APPENDIX E
ANNUAL REPORT OF THE SOCIAL SECURITY COMMITTEE
Introduction
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.
Background
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
| First Report |
POWER TO INCUR EXPENDITURE UNDER SECTION 82 OF THE WELFARE REFORM AND PENSIONS ACT 1999: NEW INFORMATION TECHNOLOGY SYSTEM FOR THE CHILD SUPPORT AGENCY (HC 180)
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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.
| Second Report |
POWER TO INCUR EXPENDITURE UNDER SECTION 82 OF THE WELFARE REFORM AND PENSIONS ACT 1999: NEW INFORMATION TECHNOLOGY SYSTEM FOR THE CHILD SUPPORT AGENCY (FURTHER REPORT) (HC 315)
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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.
| Fourth Report |
SOCIAL SECURITY AND CHILD SUPPORT COMMISSIONERS (HC 263)
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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.
| Fifth Report |
THE CONTRIBUTORY PRINCIPLE (HC 56-I)
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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)
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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)
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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.
Legislation
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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