Select Committee on Work and Pensions Seventh Report

Conclusions and recommendations

1.  We appreciate the value of means-tested elements of the benefits system that target assistance at those people most in need of financial support. Having said that, evidence to this inquiry suggested that there is a direct correlation between the amount of means-testing and the complexity in the system. We recommend that the Government specifically evaluates the current caseload of means-testing in the system as part of its simplification efforts and where possible, reduces it. We particularly consider that, in order to achieve simplification, priority should be given to alignment of rules for different benefit eligibility. (Paragraph 51)

2.  We accept that the contributory principle is valued by many as a contract between the state and the individual and reflects the Government's rights and responsibilities agenda. However, the contributory principle adds an additional layer to the current system and research suggests it is no longer as relevant to the benefits system as it once was. We therefore recommend that the Government reviews whether or not the contributory principle remains a relevant part of the modern benefit structure (Paragraph 55)

3.  The existing system, with its benefits paid according to different principles and rules, is clearly complex and in need of change. We believe that measures to simplify the benefits system could, if done sympathetically and systematically, contribute to the Department's wider objectives, and improve the lives of millions of claimants. The Government should be taking as its starting point a review of:

Whether all existing benefits are necessary;

Whether some benefits could be merged;

The interaction between benefits and how the qualifying arrangements differ; and

The overall purpose of the benefits system. (Paragraph 56)

4.  We conclude that there is a lack of vision and drive within DWP and across Government to simplify the benefits system, and we share the reservations of a number of witnesses about what the Benefit Simplification Unit can achieve under its current structure. We commend the role it is playing preventing further complexity being introduced into the system, but this is a very long way from having a plan to systematically introduce simplification, and from the DWP Permanent Secretary's "very clear simplification ambition." The fact that the BSU's Simplification Guide imposes a unique condition, "if resources permit", on "spring cleans" of particular rules or processes is disappointing, but indicative. (Paragraph 79)

5.  Our predecessor Committee recommended in 2004 that "the Department establishes a high level working group chaired by Ministers, comprising IT suppliers, social policy experts and other relevant parties, including representatives of client groups and front-line staff, to make recommendations on how policies can be simplified." We believe that this recommendation retains considerable merit. (Paragraph 80)

6.  Engaging the expertise of front-line staff should be a high priority for the Benefit Simplification Unit. There needs to be a proactive policy of gathering ideas and then acting on them to change processes. (Paragraph 86)

7.  We welcome the DWP's decision to roll out the Lean Pathfinders more widely. We ask DWP to report progress to us, including how the emerging best practice from these Pathfinders will be rolled out nationwide, and how lessons will be learned across different benefits. We also ask DWP to consider greater formal claimant participation in these projects, for example through the work of Jobcentre Plus External Relations Managers and local liaison groups. (Paragraph 94)

8.  We ask the DWP to clarify whether it is planning to conclude its study of the scope for producing a complexity index. If so, the suggestions on measuring 'costs of compliance' made by Fran Bennett (University of Oxford) and Mike Brewer (Institute for Fiscal Studies) should be part of that study, if not, DWP should explain why. Our view is that, given the high levels of complexity and the limited progress made so far, running programmes to reduce complexity should be a higher priority for Government. (Paragraph 100)

9.  We are surprised by the decision of DWP not to publish the report prepared by Sue Royston, who was seconded from Citizens Advice to the BSU for nine months, or even to place the report on its website, as this was an extensive piece of work which drew contributions from external organisations, involved liaison and the involvement of claimants and their advocates, and is likely to result, from the comments of the Minister, in some significant changes to the system. We ask DWP to reconsider this decision. (Paragraph 105)

10.  We were refused access to the quarterly reports on complexity that are given to the DWP management team. We are disappointed at the DWP's decision, and press again for these documents to be submitted to us for scrutiny, if necessary on a confidential basis. We also press the DWP to ensure that BSU progress reports are placed on its website, in order to give the Unit a higher external profile. (Paragraph 108)

11.  As part of this inquiry we met a series of claimants and even Jobcentre Plus staff who found it impossible to get through to the new Jobcentre Plus Benefit Delivery Centres. Unlike calls to Contact Centres these calls are charged at 0845 rates and are not free. Coupled with delays in the system, this has resulted in hardship and distress for many vulnerable people. DWP should take action to resolve these problems immediately. (Paragraph 118)

12.  Engagement with those who are out of the labour market is crucial, and Better-Off Calculations are an essential tool in this process. At the same time, their complexity illustrates the opaqueness of our current benefits and tax credits system. We recommend that all staff who carry out Better-Off Calculations are given additional training to ensure that the information they give to claimants is accurate, and that the IT systems are reviewed to make them easier to use and to ensure that Better-Off Calculations accurately reflect likely tax credits payments. The Committee would also welcome assurances from Jobcentre Plus that Better-Off Calculations are a priority and that staff are encouraged not just to undertake claimant assessments but to appreciate fully the value of the calculation in giving people the incentive to return to work. (Paragraph 127)

13.  We believe that Better-Off Calculations can help claimants make informed choices about work by setting out clearly any in-work entitlements for which they may be eligible. We recommend that the Government ensures that all working-age claimants are given a Better-Off Calculation at the appropriate time, and that it sets higher national targets for how many claimants receive them. (Paragraph 132)

14.  We conclude that any attempt to simplify the benefits system must take tax credits into account. However, it is difficult to see how this will be achieved at a policy-making level. The Benefit Simplification Unit only has responsibility for DWP benefits and while there is joint HMRC/DWP work underway to improve data sharing and operational processes, there is no Government Minister, department or unit which is attempting to address the combined and overlapping complexities of the benefits and tax credits systems. This omission must be urgently addressed. (Paragraph 148)

15.  We believe that the Social Security Advisory Committee is a valuable and experienced resource that provides critical examination of the DWP benefits and HMRC's Tax Credits systems and would have a role in joining up HMRC and DWP thinking. We urge the Government to ensure that both Departments engage with the Social Security Advisory Committee as a means of collaboratively addressing complex interactions between the respective systems, reconsider formally extending the Social Security Advisory Committee's remit to include Tax Credits, and arrange for a joint review of the Memorandum of Understanding to be conducted as soon as possible. (Paragraph 149)

16.  The DWP has acknowledged in its own research that it must do more to ensure that claimants are aware of Housing Benefit as an in-work benefit. We urge the Government to work with local authorities to examine how best to raise awareness amongst benefit claimants and low wage earners and to act upon this swiftly (Paragraph 155)

17.  We recommend that the Government undertakes research to investigate whether there remain some groups of claimants for whom work does not offer the best route out of poverty, and more detailed analysis of the impact of high Marginal Deduction Rates in parts of the benefits system on overall work incentives. (Paragraph 176)

18.  The Committee awaits the Government's response to David Freud's review of welfare system but even at this early stage considers that, should the Government extend the role of contractors in delivering frontline services for claimants, it should be incumbent on providers to undertake benefits training for staff. (Paragraph 178)

19.  We agree with Sue Royston that looking at customer journeys could be a good way of shedding light on the claimant experience, and as such should be a useful tool for the new Customer Insight Team. (Paragraph 192)

20.  We welcome Sir David Varney's recommendation that a Government-wide change of circumstance service should be established by 2010. Given that the DWP has such an important role in the delivery of the Varney review through the 'Tell Us Once' project, we believe that successful implementation should be incorporated as part of the Department's targets, and closely monitored as proposed by Sir David Varney. (Paragraph 207)

21.  Tell Us Once is limited to a relatively narrow area, so we welcome the Minister's commitment to introduce a single point of contact for changes of circumstances across DWP, including for housing benefit, and ask the Department to set out a timetable of its wider work to achieve this, including the One:Time Solution and the Customer Information System. It is essential that a single point of contact is developed to facilitate both the easy communication of changes in circumstances by claimants and a prompt response from agencies. This will help claimants to avoid unnecessary hardship, such as the threat of eviction. (Paragraph 208)

22.  We welcome the fact that progress is being made towards the introduction of an electronic document storage facility in the Pension Service, and ask DWP to keep us informed of progress with this important project. (Paragraph 209)

23.  We look forward to the Government's response to the Freud review, and trust that it will include an assessment of the feasibility of his suggestion that Jobcentre Plus offices should become one-stop-shops for a range of government services. In the meantime, DWP does need to ensure that its links with other agencies who have direct contact with vulnerable people, such as health visitors and local authorities, are strong, and that help and advice about benefits is widely available. (Paragraph 218)

24.  Jobcentre Plus needs staff on the front-line who have a degree of expertise in the benefits system and are not tightly bound to the script. The analogy we would draw here is with a triage nurse in an Accident and Emergency Department. It would be inefficient if staff in Jobcentre Plus contact centres, who will be dealing with routine calls most of the time, were fully trained-up experts in the benefits system. But they should be better trained than they are now, to provide a more informed and flexible service to claimants and save work further down the line. Jobcentre Plus should learn the lessons of its sister Agencies, particularly the Pension Service, on this. (Paragraph 226)

25.  Given the points we have made already about the importance of improving the interface between in-work and out-of-work benefits, the joint DWP/HMRC pilot to develop service improvements sounds promising and we welcome the fact that it is being extended.(Paragraph 230)

26.  We ask DWP to consider whether its 'My DWP' project should include the function to submit applications for benefits online using a secure system with links to the DWP's own processing systems, along the lines of the One-e-App process used in parts of the USA. We also ask DWP to set out the legislative background to the need for a signature on claim forms, which is often described as a barrier to on-line applications. (Paragraph 241)

27.  We welcome the Minister's interest in the quality and comprehensibility of computer-generated letters, and the news that Jobcentre Plus is to begin a review of its correspondence, which has been the subject of much criticism during this inquiry. This review must lead to an action plan to improve the quality of these letters, and the action plan should be forwarded to us. (Paragraph 252)

28.  We agree with the Minister that Statements of Entitlement are the right way forward, replacing an important piece of information for claimants that disappeared when Order Books did. DWP should work to implement this measure as soon as possible, as part of the wider 'my DWP' project. (Paragraph 256)

29.  DWP must put the claimant at the heart of the simplification process, and it is clear that there is much potential for improving the customer experience - and internal DWP processes - without changing the rules. We welcome the work done by DWP to date on this, particularly the Lean Pathfinders. However, it is not enough to rely on 'masking' complexity; there is a need to go further and address the rules of the different benefits and the structure of the system itself. (Paragraph 262)

30.  We welcome the changes to rules and time periods the Government has made so far, but during our inquiry we have received evidence to suggest that amendments have not gone far enough. In order to achieve simplification priority should be given to alignment of rules for different benefits, including means-tested benefits. We recommend that the Government recognises this and outlines its intentions on alignment over the next five years, together with reasons for areas of inaction. (Paragraph 282)

31.  We agree that claimants should expect to report changes in their circumstances to the relevant agency. However, witnesses have made a strong case for the Government to examine the frequency with which claimants must fulfil this expectation. We therefore recommend that the Government undertakes a systematic review of the rules for reporting changes of circumstances and the impact of existing reporting periods, particularly for Housing Benefit. (Paragraph 295)

32.  We recommend that, following the publication of the Joseph Rowntree Foundation's research into different systems of uprating, the Government undertakes an assessment of the impact on claimants of different uprating measures and the consequences for poverty eradication. (Paragraph 298)

33.  We recommend that the Government publishes the findings of the Pension Service Solution Centre project into automatic benefits payments and examines the feasibility of introducing automatic claims and payments to other parts of the benefits system. (Paragraph 302)

34.  We were disappointed to learn of the problems being experienced in the operation of the Customer Account Management System. We are particularly concerned about the implications this may have for the introduction of Employment and Support Allowance, which will operate using this model. We recommend that the Government urgently investigates these issues in order to avoid the IT problems that have been associated with DWP systems in the past. (Paragraph 306)

35.  The Committee asks that the Government provide a clear rationale to explain its future plans for the Customer Management System and considers the impact of the serial introduction of short-lived IT systems on the administrative complexity of the benefits system. (Paragraph 311)

36.  We recommend that the Government do more to ensure that incremental simplification measures do not have unintended consequences for different parts of the benefits system. Just as policy proposals for benefits are now channelled through the Benefit Simplification Unit to assess their impact on complexity, the Committee recommends that proposals for simplification undergo a similarly vigorous impact assessment process. (Paragraph 314)

37.  We accept that the Minister did not wish to pre-empt the Government's response to the Freud review during our evidence session but we were very disappointed that he could not present a clear long-term vision for the simplification reforms of the benefits system or comment on the principle of a single working age benefit. This was particularly the case given that discussions about the possibility of a single working age benefit pre-dates the Freud review on the Government's policy agenda. (Paragraph 329)

38.  The Institute of Public Policy Research has set out one option for the radical reform of the benefits system. In the absence of a strong Departmental vision we have endeavoured to spark a debate by developing a suggested outline for a simplified Single Working Age Benefit, which is attached at Annex A. This sketches out an alternative option to that proposed by IPPR by extending the single working age benefit to provide in-work support, thus replacing tax credits. We recommend that the Government study these proposals and respond setting out which elements it agrees with and, most importantly, what alternatives it would propose for those facets it does not accept. We accept that fundamental changes such as those outlined would require a great deal more detailed development before they would be ready, but we would reiterate our disappointment that there is no obvious debate or vision being developed and, accordingly, offer this as a starting point. (Paragraph 342)

39.  We were disappointed that the Department does not appear to have undertaken comprehensive cost benefit analyses of legacy benefits in the system. We would recommend that the Government examines the benefits of buying out transitional arrangements in much greater detail than appears to have been done so far to determine whether this measure could simplify the benefits system. (Paragraph 354)

40.  The Minister advised us that the Government had considered and rejected time-limited benefits. During our visit to the USA we were told there had been very little research on the impact of time limits on claimants, including those who did not obtain employment, but that some research is due to be published later this year. We welcome the Government's rejection of time limits but consider it prudent that it reviews the expected research on the US experience. (Paragraph 369)

41.  We were impressed with the Electronic Benefit Transfer (EBT) Card that we saw in California and we would urge the Government to consider what lessons can be learned from this system for the UK. (Paragraph 371)

42.  We recommend that DWP and the Benefit Simplification Unit examines in detail measures which have been taken to simplify benefits in other countries. In particular, we recommend that the Government considers trends in Australia and New Zealand, particularly if and when they make any decisions on more fundamental reform of the benefits system. (Paragraph 378)

43.  Throughout this inquiry we have heard evidence of substantial dysfunctional complexity in the UK benefits system. Reports by the National Audit Office, Public Accounts Committee and the Department, as well as the contributions we received, all alluded to this. Incremental change, alignments of rules and improving the service for claimants certainly have a role to play in addressing these problems but there is still a long way to go. (Paragraph 379)

44.  Our concern is that the current DWP approach addresses only the tip of the iceberg, looking at new policies but not necessarily the existing structure, examining parts of the system in isolation. Without a wholesale review of all benefits, and tax credits, their interactions and idiosyncrasies, meaningful simplification will never be achieved. We do not believe that the Benefit Simplification Unit can do this in its current form. (Paragraph 380)

45.  We recommended earlier in this report that a high-level group should be established in the short-term to make suggestions for simplification. We also believe that the Government should establish a Welfare Commission, similar in format and remit to the Pensions Commission, which can take a holistic view, model alternative systems, and come up with a considered blueprint for a way forward. A benefits system which DWP staff, claimants and welfare rights advisers have a hope of understanding is in everyone's best interests. (Paragraph 381)

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