Examination of Witnesses (Questions 40-54)
MR ALAN
BARTON, MR
STEVE JOHNSON
AND MS
LINDSAY ISAACS
3 NOVEMBER 2004
Q40 Mr Dismore: What particular stages
do you think could be cut out? What do you see as unnecessary?
Ms Isaacs: Initially they are
not allowed to go unless they receive their personal invitation
document. If they have not received one, they have to phone the
conversion centre for an invitation. So we have seen quite a lot
of people who have already gone to a Post Office—and these
are people who want to open an account—they have gone to
the Post Office, but they do not have their personal invitation
document and so they are not able to. Perhaps if clients who have
taken the initiative and shown an interest, and taken that first
step of going to a Post Office, were able then to start the process
at that stage, that would certainly cut out an element at the
beginning.
Mr Barton: I am not the person
in Citizens Advice who deals with direct payment, Chairman. If
you would like us to consider if we have more to say on the detail
of this and then to put a note in to you, would that be helpful?
Chairman: That would be very helpful.
Q41 Mr Dismore: Can I ask you a more
general question? Do you object in principle to the DWP's decision
to move to direct payment?
Mr Barton: No, I do not think
we do, in that we agree that it is generally a more secure way
of paying people. We have all along been concerned about people
for whom it is not a realistic option, or who simply do not want
to have to open a bank account in their eighties. The slow track
on which DWP put the development of its alternative scheme, and
not mentioning the fact that there would have to be some alternative
scheme in all the early literature about the change—we were
unhappy about all of that. We still have quite a lot of worries
about the cheque payment alternative that will exist for those
who do not have a bank account or simply do not send the information
in. We did join in writing to DWP, with a lot of other organisations,
suggesting that something more like an order book, rather than
something that has to be posted out every week, ought to be available
for people who are not going into bank accounts. We also feel
it is important that these issues are properly talked through
with the individuals concerned, in a way that they do not find
threatening.
Mr Dismore: Picking up on some of the
points that have arisen over the question of cheques, the DWP
say it would be too expensive to keep the order book system. They
say each order counterfoil costs 68p to administer and direct
transfers in the region of 1p. So it is a significantly large
difference in the amount of money. We saw some figures on the
amount of savings of about £200 million, when the whole system
is worked through.
Q42 Rob Marris: £450 million.
Mr Johnson: We were talking earlier
on about trying to reach the hard-to-reach group, and the discussion
centred on people where there are smaller amounts to which they
might be entitled. They are the "Why bother?" group,
are they not? They are the ones who may well decide not to bother.
I think that we are worried, if it means that insistence on a
bank account or a cheque, which may or may not arrive, pushes
them over the "Why bother?" threshold. So it could be
counterproductive mentioning it.
Q43 Mr Dismore: Have the DWP said to
you what should happen if the cheques do not arrive?
Mr Barton: They have told us there
will be a system in place to ensure that these people get their
money. I do not think they have told us what it is.[2]
If one looks at what happens at the moment to people whose Giros
do not arrive, they usually wait a very long time for the money.
It is assumed that it has been stolen; they have to fill in a
form; it is all checked up on and it is usually a six or eight-week
wait—which obviously will not be any good at all in these
situations. I think that we still wait to see how the DWP is planning
to deliver on the assurance that there will be arrangements for
these people to get their money. It is very important that there
should be such arrangements, of course.
Q44 Mr Dismore: So the only experience
you can go on is what happens with ordinary Giro cheques for benefits?
Mr Barton: Yes, which is not encouraging.
Q45 Mr Dismore: You have said that you
wanted to keep the order book system for people who need third
parties to collect their money. Why do you think that is necessary?
Mr Barton: There are substantial
numbers of older people who have very severe mobility problems
and cannot get to the Post Office themselves; who live on their
own; who have carers who are provided by the social services department
and who come in, and will not be the same people every week; and
they have been in the habit of sending them to collect the money
from the Post Office. These are a large and important group whose
needs should be catered for.
Q46 Mr Dismore: Can that not be dealt
with simply by endorsing the back of the cheque?
Mr Barton: The carers come a particular
day; the cheque will not always come a particular day, will it,
the post being what it is? So there quite possibly would be real
logistic problems for them in this.
Q47 Mr Goodman: I have a couple of questions
about the complexities caused by the interaction between the Pension
Credit and the Savings Credit in particular, and other benefits.
Obviously, Savings Credit exists to reward saving; but it seems
to have brought in new complexities. Passports for remission of
health charges is different from the Guarantee Credit and the
Savings Credit, and there are particular complexities around the
withdrawal of Housing Benefit if your savings go over £16,000—and
who all this is reported to. What do you think the main problems
are? How are they affecting both the people who administer Pension
Credit and those who receive it?
Mr Barton: The DWP is very keen
to present Pension Credit as a single benefit, whereas, as you
have pointed out, it actually has two parts in it. When you get
into things like health charges, however, they do not then follow
that logic. DWP follow their own logic in the letter—and
we have problems about the letters that people get, their award
letters—but that just tells you on the face of the letter
how much Pension Credit you get. It does not tell you whether
it is Guarantee Credit, Savings Credit, or both. It does tell
you in the calculation sheet, but of course you need to be fairly
numerate to follow the calculation sheet. So you do not actually
know, and yet it is of crucial importance in relation to health
charges and in relation to your entitlement to Housing Benefit
if you have savings. Our view is that both those anomalies should
be ironed out by making any form of Pension Credit, a passport
to exemption from health charges. Of course, a lot of the Savings
Credit people will be able to get most of their health charges
back, but they have to go through a separate application system,
through the DoH system. Similarly, we think that the capital limit
for Housing Benefit should be abolished for all Pension Credit
recipients.
Ms Isaacs: Another element of
confusion is clients not knowing who they have to report changes
to; so not necessarily having to report their Pension Credit but,
in terms of their Housing Benefit, a change in income perhaps.
Q48 Mr Goodman: Could I ask you to clarify,
in your view, how much effect you think all this is having on
pensioners who are claiming?
Mr Barton: We have certainly seen
cases of people who are very worried about what their situation
is on the health charges, and how they can find out whether they
are exempt from them—because by no means everybody keeps
their award letters. So certainly quite a few people who have
been into their bureaux are worried about that. Steve may want
to say something on the Housing Benefit side.
Mr Johnson: You have people who
are told they do not have to report certain things to the Pension
Service, but they do have to report them to the local authority.
That is very confusing. In the old days, when you were just told
everything all the time, it made it a relatively simple model.
I am not asking to go back there. However, in my view, the complexity
has reached the stage where certainly my staff think twice about
trying to explain how Pension Credit works for their clients.
In the old MIG days, you could more or less explain to someone
what MIG was. "There are your needs; there's your income.
It's a top-up." We are entering a phase of, "Trust me,
I'm right", where we do not have time, and possibly not the
resources, to go down the road to make people understand. Our
impression is that there are large numbers of people who simply
do not know what they have got and what it passports through to.
Certainly the interaction with Housing Benefit is, I would suggest,
a bit of a mess: where, for Housing Benefit, people of 60-plus,
they try to integrate with Pension Credit in the way it is structured,
but there are still anomalies hanging round which are unnecessary;
and I think that the reporting thing is a very big issue.
Mr Barton: And across the 60-65
difference with eligibility for Guarantee Credit and Savings Credit
there is a complication as well, and another thing that we would
like to see changed—that everyone should be eligible at
60. It does positively disadvantage single women who are living
on their own, who have reached retirement age at 60 and get their
state pension. If they also have a private pension of some sort,
a small one, until they are 65 they do not get any recognition
of that, because they are not yet eligible for Savings Credit.
Ms Isaacs: And additionally people
who have some other form of savings but who are below the threshold,
and so are not rewarded.
Q49 Mr Goodman: That is your full list
now, is it, of what you want the Government to do?
Mr Barton: The last one is a very
important one. The Committee commented on this when Pension Credit
was being conceived. It seems extraordinarily unfair that people
who have below the full basic state pension but who have some
savings or a private pension get no benefit. It is like the old
MIG situation. I am sure that the calculations could be adjusted.
It would make them even more complicated, of course; but, as Steve
said, they have already reached the point where advisers find
it pretty difficult to understand what they are, and explaining
them to the clients is nigh on impossible.
Mr Johnson: I think that "Savings
Credit" is a terrible phrase, because the connotation is
that you have to have savings to qualify. We know that it is happening
all over the place—people are disconnecting themselves from
the system because they do not have savings, but they would qualify.
Maybe another name?
Q50 Miss Begg: That is one of the problems,
talking about saving for retirement; but the savings are actually
in the form of an occupational, private, or whatever, pension.
People do not regard that as savings, but that is the generic
term that we are using. I also have a problem that we use the
word "pensions" and we think of old people; but in fact
we should be talking about pensions for everybody. Anyway, that
is my gripe. We were talking about the difficulty of claiming.
You have some complaints about the fact that older people have
to send in original documents to the Pension Service in order
for things to be verified, and that is causing some problems.
Would you like to expand on that?
Mr Barton: They are asked to send
in original documents about all their savings. Also, they may
well have to send in birth or marriage information, or divorce
information, and all savings information and information from
their pension provider if they have a private occupational pension.
They are initially told that they have to send originals of all
these things in. A lot of people are not at all happy about doing
this, because they think that they will get lost. Also, people
who depend on a bank book to get their money out—and more
and more of them will be with direct payment—cannot get
any money while the book is away. So people are not very happy
about this. It turns out—and I submitted evidence, as an
annex to the Committee of what the Pension Service said in May
their policy, if you can call it that, was—that, if you
resist, there are alternatives. You can go along to a surgery.
For some documents but not all—and it seems to be a bit
of a changing list—you can send copies in. So we really
do think that the Pension Service needs to have much more realistic
requirements of what documentation it requires, that there should
be are local places to which people can take valuable documents;
and it needs to be absolutely up-front about what the rules are,
rather than "If you resist, you get a different deal".
Q51 Miss Begg: What you have just said
about alternative arrangements—is that different from what
the DWP is piloting in the form of alternative offices?
Mr Barton: That is an alternative
arrangement. Another alternative arrangement, which seems to operate
in some places but not always, is that some Jobcentres will verify
documents and others will not. We have made a recommendation about
that as well. We think that there ought to be a formal agreement
between the Pension Service and Jobcentre Plus about how this
will be handled, and then people can be told this. Bureaux always
need to know what the rules really are, to be able to advise people
what to do.
Q52 Miss Begg: So it is a consistency
of approach?
Mr Barton: Yes, and more
sympathy as well.
Q53 Chairman: Alan, earlier in the session,
we were talking about conversion targets—about which I do
not know a lot, and you may be the wrong people to address this
question to—but do I understand that there is a financial
and contractual incentive? Ventura operate these call centres.
Is it your understanding that conversion rates are a factor in
the payment mechanism in the contract, or is it merely a target
for PSA purposes?
Mr Barton: I do not really know
in detail, Chairman. These targets have been referred to in conversation,
but I have not then pursued it to find out exactly what the implication
is.
Q54 Chairman: I think I know a man who
should know the answer to that. Do you have anything for us? That
has been very useful. Is there anything that you think we have
left out?
Mr Barton: There is one point
only, Chairman. I did mention it briefly, but the quality of the
award letters is terrible. People get letters that really confuse
them and they feel that they have to go to their bureau to have
them explained. We are told constantly by DWP officials that this
is because they come off the old legacy IT system and they quite
agree that they are not very good, but it is awfully difficult
to do anything about it. It seems to us that there is a lack of
priority within DWP—and not just in this area, but in award
letters which apply for other benefits as well. It seems to us
that clear communication with your customers is part of treating
them with respect, and yet this does not seem to be a priority.
Mr Johnson: That is absolutely
right. If you just think of the font size of the letters and how
they are laid out, that would be an obvious thing to start with.
Chairman: Thank you for your appearance
and for your written submission. That has been very helpful.
2 Footnote: Citizens Advice has now received
information on this from DWP. Back
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