Select Committee on Work and Pensions Minutes of Evidence

Supplementary memorandum from the Secretary of State to the Chairman of the Committee

  1.  At the Select Committee hearing on 30 October I promised to provide you with additional information to supplement the evidence given on the day. I hope you find the following information helpful.


  2.  You asked for estimates of post office card account use in the first, second and third year of operation. We have already announced our operating assumption that there will be 3 million card accounts by the end of conversion to direct payment—in 2005. This is an assumption, not a forecast. Actual numbers of accounts and the way in which they are used will depend on:

    —  total numbers of benefit and tax credit customers;

    —  the rate at which benefit customers convert from order books and giros to direct payment into an account;

    —  the choices that customers make between different types of accounts;

    —  the way in which post office card account customers choose to use their accounts: they will be able, if they wish, to withdraw smaller sums of cash more frequently than they can when using an order book or giro.

  3.  In addition we expect to see increased use of other banking services at post office branches. Benefit and tax credit customers who choose to be paid into a bank account can already withdraw cash, free of charge, at a post office if they use a current account of one of the banks that has a banking partnership arrangement with the Post Office. From next April all the major banks plan to provide free cash withdrawals from their basic bank accounts at post offices.


  4.  DWP IT contracts are negotiated by a team comprising of senior managers from the relevant project and a central team of contract negotiation experts who work to our Group Director. The Group Director has responsibility for delivering the modernisation programme.

  5.  In negotiating and administering these contracts, the experienced in-house team is supported by various external advisors: legal and financial, as well as drawing on external consultancy as necessary. The contracts take into account best practice from across the UK, and Treasury IT PFI guidelines in order to satisfy a number of external stakeholders—notably National Audit Office, Treasury and the Advisory Council of Partnerships UK (PUK).

  6.  PUK independently assessed the child support reform contract, and formally approved award before the contract was signed by the Department.


  7.  1,125 customer liaison managers (CLMs) and partnership liaison managers (PLMs) are now in post. This represents 70 per cent of the target April 2003 complement for CLMs and PLMs.

  8.  Overall the local service complement now stands at 1,544 which represents 63 per cent of the April 2003 target. A further 554 [23 per cent] staff have agreed start dates leaving a balance of 347 [14 per cent] vacancies.


  9.  National Statistics determine the publication date for take-up statistics. Statisticians expect to announce publication plans later this month, once they have received and begun to analyse the final tranche of this year's research to improve the quality of Minimum Income Guarantee take-up statistics. I have asked my statisticians to publish results at the earliest possible date consistent with National Statistics good practice.


  10.  Following analysis of the findings of the inter-departmental working group on corporate manslaughter the Government is now conducting a brief regulatory impact assessment (RIA). The Home Office has lead responsibility for this exercise.

  11.  The RIA, which started in September this year, is an important part of policy making in areas in which the Government intends to legislate. It is necessary in order that policy aims are proportionate to the costs that may be incurred by businesses and other organisations concerned. The RIA, which I expect to be completed by the end of the year, will inform the process of deciding what the legislation will look like finally.

  12.  As you already know, the Government has a manifesto commitment to legislating in this area and will do so when parliamentary time allows.

  13.  In addition to the above information, I thought it would be helpful if I were to clarify one or two other matters that arose at the evidence session, specifically the qualification of DWP accounts and Housing Benefit reform in relation to temporary accommodation.


  14.  At the evidence session you asked me whether my Department might reach a position where DWP accounts would not be qualified, to which I responded that the modernisation programme should take us towards that position. By way of elaboration, the Department has targets for every aspect of the qualification including fraud and error targets which are being met. The modernisation programme is one aspect of a series a measures that will help the Department reduce the level of internal fraud and error.

  15.  However, whether or not we could ever reduce the level of customer fraud and error to a level that would lead to the removal of the qualification is a matter for the Comptroller and Auditor General. An exchange of correspondence with the Comptroller and Auditor General indicated that if customer fraud and error could be reduced to below one per cent such a proposition might be possible. But even in such circumstances it would still be open to the auditors to qualify the accounts because of the amount of money involved.


  16.  The Committee asked whether our Housing Benefit reforms (that is, the standard local housing allowance which we plan to test out in pathfinders) would exclude people in temporary accommodation; I replied that I expected that to be the case. I can confirm that will indeed be the case for the vast majority of people in temporary accommodation.

  17.  However, since there is no convenient definition of "temporary accommodation" in the Housing Benefit rules I thought I might explain in more detail what we propose.

  18.  Most people living in temporary accommodation, where local authorities have a duty under the homelessness legislation, are in properties that are owned or managed by a social landlord: either the council or a local housing association. As such, they would be outside the scope of our new standard housing allowance, which will only apply to private tenants.

  19.  However, in the minority of cases where the local authority places people directly in private tenancies with a private landlord, any resulting Housing Benefit claim would be subject to the standard allowance. Of course, claimants receiving the standard allowance will be at least as well off as under the existing rules. And, although the benefit would normally be paid to the tenant, we will build in safeguards to allow the local authority to set up direct payments to the landlord if the claimant has difficulty budgeting.

  20.  Finally the Committee asked about the therapeutic earnings provisions. We do not envisage changing the transitional arrangements but as I said to the Committee we shall be monitoring their impact. For those already working close to the 16 hour threshold they may have the opportunity of moving to a position where they could take advantage of the extra help offered by the new tax credits.

  21. Please let me know if you require any further information on any of these matters.

Rt Hon Andrew Smith MP

5 November 2002

previous page contents

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 3 December 2002