Examination of witness (Questions 40-59)
WEDNESDAY 2 MAY 2001
RT HON
MR ALISTAIR
DARLING
40. Where have I heard that before? My last
question is something that I have had a particular concern about,
I think, because of some of the issues arising with the interaction
with housing benefit. Is that group of families, and children
within those families, who are growing up on incomes that are
substantially below Income Support levels, in many cases, not
exclusively, because they are subject to restrictions on housing
benefit, and therefore are having to subsidise their rent out
of their Income Support, would you agree with me that that particular
group do deserve attention in a number of different ways, to try
to deal with that, and that really we should, as a matter of principle,
seek not to have children growing up at a level below Income Support,
however that can be addressed?
(Mr Darling) Certainly, I agree with you that we need
to make sure that incomes in households where people are not in
work are maintained at an acceptable level. You are right, housing
benefit has many problems, and, as you rightly say, there are
parts of the country, your own is one, where people are subsidising
their rents. We are looking at that, as you know, and housing
benefit is one of the areas where it needs significant reform;
it will take some time to sort it out, but we are trying to sort
out the administration at the moment. We need to look at the way
the present system works with a view to improving that and then
move into longer, structural reform. But we also need to look
at the negative effects that it can have on some people because
of the way it works at the present time. So, yes, I do agree with
you, it is something that we are giving attention to; it will
take time to do it because it is so big and there are so many
people that depend upon it, but it is one of the areas in which
I have looked to be making significant progress in the next Parliament.
41. Can I just flag up, and I am not really
expecting you to respond to this, but could I just make a plea,
allowing for the fact that long-term reform, by definition, will
take time and be complex, that, as a more urgent requirement,
we do look at the impact of restrictions, because I think there
are, at any given time, tens, if not hundreds, of thousands of
families who are caught in that situation?
(Mr Darling) You mean things like the single room
rent?
42. There are lots of different practicalities;
the single room rent, I know, there has been movement on, and
that is very welcome, but there are many families who are also
caught in the short term with £40, £50, sometimes, subsidies,
and I do not think really that can wait for long term. So I would
just flag up that I would ask for short-term consideration as
well?
(Mr Darling) When I say a short-term reform, it will
take some time to see the reforms through, but the idea is that
each year we make changes that in themselves are beneficial, both
from the administration as well as the structure of these benefits,
so I would hope that each year we will be able to see some improvement.
But the point I am making is that it will take some time to see
these reforms through to their conclusion, simply because the
structural changes that are necessary are dependent upon other
things, such as the rent restructuring that is necessary at the
same time, as you know.
Chairman
43. I would just underscore that point. I am
astonished, coming from the area that I do, that the rents are
being paid, and the restrictions that are being inflicted on some
of the areas, like Karen and Andrew represent; there is a sense,
in my mind, that the Department is not really just too sure about
who is in charge of housing benefit. It is a bit betwixt and between;
it is a housing issue, obviously, it is a policy issue as well
as a departmental issue. Supposing the decision was taken to do
something about the point that Karen has just raised, would you
expect to take that forward, or would you expect the DETR to take
that forward?
(Mr Darling) We have policy responsibility for housing
benefit, but as the Housing Green Paper, which was published last
year, recognised, housing benefit cannot be looked at in isolation
from housing policy, because the two are related, so both Departments
are involved in it. But, in terms of making the structural changes
to housing benefit, and the administration of housing benefit,
that is the responsibility of the DSS. As and when we move to
changing the structure of housing benefit, clearly, the Inland
Revenue, or certainly the Treasury, become involved, not only
because of any costs but because if we move towards something
more akin to tax credits then they will be involved as well, but
the policy responsibility for housing benefit rests with the Department
of Social Security.
Mr Thomas
44. A very general question, Secretary of State.
I think you have been Secretary of State for over three years
now. You have mentioned the professional groups who do not tend
to have a shortage of opinions about a whole range of issues to
do with the benefits system, many of whom are very competent,
very capable and have given evidence to us on technical issues,
and, as you know, it is a very technical area. It is a personal
question really, how do you ground yourself to the reality, from
the point of view of the users of the system, how do you make
sure that your political positions are in touch with the realities
at grass roots level, from a customer point of view? And, just
to follow on from that, is there a formal procedure for canvassing
the views of the users of the system?
(Mr Darling) No, there is not a formal procedure.
I suppose the ultimate answer is that I, like you, and everyone
else round this table, who is not a Clerk, are elected by the
people of this country to exercise our judgements. If you look
at the changes we have made in social security, I hope that they
have been for the benefit of most people. I use my judgement,
along with my colleagues, we are all collectively responsible
for the changes that we have made; we did what we were elected
to do, to change the welfare state, both in delivery, both in
terms of the increasing support for pensioners and families, and
so on, and we did that, and the mandate we got was through the
ballot box. One of the problems we have got, as you rightly say,
Gareth, there are a number of groups who make constructive criticisms,
there are lots of people with views which, of course, we will
listen to, but there are very few people in this country who are
not affected by the DSS, they may not know it but they are, indeed,
anyone who has got a pension is, so that is most of the population.
There are no groups of whom you could say, "These people
are truly representative of our users," if you like; in many
ways, we are, and we have been elected, that is the way the democratic
process works. I am happy, and indeed you have only got to look
at the Pensions Service, for example, you were asking earlier
about what is the front end going to look like, well we are having
discussions with people like Age Concern, to say, "Well,
what sorts of things would you like to look at?", we might
want to use some of their premises, and so on. But, ultimately,
decisions about anything to do with Government must lie with the
elected Government, rather than with lobby groups, though their
views, of course, are listened to with great interest.
Dr Naysmith
45. Just a very quick one. I was not entirely
happy with your answer to Karen, really, about the research and
funding research; a cynic might say that is an area of research
that you do not want to fund because you might not like the answer
when you get it. Now I would not dream of suggesting that, Alistair,
that would be very unfair. But I know the Department does do research,
and it commissions research as well, so how do you choose what
research you undertake, how are the decisions made?
(Mr Darling) As you rightly say, and you know, we
commission an awful lot of research; and, just to contradict what
you were saying, much of it comes up with answers that I suppose
the Government sometimes finds it would not like to hear, that
is the nature of research, but no-one should be afraid of that.
If you look at the poverty report, for example, you know the "Opportunity
for All" that we produce each year, as the years go on, we
are going to be held to account for what we promised and what
we actually deliver. Now Governments in the past have never done
that, because it would have been embarrassing to them, because,
you imagine Lady Thatcher doing such a thing, it is unlikely,
I think. So I am not afraid of commissioning research that sometimes
goes into areas that might be difficult. What I was saying to
Karen and what I say to you is that when it comes to the bit,
whenever that day comes, I would rather stand up and say, "We
have increased the amount of money we're paying to the poorest
children in this family on Income Support, going up from £17
to £30 a week, the Minimum Income Guarantee helping two million
pensioners living in poverty, Working Families' Tax Credit, all
of these things we have done and we have done because we, as elected
politicians, an incoming Labour Government, said they needed to
be done, because these are changes that were needed to the welfare
state." And I did not need an academic study to tell me that
there was poverty, or that we needed to do something about it,
or that we needed to find the money to do something it, we have
done it because we had the political will to do it. Now lots of
research has been done into these things, lots of it, and some
of it will be funded by us and others will be independently funded.
I have no difficulty with that. Equally, I have no difficulty
in acknowledging that there are still problems that need to be
tackled. But what I say to people is that if we are given the
support then we can tackle them and we will tackle them.
Mr Dismore
46. Gareth just raised the first issue which
I wanted to discuss with you, so perhaps we will go on to the
second issue, which is what the Department is doing to look at
its responsibilities under the Race Relations Amendment Act, in
terms of the ethnic communities, because there is a new duty on
public bodies to do what is needed to eliminate unlawful discrimination.
And one of the themes that has come through a whole series of
our reports, practically all our reports, I think, is the extent
to which the Department responds especially to the ethnic communities,
and certainly when we were doing the pension inquiry we went to
my constituency and heard from some of the ethnic pensioner groups
that they have needs which really they felt were not being addressed
by the DSS. One of the problems is that there is no ethnic monitoring
of claimants and outcomes from ethnic communities. What do you
think the Department needs to be doing to meet its responsibilities
under the Act, and is it going to look at whether or not ethnic
monitoring, both of claimants and of outcomes, should be taken
into account?
(Mr Darling) As I was saying, we need to make sure
that we meet our obligations under any statutory requirement.
The Department does have some information, collected through the
Labour Force Survey, for example. You mentioned pensioners, in
particular; you are right, that if you look at pensioner poverty
there are areas where there is a greater incidence of pensioner
poverty amongst the ethnic minorities than there is elsewhere.
Now, obviously, our benefits system will always be universal,
they will apply across the board, no matter where you live, no
matter who you are; but in terms of the accumulation of pensions,
and so on, because that depends on work and various other things,
then, of course, you do need to look at these things to see what
else needs to be done. What we are doing is looking to see what
further information we need to make sure we have got the right
information, so that we can then provide the services we need
for people who may be suffering from disadvantages which are peculiar
to them, rather than ones that are more generalised and which
you would expect to see across the board.
47. If I give you some further examples, obviously,
you are right that the pension is a universal benefit, but there
are other cases, for example, we looked at the Benefits Agency
Medical Service, which threw up all sorts of criticisms as a scheme.
And without a system which actually monitors whether or not ethnic
people are getting a fair deal from the system, in other words,
that they are getting the same benefit irrespective of their ethnic
origin, people will inevitably assume that they are being discriminated
against if they do not get what they perceive to be fair treatment.
When we talk of the Social Fund, for example, where the decision
whether or not to give somebody any money is entirely discretionary,
within the overall framework, how can you be sure that the decision
being taken by the decision-makers is not influenced by ethnicity?
Now the only way that can really be done is by monitoring of claimants
and outcomes, surely?
(Mr Darling) And I agree with you, you do need to
make sure that, on something that is pretty discretionary as well
as entirely discretionary, you do not have prejudice entering
into it so that people are being discriminated against. You mentioned
the medical services. I think you will agree that there are problems
within that service that are quite substantial; we are in the
process of addressing these at the moment right across the piece.
But I do agree with you that it is very important that there is
no actual discrimination, or if there is even perceived discrimination
that you deal with that and you deal with it quickly. But the
whole way in which the Medical Services work is something that
we are looking at, at the moment, because it is an area where
I think substantial improvement is required in service delivery
as well as the sort of general outcomes. But on the central point
you are making, that we are making sure the Department does not
discriminate and that people do not have that perception, that
is critically important, because I have always said the system
needs to have popular support, and that popular support means
just that, it has to be support across the piece, and not with
a group of people feeling that they are not getting what they
are entitled to.
48. But how can you achieve that without ethnic
monitoring or monitoring of outcomes?
(Mr Darling) If you take the Social Fund, for example,
we do monitor the outcomes, but one of the things that we are
reflecting on at the moment is whether or not we need to get more
information in order to see whether or not there is that problem,
or, if nothing else, to reassure ourselves that there is not any
problem with discrimination. I take entirely the concerns you
are expressing, and we are reflecting at the moment on what we
might usefully do to address that.
49. One other point, about our Social Fund report,
and I think it is more general. I think, to an extent, you touched
on this earlier on, and it is the extent to which applicants feel
they are not getting fair treatment from staff in the Department.
What do you think you could do to help people, particularly in
the Social Fund, at a particular crisis, when they are particularly
stressed, to access the benefits, both immediate Social Fund assistance
and more generally, in terms of perhaps encouraging the staff,
empowering them actually to start to give advice as well as just
processing the claims?
(Mr Darling) Part of the philosophy of Jobcentre Plus,
of course, is to help people, give them more, that to which they
are entitled but also to give them advice. But bear in mind that
the Social Fund, by its very nature, is the lender of last resort
and that if the request is declined, for whatever reason, it is
unlikely that the person who has their request turned down is
going to think extremely highly of the person who made that decision.
In fact, as you know, we have increased the amount of money going
into the Social Fund, there are more people benefiting from it
than did in the past, and I think that is important. But I think
the key thing is, you rightly identify, to make sure that, as
well as dealing with the symptoms of poverty, we deal with the
root causes of poverty. And the root causes of poverty will be
dealt with, in part, by helping some people improve their situation,
improve their incomes, not just by getting benefits to which they
are entitled but, where it is appropriate, getting them into work,
or, where clearly it is somebody who is not expected to work,
like pensioners, for example, making sure they have got everything
else that they are entitled to. But we do try, year on year, to
make sure that our customer service improves; but, as I say to
you, you will know that as an MP, if you tell a constituent "No",
and there are ways of doing that, of course, you do not always
get the gratitude to which you might expect you are entitled.
Dr Naysmith
50. I just want to turn to Part Three of the
report, Human Resources and Other Departmental Activities, it
is headed, but what I really want to focus on is fraud and official
error; and the figures that are given in the report say that fraud
and error show a reduction of 6.5 per cent this year, equivalent
to £1.32 billion. Are you happy that the Area Benefit Reviews
and the other anti-fraud measures are cost-effective?
(Mr Darling) The Area Benefit Reviews, of course,
look at the mechanisms that we have got in place; now you are
right that one of the encouraging signs is that, for the first
time ever, we have seen a significant fall in fraud and error
in Income Support and JSA, that is something that never happened
in the past and it is now happening. I have always been cautious
about this, and that one swallow does not make a summer. We have
an awful lot to do, the Department still loses too much through
fraud and error, but we are trying to reduce that. I was just
looking at the figures, you asked about official fraud and error,
there is a reduction in official fraud and error which is about
6 per cent in IS and—
51. I hope there is not too much official fraud?
(Mr Darling) No; this is mistakes made, which, as
you rightly say, are error, but there has been a reduction. In
round terms, if you take Income Support, four years ago two out
of every five cases were not right; that has been halved, it has
saved a billion pounds this Parliament. So we are steadily bearing
down on that. The other thing you might be interested in knowing,
because I do not think this is in the departmental report, is
that, if you look at the BA generally, because it is the Benefits
Agency you are talking about for the most part here, what we found
was there was a huge variation in offices, some offices have very
good accuracy rates, up in the 90 per cents, others were pretty
bad. Now there was one in particular that I was looking at, in
west London, its fraud and error rate was about 64 per cent in
January last year, it is now just under 80 per cent; the reason
is, we sent in one of the performance action teams, we have helped
reorganise things, improve the management, and so on, it is cutting
down on mistakes, on errors being made, which is, for the most
part, official error. So we are bearing down on that. We are also
trying to make sure that the information we collect from the public
is more accurate. But there is a significant reduction in fraud
and error, for the first time, but, clearly, we have a significant
way to go. The new IT that we talked about earlier in this hearing
will go a long way to enable us to make sure that we get the right
information, and, having got it, it then goes through the entire
organisation and it can be cross-checked, so that if somebody
turns up somewhere else with a different story they can be spotted
immediately, rather than, at the moment, in some cases, not spotted
at all.
52. What you say about variation between offices
is extremely interesting, because I was invited in, a few weeks
back, to Lodge House, in Bristol, which is the big office, it
is not actually in my constituency but it deals with a lot of
cases in my constituency, and I was invited in by the fraud section
to see what they do; and this probably goes back a little bit
to when we were talking about morale of staff. I cannot go into
detail too much, but the impression was clearly there that if
they had been given better conditions they could have produced
a lot more in the way of returns, and their idea was that maybe
some kind of incentive could be given to encourage people—they
were talking about things like lack of overtime, and it may have
changed a bit, but they felt that if there was a bit more overtime
and salaries were a bit better. They also claimed they were losing
experienced staff. And what I am really getting at is, do you
subscribe to the principle of what they were putting to me, because
they were claiming huge returns were possible if they were allowed
and able to work a bit longer and a bit more efficiently?
(Mr Darling) I think it is fair to say that the overtime
restructuring in Bristol did cause a number of the officers there
to complain, and, indeed, I met one of them, at a routine gathering.
53. I met about six of them.
(Mr Darling) What we have done is, what we have been
far better at now, and I think the figures are beginning to show
this, is profiling the risks to which the BA and the Department
generally are exposed to, which means concentrating your efforts.
And part of the reason that we set up a national organisation
to deal with organised fraud, one of the reasons we brought in
a senior official to look at the risk profiles and where we are
actually losing the money, is because we wanted to make sure that
our resources were targeted in the best possible way. Now you
will always get, in every office, you will find somebody in the
office, for one reason or another, who has got some complaint
they want to make; but we are, I think, targeting our resources
a lot better, and also making sure that we incentivise our staff
in the right way. In crude terms, it is all very well to send
lots of staff out on lots of visits and tick off, "I did
X visits today," but if they do not actually come up with
the result then there is not much point. If, on the other hand,
you may have got the staff doing fewer visits but actually they
come up trumps, having got somebody, or a ring of people, then
that helps the Department a lot more. The other thing is that
there is a recognition, I think, certainly over the last two to
three years, that you need to look at fraud and error in the round,
and you need to ask yourself, because sometimes it is difficult
to establish people's intentions, and so on, it is important that
you put more attention than there was in the past on the front
line, the people who sit at the desk and actually make the calculations,
and all these things, as I say, are beginning to bear fruit. So
I understand perfectly well what the chap from Bristol said, because
I am pretty sure I met really the same chap and had a meeting
with him; but I think we are actually getting better at profiling
the risks and actually dealing with them, and, as I say, the figures
are beginning to suggest that our approach is right. But, as I
say to you, this is going to take some time to turn things round,
though I think we are on the right track.
54. That is fine; but just looking at the other
side of the coin, the figures for official error are not indicated
in the Area Benefit Reviews in the report, but they are estimated
to be as much as a third of a million pounds, something like that
would be 1.4 per cent of Income Support and as much as 5.6 per
cent for Jobseeker's Allowance. Now the rate of official error
does not seem to be reducing?
(Mr Darling) No; the figures I was looking at here
are Income Support and Jobseeker's Allowance, and accuracy, which
is what official error is, is improving, and it is steadily improving,
and we are talking about the various offices where we knew there
were problems, where there was a lot of official error, and sending
in teams from outside is making a significant difference and reducing
the amount of official error, or, put another way, improving the
level of accuracy. Now those figures will start to come through
in the years to come. But, as I said to you right at the start,
significant effort has gone into trying to refocus the DSS generally
and being far better at identifying what the problems are. You
look at the DSS overall and you just see big numbers in a vast
organisation, you do not see the whole thing; you need to start
looking at what is happening in the individual units and the individual
offices. Now that we are starting to do that, it is beginning
to show some results.
55. Do you think that the amounts recovered
as a result of fraud and error are increasing?
(Mr Darling) We are increasing, as we are increasing
the amount of money.
56. And that is the trend, is it?
(Mr Darling) It is.
57. One swallow does not make a summer, I think
you said, but, you know, clearly the same trend then?
(Mr Darling) We recovered £122 million in 1997,
it was £180 million last year, for 1999-2000, so it is going
up. Part of the problem with recovery is, of course, that where
you are recovering with somebody on benefit there is a limit to
how much you can recover every week, for perfectly obvious reasons.
However by far the best way of dealing with this problem of overpayments
is to stop them happening in the first place; it is to that that
we are directing significant effort.
58. If we can just change the subject finally,
and this is the very last question from me, there is a new anti-fraud
incentive scheme for local authorities, to assist them in tackling
fraud in housing benefit and council benefit, and that is also
in the report. Do you have any indication of how many authorities
are taking up this option?
(Mr Darling) Many of them are. What I can say is that
I think that housing benefit administration, in too many local
authorities, was seen as something of a poor relation, they did
not always have their best people or the best organisation; but
I think that is beginning to change. I am quite convinced the
incentive system we have now got is far better, and the National
Audit Office has welcomed our approach, whereby we incentivise
local authorities not to let fraud into the system in the first
place, rather than the old system where you rewarded them for
finding it, because that opens an encouragement to find it. But
I think there has been quite significant improvement, over half
of local authorities have taken up the various initiatives; there
is a range of initiatives that we have been putting in place,
and, of course, I announced earlier this year, the expert teams
which we are sending in to some local authorities. To give you
an example, in Northampton, where I issued directions last summer,
because I can do that under various powers I have got, requiring
them to improve things; they enlisted help from outside and it
is turning things round, there is a significant improvement going
on in there. But one of the problems in housing benefit is, it
is administered by 409 different authorities, some are very good,
some are not at all good, and what we are trying to do is to drive
up the standards of all local authorities so it is better administered.
We have got to play our part, by some simplification, some improvements,
that will help them in administration; but that is very, very
important.
Chairman
59. I think that the Area Benefit Review process
is a very much more positive way of looking at bearing down on
fraud; is there any expectation that it will be extended beyond
JSA and Income Support?
(Mr Darling) Yes, it will be.
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