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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 282-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE THE COMMITTEE OF PUBLIC ACCOUNTS Wednesday 26 January 2005
HELPING THOSE IN FINANCIAL HARDSHIP: THE RUNNING OF THE SOCIAL FUND
DEPARTMENT FOR WORK AND PENSIONS
Evidence heard in Public Questions 1-104
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Committee of Public Accounts on Wednesday 26 January 2005 Members present Mr Richard Bacon Mr Frank Field Mr Brian Jenkins Jim Sheridan Mr Gerry Steinberg Mr Alan Williams
In the absence of the Chairman, Mr Alan Williams was called to the Chair ________________ Sir John Bourn KCB, Comptroller and Auditor General and Mr Jeremy Lonsdale, Director of Work and Welfare Value for Money Studies, National Audit Office, further examined.
Ms Paula Diggle, Second Treasury Officer of Accounts, HM Treasury, further examined.
REPORT BY THE COMPTROLLER AND AUDITOR GENERAL: Helping those in financial hardship: the running of the social fund (HC 179)
Examination of Witness Witness: Mr David Anderson, Chief Executive, Jobcentre Plus, Department for Work and Pensions (DWP), examined. Q1 Mr Williams: Today, we are going to question on the running of the Social Fund and I welcome here Mr Anderson. Is this your first visit? Mr Anderson: No, it is not; it is my third Committee of Public Accounts. Q2 Mr Williams: Third, is it? You do not show any scars or wounds. Mr Anderson: Only on the inside. Q3 Mr Williams: As I have explained to you, and I will explain to people sitting around you, there is going to be a series of votes non-stop which will go on for an hour and a quarter to an hour and three quarters, we do not know, starting at 4.30. My aim is to see whether we can get through this so that instead of keeping you here, we will be able to complete it when the voting starts and then you can go, otherwise you will be sitting around and we would just be doing five minute snatches. Shall I start straightaway with the most fundamental question? The Social Fund has been around a long time, yet what comes over in the report is how few people are aware of it and aware quite of what it offers or even that they have a right of appeal if they have made an application and failed. Why do you think awareness is so low and what are you planning to do to rectify that? Mr Anderson: There are different levels of awareness amongst different groups for different parts of the Fund and a consistent theme, looking at the whole report, is that you find different levels of decision making and understanding around funeral payments, Sure Start maternity grants on the one hand, which are quite well known by the communities who need them, through at the other end of the spectrum to crisis loans, which probably have the widest possible community in that they are open to anybody and they are less known. Then the community care grants and the budgeting loans are quite well known to benefit claimants, who are eligible for them. So the question you ask has different parts. We have a lot of activity for replacing leaflets, improving leaflets which will help the key groups who use the service. Most of the customers of the services are benefit claimants and they will get information through that. We have programmes to work with the Pension Service to improve awareness of Social Fund amongst pensioners and we have work planned with ministers to simplify the Fund so that we find it easier to make our own staff more aware of it, which is also one of the key things in the report. So there is a lot of work in train to address the issue you raise. Q4 Mr Williams: The impression we get is that the message still is not getting through to a lot of the most needy. Perhaps if you have any proposals in mind, you will drop us a note to tell us exactly what you are intending to do to heighten awareness, is that all right? Mr Anderson: That is fine. Q5 Mr Williams: I am one of the few people here, other than Sir John I think, who was here 12 years ago when there was a hearing on the Social Fund. I remember it very well. We made certain recommendations at that time, particularly we were very worried about the local variability in the level of grant and loan that was available and also in the percentage of people who were getting those loans and grants. If we turn to page 19, where we have the two graphs, 12 and 13, if we look at the upper one, that deals with variations in the percentages who get payment and you find if you look at the first of them, which is the community grant, it varies between 29% and 63%, so it more than double in some localities than others. It varies between 40% and 88% on funeral payment and if you look to the third column, crisis loans which after all are particularly important, it can be as high as 97%, but it can be as low as 46%, again half. Then, if you look at the lower part, we see the same variability in the amounts that are given. So you have double shown in relation to the community care grant, up to double in the funeral grants. Now 12 years ago, we highlighted this. Why is it still so apparent and so widely varied in view of that we are dealing with people who are often in very great need? Mr Anderson: The key changes that have happened over the 12 years are in budgeting loans, where much more work is done now to set a national budget and make sure that the money which is available for each district is as closely as possible aligned to its need. As far as community care grants go, there is so much discretion in the scheme in terms of the decision making, particularly in terms of whether the case is a priority, which is concerned with those cases where people need to establish themselves in the community and demographics have a very, very important part to play there. You would expect more people to need that kind of help in some districts than in others, therefore you would expect on community care grants to see quite a difference in the variations of people who get a payment and those who do not. Q6 Mr Williams: When you look at the level of amounts as well, take for example funeral payment, it can vary between £700 and £1,400. You cannot put that down to demographics can you? Mr Anderson: No. In terms of payment on funeral payments, obviously there are variations in cremation charges and funeral charges in different parts of the country and a good part of this money is --- Q7 Mr Williams: But it is hardly likely to be double. Mr Anderson: No, I do not think it would be as much as double and some of this will be differences in the number of people, for example, who get further away from where they are buried, across one boundary or another, and some of it will be the difficulty in consistency in decision making. Certainly in funeral payments, we are aware that there are some aspects of the decision making that we need to improve, notably around some of the technical areas about what you can include and what you cannot include and we have to work on that. Q8 Mr Williams: How can we stop it being quite as arbitrary as it is? The ranges are utterly unacceptable. Could you again put in a note, unless one of my colleagues asks for further clarification now, of what you are doing to try to remove the arbitrary discretionary ability of decision making, in order to get a greater degree of consistency? In a way that is reflecting the next question. If you look to page 26, graph 15, this is the correctness of initial decision making as between the types of awards. It is very worrying that urgent decisions such as crisis loans and funeral payment have just over 50% accuracy and the community care grants have about 75%. Why is there such a lack of precision in decision making? Mr Anderson: If we look at the two poorest results here, for crisis loans and for funeral payments, there are several differing factors for each. One reason for these low numbers is a common reason in other benefit areas; it is where we have had difficulties in retrieving papers and therefore a decision is marked as an error where we cannot provide all the evidence that was used to make the decision. That would make a significant difference in the decisions that were correct. Another key area for crisis loans is so-called alignment payments and these are deemed incorrect where we make an alignment payment when a benefit payment is due and in those cases, we should make an interim benefit payment rather than use a crisis loan. In practice the reason that people do that is because very often the people who would make the interim benefit payment are the same people who have delayed making the original benefit payment, but the crisis loan team are a different team and they can give the money straightaway and they do so. That is deemed as an error, rightly so because it is an error. Those two reasons show that some of the decision making is not as poor as this graph would suggest it is. The statistics that we have for errors which actually affect customers - this table includes errors which do not affect customers, but are technically incorrect decisions - are much better than this. If we looked at crisis loans for this year, overall the number would be 65% accuracy, where we were talking about affecting customers. So there is a number of reasons there. Q9 Mr Williams: Could we have a note on those up-to-date figures with explanations, where appropriate, of the changes which have taken place? Mr Anderson: Yes. Q10 Mr Steinberg: Regardless of what you say, Mr Anderson, I think this is a very poor report. I have to say that I have never actually ever been impressed with the Social Fund and I have always seen it as a sort of derisory way in which to treat people who are in poverty and crisis. As far back as when it was introduced in the early 1980s and the 1990s, I always felt that it did not meet the needs of the people for whom it was meant and that was the people who were in crisis and were in poverty; it seemed to neglect their needs. My experience at the time clearly showed that as well. The way that I actually saw a crisis and the way that was dealt with by the benefits officers clearly did not reflect, as far as I was concerned, the situation that people were in. Right from the beginning I thought it was a very, very poor system. However, it is with us now and there is nothing we can do about it. I have to say that at the present time I get very few cases from the Social Fund and I put this down either to it being administered much better, there is not so much crisis about because people are actually better off, or people just ignoring it altogether. Which is it? Mr Anderson: I should like to think that what is happening is that there are fewer people unhappy with the way decisions about crisis loans are made. Q11 Mr Steinberg: I thought you would say that. If you read the report, that is just not a true reflection of the report, is it? Absolutely not. If you read the report, it clearly states in the report that the staff do not understand it, the staff are not trained in it, the staff do not give advice in it, the staff do not know about it themselves, in fact some of the staff do not even know it exists. You are sitting there and saying it is because it is being better administered by staff. That is not what this report says. Mr Anderson: I think the evidence is that the majority of decisions are correct and that the staff who deal with --- Q12 Mr Steinberg: The majority of decisions are correct? That is not what this report says; far from it. This report says that over 50% of decisions made were wrong. Mr Anderson: A high proportion of the decisions which go to review are overturned, but that is different from the proportion of decisions which are correct in the first instance. Obviously, the cases that go to review are a sub-set where people have been unhappy with the decision. If we look at table 15 which is on page 26 of the report, which is the one to which Mr Williams just referred to that is about the decision making --- Q13 Mr Steinberg: The report clearly says that 50% of the applications made at job centres to the Benefits Agency which pays them, are wrong. The applications which come in from your own job centres are returned. Right or wrong? Mr Anderson: I do not believe that is correct. Q14 Mr Steinberg: Let us have a look. Over 50% are returned, only 47% are correct. Mr Anderson: I do not have the page reference you are talking to, but the statistics sound as though they may be referring to the cases that are reviewed rather than all the cases. Sir John Bourn: Paragraph 3.10. Q15 Mr Steinberg: I knew I had read it somewhere. "The quality of initial decision-making varies between types of award. 92% of Budgeting Loan initial decisions are correct but only 52% of Crisis Loans and Funeral Payments initial decisions". Mr Anderson: Yes, and overall the figure --- Q16 Mr Steinberg: That is appalling and you are sitting here defending it, are you not? You are saying it is being administered better now and it is not being administered better, it is being administered no better than it was right at the very beginning. Mr Anderson: As I just explained to Mr Williams, the statistics on the decision making which are in Table 15, which is on page 26, show that we have difficulty in decision making for crisis loans and funeral payments. The discretionary nature of these decisions means that they are difficult --- Q17 Mr Steinberg: Go to paragraph 2.14. You have said all that before and you are just repeating yourself. If you go to paragraph 2.14, page 18, it tells us here that two people with identical circumstances, at the same time, could go into a different job centre and get different decisions regarding their applications for a community care grant. The system that can do that is therefore, in my view, fundamentally unfair. How can two people be treated totally differently with exactly the same conditions? Mr Anderson: The way that the community care grant is administered is that the district has an amount of money which is available to it to pay out and the decision makers have to allocate a priority to the cases that they get. Therefore, it is possible that cases of equal priority would receive different --- Q18 Mr Steinberg: How is that fair then? How is it fair if a constituent of mine goes to get a loan and Frank Field's in Liverpool goes, they both have exactly the same conditions, yet one could come out with a different grant from the other; exactly the same circumstances. How is that fair? Is it fair? Mr Anderson: In those particular cases, if that arose, it would not be fair. That would be very rare indeed, because we make enormous efforts to make sure that the way the budget is allocated for community care grants matches the demand that will arise and it is based on forecasts of the demand for the community care grant which could arise in each district. Q19 Mr Steinberg: So really it depends upon the resources you have. Mr Anderson: Yes, we try to allocate the resources across districts according to the likely demand. Q20 Mr Steinberg: Well that cannot be a very good system, can it? I want to return now to the report. If you read the report, it makes it quite clear that the vast majority of the staff in the benefits offices and the job centres do not understand the system. So presumably they cannot answer questions. How can the system work when the staff themselves do not understand the system? Mr Anderson: The report does identify some shortfall in knowledge of staff and we are working very hard to improve that. We take a lot of action --- Q21 Mr Steinberg: How long has the scheme been going? Mr Anderson: The Fund has been going a long time, as you point out. Q22 Mr Steinberg: About 15 years. It is taking a very long time to do a bit of training. On the other hand I also read in the report, if I remember rightly, that there is no training anywhere. There is no official training. Am I right? Mr Anderson: No, that is not correct. Q23 Mr Steinberg: Well it says so in the report. Mr Anderson: The training has not been updated nationally since 2002. Training is done on a local basis, training is presented on a local basis and bulletins have been issued to update the training which is available to make sure that it is accurate. So there is training and it is available to people. We are trying to address the issue that you recognise, which I accept needs improvement, by the introduction of a standard operating model across the country, which will increase the size of the processing units. We are doing this work in 140 places; we are going to do it in 20 places. That will allow us to have more people with better knowledge and should improve the decision making. Q24 Mr Steinberg: Twenty years ago, 17 or 18 years ago, when I first became a member of parliament, the attitude at the benefit office was never to give advice; if the person did not ask a question, then they did not pre-empt it: "Just tell them what they ask and if they do not ask, do not tell them". Now that was the attitude of benefit offices throughout the country 15 to 16 years ago. I hope it has changed, I hope the philosophy behind that has all changed now, the culture has changed, but when I read this report, I do not believe it has. I do not believe that the staff give advice, I do not believe that the staff guide the people in the right direction and I do not believe that the staff tell them what they are entitled to and what they can claim. I do not believe they do it out of vindictiveness; I think they do it because they do not know themselves. How accurate is that? Mr Anderson: Since the beginning of this year, our customer service target has included a particular reference to proactivity and that is now measured as part of our regular service monitoring. We are improving our performance on that measure as we go through the year. Previously, as you rightly say, there was not a measurement of proactivity in the service measures, so we have recognised the problem you address. It is also fair to recognise that there has been significant change in the Benefits Agency since it merged with the Employment Service and the amount of training that people have had to adapt to new processes, new ways of working is enormous. The priority that is focused specifically on the Social Fund in that area has to be viewed in a line with the priority for everything else. Q25 Mr Jenkins: Mr Anderson, I want to continue to some degree on the line of Mr Steinberg. When you read this report, did you feel elated with the report or did you feel somewhat disappointed? Mr Anderson: I felt that the report was well balanced. It recognised some of the things that we are doing well and drew attention to some of the things that we need to improve. Q26 Mr Jenkins: What are the things that you feel you need to improve on? Mr Anderson: We need to improve the consistency of the decision making, and we need to improve the consistency of the service levels that were being provided. We have a number of activities which are designed to achieve that. Q27 Mr Jenkins: Like Mr Steinberg, when I read this report I was, to say the least, disappointed and I thought it looked like we had an organisation here that was not really in control and there are lots and lots of questions I could ask you on particular details. Overall, your organisation does not seem to have the control and as Mr Steinberg pointed out, you have staff who do not know what is available to them and maybe you are taking the wrong approach. Maybe you should have less staff, better qualified, better trained and more able to assist. Maybe you should be dealing with the telephone, maybe you should deal with IT and maybe you should have touch screens so that people know what is available to them. Are we going to make any progress in this service to make sure this is available to people? Mr Anderson: Yes. The key change is a centralisation in the number of sites from 140 to round about 20, which will improve the critical mass for training measurement and everything else and the introduction of a standard operating model, which is one consistent model applied across the country. It includes definition of roles, definition of training, definition of how to use the IT and will improve our consistency considerably. That model is being piloted from the beginning of December; we have been going with it for six weeks. Q28 Mr Jenkins: In the report it talks about crisis loans. Crisis loans tend to be people walking into the office and they want a loan because they want it like now, because it is a crisis, and you have a target of one day to assess and make that loan. How many of your districts actually achieve that target? Mr Anderson: The vast majority of districts achieve it most of the time. The problem is the average over the year. You cannot get below one day, because that is the minimum time we can accord, but if you have one loan in the year that takes two days, then you have missed the one day target. That is why the report shows a very low proportion of districts, 7%, achieving one day, because that is 7% of districts which never went to more than one day to deliver a crisis loan. We are looking at making that target two days, so that realistically, we can see what is happening. 90-odd% of districts --- Q29 Mr Jenkins: That would be an improvement: double the amount of time you have. Mr Anderson: It would provide a more accurate picture of what is happening because the one day target does not tell us anything either. Q30 Mr Jenkins: So you were not disappointed with 7%, you accept that. Mr Anderson: I do not believe that 7% provides a useful picture when all that is telling me is that there are 7% of districts that never took more than one day. If, for reasons of priorities, occasionally a crisis loan takes two days, then that may be acceptable. Not all crisis loans are for immediate cash. Q31 Mr Jenkins: So you are going to have a new target, a two day target. Will it remain a one day and a two day target and will we get figures for that in the next accounting? Mr Anderson: We can certainly monitor both and it would be more helpful to show how many of these were actually done in one day and how many in two days. That is certainly a statistic we can produce. Q32 Mr Jenkins: When Mr Steinberg talked about these two people going into two different offices and getting two different amounts of money, you said districts have a set amount of money, so they set different priorities and different awards are made and you said you allocate money according to the need in the district. Would you tell us which districts would get the most money? Would it be the most socially deprived districts, or would it be the wealthiest? Mr Anderson: Yes, the forecasting for how much money is needed is based on the proportion of cases that were able to be met from the budget the previous year. So those districts which met the least number of cases the previous year get more money. It is effectively measuring demand and deprivation and allocating the budget on that basis. Q33 Mr Jenkins: So the people walking into the district office with the most deprivation would get a greater award than the people walking into the office in the nice leafy suburbs or shire counties. Mr Anderson: They would not necessarily get more money, but there would be more money in total available for awards in that district. Q34 Mr Jenkins: But it would depend on the number of cases calling on that money then. Mr Anderson: Yes. Q35 Mr Jenkins: I think I understand that. Now can you tell me, and I might be wrong here, because I used to vire money around between different budget headings and all sorts of things, if somebody walks in and they need a set amount of money, why their award should be affected because you did not get the formula right? Mr Anderson: We have to do the best job we can to allocate the money where the demand will be and that is what we try to do. Q36 Mr Jenkins: But within the national network we can transfer funding around so we know that when the Fund has gone done to 80%, you can trigger an alarm to send extra cash. Mr Anderson: For budgeting loans that is exactly what happens and we move money around for budgeting loans during the course of the year from one district to another. For community care grants, we only meet high priority cases in the vast majority of districts; districts all use the high priority money that is awarded to them. It is therefore hard to see from whom to take the money to move it to other people. This is a budget where we have three categories of award: high priority, medium priority, low priority. We paid no low priority cases last year and hardly any medium priority cases. All the cases, wherever they arose, were high priority and the determination of that is the same. Q37 Mr Jenkins: So you have no plan to even out this allocation of money then. Mr Anderson: We believe that it is allocated in the fairest way that it can be at the moment. Q38 Mr Williams: May I just interrupt there? Take the recent floodings we have had and the gales and so on, this must lead to an enormous demand, a widespread demand. Is there an emergency top-up available for everyone? Mr Anderson: There is a contingency budget which is held centrally to which districts can apply if there is a particular emergency in their area that means that the pattern of demand that they have is dissimilar from that which they have had historically. A flood would be a perfect example. Q39 Mr Jenkins: I hope Mr Anderson realises that we have certain concerns and that the recommendations the NAO have placed in this report have flagged up certain concerns. I am going to ask now about the person who walks in, very often treating you like a bank, a no-interest bank and they want a loan from you and they pay it back out of all sorts of benefits over the next six months and when they have paid it back, they walk back in and get another loan and pay that back. I am not worried about that, believe me. I would rather they came to you than to a loan shark on the corner. You are doing a good job socially and I would support you. If you want extra money to do that, you can have extra money to do that. What about the people who walk in and say "My giro cheque has not come for a Job Seeker's Allowance, I need some cash now"? You give them some cash, because the efficiency of the department is not very good to start with, they should have been paid to start with. So the first count is that it is an own-goal. The second one is, when they have not paid it back and maybe they disappear into the world of work and then reappear somewhere else, in a different part of the country maybe or come back on the books, how do you track these people down? I get the impression that some of these can call in your offices time after time, take money out, make little or no repayments and you lose track of them and your debts are building up. Mr Anderson: Each account will have a flag on it if there is an outstanding loan at the point that somebody leaves benefit and when a new claim comes in, the system will match that up and a report will be printed which should be actioned in each office. That does not happen perfectly in every case and we have another process which allows us to run a check of all outstanding budgeting loans against all new benefit claims and assess whether an office has actually missed something from these regular reports. We ought to pick people up when they come back onto benefit. For people who are still in work, the report indicates that we are moving the responsibility for reclaiming their debt to the debt management service part of the Department for Work and Pensions, because they can use direct debit, which we do not have, and that will improve the quality of recovery from people who are in work. Q40 Mr Jenkins: So if John Smith is unemployed and has a debt in Liverpool, leaves Liverpool and goes down to London and signs on in London, you would pick him up immediately. Mr Anderson: Yes, the system would indicate that he had an outstanding loan. Q41 Jim Sheridan: Mr Anderson, I do not necessarily disagree with either of my colleagues, either about the report or indeed the Social Fund itself but I have to give credit where credit is due. As a young man with a young family, I had the misfortune to use the benefit system and it really was quite an embarrassing position to be in and an embarrassing experience; I am thankful I am over it. I have been in the new Jobcentre Plus offices and I have to say that nowadays it is a million miles better than it was maybe 20 years ago. Someone picks you up at the door and walks you through the system, whereas in the past you waited in one queue and another queue and another queue. So credit where credit is due: the Jobcentre Plus system is absolutely first class and deals with the people who use the system. However, one thing does worry me in the sense that the staff were extremely helpful. Do you have any concerns whatsoever, given that there are proposals on the table to cut the number of staff in your department and given what Mr Steinberg has already said about training and people being allowed time off for training, etcetera, that the cuts in civil servants will affect the service to the general public from your department? Mr Anderson: Yes, as a management team obviously we are concerned that we need to formulate a plan to continue the quality of service delivery while we reduce staff numbers. I believe that to be possible, I believe that there is a number of improvements that we can make in the efficiency of the way we operate. In the benefits processing space, this is notably centralising activity. We currently have 670 offices with an average of 27 people in each; 300 of those people have fewer than 10 people processing benefits and we are going to go down to about 80 sites where we process benefits. I think that will give us a significant improvement in productivity. Q42 Jim Sheridan: What really concerns me is the progress that made just now where people are treated as people in benefit offices now, and not just as a particular number. I am really concerned that any cuts in the staff will take us back to where we were some years ago and that progress would be halted. In this assessment you have done of the staff, have you factored in the appropriate time to allow people to take up quality training in order to deal with the general public? Mr Anderson: Yes, we have. I do not trivialise some of the issues about training that are in here; we have had a huge amount of training to do. The priority for Social Fund training is around the new operating model. Fundamentally we aim to direct the face-to-face service which we will have available in our offices to the people who need it most and we will encourage those people who are able to look for work themselves to use telephone or internet and that will mean that we have time for the most deserving customers. Q43 Jim Sheridan: So for those who require face-to-face interviews, because there are still people who prefer it, that service will definitely still be there. Mr Anderson: It will. Q44 Jim Sheridan: Can I then just turn to funeral payments? You talk about who is eligible and that is obviously the claimant or indeed their partner. What happens, for instance, if a single parent has lost their life, or the other partner is already dead? How far down the extended family do you go to try to get them to meet the costs of the funeral? Mr Anderson: The normal procedure would be to go to a near relative and that is defined as one line up or down in terms of the family tree, or a partner clearly, if there is one. Q45 Jim Sheridan: So what do you mean by near relative? Is that a daughter or son? Mr Anderson: Yes. Q46 Jim Sheridan: An auntie or uncle? Mr Anderson: Yes; in the next generation, if they are in regular contact. If they are not in regular contact --- Q47 Jim Sheridan: And if they cannot pay it? Mr Anderson: We then get into grey areas. If they cannot pay it and the person who has applied is on benefit then obviously will pay the claim. Q48 Jim Sheridan: Another concern I have, and I share the concerns that the Chairman has already expressed, is about pensioners, extremely independent people who, despite the fact that they do not have the money to pay for these things, will find the money from somewhere, because they do not like to be seen to be dependent on the state. What advice or service do you offer them just to encourage them that that Fund is there and it can help them? Mr Anderson: The key leaflet for total service to pensioners, which is available at all post offices, which describes the services which are available to pensioners, does have a section on the Social Fund and obviously that is helpful. We are working with the Pension Service to make sure their people in contact centres are aware of the Social Fund in the same way that we are working to try to improve awareness amongst our own staff. The contact centres are now the key method that the Pension Service is using to contact their customers. Q49 Jim Sheridan: What do you mean by contact? What is a contact centre? Mr Anderson: A telephone answering centre. The vast majority of pension --- Q50 Jim Sheridan: Pensioners will not go near telephone answering machines. Is this one of these things which says press one for this one, press one for this one? Mr Anderson: No, no; it is answered by a person but the bulk of pension activity is now delivered through the telephone. Q51 Jim Sheridan: Do you take that information out to pensioners' forums, Age Concern, elderly forums? Do you take that service out and explain it to them? Mr Anderson: Yes, we are working with various groups to make information more available to pensioners. I think we accept the criticism in the report that there is more to do and we have not succeeded, but I also think the point you make is very valid that pensioners do not want to take loans by and large and they are averse to using this sort of service. Q52 Jim Sheridan: So if an elderly forum in my constituency contacts your department to send someone along to talk about benefits or funeral allowances or whatever it may be, you are more than happy to send someone along. Mr Anderson: We would be. Q53 Mr Williams: Will you encompass that within my request for information on what you are doing to increase awareness? Mr Anderson: Yes. Q54 Jim Sheridan: Does that not sort of mask the figures in terms of people whose benefit payments are late being then encouraged to go for a crisis loan because their benefits have been held up or are late? Is that not just an easy option to go for a crisis loan? Mr Anderson: That appears in these statistics as an error and it is an error and we should not do it. On the other hand, if we do have a delay in paying benefit in a particular district and it is those same staff that make the interim payments as well as the initial payments and they cannot do it, then it is understandable that staff faced with a customer who needs the money will give a crisis loan. I accept that is not good practice, we do not encourage people to do it, we are trying very hard to drive down clearance times in all the districts so that this does not arise, but it does arise in too many cases now as the report points out. Q55 Jim Sheridan: The department considers that legal action is often too costly, so why do you pursue these cases? Mr Anderson: The vast majority of loans that are recovered are through benefit payments and the cost of that is very low. Q56 Jim Sheridan: Is that deducted from people already on benefits? Mr Anderson: Yes. For the people who are off benefit, there are occasions when we have legal action and the cost can be high. On the other hand, I think we need to maintain the integrity of the loan scheme by making it clear that people are expected to repay and it is possible, if we did not pursue the loans, that the proportion of people who did not repay might go up. It is difficult to quantify that. Q57 Jim Sheridan: So how do you pursue them? Through the small claims courts? How do you pursue it through the legal system? Mr Anderson: Yes. Q58 Jim Sheridan: Is it through the small claims court and that is somewhat costly? Mr Anderson: I have figures somewhere. I think it can cost about £30 to get a judgment, but I could check that figure for you and have it directly to hand. Q59 Mr Williams: Does it then cost you a lot to enforce it and opposed to getting a judgment? Mr Anderson: Yes. The last paragraph of the report points this out. The most expensive debt that we collect costs us £1.35 per pound to collect and we have therefore to look at the value for money of that. I think the value for money of that is in maintaining the overall integrity of the loan scheme; we have to make sure that people realise that these loans are repayable. In the case of benefit claimants, there is a maximum proportion of anybody's benefit that we will take as a repayment, which is currently 25%; the standard rate is 15% and there are plans to bring that down to 12% which were announced in the pre-budget report. So we are actually limiting the amount of debt we will take from benefit payment and we just defer the remaining loan until people can afford to pay it. Somebody has handed me the numbers: £50 for a full warrant, £60 for an attachment of earnings and £23 on average for a summons. Those are the costs of taking action. Mr Williams: That is useful for our records; thank you very much. Q60 Mr Field: Four years ago the Social Security Committee reported on this very topic and was pretty scathing. In response the government said it was resolutely going to change its performance. I wonder whether I could ask you about the three main findings of the Social Security Committee and compare them with the findings of the National Audit Office report on how you are conducting the Social Fund now. The first main finding of the Social Security Select Committee was that Social Fund applicants need more active and informed assistance from staff. Yet we find in this report that the awareness of staff is poor, customers are still not informed of the types of awards and information on Social Fund debt is not easily obtainable. What progress have you made then in the last four years on this main recommendation which you accepted? Mr Anderson: There are some key changes which have either been made or are in the pipeline in order to help --- Q61 Mr Field: You say it is in the pipeline, but this was four years ago. Mr Anderson: Some of them are changes to systems which take some time. One of the key things on budgeting loans was announced in the pre-budget report which was a removal of the so-called double debt rule, which is one of the things that customers find very hard to understand and that will be implemented. We have changes planned in the computer system which will allow us to have all the loans on the system and that is due for delivery in 2006. Some of these things have taken some time, but they have been addressed. Q62 Mr Field: May I just ask who is in charge of the computer system? Mr Anderson: I am. Q63 Mr Field: Is it an in-house job? Mr Anderson: Well, we are responsible indirectly; it is contracted out. The operation of it is contracted out. Q64 Mr Field: To whom was it contracted out? Mr Anderson: EDS. Q65 Mr Field: If it does work, would you come back specially and tell us, because we would really like to be able to record a first for EDS. Sorry, I interrupted you with the excitement of knowing the computer system was going to deliver. Mr Anderson: In fairness the operation of the Social Fund computer system is very reliable and is not subjected to some of the difficulties in some other systems that we operate, which I know have exercised the Committee. Q66 Mr Field: It is just that my heart sank; my poorer constituents have enough trouble in their lives without having to deal with EDS again. It makes it more of a lottery than I thought. Sorry, Mr Anderson, I interrupted you. Mr Anderson: At the beginning of 2003 we implemented a Social Fund focus group which is led by one of our deputy field directors and aims to draw together best practice from across Jobcentre Plus and to make sure that the staff know about it. They have made significant progress. We have implemented a new set of key management indicators for the Social Fund within Jobcentre Plus. We used to have just one indicator which was around the clearance times for community care grants: we now monitor that for all Social Fund payments. We have seven management indicators where there used to be one. Q67 Mr Field: And that comes in when, Mr Anderson? Mr Anderson: That is operational already; it came in at the start of this financial year, so April last year. We have included Social Fund performance in our mainstream mystery shopping programme. Whereas previously Social Fund was not specifically an element of our key service assessment it now is. Q68 Mr Field: When did that come into force? Mr Anderson: At the beginning of this year. The letters for notifying customers about their payments were changed after a full review in 2002. Q69 Mr Field: That came into effect when? Mr Anderson: In 2002. We have introduced access to the Social Fund by telephone, which will gradually make a difference. Q70 Mr Field: And that started when, Mr Anderson? Mr Anderson: Last year. We had to get new regulations to allow the loans to be done by telephone. Our immediate plans are to introduce the standard operating model which I described, which I think will make a big step forward. Q71 Mr Field: Would it be fair to say that although there is one change in 2002, the thought of coming before the Committee with a National Audit Office report supporting you concentrates the mind wonderfully on fulfilling commitments which the department made in 2001? Mr Anderson: I am sure the department entered into the commitments with a recognition that they would help improve service for customers. I certainly accept the recommendations in the current report and am committed to making sure we implement them. Q72 Mr Field: May I go on to the second undertaking you gave to the Select Committee in 2001. The Committee expected to see a significant reduction in administrative errors and your response as a department was that you would meet that. Yet if we look at this report, which Mr Steinberg has already commented on, it says there is a high number of initial decisions in some types of award which still contain errors. Nearly half of the cases for funeral payments and crisis loans come into that category. Could you remind us what the error rate was in 2001 Mr Anderson and what you have now improved it to? If not, might we have a note on that? Mr Anderson: I do not have that statistic to hand. I will provide a note. Q73 Mr Field: It would be very helpful. The third main area where you promised to improve markedly was to reduce the staff turnover in the Benefit Agency. There are obviously difficulties, which Mr Sheridan touched upon, with the numbers that you are having to get rid of in the service by government edict , but how significant has the reduction in turnover been since you gave that commitment to the 2001 report? Mr Anderson: The current staff turnover in the benefit processing area is not broken down by the allocation of staff to a particular task; it is only broken down by grade. Therefore I cannot answer that question. Q74 Mr Field: Might you give us a note on what the turnover generally was then, in 2001, compared with what it was when this report was compiled? Mr Anderson: Certainly. Q75 Mr Field: My last question is about contingency fund which you hold centrally which the Chairman raised. Can you tell us how large that is? Mr Anderson: Yes. I believe it is a million pounds and I will just check. I am told that is correct. Q76 Mr Field: A million pounds. In the West Country last year we had that flooding. I should have thought that would have scooped the pile, would it not? Mr Anderson: I was monitoring Social Fund applications during the course of that flooding. There was increased activity, but it was in the tens of cases and not in the hundreds or thousands. Clearly, I suspect the vast majority of people who were affected had other means and were not benefit claimants or Social Fund customers. Q77 Mr Field: Or did not know about the Fund. Mr Anderson: Or did not know about the Fund. Q78 Mr Field: Or the staff did not know about the Fund or the extra money they might be call down. Mr Anderson: We did actually provide out-of-hours service on the day that those things arose and people were made available locally to help and local offices would have been very well aware of the crisis fund at that point when it was arising. Mr Field: If we could have a note on those two points, Mr Anderson, that would be helpful. Thank you. Q79 Mr Bacon: I just have one or two questions about the computer. How confident are you that the Social Fund computer system will be fit for purpose by April 2006? Mr Anderson: The change I referred to in changing the system is due for implementation in the year starting April 2006. We would expect that to come in, at the latest, in October, based on our current plan and I am confident that that will be delivered. Q80 Mr Bacon: So the sentence "The department plans to increase system capacity to remedy this problem in April 2006" in paragraph 4.17 is not actually correct. Mr Anderson: It was correct at the time. Q81 Mr Bacon: But you have had a six month delay since then. Mr Anderson: We are balancing the priorities for all our computer changes based on our budgets for the SRO full period, therefore priorities are moving all the time. Q82 Mr Bacon: How much do you pay EDS? Do you pay them some money each year on the contract? Mr Anderson: Yes, we do. Q83 Mr Bacon: How long has the contract been running? Mr Anderson: The contract for the Social Fund in particular or the contract for all our activities with EDS? Q84 Mr Bacon: You have just given me a great idea. Answer the first one first. Mr Anderson: I do not have that information with me. Q85 Mr Bacon: Do you know how long the contract has been going with them since? Mr Anderson: No.
Q86 Mr Bacon: Is it possible to send us a note about how long it has been going, for both the contract or contracts between DWP and its various bits and EDS generally and EDS and the Social Fund specifically? In addition to stating when those contracts began, could you put in there a little note on each year since the contract or contracts began with the amount that has been paid to EDS each year under those contracts, both generally and for the Social Fund and what you are expecting to pay into the future? Could you do that? Mr Anderson: If that is not affected by commercial confidence, yes. I am not aware of the exact rules on what we can and cannot disclose around those contracts but I will check that. Q87 Mr Bacon: The amounts themselves do not tend to be commercially confidential, even if the negotiation process by which they were reached was. Mr Anderson: I shall certainly provide the information if I am able to do so. Mr Williams: We have asked a comprehensive set of questions and I hope collectively between the NAO and your colleagues you will be able to pull them all together and make sure that none of them are missed. Q88 Mr Steinberg: I just want to sum up where I was going because I did not actually have the opportunity to get there. I was previously given statistics and I have been very selective about the statistics that I have used from the report. Mr Sheridan touched on this. 47% of people on low incomes do not know the Fund exists, 50% of applications from job centres are rejected, 50% of the community care grant decisions, 41% of crisis loan decisions are overturned on review. Tell me, why do only 47% know about it, why are 50% of applications from job centres rejected and why are 50% and 41% of crisis loan decisions overturned on review? Mr Anderson: I think they are three very different questions there. On the overall awareness of the Fund, obviously the vast majority of parts of the Fund are only available to people who are benefit claimants. I think the awareness amongst benefit claimants would be significantly higher and we notify people in various ways who are benefit claimants. Crisis loans are available to all people on low incomes, some of whom clearly are not benefit claimants and we need, for example, to improve the information that we give to people on tax credits or who do not receive any support and try to make that more available. Q89 Mr Steinberg: You are waffling, are you not? 50% of the people who are entitled to this Fund do not even know it exists. That has to be a failure of your department. Mr Anderson: We have a dilemma in the fact that the Fund is limited in the amount of money that we have. Q90 Mr Steinberg: So you do not tell people about it. Mr Anderson: We currently use all the money to meet the demand that we have. Q91 Mr Williams: Rather than repeating the questions we have already had, you have already undertaken to give us a note on what you are doing at the moment to increase the awareness. Mr Anderson: Yes.
Q92 Mr Steinberg: So why are 50% of applications from the job centres rejected? Mr Anderson: I do not recognise that statistic, I am sorry Mr Steinberg. Can you tell me which aspect of the report that is from? Q93 Mr Steinberg: I read it in the report; I would not take it from thin air but I cannot remember exactly where I read it. Mr Lonsdale: It is in paragraph 4.12. Mr Steinberg: I read the report while I was watching the football match on Sunday afternoon, which is perhaps the reason why I did not write down the exact paragraph. "Districts told us that they return up to 50% of the applications received from jobcentres for this reason." What is the particular reason? It is because they are inefficient, are they not? They have given insufficient information. It is as simple as that: administrative errors. Q94 Mr Williams: Could we have the answer to one question before we lose sight of what the question was? Mr Anderson: This is referring to crisis loan applications and crisis loans are obviously being dealt with in a hurry. Very often the person taking the information from the person giving the crisis loan may not have access to all the information that is required by the form, but may submit the form out of the desire for speed to try to make sure that the payment gets to the person on the same day. Q95 Mr Steinberg: Finally, why is the appeal upheld for 50% of people who go to appeal? Because you made the wrong decision in the first place. Mr Anderson: Because the decisions under this Fund are discretionary and it is very difficult to have a clear-cut decision where there is so much discretion in the hands of the decision maker. Very often people who are going to appeal or to the review service provide more information at that point than they did when the original decision maker looked at the case. Therefore, very often the outturn is different. Q96 Mr Jenkins: Mr Anderson, the last question I asked you was about John Smith moving from Liverpool to London and you said quite categorically that he would be picked up automatically. If you read paragraph 5.14, "If someone with a Fund loan returns to benefits having not claimed them for a period of time, recovery is not re-initiated automatically ... Fund staff have to arrange benefit deductions manually. Many districts said they have insufficient staff to do this on a regular basis". You lose £6.1 million that could be collected in and yet only 56 districts, that is 62% of your districts, use MIDAS to identify people with outstanding debts when they return to benefit. Would you like now to reconsider your previous answer? If you want, you can send in a note to tell us which one is right. Mr Anderson: The answer which I gave, that the system produces a report, is correct. The system does produce a report which staff can read which they ought to action to recover the money. I do not think I said that this was automatic process and it is not. The report is correct in what it says. I also said that staff do not always use the report as well as they should and are encouraged to use the MIDAS system. I can assure you that the regular use of the MIDAS system is part of the standard operating model that we are currently introducing. Q97 Mr Jenkins: Only 62% use it. Mr Anderson: Yes.
Q98 Mr Jenkins: Are you going to do anything about the other 38%? Mr Anderson: Yes, we are going to centralise this into a small number of centres and make sure everybody uses it because it is in the standard operating model. Q99 Mr Williams: If you turn to page 37, Table 23, a graph, it deals with variations between districts in cost per application for grant dealt with. You see for budgeting loans that the highest district is five times higher than the lowest. In the case of crisis loans, it is more than five times higher than the lowest and in the case of grants, it is nine times higher than the lowest. How on earth can there be such glaring variations between the costs of processing cases? Mr Anderson: The key difference arises where some districts have introduced a telephone system and others have not and that makes a very significant difference to the cost. Q100 Mr Williams: Favourable or unfavourable? Mr Anderson: It is cheaper if we use the telephone service. The standard operating model will implement the telephone service nationally and this variation should be reduced significantly. I agree that this does not suggest overall that currently we are being as efficient as we should be in processing across the country. Q101 Mr Williams: I do not know how many this will involve, but I should like to have a list of those which are in the highest category of each of those three: that is the budgeting loan, the crisis loan and the grant. Could you get us a note on that within the next couple of weeks? I am told by the NAO that you are developing a standard operating model which you hope will produce savings. What can you tell us about that in the one minute that is left to us? Mr Anderson: That we intend that it should both improve the quality of decision making and the consistency of service available to customers across the country. Q102 Mr Williams: Over what timescale? Where is it? Mr Anderson: It started piloting at the beginning of December in two districts in Wales; it has currently been going for six weeks. Based on the evidence we plan to review it at the end of April and provided we have been successful, we will then roll it out nationally. I do not yet have a timescale for rolling it out nationally. Q103 Mr Williams: Thank you. The bell has not gone yet, so let me get rid of one more question. This is paragraph 2.22. When will customers routinely be provided with the information they need to assess their individual debt position? I gather that is not available very readily at the moment. Mr Anderson: It is available to customers on request currently; we do not send out statements to customers and there are no immediate plans to send statements to customers. Q104 Mr Williams: A final one, following on from something we had before about collection of debts. I understand that you are doing less to collect debts from customers who are off benefit than you are from customers on benefit. Yet the customers on benefit are obviously the poorer. Why this reverse of what would seem to be logic? Mr Anderson: The cost and techniques for pursuing customers who are off benefit are significantly higher than for those on benefit. What we are doing is transferring this activity to the debt management service within DWP who are specialist in this area and they will have a wider range of techniques available to reclaim this money. We shall be addressing that point. Mr Williams: Thank you. We have done what we set out to do: we have just beaten the division bell. May I thank you very much for your co-operation and look forward to seeing the detailed answers you promised us; there are quite a lot of them. I thank my colleagues as well for being so co-operative. Thank you very much. |