Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 1 - 19)

WEDNESDAY 7 DECEMBER 2005

DEPARTMENT FOR WORK AND PENSIONS

  Q1  Chairman: Good afternoon, and welcome to the Committee of Public Accounts. We are today looking at the subject of tackling the complexity of benefit regulations. We are joined by Mr Leigh Lewis, who is the Permanent Secretary at the Department for Work and Pensions, and may I congratulate you on your new appointment?

  Mr Lewis: Thank you.

  Q2  Chairman: It is a very big job and we wish you well with it.

  Mr Lewis: Thank you.

  Q3  Chairman: We also welcome Mr Adam Sharples, who is the Director General for Work, Welfare and Equality, and Mr Brendan O'Gorman, who is the Divisional Manager for Benefit Reform. You are all very welcome. Now, obviously I want to start talking about how we are going to reform the complexity of this system, so perhaps you could start, Mr Lewis, by looking at paragraph 1.12 which you can find on page 25. It deals with the history of some of this, for instance, "In the mid-1980s, for example, the `Fowler reforms' were driven by the desire to simplify and rationalise some of the complex means-tested schemes in place". Now, you profess to want to simplify the system, but it becomes ever more complex. When will this end, Mr Lewis?

  Mr Lewis: I think, as the Report from the National Audit Office says, Chairman, this is an inherently complex area of public policy and public delivery and I think we are probably naïve to believe that there is a magic-wand solution. However, I think it is right and fair to say that there are serious and substantial areas where we have reformed and made the system simpler. I will not at this moment, unless you would like me to, go through every one such in detail, but Pension Credit, payment modernisation, areas of Housing Benefit and areas of Jobseeker's Allowance are all ones where I think we have been able to make serious and substantial simplifications to the current system.

  Q4  Chairman: All right, thank you. We will develop that obviously over the afternoon and there will be plenty of time. Now, let's look at how your Executive Team operate. If you look at paragraph 2.2, which you can find on page 29, it talks about five types of interactions within different parts of the system and that drives complexity. What I would like to know, Mr Lewis, is how often does your Executive Team meet to consider the benefits system as a whole and how you can reform it rather than particular parts of it?

  Mr Lewis: I probably am not able to answer that question as fully as you might like in the sense that, although my Executive Team meets weekly, it has met so far precisely three times under my chairmanship since I joined the Department and I simply cannot tell you how often the Executive Team—

  Q5  Chairman: Well, as a new great performer in this Department, are you now going to drive this process forward by getting your Executive Team to consider this process as a whole rather than in parts?

  Mr Lewis: Yes, I most certainly am, but I am going to do something else actually which I would like to say to the Committee at the outset because I have spent a lot of time, as you would expect me to, reading this Report and trying to get myself up to speed in that respect. I certainly do want this to be one of the main themes of the Executive Team in the Department. It is already one of the clear principles in our five-year strategy and the one thing that I want to say at the outset is that I have decided already to set up something we have not got which is a dedicated Benefit Simplification Team which is going to sit inside Mr O'Gorman's division. It is going to report directly to Adam Sharples on my left and to ministers and I am going to charge it, actually very much in the spirit of the NAO Report, with being a counterweight to all of the tendencies which, otherwise, tend to drive increasing complexity, so I want to build in a counterweight to that. I want to build a small team, it will be a small team, which is charged by me and by ministers with trying to see, and set, the other side of that balance in motion.

  Q6  Chairman: Good, that is a very helpful reply, thank you very much. Now, still on the same subject, we in Parliament consider legislation obviously item by item. What do you do to help MPs to consider the system as a whole and, if you do not do it at the moment, why do you not consider doing this as well?

  Mr Lewis: Well, I think actually, if I may say so, that there is room for much greater dialogue on a working level between the Department and Members of Parliament on the whole issue of the benefits system and the complexity of that system. Clearly of course some of the decisions which parliamentarians take will always be political in nature and that is exactly as it should be, but I do not think we have necessarily in the past had a sufficient dialogue with Members of Parliament to say, "Yes, of course we can do this, but if we do this, it is going to have these consequences and these results in terms of either simplifying or adding to the complexity of the benefits system". Perhaps at the risk of straying a long way outside of my own experience in this area, I think perhaps at times we have all been responsible for pursuing and promoting policies which have added to the complexity of the system without always stopping to think of the consequences.

  Q7  Chairman: You may recall that in our Fifth Report on Inland Revenue Tax Credits and tax cases we said that the Accounting Officer should seek a ministerial direction if the proposed schemes would add unacceptable complexity. That would be an interesting idea that you could consider in your Department. If ministers come along to you with a proposal which adds complexity, you could seek a ministerial direction, could you not?

  Mr Lewis: Yes, we could. As you will know of course very well, a ministerial direction is something which no Accounting Officer seeks lightly and I think that the way that I would expect to proceed is to have, as one does in a department, discussions with one's ministers and with one's colleagues about the balance of advantage, but in absolute extremis I think that the suggestion put forward is a helpful one.

  Q8  Chairman: Thank you. Let's now look at these 30,000 job cuts, paragraph 1.3, which you will find on page 22. You currently employ 130,000 full-time equivalent staff and you are going to reduce it to 100,000 by 2008 which is very commendable and is going to have a huge impact on your Department. Then, let's turn now to page 41 where you see how your staff have great difficulty in dealing with the complexity, and this is paragraph 3.6: "the Department estimates that at any one time there were around 125,000 incorrect cases resulting from customer error". Well, the obvious question is: how are you going to reduce fraud and error when you are cutting the staff by 30,000?

  Mr Lewis: I think what we have to do, and actually we are virtually half way to reaching that 100,000 manpower target, is work a great deal smarter in that environment. I think we have to have better systems, we have to have better processes, we have to have better IT and I think we have to work in a simpler way. I think in all of those areas actually we are making headway. Some of the reforms that we have already instituted, for example, the enabling of people to register claims to benefits by telephone rather than in person, are undoubtedly already enabling us both to reach that manpower target and to deliver a better service to our customers.

  Q9  Chairman: When Sir Richard Mottram appeared before us in March, he referred to "organisational churn" having a serious effect on the amount of error going up. Now, inevitably if you are cutting 30,000 staff, moving staff around in agencies, that is going to add to the organisational churn, is it not?

  Mr Lewis: Yes, it is. It undoubtedly is and I do not think anyone who has run a large organisation would believe that one can reduce staffing by that degree without there being some inevitable consequences in terms of staff turnover and so on and so forth, but I think it is a challenge for us actually. That is the challenge for the senior management team in the Department to achieve that manpower reduction and at the same time ensure that not only does our quality and accuracy not dip, but actually we seek to improve it and that is the challenge I am going to take up.

  Q10  Chairman: Well, you have a very good manner at dealing with the Committee and you are very good at talking about the challenges and how to deal with them, but during the course of the afternoon we are going to have to press you further on how you are actually going to achieve it. Let us look at box 13, page 37. If we are talking about the impact on your staff in understanding this, "Volumes of guidance on benefits—Decision-makers' Guide, 12 volumes; Income Support, 14 volumes; Jobseekers' Allowance, 24 files; Incapacity Benefit, five volumes in 44 sections; Disability Living Allowance, 30 chapters; Retirement Pension, six volumes", how can your staff be expected to understand all of this?

  Mr Lewis: Well, let me take your admonition to me and let me come to specifics: what have we done? I take no personal credit for this, but what has been done though, to try and make that simpler for our staff? First of all, all of our benefit guidance, for example, for our staff in Jobcentre Plus is now electronic and we have completely phased out paper copies. It is much, much more accessible when you go into the system, so people can navigate their way through it much more easily. It is, by definition, up to date because it is kept up to date on an electronic basis, whereas in the old Social Security offices of the past, there were dusty files sitting on shelves which might or might not have been updated. We have put in place a telephone support line for our staff who are having difficulty in interpreting guidance. Actually, even with some of the complexities, about two-thirds of our staff think our guidance is fundamentally fit for purpose. None of that is to say that there is not more to do; there absolutely is.

  Q11  Chairman: You are relying so much on these wonderful new improvements to information technology. Alan Williams has been here a long time, he has heard it all before, and if we start at paragraph 3.24 onwards, page 47, we have heard so much of this before on IT improvements, but when are they going to be fully functional?

  Mr Lewis: I want just to say something against that background which is both as of the here and now and then in my past incarnations when I was within the Department for Work and Pensions' family, running Jobcentre Plus and the Employment Service before it. We have had our IT difficulties of course and we still have IT difficulties. I know that and the Committee knows that. We have also had some huge IT successes and those tend not actually to receive anything like the same amount of attention or publicity and they should. If you go into one of our newly integrated Jobcentre Plus offices, you will find those touch-screen terminals which have completely replaced all of those little cards on all of those little boards. There are 8,500 of them. They work incredibly well and we get half a million visits every week to our Internet site. There is one other, and I will not bore you by reading out a catalogue on the other side, but with the payment modernisation process we now pay 97% of our customers directly into their bank accounts at a unit cost of 1p where we used formerly to pay by cheque, and still do in a tiny minority of cases, which costs £1.61 per payment.

  Q12  Chairman: We get the message, but we also know about the IT difficulties. You are perfectly entitled to talk about the successes. Now, let's look at one letter which you sent out to a poor member of the public which you will find on page 11. Would you understand this, you are a very clever man? "We are pleased to tell you that your claim for Carer's Allowance has been successful . . . You are entitled to £43.15 a week from 9 March 2004. You are entitled to an increase of £25.80 a week from 9 March 2004 for a dependent adult. We cannot pay you from 9 March 2004. This is because the amount of Incapacity Benefit you get is more than the amount of Carer's Allowance we could pay you". Is that understandable?

  Mr Lewis: No, I read it several times and I failed to understand it, Chairman.

  Q13  Chairman: What will you do about it?

  Mr Lewis: Well, what we have to do actually is go on improving very substantially the letters which we send to our customers. We have got a programme very much to do that, but I think that is an area I really do want to address because I think too often we send our customers information which, whilst strictly accurate if you understand the complexities of the system, is terribly difficult for the recipient to understand.

  Q14  Chairman: My last question, Mr Lewis, is: if you could remove three particularly troublesome regulations, what would they be?

  Mr Lewis: I do not know that I can simply pick that up. There are complexities in the system. There are hugely complex regulations about students, about some small groups, retained firefighters, share fishermen. There are lots of groups within the system. Some of the regulations in relation to Mortgage Income Support are very complex. However, as the NAO Report says, they all have their purpose in terms of the policy objectives, so it is too easy in a way just to say, "I'll sweep them away". What I do think we have to do is to have a more grown-up conversation which is, "What's the balance of advantage and disadvantage?" A Member of Parliament recently put down a question, asking whether we could introduce benefit disregards for school crossing patrol people. Now, no doubt there is a good policy reason for doing that, but if we were to do it, it just adds yet one more piece of complexity, and I think that is the debate we should have.

  Chairman: Right, thank you very much. Mr Davidson?

  Q15  Mr Davidson: I wonder whether, among your many talents, you do your own glazing, but, should you do so, and I do not know whether or not a member of staff here could advise you, but if you have ever bought glass from Pilkington's, you will know that one of the categorisations they have for frosted glass is an obscuration index, so five is the most obscure to one, which is clear. Do you have anything within the Department equivalent which measures the leaflets you produce or the regulations you apply?

  Mr Lewis: I have never done my own glazing, but, as a student, I lived very near St Helens, so perhaps I should have gone to Pilkington's more often. No, as far as I know, having been in the Department for just three weeks, we do not have that, and that is a suggestion that quite seriously we might take away. I have spent a bit of time looking at some of the leaflets we produce and going through them and there is both good and bad. There is a Pensions Guide, of which we sent out 1.8 million copies last year, which I think actually is a model of clarity. It is very clear, helpful, very well written and I think it is a credit to the Department. There are others which are much, much less clear.

  Q16  Mr Davidson: Can I ask whether or not you have come across the SMOG formula which I had not come across until recently? It is the `simplified measure of gobbledegook' formula which is apparently an internationally recognised means of assessing forms and the like. Will you be using something like that in the future to work your way through the material you produce?

  Mr Lewis: Certainly I have not seen a SMOG index, if we use one. What we do have on the back of this leaflet, but not on the back of this one, is the Crystal mark, clarity approved by the Plain English Campaign, and we certainly do use that as a test and as an external verification.

  Q17  Mr Davidson: That is a test, so will you be applying that in the future to all the material you produce rather than just to some of it?

  Mr Lewis: Well, I would like to. I do not want to give this Committee an absolute guarantee because we produce many, many leaflets, actually rather too many leaflets and we have been cutting down on this, but over time I would like all of our leaflets to meet the test set by that.

  Q18  Mr Davidson: You say "over time" and I accept that. I had a look at the strategy document and I found it very difficult to identify any indication that simplification was any real part of the strategy. There are a couple of mentions at various points, but it does not leap out as being part of the Mission Statement or part of any major sections of the Report. To what extent can you guarantee us that, whilst the direction of travel is in the right direction, this is actually going to be a meaningful priority for yourself and your colleagues?

  Mr Lewis: There are two things which I hope will give you some degree of assurance. First, the Secretary of State, Mr Hutton, when he appeared shortly after his appointment at the Work and Pensions Select Committee on this, said that he thought we had to be more ambitious in the Department on this. I have already made clear in a very brief time in the Department that I think we have to be more ambitious on this, so we have the Minister in charge of the Department and its Permanent Secretary both believing that we need to be more ambitious.

  Q19  Mr Davidson: More ambitious, but starting from an extremely low base does not necessarily provide the necessary solution to me. Will it be clearly identifiable in the next strategy document you produce as being one of the major priorities of the Department?

  Mr Lewis: I certainly want to give it a higher priority. I am not going to try and look ahead. We have only just produced that five-year strategy for the Department and, by its nature, therefore, it is going to be a while before we produce another. What I will commit to is that this is going to be a personal priority for me and that is one of the reasons why, as I said to the Chairman, I have decided to establish a small team actually dedicated to making the system simpler.


 
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