| Summary
The complexity of the benefit system is a key factor affecting the performance of the Department for Work and Pensions (the Department).[1] Much complexity is intentional and some is also inevitable, and allows the Department to tailor the regulations to the varied needs and characteristics of the population, administer it cost-effectively and protect public funds against abuse.
The system has grown over many decades. There are few forces working against additional complexity, and the well-established processes of consultation and scrutiny of legislation do not act as a brake. Between 2000 and 2004, there were 364 statutory instruments, although not all of them of course added to complexity. Since 1990-91, the Child Poverty Action Group's guide to welfare benefits has nearly quadrupled in size.
The consequences of complexity include high levels of error by staff and customers. It also helps create a climate in which fraud against the benefit system can more easily take place and go undetected. Fraud in key benefits has reduced since 1997-98, but levels of error have increased recently, in part because of the organisational change within the Department. In 2004-05 fraud and error still stood at £2.6 billion. Complexity is also a factor deterring the take-up of benefits by groups such as pensioners, and in contributing to decision-making errors, which result in 250,000 appeals a year. The Pensions Commission has identified that complexity in the pension system — state and private combined — is an important factor in discouraging millions of people from considering their future pensions arrangements. Complexity also affects the ability of staff to administer benefits efficiently, and the ability of many customers to understand easily what is expected of them.
The Department recognises that complexity is a problem and has taken opportunities to reduce it, for instance in the design of Pension Credit, in systematically removing anomalies from Housing Benefit, simplifying claim processes for several benefits, better sharing of information with local authorities, and using technology to protect customers from complexity. However, these are rather piecemeal developments and it is difficult to tell whether the system as a whole has become more or less complex as there is currently no objective way of measuring it.
Some of the steps taken to simplify processes for customers are a way of managing complexity, rather than eliminating it. Managing complexity requires well-trained staff supported by accessible guidance and assistance and efficient information technology systems. There is evidence that some staff are reluctant to offer information as they fear misleading customers. Yet the number of people who seek help in dealing with their benefit claims each year - 1.3 million go to Citizens Advice alone - shows the scale of assistance needed. The Department should also improve its written communications with customers, which appear to have improved little in six years.
The Department has made a number of commitments for further action and intends to give greater priority to tackling complexity. It will report to Parliament annually on actions taken and is setting up a small Benefit Simplification Unit to act as a further internal counterweight to increasing complexity. The Unit will, amongst other things, look to develop a way of measuring complexity.
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