactions, the chances are
that that should be a cheaper way of doing it.
Chairman: I wait with
interest to see whether that happens.
Mr Wicks
328. I think it is the case that our staff
turnover rates in some parts of London, for example, and maybe
other cities, is quite high. Is that right?
(Mr Lord) I am sure it is. I do not have the figures.
329. I think we had some figures which showed
they were really quite high which was a concern given the experience
of training you need to be an effective benefit officer. Do you
think in London and maybe other cities that you are paying enough
to attract staff?
(Dame Ann Bowtell) We do have the flexibility
to pay extra in particular places where we have staff shortages.
Over recent years, we have not been recruiting in a big scale,
so it has not really been an issue. Our overall wastage rate is
not that high, and it is between 4 and 5 per cent. But there clearly
will be problem areas and it is beginning in places like London
and we also have some problems in the IT area where obviously
at the moment we tend to lose people, but because our overall
staffing has not been going up and in some areas it has been going
down, actually there has been less of a problem than there might
have been. We hope now that we are stabilised and that we can
stop using quite so many casuals, because the real trouble is
the short-term appointments and the casuals because you train
them and then they go. So as we can begin to get into more permanent
appointments, and we are beginning to see that now, I think the
situation will get be a bit easier.
330. It is just that disparity and the public
sector pay constraint on the one hand.
(Dame Ann Bowtell) Well, pay is clearly a problem
and there are just limits on the amount in the budget that we
have and we negotiate the pay we can cope with.
Mr Flight
331. In looking at your overall staffing
structure, have you used outside consultants to advise you and,
if so, who?
(Dame Ann Bowtell) I have not myself. It may well
be that the agencies who would be dealing with their individual
staffing structures have done so, but I am afraid I do not know.
I could let you have a note on that. I would be surprised if some
of them have not, but it is not an area I know about.[3]
Chairman
332. You mentioned IT problems with staffing.
You can give us an assurance that on the 1st January in the year
2000 my granny will get her pension payment on time, can you?
(Dame Ann Bowtell) Our year 2000 project has had
the NAO all over it and they could find nothing wrong with what
we are doing. We are paying very close attention to it. My departmental
board have a report on it every month. We have been working on
this for some years. The big benefit systems were always okay
because they have always had to deal with dates. Dates of birth
are what we trade in and we have still got a lot of people around
who were born in 18-something, so we did not have built into our
big systems the problems that there are elsewhere. But clearly
there are lots of smaller systems around where we do have problems
and we are working on them.
Chairman: I cannot
resist the cheap shot that some of your computers, I think, were
made in the 18th Century!
Mr Pond
333. I think, Chairman, you should declare
an interest on behalf of your granny! Following Malcolm Wicks'
question about the level of salaries, I was intrigued to know,
and you may have to give us a note on this, how many of the 1,400
staff involved in administering family credit in Preston were
themselves in receipt of or eligible for family credit.
(Dame Ann Bowtell) I do not know off-hand, but
no doubt more will be eligible for the working families tax credit
as it is more generous.
334. Could you let us have a note on that
just as a matter of interest?
(Dame Ann Bowtell) Yes, I will do.[4]
335. In terms of some of the changes in
staffing, a few moments ago you were saying that the natural wastage
rate and staff turnover rate is relatively low, and in an earlier
answer to a question, you said that all of the reductions in staffing
have been voluntary, and I assume that includes an element which
is natural wastage, but presumably if the turnover rate is relatively
low, then the majority of the remainder were on the basis of some
voluntary agreement, early retirement or voluntary redundancy.
Now, that obviously has a cost attached to it. Do we have any
figures on the net savings, financial savings, that arose from
those actual numbers of reductions in staffing?
(Mr Lord) The simple answer is no, I do not have
a figure to give to you, but the number of assisted exits was
around 2,000 and, from recollection, the cost was about £40
million, although that is subject to checking, but it was a cost
in respect of which the Treasury gave us additional funding, so
we did not have, as it were, to find another £40 million
worth of savings to pay for the exits which we had secured.
336. The Chairman mentioned the concern
about morale on staff. There is also of course the question about
the impact on service delivery, the quality of service and, in
response to that, Dame Ann, you were saying that there is no way
of assessing it and you do not seem to be concerned about that,
although you did mention that part of the mechanism for achieving
these staff savings was the merger of districts. Now, that must
have implications, must it not, in terms of accessibility of clients
to the service?
(Dame Ann Bowtell) Not necessarily, no, because
that would be about the management. The structure that we have
got now is that within a district you may still have a number
of different outlets, so a single district manager can have four
or five separate outlets, so what you are doing is merging the
more senior people and reducing the more senior jobs. The question
of how many outlets you have will be quite a separate thing, so
it does not necessarily mean that.
337. Has there been any assessment of the
impact on the quality of service that clients perhaps have raised
as a result of the changes in staffing levels?
(Dame Ann Bowtell) All we have nationally is performance
against targets and the Benefits Agency has a set of performance
targets on claims clearance and accuracy and so on. Their performance
has not improved against those, but I would not expect it to have
done given that they have been in a tight squeeze, but nor, I
think, is there any deterioration, so from that sort of measure,
there does not appear to be a reduction, and I would not expect
there to be. You are making the change in management behind the
scenes, so I would not necessarily expect that to happen on the
front-line. The fact that the Benefits Agency Chief Executive
felt it possible to do that, I think, would suggest that that
was something he wanted to do for good management purposes and
it should not necessarily have an effect on what is happening
to the person in the office.
338. I am quite anxious that we cover the
issue of housing benefit because I think all of us would agree
that this is a major difficulty for us in terms of social security
reform and the question about what we do with housing benefit
fits within social security policy in a very strategic role. Could
you explain to us first the formal role of the Department in the
administration of housing benefit?
(Dame Ann Bowtell) Well, we are responsible for
housing benefit policy. In other words, we are responsible for
the Act and regulations under which housing benefit is set up,
but local authorities are statutorily responsible for actually
administering housing benefit, not the Department. We provide
subsidy for their administrative activities, so, as part of seeing
that we get value for money from that subsidy, we have a responsibility
to see that that subsidy is well spent. Finding the right way
between the Department's responsibilities and the local authorities'
freedom has been something which we have been grappling with over
many years. I think successively, since housing benefit was set
up, we have been moving to a more active role in terms of monitoring
what they do and being interested in the performance of what they
do, but local authorities are statutorily responsible for it,
so the extent to which the Department can actually intervene is
limited. What we have got now is the Benefit Fraud Inspectorate
which is able to go into much more detail than the auditors have
ever been into how they actually perform. They produced their
annual report just recently and a first report on an individual
inspection on Blackpool, and they are going in great detail through
the local authorities to see how the local authorities actually
deliver housing benefit, and not just into the local authorities,
but into the Employment Service and into the Benefits Agency,
into those connections. They are producing very detailed reports
from which I think lots of lessons will be learned and they are
actually getting together the players to look at the report and
to agree on how to carry things forward after that. I think that
is going to provide us with much more information than we have
ever had before about how housing benefit is administered and
it will be very helpful to other local authorities as this rolls
out and the Benefits Agency offices in improving the liaison between
them, so I think there is a lot going on there which I think will
improve matters a lot.
339. What about the liaison between yourselves
and DETR on the joint aspects of housing benefit?
(Dame Ann Bowtell) DETR have a responsibility
for paying some of the money which supports housing benefit. They
actually pay through their general support part of the benefit
subsidy and part of the administration subsidy and we have a sort
of concordat with DETR about who is responsible for what, and
we clearly have regular contact with DETR, but most of the day-to-day
responsibility rests with us in terms of the actual housing benefit
administration.
3 Note by Witness: Since 1997 the War Pensions
Agency have used the consultants Ernst & Young to review their
organisation, management structure and high level working practices-with
particular reference to support functions. Back
4
Note by Witness: About 10 per cent of the 1,400 staff in
the Family Credit Unit are in receipt of family credit. Back
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