APPENDIX 15
Memorandum submitted by Public and Commercial
Services Union (PCS) (CP 13)
1. PCS, the Public and Commercial Services
Union, welcomes the opportunity to provide a submission to the
Social Security Select Committee inquiry into the contributory
principle.
2. PCS is a modern and progressive Trade
Union, representing some 250,000 members across the civil service
and related areas of commerce, including the Inland Revenue (and
what was formerly the Contributions Agency), Department of Social
Security, Benefits Agency and Employment Service. PCS members
(and members of the PCS's predecessor unions) have been at the
forefront of both collecting and administering the contributory
system since its inception. We believe this experience gives us
a unique perspective to comment on the contributory principle
and its past, present and future.
3. PCS has always attempted to work in a
spirit of partnership with both the government and individual
managements and was therefore pleased that the merger of the Contributions
Agency was completed successfully with a minimum of disruption.
PCS were pleased to be able recommend the transfer package to
members working in the Contributions Agency which members then
overwhelmingly accepted.
4. Since the merger PCS have also welcomed
the New Enterprise Support Initiative and believe it will offer
significant benefits to business and is an example of the enhanced
service the Contributions Agency and Inland Revenue can provide.
We are also eager to work with the government to make a success
of the closer working mechanisms they have put in place between
the Inland Revenue and the Department of Social Security.
5. PCS and its predecessor unions have always
had strong support for the national insurance system, for the
contributory principle and for the minimum of means testing. In
our submission to the "New Ambitions for our Country; A New
Contract for Welfare" green paper (which was copied to you)
we urged the government to guarantee that these basic principles
of the welfare system would remain untouched. PCS believes, and
this view is supported by our members administering the contributory
system, that it is vitally important to maintain the integrity
of the system of national insurance and the link between contributions
and benefits.
6. Even now nearly half (approx. £50
billion) of all benefits are met by national insurance contributions.
It is crucial that in the public perception the link between contributions
paid and benefits received is maintained. In PCS members' experience
the working population have historically been more tolerant of
increases in national insurance, compared with increases in income
tax, because they make the connection between what they pay in
and what they may need to get out of the system.
7. Like the government PCS acknowledges
that work must pay and this ethos has been at the centre of all
the current government's budgets. However we are concerned that
any changes the government make to the tax and benefits system
must acknowledge the impact it has on the work of PCS members
and their jobs. We were pleased to note that the working families
tax credit (WFTC) took on board many of the objections that were
raised when the principle was first suggested. However, at present,
we would wish to learn the wider lessons of WFTC before there
are any further moves to deliver benefits by the use of tax credits.
8. We note there a number of proposals to
modernise the national insurance system and we would wish to see
the burden shift from the low paid as clearly this has implications
on the incentive to work. We are also concerned that workers presently
earning below the lower earnings limit are excluded from certain
benefits altogether. We also believe that there are further problems
with the way the current system operates as individuals suffer
a loss of benefits if a job is taken and subsequently lost; an
individual would then have to wait a further six months before
receiving mortgage interest benefit payments. This is a clear
disincentive and some form of linking period should be established
if the qualifying period itself is not abolished. We believe one
solution to address this problem is to extablish a crediting in
arrangment and we would be keen to explore this point further.
9. In the PCS's view a modernised National
Insurance scheme which will "promote work and cut red tape"
(as the welfare green paper argued) must not be achieved at the
expense of the contributory principle or by bringing about the
introduction of further means testing. In our view the social
security system should combine universal benefits and earnings
related social insurance provision, cover those currently excluded
and ensure means testing is kept to an absolute minimum.
10. PCS would be opposed to any idea that
suggested benefit entitlement should be based on crude assessment
of annual earnings instead of national insurance paid, as there
is a very strong association in contributors minds between national
insurance paid and the receipt of benefits at some later stage.
Of course fundamental to this approach is the fact that national
insurance is accurately collected and recorded, and that the information
held is accessible to contributors through their working lives.
11. PCS hoped (and still hopes) the introduction
of major IT systems, such as the National Insurance Recording
System 2 (NIRS 2) project will greatly assist in bringing about
a streamlined efficient service. It is of vital importance that
the project is allowed to properly develop in order to bring about
a return on the significant investment that has been made. We
are therefore concerned about the continuing involvement of Andersen
Computing in NIRS2 and we believe it is a clear example of private
sector failure at great public expense. As we stated in our submission
to the Social Security's Select Committee and Employment Sub-Committee's
inquiry in to the Single Work Focused Gateway:
"According to a paper presented to the
Benefits Agency's Resources Steering Standing Committee on 16
March, (reported in `Computing' magazine 14 April 1999), the Agency
has `low' confidence in NIRS2 supplier Andersen Consulting's `ability
to meet current commitments to fix integrity problems, while also
delivering on recovery products to time'. Compensation payments
for the delay alone are expected to run into millions of pounds."
12. We believe it is vitally important the
problems with NIRS2 are urgently addressed and solved so public
confidence in the National Insurance system can be restored.
13. If the committee wish us to expand on
any of the above points or provide evidence orally, we would be
happy to do so.
May 1999
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