Memorandum submitted by the Child Poverty
Action Group
1. Ahead of your session with officials from
the Department for Work and Pensions on 7 December, this document
seeks to inform the Committee's interest in benefit complexity
by setting out some key issues that we hope your session will
cover. It does not propound specific reforms, but rather argues
for a cautious approach. CPAG would like to see a simpler experience
of the benefits system, this might include looking at the current
complexity of benefit regulations, the structure of the system
or its administration. We do not believe it can be taken for granted
that the root cause of the poor experience too often experienced
by claimants solely results from complexity—the effectiveness
of structures and bureaucracy in managing these play a significant
role.
2. As backdrop we note both the useful recent
report from the National Audit Office[4]
and official interest in simplification, as witnessed by the new
Secretary of State for Work and Pensions, John Hutton MP, who
suggested that the Department for Work and Pensions (DWP) would
seek ways of simplifying benefits and discussed the possibility
of a single working age benefit in oral evidence to the Work and
Pensions Select Committee evidence session.[5]
Beyond this however the DWP have said little about complexity,
though we expect further signals of future policy in the Welfare
Reform Green Paper in January. Since this is such an important
issue and yet we do not know much about the DWP's thinking we
strongly welcome the Select Committee's evidence session and hope
that this will clarify which way the department is developing
its thinking.
3. As a starting point of principle CPAG
believes that benefit systems should be of a standard with which
all in society would be happy to use and to engage with; it should
not be one "reserved for the poor".[6]
We also wish to emphasize the need to tread carefully in this
area. The benefits system is undoubtedly complex and has got more
so—CPAG produces an annual handbook explaining the benefit
and Tax Credit system[7]
which now runs to 1,582 pages. By way of an example to illustrate
why the benefits system currently needs a handbook of that length,
the rule which describes nothing more than the date on which a
supersession decision (superceding a previous decision) takes
effect runs to 34 subparagraphs[8].
Complexity causes real problems for claimants and administrators
alike, but it is not complex without reason. Complexity often
arises from the intention of meeting complex needs and so attempts
to simplify must bear in mind the need to minimise the numbers
of losers from any reform.
4. CPAG has welcomed the resources that
Tax Credits have brought directed at tackling child poverty, but
they have also brought fearsome complexity and have extended means
testing to a larger proportion of the population. A similar (though
perhaps less complex) pattern is observable with the Pension Credit.
Means testing tends to bring complexity with it since this involves
targeting with a test of means—universal solutions (such
as Child Benefit) are simpler to administer and simpler to understand.
5. CPAG does not reject the more radical
approaches to benefit reform—including the single working
age benefit—but we see many significant difficulties for
claimants in the implementation of such a scheme, particularly
if the backdrop to this is a continued heavy reliance on means
testing and broader resource constraint. CPAG sees perhaps greater
potential in the process by which DWP and other Departments manage
the claimant's experience of complexity.
THE PROBLEMS
ASSOCIATED WITH
COMPLEXITY
6. Here we explore briefly some of the key
problems associated with complexity, and to do so we outline those
affecting key means-tested benefits and Tax Credits.
7. Non-take up. Key benefits and
Tax Credits have low take up. This undermines the implied overall
policy goal of getting the correct entitlements to entitled persons
and families. Non-take up may be influenced by a number of factors,
but complexity leading to lack of understanding of (potential)
awards is a major driver. It is no coincidence that the take-up
of the universal and relatively simple Child Benefit has been
estimated to be 98%[9]
whilst Tax Credits have been estimated at only 80%,[10]
a pattern made more perverse since the latter is specifically
aimed at reducing poverty. Non-take up may be caused by a lack
of knowledge but in some cases (probably a minority) it might
also represent a choice not to participate—bred by an understanding
of the difficulties which might well be experienced in the benefits
system—as a mother in receipt of Tax Credits and having
experienced problems with these put it to CPAG:
I don't trust them, how could I trust them. I'd
always be thinking "when am I going to have to pay that back"
In either case—that of difficulty in understanding
and accessing entitlements or of someone who expects a bad experience
then being put off staying in the system, or applying to it, non-participation
damages official anti-poverty objectives.
8. Claimant error. We place concern
over error above that of fraud because the statistical evidence
would suggest the former is a greater problem,[11]
because fraud is falling (where error is not)[12]
and because a concentration on fraud risks damaging the anti-poverty
agenda by stigmatising claimants. If processes are very complex,
error is quite likely, especially given that poverty may be associated
with other factors—such as not having English as a first
language or low literacy—which will place claimants at an
additional disadvantage in understanding the process of claiming.
If processes are complex and if inadequate advice or support (for
instance face to face advice) is available then claimant error
is quite likely, leading to other problems further on (including
non-take up, underpayments and overpayments).
9. Poor decision-making, official error
and inconsistency. If administrators cannot understand the
benefits that they operate (below it is argued that this may not
be complexity in itself but rather the failure of systems to manage
this effectively) then official error is very likely. High error
rates, as witnessed by a well-used appeals process and one which
frequently awards in favour of claimants, cause difficulties for
claimants (for instance being denied their entitlements) and they
cause difficulties for administration in setting these right at
a later date. The voluntary sector is often needed to pick up
the pieces of this—providing independent advice and assistance
to appeal, yet this is, itself, an indication of broader systems
failure and good quality advice is not always easily accessible
to claimants.
10. Delays. Overworked bureaucracy
is associated with delay, and delay associated with a poorer claimant
experience and quite possibly hardship. Again this problem is
not inherent to a complex system, but it probably is to a complex
system which is under resourced in its operation. Delays not only
cause difficulty for individuals, and can exacerbate child poverty
but have a knock on impact on the rest of the social security
system (through, for instance, the social fund having to cover
shortfalls of other benefits which have not yet been paid).
11. Benefit interaction. Since significant
passporting links exist within the benefits system (including
those to outside departments) the capacity for errors to arise
increases. The complexity of links between benefits is probably
very poorly understood and it is also quite possible claimants
do not know about the existence of some passported benefits (including
not only centrally provided provision but local support such as
school uniform grants which may be passported from receipt of
other benefits). This is worsened by departmental ineffectiveness
in sharing data, as witnessed by the recent test case of Mrs Hinchy[13]
taken by CPAG, in which the DWP successfully argued that even
though one part of it knew about a change of circumstances other
parts of the DWP could not be assumed to know about the change—such
a basic inability to share records bodes ill for the effectiveness
of passporting more generally. Again this factor is worsened by
both complexity and poor structures to manage this; CPAG believes
there is significant potential to reform the delivery of existing
policy to improve its effectiveness and to ease the burden on
claimants.
12. Stigma, time and quality of service.
More generally we would stress that a complex system which requires
much of claimants (including stress, time, travel and phone calls),
asks them personal questions, particularly around income and family
circumstances, and potentially separates them out from their peers
(through the means test) risks stigmatising claimants: undermining
anti-poverty objectives and punishing people for their poverty.
A decent quality of service, delivered through the DWP or other
Departments such as Her Majesty's Revenue and Customs, should
be a matter of right not luck.
IS COMPLEXITY
THE PROBLEM
OR THE
SYSTEMS WHICH
DELIVER BENEFITS?
13. Through constituent casework members
of the Committee will be more than well aware of the complexity
of the benefits system, exacerbated by poor links across departments
and between central and local government. Indeed the existence
of dedicated MP hotlines suggests MP support is actively used
(quite possibly inappropriately since it is probably time consuming
and is only available to those who visit their MPs) to manage
problems in certain cases. The link between the systems complexity
and the claimant experience is partly through the weight of complex
regulations but—critically—through the impact of these
regulations on the bureaucracy of delivery agencies such as JobCentre
Plus.
14. CPAG believes that the benefits system
could both be complex in backroom process but the actual experience
of engaging with the benefits system be much more straight forward—if
policy were better supported by adequate resources: enough well
trained and motivated staff; a decent IT system to support this
and services which are accessible by a number of means (including
both through the call centre approach and with available face
to face advice). On each count the problem of complexity (in the
regulations) is worsened by poor delivery: tackling benefit complexity
may mean looking at the extent of regulations but it should also
look at the process of delivery claimants receive. The Gershon
efficiency savings require significant staff cuts in both DWP
and the Revenue—we remain concerned that these may result
in higher error and a worse claimant experience.
MEETING COMPLEX
NEED
15. The benefits system is undoubtedly complex
and this causes problems for both claimants and administrators.
However the evolution of the benefits and tax credit system has
been one which accrues complexity, either through policy change,
guidance or case law, at least in large part to respond to the
circumstances of an often vulnerable client group. As such, simplifying—if
this were to make benefit regulations more crude and potentially
arbitrary—risks reducing this ability to respond to complex
need.
16. One key solution is to shift the balance
between means testing and universalism since the latter benefits
are generally much simpler and better understood than the former,
and in partial consequence (along with lack of stigma) they are
more effective at getting through to those entitled to them. A
(partial) move towards this would be to increase entitlement and
coverage of key means tested benefits, thus enabling simpler regulations
by having a cruder mechanism of targeting but without removing
entitlement for particular groups. If this were not done by increasing
the (overall) adequacy of benefits however this risks disentitling
those perhaps relatively small groups but who nevertheless have
significant and complex needs—there is the risk that benefit
simplification, if this were done crudely, would worsen the situation
for those with the most complex needs, often the poorest families.
WHO WOULD
BE THE
WINNERS AND
WHO THE
LOSERS?
17. CPAG believes that any moves to simplify
the benefits system should be well informed by an understanding
of who might the winners and the losers of any approach. We are
conscious that the benefits system seeks to meet need, which is
inevitably complex and variable, and managing this process is
difficult. CPAG is very supportive of universal policy such as
child benefit—both in its simplicity and its effectiveness,
but we recognise that this policy is expensive. Moves towards
simplicity which reduce the claimant experience of complexity
are to be welcomed—be they a greater use of universalism
(together with the required additional resource), improvements
in regulations or improvements in the "front room" experience
of the benefits system.
18. Simplification should not be at the
expense of a loss of responsiveness (eg to disability) which would
create losers in a vulnerable part of the population. Similarly
it should not be presumed that increasing simplicity will, of
itself, create a more effective system.
19. We end on the example of the Child Support
Agency (CSA), a recent example of reform we do not wish to see
repeated. The 1999 Child Support Act sought to simplify the formulae
for assessing maintenance and in doing so to provide a system
that would be easier to administer and therefore be more effective
at getting money to children. Ahead of a recovery strategy for
the CSA promised for the end of 2005, experience has shown that
far from improving delivery, the moves to simplify, and the change
process necessary to introduce this, have left an agency mired
in administrative difficulty resulting in backlogs, delays and
poor quality of service for a vulnerable client group. We urge
great care to be taken in considering appropriate steps to simplify
the benefits system.
ABOUT CPAG
CPAG is the leading charity campaigning for
the abolition of poverty among children and young people in the
UK and for the improvement of the lives of low income families.
CPAG aims to: raise awareness of the extent, nature and impact
of poverty; bring about positive income policy changes for families
with children in poverty; and enable those eligible for benefits
and tax credits to have access to their full entitlement.
4 C & AG's Report, Dealing with the complexity
of the benefits system (HC 592, Session 2005-06).<jf173>
Back
5
In an oral evidence session on the Departments Annual Review,
23 November 2005. Back
6
The title of J Bradshaw and A Deacon, 1983, Reserved for the
poor, means test in British social policy (Blackwell). Back
7
CPAG, Welfare benefits and Tax Credits handbook 2005-06,
Child Poverty Action Group, 2005. Back
8
Regulation 7 of the Social Security (Decisions and Appeals) Regulations,
1999. Back
9
CH 2 March 2004, col 816W. Back
10
CH 4 July 1995, col 95W. Back
11
For example, in terms of overpaid benefit the DWP have estimated
a fraud level of 1% for the Pension Credit, compared to 1.7% customer
error and 2.2% official error (therefore 3.9% error). See
DWP, 2005, Fraud and Error in Pension Credit from October 2003
to September 2004, National Statistics. For Income Support and
Jobseekers Allowance, DWP have estimated 2.6% fraud, 1.2% customer
error and 2.4% official error (3.6% error). See DWP, 2005
Fraud and Error in Income Support and Job Seekers Allowance from
October 2003 to September 2004 National Statistics. Back
12
Using data for Income support and Jobseekers allowance from several
years, between April 2002 to March 2003 fraud was estimated at
4.5%, in the latest available data (October 2003 to September
2004) this stood at 2.6%; claimant error has gone from 0.9% (April
2002 to March 2003), to 1.2% (October 2003 to September 2004);
and official error has gone from 1.9% (April 2002 to March 2003),
to 2.4% (October 2003 to September 2004). See DWP, 2004, Fraud
and Error in Income Support and Job Seekers Allowance from April
2002 to March 2003 National Statistics; DWP, 2005,Fraud and Error
in Income Support and Job Seekers Allowance from October 2003
to September 2004 National Statistics. Back
13
This case was heard by the House of Lords in February 2005. The
case related to a claimant who was overpaid one benefit (income
support), as a result of another having come to an end (Disability
Living Allowance). The ruling suggested that the claimant had
failed to report the change, even though both benefits were administered
by the same department. Back
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