Select Committee on Liaison First Report




1.  The Social Security Committee examines the policy, expenditure and administration of the Department of Social Security and associated Agencies including the Benefits Agency and the Child Support Agency. The Committee normally meets each week when the House is sitting and in the 1999-2000 Session met formally on 32 occasions, normally taking oral evidence. In addition the Committee travels within the UK on a regular basis in order to undertake informal meetings with those directly involved in current inquiries and occasionally takes formal oral evidence during those visits. When appropriate the Committee also studies comparable social security systems overseas. Details of the UK and overseas visits are given below within the descriptions of our recent reports. The Committee also has meetings with visiting Parliamentarians and with organisations dealing with matters within its remit.

Current trends in Social Security

2.  Considerable changes are being brought about by the Government's welfare reform and modernisation programme, including:

  • The Government's commitment to end child poverty within a generation;

  • the switch from benefits to tax credits as part of the strategy of encouraging "work for those who can." This has led to a transfer of resources and responsibility from DSS to the Treasury and Inland Revenue - with the introduction of Working Families Tax Credit (to be replaced by Integrated Child Credit and Employment Tax Credit from 2003) and the proposed pension credit. Child Benefit will also be transferred to the Inland Revenue from 2003.

  • the creation of a new DfEE Agency for people of working age (from 2001-2), leading to the abolition of the Benefits Agency, the largest DSS Agency;

  • the introduction of the State Second Pension (from 2002) and Stakeholder Pensions (from 2001) and the creation of a new pensions organisation to deal with all aspects of pensions and pensions policy from 2001-2;

  • reform of disability benefits including restrictions on eligibility and amounts of Incapacity Benefit; abolition of Severe Disablement Allowance; a new "Disability Income Guarantee" for severely disabled people on means-tested benefits; and new review arrangements to check awards of Disability Living Allowance;

  • Child support reforms, due to begin in April 2002;
  • The introduction of new technology systems to underpin benefits and child support, starting with child support in 2002. Organisational change has led to the abolition of the Information Technology Services Agency (ITSA), with its design, development and delivery functions being taken over by the Department=s lead service provider Affinity, with strategic management going "in-house" to DSS;

  • The modernisation of payment systems, with the phasing out of order books and giros starting in 2003, to be completed by 2005;

  • Modernisation of decision-making and appeals within benefits and child support.


3.  The Liaison Committee's Report "Shifting the Balance: Select Committees and the Executive" recommended that certain Select Committees produce an annual report reviewing progress made on earlier recommendations. This memorandum includes, in an Annex, information provided by the Department of Social Security showing progress made on a report by report basis.

The Work of the Committee in the current Session


4.  The Committee was asked urgently to consider the above power under which the Secretary of State could incur expenditure in advance of Royal Assent. The proposed expenditure was on a contract to replace the IT systems in the Child Support Agency. The Committee took evidence, in private because of the "commercial in confidence" nature of the inquiry, and found that the draft report which had been supplied did not give sufficiently accurate information on which the Committee could give an unequivocal recommendation to the House. Furthermore, the amount of expenditure requested in the draft report was substantially reduced during the oral evidence session. We therefore recommended that a revised draft be submitted to the Committee by the Secretary of State before being laid before the House. The First Report of the Committee was published on 25 January 2000.


5.  In our further report on the subject we considered the final report which the Secretary of State had submitted. The information supplied enabled the Committee to recommend approval to the House. We also recommended that the arrangements for considering future similar proposals were considered by the Procedure Committee. The Second Report of the Committee was published on 20 March 2000. The Procedure Committee took up the latter recommendation and the Chairman (together with the Chairman of the Committee of Public Accounts) gave oral evidence on 21st November.

Third Report  MEDICAL SERVICES (HC 183)

6.  The Committee examined the effectiveness of the contracted-out Medical Services system, which hires doctors (EMPs) to produce evidence, often including a physical examination, of benefits claimants, which is then used by Benefits Agency decision makers to assist them in determining whether benefits should be paid. There had been widespread concern that EMPs had been providing an unprofessional service by failing to examine claimants adequately, or by brusque and rude behaviour. The Report presented evidence of rude and/or ineffective examinations by EMPs and concluded that present treatment of claimants was not acceptable. It also raised concerns about the treatment of particular groups of claimants, specifically, claimants with mental health problems, claimants from ethnic minority groups and female claimants. The Report also expressed concern that there had been a falling number of examinations and that as a result more people were being found eligible for benefits on the basis of written evidence alone. The Report recommended that the contract be renegotiated to ensure that there could be no question of profits being increased by reducing the number of examinations held. It further recommended that EMPs receive more effective training, that action be taken to dismiss unsatisfactory doctors, and that the system for monitoring EMPs' performance and customer satisfaction be improved. As part of the inquiry the Committee visited Bristol and inter alia took oral evidence and also met claimants. The Third Report of the Committee was published on 20 April 2000.

Government Reply

7.  The Government's response to the Report [Cm 4780] was produced in June 2000 and was detailed and thorough. The response reiterated the Government's commitment to raising standards and stated that more rigorous recruitment criteria for doctors had been introduced, that revised guidance had been issued to EMPs, that a task force had been set up to monitor all communications with claimants, and that improved monitoring of doctors performance and complaints against them would be introduced. The Government shared the Committee's concern about the treatment of certain types of claimants, although it rejected the need for a review of the treatment of claimants with mental health problems. The Government also shared the Committee's concern about the falling numbers of claimants being examined and the possibility of commercial gain for Medical Services. It stated that the link between these two factors would be scrutinised in an on-going review of the contract.


8.  Based on answers to Parliamentary questions and concern by Members, the Committee decided to undertake an inquiry into the Social Security and Child Support Commissioners who are the equivalent of High Court judges, specialising in social security and child support law. A disturbing picture of delay in dealing with appeals was confirmed in evidence and the Committee made wide-ranging recommendations to try to shorten delays and make judgements more readily available to appellants and those representing them. The Committee=s Fourth Report was published on 25 May 2000.

Government Reply

9.  The Government's response to the Report [Fourth Special Report, HC 868] was published on 2 August 2000. The Committee was encouraged by the steps which are being taken to reduce delays and improve the quality of service. Following recommendations of the Committee, three further Commissioners had been appointed and it was planned to have new management information systems in place in the Office of the Social Security and Child Support Commissioners from October 2000. The various Government departments and offices involved in the Commissioners Appeals process were now drawing up service level agreements, including performance indicators. The DSS in particular were looking to undertake a "radical review of the whole process" of submissions and directions, to meet the Committee's recommendation that 95 per cent of submissions should be made to the Commissioners within the statutory limit. Publication of Commissioners' decisions has now resumed, with plans to publish a backlog of 130 reported decisions by March 2001, and to put the backlog of starred decisions on the Court Service website. The Commissioners have now set up regular meetings with claimant organisations, as recommended. Finally, a few days after the Committee's report, the Lord Chancellor announced a Review of Tribunals to be conducted by Sir Andrew Leggatt. The Government rejected the granting of legal aid in complex cases.


10.  The Committee's inquiry into the contributory principle set out to examine the role of National Insurance within Britain=s social security system and to ask whether, in the 21st century, benefits which are paid on the basis of contributions still have a role. The Committee concluded that National Insurance benefits were important in meeting the wider aims of social security - which went beyond the relief of poverty, to tackling inequality and underpinning individuals' steps towards financial independence and responsibility. The Committee urged consideration of raising National Insurance contributions, in the context of real earnings growth, to pay for improvements to benefits. Improvements sought by the Committee were the extension of eligibility for benefits to workers in low paid work, and use of the growing surplus in the National Insurance Fund to pay for a non-means-tested benefit for carers of disabled people, paid at the same level as Incapacity Benefit. During the course of a very thorough inquiry which was started in a previous session, the Committee travelled to Norway and Finland to draw on those countries' experience of a system which is largely universal and to Australia to study the almost totally means-tested system there. We also commissioned research from the Microsimulation Unit at the University of Cambridge and from the Government Actuary on various alternative proposals which had been put to us in evidence. The Committee's Fifth Report was published on 20 June 2000.

Government Reply

11.  The Government's response to the Report [Cm 4867] was published on 2 October 2000. It reiterated its goals for the welfare system: a concentration on encouraging work, assisting "those who need it most," and encouragement to others to make greater provision through private insurance and pensions. Implicitly, it rejected the Committee's conclusion that the social security system, and National Insurance benefits in particular, had a wider role than simply assisting the poorest. The Government rejected raising National Insurance contributions to fund improvements in benefits, on the basis that this would not be welcome. The Committee's recommendation to extend National Insurance benefits to people earning ,£30 a week or more was rejected because of the "cost and regulatory impacts". The Government agreed to consider the Committee's proposals for a gradual extension of the zero rate band. It rejected the Committee's recommendation to pay higher benefits to carers, using the National Insurance Fund surplus. We felt that the Government=s response was of poor quality, failing seriously to address the key issues raised by the Committee.

Sixth Report HOUSING BENEFIT (HC 385-I)

12.  Members of the Committee were aware of, and concerned by, the complications and in some places inefficiency of Housing Benefit which is a central government funded benefit administered by local authorities. In the 1999 Budget the Government announced that a green paper on Housing was expected in due course. In the event the Committee started the inquiry before the document was published in April 2000. The Committee took evidence from a wide selection of witnesses, visited local authorities in Camden, St Helens, and Conwy and arranged a pre-inquiry seminar. The main recommendations were aimed at simplifying the benefit, while suggesting that a review should be undertaken of the provision of help with housing costs. The Committee's Sixth Report was published on 27 July 2000.

Government Reply

13.  The Government's response to the Report on Housing Benefit [Cm 4869] was published on 2 October 2000. The Government's view was that the Committee's Report did not fully acknowledge the advances which it had made to improve delivery. It argued that the Report presented proposals which would need to be costed and which would require new legislation. The Government's response to most of the Committee's specific recommendations was that it was considering how to proceed in the light of consultations on the Housing Green Paper. The Government's response to a very detailed and carefully considered Report was, we believe, disappointing and suggested a reluctance seriously to engage with the Committee's conclusions and recommendations for housing benefit reform.

Seventh Report PENSIONER POVERTY (HC 606)

14.  The Committee's inquiry into pensioner poverty examined the extent of pensioner poverty in the United Kingdom today, its causes and possible solutions. The Government's pension reforms and the extent they would address the problems identified formed a central part of the inquiry. The main conclusions of the inquiry were that the Government should seek, through research, to establish a minimum income standard for households over pension age, and that the level of the basic state pension should be raised towards this target minimum income. In the absence of such research, the Committee suggested that a target figure of £90 be set as a "good starting point." The Committee also concluded that the Government's decision to price index the basic state pension and the new second state pension while earnings-linking the Minimum Income Guarantee was unlikely to be sustainable in the long-run. More immediately, the Committee warned, unless the Government's proposals for a 'pensioner credit' could overcome the problem experienced by many low-income pensioners who found themselves excluded from financial support due to their prudence in making self-provision in retirement, a restoration of the earnings-link would be necessary. The issues facing the poorer pensioners (including those in ethnic minorities) was brought home vividly to the Committee when they visited Hendon to meet pensioners' representatives. The Committee's Seventh Report was published on 2 August 2000.

Government Reply

15.  The Government's response to the Report [5th Special Report, HC 952] was published on 15 November 2000. The Government rejected the Committee's recommendation for research to establish a minimum income standard on the basis that there was no single research method which could be used to assess adequacy levels. The Committee called for a rise in the level of the basic state pension towards a target of £90. In its Pre-Budget statement, the Government did announce a rise in the basic state pension from 2001 beyond price inflation - to £72.50 for a single person (an increase of £5), rising to £75.50 in 2002. At the same time, it announced that the Minimum Income Guarantee would be increased even beyond normal earnings-indexation to £92.15 a week (an increase of £14, rising to £100 a week in 2003). The Government did not directly address the Committee's concern that the policy of price-indexing the basic state pension and state second pension, but earnings-linking the Minimum Income Guarantee, was not sustainable in the long run. It did give the cost of restoring the earnings link in 2020 and argued that earnings linking would not do enough to help people with small savings. The Government=s view is that its new Pension Credit will encourage savings by abolishing the capital rules and rewarding saving with a higher credit.

Government replies to Reports

16.  Government replies were generally timely and, unless by mutual consent, produced within the two-month deadline for replies to be received. The Department kept the Clerk informed of progress of the replies and there were no problems with unexplained late delivery. On the other hand replies were rarely delivered much in advance of the deadline giving the impression that the Department sees the two-month rule as the norm rather than a maximum.

Relations with the Department

17.  Relations with the Department were businesslike and reasonably cordial. The quality of written evidence varied but was generally acceptable. Oral evidence was, with one exception (First Report) also generally acceptable.


18.  The Committee did not consider any draft legislation in this session apart from the Report which the Secretary of State intended to lay under the power to incur expenditure (First and Second Reports) The Committee was ultimately able to support the proposed Report, and it was eventually considered by a delegated legislation Standing Committee, the membership of which did not include any Committee member and the report of which was agreed formally by the House.

Resource Accounting and Budgeting

19.  The Committee took evidence from the Secretary of State on the proposals for Resource Accounting and Budgeting and was able to endorse the proposals and the action taken by the Department.

Other Activities

20.  The Committee met various groups and individuals, including visitors from overseas. It also meets the Social Security Advisory Committee on a regular basis. During the session the Committee arranged an "Awayday" which included sessions with academics followed by informal discussion of the Committee's work.

Continuing inquiries

21.  The Committee continued to monitor the Government's handling of the situation in which contributors were not informed that the widow's SERPS pension was to be reduced in 2000. The Government announced during the session that it was delaying the cessation of the pension and intended to set up a compensation scheme. Details of the scheme were announced on 29 November and the Committee intends to take further evidence on the matter. As the Parliamentary Session ended the Committee had just embarked on an inquiry into Integrated Child Credit. After taking the first oral evidence and receiving written evidence the Committee travelled to Canada, where the system already in place is very similar to that proposed for the UK.

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