Select Committee on Work and Pensions First Report


Housing Benefit

61. In the project to create a 'work first' welfare system, the role of Housing Benefit is crucial. Research has shown that worries about paying housing costs can be a major deterrent to unemployed people contemplating work. Failings in the administration of Housing Benefit, particularly in processing changes of circumstances quickly, can act as a major disincentive for people facing low paid or intermittent work opportunities.[124] Fast and accurate delivery of in-work benefits including Housing Benefit at the start of a job can reduce the financial uncertainties of moving off stable out-of-work benefit income. More generally, the lack of integration between Housing Benefit, administered by local authorities, and other benefits, administered by central government agencies, results in a cumbersome bureaucratic system where mistakes occur and delays are widespread. The lack of common systems allows benefit fraud to flourish. Therefore, the attempt within ONE to create a single point of contact for both local authority benefits and other social security benefits held considerable promise. The difficulties faced by ONE staff and local authorities in achieving this ambition are instructive, if the lessons are to be learned for the future.

62. A particular problem was that ONE staff did not have a knowledge of Housing Benefit and Council Tax Benefit. Therefore Personal Advisers were poor at ensuring clients provided all the necessary information needed to make successful Housing Benefit and Council Tax Benefit claims.[125] We received evidence that the introduction of ONE had led to delays in the processing of Housing Benefit in some areas.[126] Lack of knowledge of Housing Benefit and Council Tax Benefit also has implications for offering informed advice on back-to-work benefits. Computer-generated 'better-off' calculations do include Housing and Council Tax Benefits; but they do not cover the various transitional schemes for certain client groups which have been introduced. We agree with Ms Gwyneth Taylor of the LGA, who told us "people in the Benefits Agency and Employment Service need to know what is going on in Housing Benefit. They do not need to know all the nitty-gritty detail, but they do need to have enough of an understanding to be able to give broad advice to people."[127]

63. Another significant problem was that lack of compatible IT made it impossible for Advisers to answer clients' queries concerning the progress of a Housing Benefit or Council Tax Benefit claims.[128] At a stroke, the concept of a single point of contact for all benefit queries is lost. On an administrative level, lack of compatible IT slows down the vital sharing of information concerning changes in claimants' circumstances, necessary both to allow speedy revision of benefit payments, and to prevent overpayments and fraud. Many local authorities' use of IT is considerably more sophisticated than the systems in use in benefit offices. John Kelleher, in charge of the delivery evaluation of ONE, referred to the "terrible incompatibility of systems," where local authorities were "simply too far ahead" in managing documentation and records electronically compared to ONE offices.[129] Mr David Gary, an LGA representative dealing with the Somerset ONE pilot, lamented the fact that his authority had had to go over to a paper system in order to liaise with ONE.[130]

64. The ONE pilots did at least begin the process of requiring local authorities and Benefits Agency/Employment Service staff within ONE to set up formal liaison mechanisms to work together towards greater integration of services. Mr Gary of the LGA told us: "at local level much of what has worked has worked because locally people have made it work."[131] The danger is that the goal of improved liaison on Housing Benefit will be given lower priority within Jobcentre Plus, as the new organisation focuses internally on the merger of the Benefits Agency and Employment Service. In Ms Taylor's words, "there was a lot of progress at local level which it would be a shame to lose."[132] In its memorandum to the Committee, the DWP said: "In Jobcentre Plus we plan to build close working relationships with local authorities and to develop a shared agenda, including improving liaison on Housing Benefit and Council Tax Benefit and a wider agenda on economic development. If we get these partnerships right we shall reap the same benefit as in the ONE pilots."[133] Although the aspiration is welcome, it is not clear to us that the formal mechanisms are in place to ensure that this liaison takes place at a local, regional and national level - and is properly monitored. The ONE pilot areas have made a start, but the incentives for Jobcentre Plus Pathfinder offices to put time and energy into building partnerships with local authorities is far less clear.

65. Mr Leigh Lewis drew attention to one significant improvement with Jobcentre Plus, which may make future liaison easier. In future, all 90 districts which will make up Jobcentre Plus nationally will have boundaries aligned with local authority boundaries. This will mean that no local authority should have to deal with more than one Jobcentre District. We welcome this improvement, which will certainly assist local authorities. The problem will remain, however, that Jobcentre Plus districts will still have to deal simultaneously with several local authority Housing Benefit and Council Tax Benefit departments (each with different IT and processes). This will make it difficult for Personal Advisers to act as the single point of contact and information regarding a client's Housing Benefit claim. In evidence to us, Mr Lewis said: "[a] Personal Adviser's role does not in a sense stop at the office door. If, for example, that adviser is talking to someone who is wanting to go into work, who is worried about their housing benefit claim, worried about housing benefit run-on and issues like that, that adviser will talk to their local authority colleagues, will try and make sure that the liaison is as good as it can be."[134] A study of Jobcentre Plus districts and local authority areas shows that of the 90 districts, a third will have to deal with five or more different local authorities. Eight districts will have to deal with ten or more local authority areas.[135] Thus liaison by Personal Advisers with local authorities concerning individual clients will continue to be challenging.

66. We recommend that the Government publishes the strategy Jobcentre Plus has adopted to build close working relationships with local authorities over the administration of Housing Benefit and Council Benefit, including the systems it intends to put in place to ensure that:

  • Jobcentre staff are properly trained in these benefits in order to advise clients who are considering employment;
  • that staff identify and notify local authorities promptly of relevant changes of circumstances;
  • that liaison with local authorities features in the key work objectives of Jobcentre Plus managers; and
  • that management information is collected and monitored at Agency level to ensure that the strategy is being implemented consistently across the organisation as a whole.

Wider cooperation with local authorities on job creation and local regeneration

67. Considerable evidence suggests that good area-based partnerships between local authorities, the private sector, the Employment Service and community organisations have been effective in underpinning welfare to work strategies.[136] Local authorities are at the forefront of developing such partnerships with the aim of promoting local economic regeneration and the creation of jobs. Again, we were told that Jobcentre Plus intends to work closely with local authorities on the wider agenda of economic regeneration.[137] The Minister acknowledged that "the new Department is an important partner in urban regeneration because of our focus on jobs and also because of our interest in intermediate labour markets...I do encourage local managers to get themselves and to get their staff involved."[138] We welcome the Minister's encouragement to local managers. However, it is not clear to us what mechanisms exist to give the impetus to Jobcentre Plus managers and their staff actively to engage with local authorities in area-based partnerships to encourage employment and regeneration. We recommend that, in the near future, the Government tries to devise jointly with local authorities a strategy for ensuring that the DWP and Jobcentre Plus work with local authorities on the wider agenda of economic regeneration.

68. There is also a case for Jobcentre Plus to work more closely with local authorities in the identification and development of employment-focused services for disabled people. In England, all local authorities providing social services have been required by the Department of Health to draw up Welfare to Work for Disabled People Joint Investment Plans (JIPs). These are three year plans which identify the needs and resources that affect access to services that help people enter or sustain work, or work-related activity. Local authorities are also involved in Health Action Zones (HAZs) in 26 areas. HAZs have developed programmes linking health and employment, supporting local projects around this subject. We recommend that Jobcentre Plus develop and publish a strategy for working in partnership with local authorities to identify and support employment-focused services for disabled people.

The role of the private sector

The Private Voluntary Sector model (PVS)

69. The Committee welcomed the opportunity to hear first hand from the private companies charged with delivering the four Private Voluntary sector ONE pilots: Reed in Partnership (North Nottinghamshire), Deloitte Consulting (Leeds and Suffolk) and Action for Employment (North Cheshire). In one sense, their experiences of running the pilots might be said to be no longer relevant, the decision already having been taken that Jobcentre Plus will be rolled out as a public service.[139] In the event, we felt that all three companies had important and useful observations to give the Committee, which were relevant to the ONE process in general and the lessons which need to be learned for the future. Two of the three companies - Reed in Partnership and Action for Employment - have agreed to one year extensions to their existing contracts. Deloitte Consulting has declined an extension, and its involvement in ONE will end on 31 March 2002.[140]

70. In creating the PVS partnerships, Ministers said they wished: "to harness the enthusiasm, expertise and knowledge of the private and voluntary sector in leading the delivery of [ONE]...The specific objective of this variant is for the private and voluntary sector organisations to work in partnership with each other in developing innovative and flexible ways of delivering [ONE]."[141] The PVS pilots have faced problems which the public sector led pilots did not face. Not least of these was the nine weeks they were given between winning the contracts to run the ONE pilots and being expected to be fully operational, and the steep learning curve for private sector managers in getting to grips with the business.[142] There have also been staff turnover problems, as staff seconded to the ONE pilots returned to their 'home' agencies, particularly as the planned period of the pilots came to an end. This has led to direct recruitment of staff from outside the Benefits Agency and Employment Service, with an inevitable drop in levels of performance as new, less-qualified staff learned the job.[143] The discrete nature of the PVS pilots also meant that there was less opportunity to draft in extra staff from a wider area at periods of extreme pressure.[144] The relatively short length of the contracts also inhibited both IT development and capital investment more generally.[145]

71. All the private companies were heavily critical of the contractual terms under which they were expected to run the pilots, which, in their view, restricted the scope for innovation and led to poor outcomes in getting people into work. Their criticisms of the contract have a wider relevance, in that they highlight issues concerning the culture and priorities of the Department which deserve examination. The contracts operated on a capped funding model, with remuneration heavily linked to meeting fixed targets to do with benefits processing and meeting a defined percentage of Employment Service job placement targets. A major criticism of the contract was that it prioritised output measures over outcomes. Output related funding targets relating to quality of completion of forms and the number of days before an initial work-focused meeting carry greater payment returns than outcome measures - getting people into jobs. Therefore, when the pilots came under pressure due to high claimant demand and shortage of staff it was the work-focused element which got squeezed.[146]

72. Non-JSA clients who needed considerable input to help them contemplate work suffered under this regime. Research on the use of Capability Reports in the ONE pilots noted that the Employment Service targets were primarily concerned with JSA job placements. Particularly in the private sector, where funding was tied to meeting placement targets, JSA clients were therefore the main priority. Other targets, such as the number of new claims processed, again militated against Advisers being able to give attention to working in an ongoing way with Incapacity Benefit claimants.[147] Mr Richard Granger of Deloitte commented: "The standard process does not recognise the amount of effort required to deal with many non-JSA clients who are beginning the 'journey to work' and face many barriers to accomplishing it successfully. Such clients require levels of support and persistence that are not accommodated by the service or financial model mandated for ONE."[148] We consider that Deloitte's observation has a wider relevance beyond the PVS model.

73. The private companies were exasperated by what they saw as the over-bureaucratic and inflexible attitude of the officials supervising the PVS pilots to proposals for innovation. Action for Employment said that innovation had proved very hard work to implement in the pilot - "the management time and effort required to introduce the tiniest change is almost prohibitive."[149] These comments were repeated by the other private contractors. Again, they mirror the impression given by Mr Kelleher that in all the pilots, local managers on the ground were inhibited in useful innovations responding to local conditions because they had to wait for permission from more senior managers further up the hierarchy.[150]

74. Under the terms of the PVS contracts, around fifteen per cent of DWP funding was tied to 'innovation'. For Reed and Deloitte especially, it had taken many months to get approval of projects to access these funds. Across all four PVS models, innovation money has been put into programmes aimed at reaching clients who are further from the labour market.[151] Results from the North Nottinghamshire ONE suggest that, as a consequence, the pilot has more than doubled the number of non-JSA clients placed in work.[152]

75. The private sector does not appear to have been particularly well used in the ONE pilots, where they have been over constrained by contract limitations linked primarily to the need to ensure that benefit payments are paid swiftly and accurately. It is disappointing that the potential of the private sector to bring innovation to the ONE pilots was not properly harnessed, and that its future contribution to Jobcentre Plus appears to have been ruled out. We were not convinced that their contribution in dealing with job-ready clients was particularly effective or had much potential to add value to the 'in-house' provision of services. However, we believe that within the field of welfare to work, private sector companies may have a greater potential to be used in the area of re-integration of people at some distance from the labour market where diversity of supply, innovative thinking and an element of competition might be constructive if clearly linked to outcome rather than process.

The role of private employment agencies

76. During the course of its study visit to the Netherlands, the Committee went to a Dutch Centre for Work and Income (CWI). We were impressed by the fact that private employment agencies (PEAs) had desks in the CWI offices, alongside the CWI advisers. This meant that clients who were job-ready could immediately be directed to a PEA desk for assistance. The Education and Employment Committee considered the role of PEAs in recruiting unemployed people in its January 2001 report.[153] That Committee acknowledged the important role that temporary work could play in moving people closer to sustained employment. As discussed in that Report, many PEAs have developed partnerships with the Employment Service which have been effective in improving the employment opportunities of unemployed jobseekers. We recommend that the Government consider what greater role PEAs could play alongside Jobcentre Plus in placing unemployed people into temporary jobs which can then enhance their chances of moving into permanent employment, whilst continuing to support clients in their efforts to achieve permanent employment.

Targets and performance measures

77. From the preceding paragraphs, it must already be apparent that, within ONE, targets exerted a powerful influence on the behaviour of staff. On a day-to-day level, it was the targets to which staff worked which determined their priorities - regardless of the overall ONE vision. At the start of ONE, there were no new targets set for the pilots; instead, it was intended that staff would operate within the Agencies' existing targets. The one exception was a commitment that initial Personal Adviser meetings would take place within three days of the start-up meeting.[154] The absence of new targets meant that employment targets were primarily focused around existing job placement targets for JSA clients, with the inevitable result that this was where the energies of staff were concentrated. As the DWP noted, "caseloads were too full of JSA clients to provide the necessary intensive help that clients to other benefits might need to find work, and staff did not have time to do the work."[155] Inherited Benefits Agency targets stressed the importance of speed of processing and accuracy (as measured by the quality of information and evidence collected to support a benefit claim). At times of heavy pressure, it is clear that the work-focus got lost as staff concentrated on meeting basic process targets, such as the requirement to have a Personal Adviser meeting within three days.

78. In an effort to devise targets which better supported ONE's objectives, key performance indicators were devised which established minimum performance measures, as a baseline for improvement. These were introduced from October 2000. The minimum standards now cover the number of job 'entries' achieved, with JSA and non-JSA placements measured separately; job sustainability; call backs within 24 hours (for Call Centres); booking Personal Adviser meetings; and the quality and completeness of evidence gathering.

79. From April 2001, the minimum standard for job entries in the Basic Model and Call Centre Pilots combined was 3,651 JSA job entries, and 397 non-JSA job entries.[156] In the Private Sector pilots, the job entry targets were 2,035 JSA targets and 277 non-JSA targets.[157] The minimum standard for job sustainability was that 75 per cent of those placed in work should not return to ONE to claim the same or another benefit within a continuous period of 13 weeks of taking up employment.[158] On call backs, the minimum standard set for the Call Centre pilots was that 90 per cent of clients were to be called back within 24 hours.[159] For booking clients to attend initial Personal Adviser meetings, it was recognised that the original three day target had "perversely driven speed rather than the quality of the interview, in its length and focus on work issues."[160] Therefore from April 2001, the minimum standard set was that 80 per cent of clients should have their first Personal Adviser meeting within four days.[161] For evidence gathering, a 90 per cent minimum target has been set for the quality and completeness of information and evidence collected to support a benefit claim.[162]

80. The policy makers overseeing ONE have clearly been alert to the need to readjust the targets set to better accord with the aims of ONE. Nevertheless, there appear to be tensions between the work focus and the process targets to do with benefits delivery, which have resulted in the latter achieving a greater emphasis - particularly in relation to non-JSA clients. The private sector partners argued that the need to concentrate on meeting "Agency process focused targets" (to which greater 'weighting' was given under the funding regime governing the contracts) detracted from their ability to deliver a more "client-focused" approach related to helping people move into work.[163] Deloitte lobbied hard, but unsuccessfully, to be allowed to experiment with the - at that time - three day interview target. They argued that where a client was job-ready, there was a substantial case to be gained by submitting the person for interviews immediately - rather than spending the majority of the first contact meeting concentrating on benefit claim completion. Their proposal was that they be allowed to experiment with giving advisers more time with job-ready clients at the point of first contact, so that they could be placed straight into work without the need to claim benefit. Their conclusion was that: "the current performance regime and operation has output measures at its heart - how many days pass before the individual receives a one hour meeting after their initial start-up meeting. This militates against the work placement and labour market activity targets, which are outcome based."[164]

81. The private sector companies' criticisms are matched by those of John Kelleher, who commented more widely on the performance measures used within the ONE pilots to judge success: "It was the concentration on process that caused the problem...we needed more concentration on the design of the process and not to get lost in the epiphenomenon of the process - did you see the person, did they have their first Personal Adviser meeting after three or four days? That is not going to determine whether people get jobs or not. There is the problem of falling back into all sorts of bureaucratic default about saying that the system works, that the queues were not too long, we saw them in a certain time, we saw everyone after 20 weeks, which is nice and good as far as it goes but it is only quite tenuously associated with impact."[165] Meeting processing targets must not overshadow the major policy re-orientation which ONE represents: to deliver a work-focused service tailored to clients' needs. But it is not an 'either/or' situation. We are concerned to see that benefit claims are determined swiftly and efficiently. The answer lies in ensuring that there are sufficient resources to carry out both activities - assisting clients to work and processing claims - without the two coming into conflict.

82. The current work-related targets are heavily biased towards achieving job placements for JSA clients. The job placement targets for non-JSA clients are extremely modest, despite the fact that in most of the pilots at least a third of all ONE clients are receiving benefits other than JSA. The danger is that, as a result of the target regime, Advisers are encouraged to devote their energies only to the most job-ready of non-JSA clients whilst others, who need greater support to successfully enter the labour market are 'parked' on benefit. There are at present no performance measures which give staff recognition for the work they do in helping clients move closer to the labour market, for example, by encouraging a client to do voluntary work, undertake a training course or improve personal skills and attitudes (for example, increased levels of motivation or levels of confidence). As a result, it is unsurprising that such activities are not awarded adequate time or attention.

83. The final work-related target regime for Jobcentre Plus has yet to be announced. But draft proposals suggest that the focus will again be on job entries, but weighted through a new system of point scores intended to focus effort on priority groups and areas.[166] Under this new system job entries for lone parents, sick or disabled clients, and others on non-JSA benefits would be weighted higher, through more points, than JSA clients. In turn, job entries achieved for longer unemployed JSA clients and those eligible for JSA New Deals would rank higher than entries for short-term JSA clients. Reflecting the current PSA targets, extra points would be given for job entries obtained in the 30 local authority districts with the poorest initial labour market position; and in an additional 30 local authority districts with a high proportion of disadvantaged ethnic minority clients.

84. We are concerned that the proposed job-entry targets for Jobcentre Plus give equal weighting to all non-JSA clients. Our inquiry has shown that staff have the most difficulties in dealing with Incapacity Benefit claimants. Moreover, research conducted as part of the ONE evaluation on the attitudes of employers towards non-JSA clients, found that employers were less willing to take on sick or disabled clients than lone parents, and were particularly resistant to employing people with mental health problems.[167] If all non-JSA clients are treated in the same manner, lone parents are likely to get priority because they are easier to place.[168] We recommend that, within Jobcentre Plus, job-entry targets are set for non-JSA clients which reflect the greater or lesser difficulties which the different client groups face in entering the labour market, and which will reflect the varying efforts which will be needed by Advisers to assist them.

85. We are concerned that the proposed target regime for Jobcentre Plus will not be enough to incentivise staff to do the detailed work with less job-ready clients which will be necessary if the goals of Jobcentre Plus are to be fulfilled. Targets are needed which reward staff for moving clients closer to the labour market, otherwise they will concentrate their energies and resources on those most immediately job-ready. We therefore recommend that the Government seeks to develop and pilot a new range of targets aimed at measuring the 'distance travelled' towards labour market participation by clients who are not immediately job-ready. These targets would aim to measure improvements in employability achieved by the intervention of Jobcentre Plus, either alone or through referral to external agencies. Key measures might be improvements in work skills, attitudinal skills, personal skills, and practical skills - as steps along the way to more tangible targets such as qualifications and jobs. One suggestion might be to use the next round of New Deal Innovation Fund bids to test more mixed targets for these client groups, including both 'hard' and 'soft' targets, with a view to evaluating the lessons for mainstream Jobcentre Plus delivery.

124   See Appendix 5, also Appendix 7, para 37. Back

125   LGA, Q. 166. Back

126   See Newport CAB Ev 6, also Leeds City Council, Appendix 14. Back

127   Q. 184. Back

128   See Q. 260. Back

129   Q. 260. Back

130   Q. 168. Back

131   Q. 163. Back

132   Q. 172. Back

133   Ev 100, para 20. Back

134   Q. 353. Back

135   See Appendix 13. Back

136   See, for example, What works locally? Key lessons on local employment policies, Campbell and Meadow, Joseph Rowntree Foundation, 2001. Back

137   DWP memorandum, Ev 100, para 20. Back

138   Q. 357. Back

139   See the Minister for Work, QQ. 259-362. Back

140   Q. 89. Back

141   Previous ONE inquiry HC 412, Ev p. 6. Back

142   See Reed, Ev 40. Back

143   See Reed Ev 40, para 10; Deloitte Ev 47, section 5. The Public and Commercial Services Union suggested that another reason for the outflow of trained staff back to their 'home' agencies was higher pay with the home agencies. See Ev 27.  Back

144   See Appendix 14. Back

145   Q. 110 Back

146   Reed Ev 40, para 7. Back

147   DWP Research Report No 162, para 3.3.1. Back

148   Ev 45. Back

149   Action for Employment, Ev 57, para 11. Back

150   Q. 265. Back

151   See Ev 124 for a DWP list of PVS innovations; Appendix 12 for a list of innovations from Partnership; and Appendix 9 for a supplementary note on innovations from A4E. Deloitte Consulting have advised that the DWP list of Deloitte innovations is correct, apart from the mention of Lone Parent Mentoring in Leeds. This was designed and proposed to the Leeds Pilot Steering Group, but ultimately was not approved. Back

152   Ev 42, para 32. Back

153   Recruiting Unemployed People, Third Report of the Education and Employment Committee in Session 2000-2001, HC 48. Back

154   Previous ONE inquiry, HC 412, Q. 66. Back

155   Ev 108, para 75. Back

156   In the six months from April to September 2001, the actual job entries achieved in the Basic Model and Call Centre pilots were: JSA - 3,774 and non-JSA - 456. For further information, see Appendix 17. Back

157   In the six months from April to September 2001, the actual job entries achieved in the Private/Voluntary sector models were: JSA - 1,833 and non-JSA 177. For further information, see Appendix 17. Back

158   See Appendix 17 for performance information.  Back

159   Between April and September 2001, the Call Centre pilots as a whole achieved 47 per cent of call backs within 24 hours. See DWP further evidence, Ev 131. Back

160   DWP Ev 130. Back

161   During the period from April 2001, only the pilots in the PVS model achieved this target, managing 81 per cent within 4 days. The Basic Model pilots achieved 76 per cent; and the Call Centre pilots 70 per cent. See DWP Ev 131. Back

162   For performance against this target, see Appendix 17. Back

163   See Deloitte evidence, Ev 48. Back

164   Ev 55, para 7.2. Back

165   Q. 275. Back

166   DWP Consultation on Jobcentre Plus targets, November 2001. Back

167   See Recruiting benefit claimants: A survey of employers in ONE pilot areas, DWP Research Report No 139, para 3.13.4. Back

168   This was certainly the view of ONE staff interviewed as part of DWP funded research on the new Capability Assessment - see DWP Research Report No 162. Research on employer attitudes found that, employers had been and would be most likely to take on lone parents, as against the long-term unemployed and people with physical or mental disabilities. See DWP Research Report No 139. Back

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