2 Running the Social Fund
9. The Social Fund is administered by nearly 3,500
staff at a cost of approximately £70 million. Application
volumes have risen by 4% since 2001-02, whilst staff numbers have
fallen by 8%. It is not currently possible to consider the Fund's
annual administrative costs over time because the Department is
unable to provide comparable figures for previous years. It has
recently introduced a new costing system which calculates all
staff costs for Jobcentre Plus activities. On the basis of the
information available, average cost per application in 2003-04
was £15 for Budgeting Loans, £16 for Crisis Loans and
£24 for grants. However, the data has significant limitations.[17]
10. There are very large variations in unit costs
between districts (Figure 3). For example, for Crisis Loans,
the highest cost per application was six times the lowest and
nearly double the average.[18]
The Department suggested they were probably due to different approaches
to claim handling, such as the greater use of phone contact in
some districts for collecting evidence and taking in Crisis Loan
applications. Greater use of the telephone is an aspect of the
standard operating model which is being developed by the Department
and which is designed to help improve efficiency and consistency
of case handling. The model included defined roles, better training
and clearer use of IT. It is being piloted in two districts in
Wales and will be reviewed in April 2005. There is no date yet
for full roll-out.[19]
Figure
3: Variation between districts in cost per application
Note: Figure
for grants includes Funeral Payments, Sure Start Maternity Grants
and Community Care Grants combined. Part of the reason for the
variation in cost per application for grants is likely to be the
differing proportions of these three grants across districts.
Source: National Audit Office analysis of Department
for Work and Pensions data
11. The National Audit Office found that other practices
reducing costs included the use of specialist teams in some districts
and specific practices such as logging all applications on the
computer system immediately on receipt, which not all districts
do. Factors driving costs up included the poor quality of applications
received by those processing them from some jobcentres.[20]
In some districts, a large number (up to 50%) had to be returned
because of a lack of basic information, wasting staff time and
frustrating applicants. Jobcentre staff were tending to take applications
in too quickly without checking, because of their urgent nature,
and needed better training.[21]
12. A further factor affecting efficiency is the
adequacy of the Social Fund computer system. The system is delivered
through the Strategic Outsourcing Business Allocation contract,
awarded to Affinity (the EDS led consortium) in 2000. For services
relating to the Social Fund, the Department expect to pay £3.72
million in 2004-05, plus a portion of standby/recovery and other
costs. Future costs are not currently available as contractual
arrangements with EDS are being reviewed.[22]
The Department considers that the system meets its requirements,
but the National Audit Office still found evidence of a number
of shortcomings. Its lack of capacity for cases with a large number
of applications or outstanding loans can slow down the processing
of awards in all districts.[23]
The timescale for necessary upgrades has slipped from April to
September 2006 since the National Audit Office reported, apparently
because of shifting priorities.[24]
13. It is important to get decisions on benefits
right first time for the sake of the claimant, as well as to ensure
efficient administration.[25]
There are low levels of decision-making accuracy in Funeral Payments
and Crisis Loans, for which only 52% of initial decisions are
correct (76% and 69% respectively for 2000-01), and in Community
Care Grants, for which only 76% are correct (79% in 2000-01),
according to departmental checking criteria, which have changed
over time, making comparisons difficult.
14. The Department said that the discretionary nature
of decision making for some awards meant that there would be differences
of view,[26] and that
these figures included errors which did not affect the outcome
for the customer. Where the Department could not retrieve customers'
papers, it was impossible to verify the accuracy of the decisions
made.[27] Nearly 40%
of Crisis Loans are alignment payments, where customers are awaiting
payment of another benefit. Although tiding customers over until
their first payment is legitimate, delays in starting such payments
cut into the money available for other uses of the Social Fund.[28]
For its monitoring in 2004-05, the Department is distinguishing
between those cases where it is clear from available evidence
that the outcome was wrong in monetary terms, and those where
having insufficient evidence is treated as an error.[29]
15. There are problems with clearance times for applications
for certain awards. The most significant is for Crisis Loans,
where in 2003-04, for example, only 7% of districts met the 1
day clearance time target, and some took an average of 3.5 days,
even though these awards are paid out to people in emergencies.
The Department said that the current way of measuring meant that
districts could not record a clearance time of less than one day,
and so a single case taking over one day would cause a district
to miss the annual average target. It was increasing the target
to 2 days (but would monitor for both 1 and 2 days).[30]
16. Jobcentre Plus offices are an improvement on
previous arrangements, with better facilities and a more forthcoming
approach to customers. But progress could be lost with the large
number of staff reductions to be implemented by the Department
by 2008. Levels of staff turnover might also undermine efforts
to develop wider knowledge of the Social Fund.[31]
The Department was aware of the risk, but had plans to mitigate
the effect of staff reductions by making efficiencies and centralising
processing. A reduction from 140 to 20 in the number of sites
that processed Fund awards would help to achieve a critical mass
of staff for training and development purposes, and so build up
expertise.[32] Comparisons
of staff turnover over time are hampered by changes in the organisation,
such as the creation of Jobcentre Plus, but figures for 2004 are
broadly the same as for the Benefits Agency in 2000-01.[33]
17 C&AG's Report, paras 4.2-4.4 Back
18
C&AG's Report, Figure 23; Ev 15; Q 101 Back
19
Qq 27, 102 Back
20
C&AG's Report, paras 4.5-4.14; Qq 8, 12-15 Back
21
Qq 92-94 Back
22
Qq 79-87 Back
23
Qq 62-65; C&AG's Report, para 4.17 Back
24
Qq 80-81 Back
25
12th Report from the Committee of Public Accounts,
Getting it right, putting it right: Improving decision-making
and appeals in social security benefits (HC 406, Session 2003-04) Back
26
C&AG's Report, Figure 15; Qq 8-9, 15, 17, 72; Ev 13-14 Back
27
C&AG's Report, paras 4.19-4.20; Q 8 Back
28
C&AG's Report, paras 2.9, 3.15, 4.20; Q 8 Back
29
Qq 9, 72; Ev 14 Back
30
C&AG's Report, Figure 16; Qq 28-31 Back
31
Qq 41-42, 73 Back
32
Q 27 Back
33
Q 74; Ev 14-15 Back
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