Memorandum submitted by DWP
1. This memorandum is submitted by the Department
for Work and Pensions (DWP). It covers the following:
The current benefits system
Complexity in the system
What the department is doing about
2. The Department is aware that the benefits
system is complex. It has been designed to address the needs of
its customers, who live a variety of different and complex lives.
It is inescapable that benefits designed to meet such a variety
of needs should reflect that diversity. Often the pressures on
the Department are to make the system more complex in order to
cater for special cases, perceived injustices, European Union
requirements and court decisions. However, the Department has
a responsibility to avoid adding unnecessary detail which risks
needless cost as well as causing confusion and error.
3. The Department is determined to do more
to simplify the current system. The National Audit Office report
on benefit complexity in November 2005 acknowledged that the Department
had started specifically to design new benefits to reduce complexity,
as well as removing anomalies, simplifying the information it
requires its customers to provide, and using technology to provide
better services for its customers.
4. In December 2005 the Department established
a dedicated Benefit Simplification Unit specifically to encourage
a greater focus on reducing the complexity of the benefit system
and a better perception of what the system feels like to its customers.
One of its first tasks was to produce a Benefit Simplification
Guide which has, for the first time, brought together best practice
in a succinct and accessible way. At the same time arrangements
were put in place to ensure that simplification was specifically
addressed in all submissions to Ministers on benefit issues.
5. Simplification is now receiving greater
prominence in all DWP policy and delivery decisions and the Department
is devoting more resource and attention to this issue than for
6. Real results are now coming through,
most recently in the 2006 Pre Budget Report and in the very major
set of simplification changes announced in this year's Budget.
In addition the Department is implementing a new business strategy
which will transform the way it delivers services to its customers.
7. We are now seeing real and tangible progress
in simplifying both the benefit rules and delivery mechanisms.
But we know that more needs to be done in the medium and long
term. The recent Freud Report "Reducing Dependency, Increasing
Opportunity" commissioned by the Secretary of State recommends
a wide debate on the scope for a single system of benefits for
people of working age. The Department will play a full part in
promoting that debate, whilst, in parallel, it continues to look
energetically for further opportunities to simplify the existing
1. THE CURRENT
1.1 The current benefits system has been
around in some form since the early 20th century but the current
structure has grown out of the 1942 Beveridge Report. The Report
was designed to counter the five giants of illness, ignorance,
disease, squalor, and want. It considered the whole question of
social insurance, arguing that want could be abolished by a system
of social security organised for the individual by the state.
Beveridge recommended the establishment of a National Health Service,
National Insurance and Assistance, family allowances, and stressed
the importance of full-employment. His measures were adopted and
formed the basis of the British post-war Welfare State. Family
allowances were enacted in 1945, and National Insurance and the
National Health Service in 1946; full employment became government
policy. Together, these developments created the welfare state,
a system of social security guaranteeing a minimum level of health
and social services and for the first time a national system of
benefits which was meant to provide "social security"
from the "cradle to the grave".
1.2 The system introduced in the 1940s was
in many ways much simpler than today's benefits system. For example
there were fewer benefits and fewer ratesNational Insurance
sickness and unemployment benefits and retirement and widows pensions
were all paid at the same rate although there continued to be
a discretionary national assistance scheme which provided a means-tested
safety net. Since then there has been a steady increase in the
range of benefits and a growth of different rates for different
groups of people and categories of need.
1.3 Benefits today generally fall into three
basic classes. They are:
Contributory benefits are paid in
return for the National Insurance contributions a person pays
whilst in work. They include State Pension, Incapacity Benefit,
contribution-based Jobseeker's Allowance and Bereavement Benefits
(on the deceased spouse's contributions). Contributory benefits
are not means-tested but criteria relating to the particular contingency
must be satisfied (eg unemployment). In addition sufficient contributions
must have been paid into the National Insurance Fund prior to
Non-contributory benefits are not
dependent on certain income levels, but on a person's circumstances,
such as having care or mobility needs arising from a disability
or caring responsibilities. Examples are Disability Living Allowance,
Attendance Allowance and Carer's Allowance. Applicants for such
benefits must provide evidence that they meet the eligibility
conditions. In the case of the former, this may require a medical
assessment. Other benefits are provided as an entitlement to people
meeting simple eligibility standards. Examples are Child Benefit,
paid to anyone with responsibility for a child, and the Winter
Fuel Payment, paid to people aged 60 or over resident in Britain.
Means tested benefits are only paid
if a person's income and capital, such as savings, and family
assets, are below a stated level. Means-tested benefits include
State Pension Credit, Income Support, Income-based Jobseeker's
Allowance and Housing Benefit. Applicants for such benefits must
provide evidence that their circumstances meet the eligibility
Annex A gives details of the major benefits,
work programmes and other forms of support.
1.4 Spending on DWP benefits is forecast
to be £119 billion in 2006-07. Including disability benefits,
two thirds of DWP benefit expenditure in 2006-07 will go to pensioners,
compared with only half in 1996-97. Benefits paid to unemployed
people amount to less than 3% of DWP spending. DWP benefits accounted
for 9.1% of GDP and 21.6% of total government expenditure in 2006-07.
1.5 The Department and its agencies deliver
benefits and other services to some 28 million people via 110,000
staff. The main agencies which deliver benefits are:
people of working age to find work and receive any benefits they
may be entitled to, as well as offering a dedicated service to
employers to fill their vacancies quickly and successfully. Every
working day, Jobcentre Plus pays more than £90 million in
working age benefits, receives 23,650 jobs, conducts 43,000 work-focused
interviews and helps 6,700 people into jobs (including over 400
lone parents and over 200 people with a Health Condition or Disability).
The Pension Service is responsible
for delivering benefits, entitlements and other services to over
12 million pensioners in Great Britain and abroad. These include
State Pension Credit, State Pension and Winter Fuel Payments.
It also provides State Pension forecasts to people of working
age. The agency is organised around two main access channels (telephone
and face-to-face). Telephone, post and e-mail customer contacts
are delivered through our nationwide network of 20 Pension Centres.
Face-to-face services are delivered through Local Service staff
who are organised within a nationwide network of "clusters",
with each cluster being broadly aligned to local authority boundaries.
Disability and Carers Service
serves more than 4 million severely disabled people and carers
with annual expenditure in excess of £13 billion. The Service
delivers Disability Living Allowance and Attendance Allowance,
which are designed to help meet the extra costs in relation to
care or mobility that a disabled person has to meet as a consequence
of their disability; and Carers Allowance which can make a contribution
to the financial needs of people who are caring for a disabled
person for 35 hours a week or more.
1.6 DWP agencies work alongside local authorities
who administer Housing Benefit and Council Tax Benefit and HM
Revenue and Customs who administer Child Benefit and Child Tax
Credit and Working Tax Credit. In many cases DWP agencies are
paying benefits to people who are also customers of local authorities
2.1 A large part of the benefits system
has become complex over the years in order to meet policy aims
and to safeguard it against abuse. Much of the complexity is there
as a deliberate consequence of the principles and objectives behind
the benefits. This is mostly as a result of successive governments
who have sought to develop rule based systems that have favoured
2.2 Design characteristics can make the
system more complex eg means tested benefits, verification and
supporting evidence. Contributory and non-contributory principles
tend to add to complexity. Minor changes to the system happen
frequently and for varied reasons: sometimes due to changes in
Ministerial priorities and sometimes as the result of court decisions.
Complexity may arise if resources are to be accurately directed
to those most in need.
2.3 The Department's customers live multifaceted
lives and over time the system has been designed to address a
large range of needs and circumstances. There are tailored schemes
for, among others, lone parents, pensioners, sick and disabled
people, carers, bereaved people, new mothers and the unemployed,
and arrangements are in place to help people pay their rent and
council tax. Moreover, the Department must ensure that the benefits
system provides the most effective support for helping people
into work while protecting those in greatest need. As a result
a considerable number of small and large scale changes have been
introduced over successive years which have interacted and overlapped
with existing provisions to cause complexity.
2.4 In addition transitional protection
is often used to protect existing customers where the Government
introduces new rules. This ensures that losers are not created
as a result of changes that involved a reduction in benefit entitlement.
Transitional protection avoids losers but increases complexity
because it preserves the old rules alongside the new.
2.5 A report "Dealing with the Complexity
of the Benefits System" was published by the National Audit
Office on 18 November 2005. The report argues that an appropriate
degree of complexity exists where there is a balance between the
system being detailed enough to meet the needs of a wide range
of different individuals in various circumstances, yet straightforward
enough to run efficiently.
2.6 Announcing the publication of the report
the Comptroller and Auditor General Sir John Bourn said:
"The complexity of the benefits system is
one of the most important issues affecting the performance of
the Department for Work and Pensions. There is a balance to be
struck between a system which is detailed enough to respond to
needs and yet straightforward enough to be run efficiently, communicating
clearly with customers and minimising error. This balance has
not yet been reached. It is not for me to direct specific changes
but I recommend that the Department builds on current work to
tackle the problem both in the short and long term."
2.7 The National Audit Office report set
out a number of key principles for a simplification strategy:
specifically designing new benefits
to reduce complexity;
systematically removing anomalies;
simplifying processes including customer
using technology to protect customers
from complexity; and
making the most of external scrutiny
3. WHY DOES
3.1 The NAO report highlighted specific
areas where complexity caused the most consequences. These were:
Incorrect or inconsistent decisions:
errors may occur because staff and customers do not understand
the benefit rules and what is required of them. As a result staff
may assess the benefit entitlement incorrectly or fail to follow
complex processes properly. Customers may not understand what
information they need to provide.
Complex regulations and delivery
structures make fraud easier to conceal and more difficult to
The customer may be put off claiming
because they find it difficult to navigate their way around the
Confusion about how their benefit
award is calculated can lead to increased numbers of customers
appealing against decisions.
More re-work required to recover
overpayments, deal with customer contacts generated by delays
and misunderstandings, and manage the appeals process.
The degree of customer support required,
illustrated for example, by the numbers of people seeking assistance
on benefit issues from advisory bodies.
Problems caused by the complexity
of the present benefits system and its interaction with work and
3.2 In this context simplifying the system
has clear rewards for customers and for staff. There are also
financial advantages to simplification in improved efficiency,
reductions in customer and staff error, fewer complaints and fewer
Implications for work incentives
3.3 The Government believes that work is
the best route out of poverty, and is committed to making work
pay. Through the Working Tax Credit (WTC) and the National Minimum
Wage, the Government has increased the minimum income that people
can expect on moving into work, thereby improving financial incentives
to work and tackling poverty among working people.
3.4 Simplification of the benefits system
has an important role to play in two main respects:
(a) Lack of transparency can make it harder
for people to realise that they would be better off in work. There
is no unemployment trap for the vast majority of working age benefit
claimants because, assuming work of at least 16 hours a week,
their out of work benefits would be exceeded by minimum earnings
plus in-work benefit and tax credits. However, many people persist
in believing that they will not be better off in work and recent
research into Housing Benefit suggests that that poor understanding
and lack of awareness of the available in-work support is a factor.
(a) Administrative complexity at the point
of transition between work and benefits can make people afraid
to leave benefits.
4. WHAT IS
DWP Benefit Simplification Unit
4.1 When giving evidence on the National
Audit Office report, DWP's Permanent Secretary, Leigh Lewis, told
the Public Accounts Committee in December 2005 that he was determined
to reduce complexity and error in the benefits system. He announced
that he was setting up a small Benefit Simplification Unit to
act as a catalyst in driving forward simplification across the
benefits system; to challenge existing complexity; and to ensure
that the benefits system operates in ways that customers and staff
4.2 As a first step the Unit produced
a Simplification Guide to Best Practice for the Department's staff,
which was published in May 2006. The guide is intended to be used
by staff developing new policies and operational procedures and
is available on the Department's Internet site. The Unit consulted
with staff and the Social Security Advisory Committee in developing
the guide and the Committee also agreed to a requirement that
all Explanatory Memoranda submitted to it should include an assessment
of the impact of the proposed measures on the complexity of the
benefits system and its operation.
4.3 The Simplification Guide included a
new requirement that all submissions and scoping papers that recommend
policy or operational changes to benefits, other than pensions,
must be referred to the Unit before they are submitted to Ministers.
Staff are required to include a specific section in all submissions
detailing the impact of the change on benefit complexity and,
if the proposal will lead to increased complexity, a clear explanation
as to why this particular option is being recommended. Where the
Unit believes that the explanation provides insufficient justification
its view will be recorded. In addition all DWP projects must now
show in their Strategic Outline Business Cases how they have maximised
the opportunity for simplification.
4.4 During the Benefit Simplification Unit's
first year in operation the Department made a number of other
changes which have further reduced complexity. These include improvements
to the Social Fund scheme; increasing the savings limit for budgeting
loan applicants; aligning the treatment of charitable/voluntary/personal
injury income across benefits; abolishing the requirement to down
rate some benefits after 52 weeks in hospital; consolidating over
200 statutory instruments introduced since the start of the Housing
Benefit scheme in 1988 making it easier for customers and staff
to understand the benefit rules; and aligning the capital limits
across the working age benefits.
4.5 In December 2006, the Pre-Budget report
announced both the removal of Adult Dependency Increases in Carer's
Allowance for new claims from 2010, thus increasing consistency
in the system by aligning with the planned treatment of such increases
within other benefits, and an extension of Job Grant arrangements
to Jobseeker customers under the age of 25 years, who were previously
excluded, thus equalising the terms of the Job Grant for all working
age benefit recipients over 18.
4.6 The Benefit Simplification Unit has
recently agreed with the Treasury a number of simplifications
to the benefit rules as part of the Department's 2007 Budget settlement.
Ignoring compensation payments in
the final pay packet: when implemented this measure will ignore
all final earnings on new claims to benefit including holiday
pay and pay in lieu of notice. Around 1.7 million enquiries to
employers each year will no longer be needed.
Paying all Jobcentre Plus working
age benefits a minimum of two weekly in arrears on a common pay
day assigned to each individual based on the last two digits of
their National Insurance number. This will remove the current
mix of different pay periods and the confusion caused when customers
change from one benefit to another.
Removing the double dating provisions
for Disability Living Allowance and Attendance Allowance claims
by introducing a simpler method for dealing with backdated claims.
Aligning the treatment of income
from sub-tenants across the benefits system by introducing a flat
rate £20 disregard to mirror the disregard in State Pension
Credit and pension age Housing Benefit and Council Tax Benefit.
4.7 The Department has given a commitment
to investigate whether it is possible to produce a measure of
benefit complexity. The Unit has been working to establish if
a benefit complexity index can be developed that could be used
over a period of time to assess progress towards benefit simplification.
Initial findings show there it would be difficult for any single
metric to give a clear measure of complexity. Work is now proceeding
to establish whether a suitable collection of data from different
sources could provide a reliable measure.
4.8 A secondee from Citizens Advice joined
the Unit in June 2006 for nine months to look at what could make
the benefit system simpler from a customer perspective. Her work
built on her experience within Citizens Advice of customer's problems,
discussions with representatives of voluntary organisations at
a national and local level and meetings with DWP staff responsible
for benefit strategy and delivery. Her findings suggest that for
most customers the overall simplicity of the system is as important
as the simplicity of individual benefits; that customers need
simpler and more effective ways of obtaining information about
their entitlement. Her work will feed into the Department's new
4.9 Alongside the Unit the Department set
up an Official Error Reduction Task Force in January 2006 comprising
membership at senior level from across DWP, with the specific
aim of reducing official error in the payment of Income Support,
Jobseekers Allowance, State Pension Credit and Disability Living
Allowance. In 2005-06 the Department paid more than £116
billion in social security benefit payments to our customers,
the vast majority of which was paid out accurately and on time.
4.10 The Task Force has analysed internal
official error data and identified the "top 10" official
errors in Income Support, Jobseekers Allowance, State Pension
Credit and Disability Living Allowance which together constitute
around 60% of official error loss in these benefits. It has introduced
a package of improvement initiatives targeted at reducing these
errors. They include:
the creation of dedicated action
teams in Jobcentre Plus to clear backlogs and deal with complex
cases where error is more likely to occur;
a programme of case-load cleansing
in The Pension Service;
the introduction by the Disability
and Carers Service of an enhanced checking regime to prevent error
entering the system; and
a number of IT system enhancements
to help reduce official error further.
4.11 The Benefit Simplification Unit and
the Official Error Reduction Task Force jointly published its
end of year report on 24 January 2007. On the same day, the Department
also published a comprehensive and ambitious strategy for reducing
official and customer errorGetting welfare right: Tackling
error in the benefits system. The strategy focuses on:
preventing error from getting into
the system from the outset, correcting the error that is already
contained within it, and improving compliance with processes,
so that our staff and customers can ensure claims remain correct
once they are in the system;
ensuring that the benefit system
is informed by an increasing understanding of how the system works
for the Department's customers, their advocates, other service
users and the staff who administer benefits; and
taking steps to reduce complexity
in the current benefits system (both regulatory and operational).
DWP Simplification Plan
4.12 The Department works closely with the
Cabinet Office Better Regulation Executive in seeking to reduce
burdens on business and others, including individual citizens.
The Department published its first Simplification Plan in common
with other Whitehall departments on 11 December 2006. The plan
sets out the Department's strategy to reduce the burdens imposed
by its regulation. It is part of a rolling programme of simplification
to identify regulations that could be simplified, repealed, reformed
or consolidated and includes proposals for reduction of administrative
4.13 The plan sets out 40 proposals to simplify
and clarify the stock of regulation, many of which have been delivered,
and plans to reduce administrative burdens on business by 25%
(£118 million) by 2010. The plan also sets out a number of
reviews which the Department is taking forward to meet or exceed
this target. The Department identified £53 million worth
of administrative burdens on business which have been delivered.
4.14 The DWP Better Regulation Stakeholder
Group, chaired by Minister of State for Pensions Reform, engages
directly on the administrative burdens reductions exercise and
the simplification plan, providing scrutiny, challenge and validation.
The group includes representatives from employers' organisations,
large and small businesses, trade unions, the third sector, local
government, the Pensions Regulator and the Pension Protection
4.15 The Department is working with its
stakeholders on a number of reviews to identify where policy savings
and administrative burdens reductions might be made. The policy
reviews currently underway are:
Private Pensions Deregulatory Review
This externally-led review is examining
the regulation of private pensions, drawing on proposals from
stakeholders taking account of the balance between protecting
members and encouraging employer provision of pensions and having
regard to legal and other constraints. The review will report
to Ministers with recommendations by spring 2007.
Private Pensions Institutional Review
The purpose of this externally-led
review is to examine how the functions of the Pension Protection
Fund and the Pensions Regulator and other institutions involved
in the regulation and protection of work-based pensions, including
the Financial Services Authority, fit with the Government's existing
pension policies, its pension reform proposals and wider developments
in the pensions market. It also extends to those organisations
involved in provision of advice, mediation, dispute resolution
or compensation for pensions.
The aim of the Review is to encourage
debate and build consensus on the most appropriate way to organise
institutional responsibilities to deliver Government pension policies
in the future. It will report to Ministers with recommendations
by spring 2007.
The Department has established a
Statutory Sick Pay review working group of external and government
stakeholders to review the Statutory Sick Pay scheme. The group
is undertaking a thorough examination of the existing provision
for short-term sick pay for employees, and will provide ministers
with a preliminary report in spring 2007, and with agreed final
recommendations on the future of Statutory Sick Pay by mid 2007.
4.16 The administrative burdens reviews
currently underway are:
Employers' Liability Compulsory Insurance (ELCI)
By September 2007 the Department
will identify with stakeholders ways to reduce the administrative
burdens arising out of the requirement to store and display ELCI
Statutory Sick Pay/Statutory Maternity Pay (SSP/SMP)
The Department, with its stakeholders,
is looking at the administrative burdens on employers created
by SSP/SMP legislation. These burdens have been identified mainly
as those regulations requiring employers to record and retain
information about payment of SSP/SMP to their employees.
Private Pensions reviews;
disclosure of information;
occupational pensions scheme administration
trustee returns and reports; and
4.17 The Department will publish an updated
Plan in late 2007 that will show simplification that has been
delivered and simplification proposals newly identified in 2007.
Simplification for our customers
4.18 The Department is now paying around
98% of its customers by Direct Payment, a considerable simplification
over order books. Direct Payment increases choice, reduces fraud
and assures a safe, convenient, more modern and efficient way
of paying benefits. It also reduces waste in social security administrative
costs; every penny spent on administering benefits is one less
penny that could be spent on other priorities.
4.19 The results of independent research
commissioned by DWP show that there are very high levels of satisfaction
amongst customers who have transferred to Direct Payment. 91%
of customers stated that they were satisfied with the process
of making the arrangements to receive their benefit by Direct
Payment and 93% stated they were happy to receive their benefits
in this way.
4.20 Over the last few years a number of
improvements to claim forms have been made across the Department.
The State Pension Credit form has been reduced to 13 pages and,
since 24 July 2006, customers have been able to apply for State
Pension and State Pension Credit at the same time over the telephone
without the need to sign any form. For straightforward applications,
customers are given their provisional State Pension and Pension
Credit entitlement at the end of the call. The Department has
also made it easier for people claiming State Pension Credit to
claim Housing Benefit and Council Tax Benefit by shortening the
claim form from 26 pages to three pages; avoiding the need to
ask customers again for information already provided for the Pension
4.21 All Disability and Carer Service leaflets
were reviewed in 2006 and have received the Crystal Mark accreditation
from the Plain English Campaign. A new Disability Living Allowance
Adult claim pack was developed in conjunction with disabled customer
groups. This simplifies the claim pack and provides customers
with better guidance on completion. A better Reasons For Decision
letter will provide customers with clearer reasons as to why a
decision has been reached. This will be tested in May 2007. A
shorter Carer's Allowance Claim Form for State Pension customers
has been available from 11 December 2006.
4.22 Following a study by the National Audit
Office in 2005-06 the Department's Communications Directorate
has commissioned a full review of all the Department's information
products with the aim of reducing the number that are published
and making sure that the content and format of the new leaflets
are accessible to all customers. The review has already started
to rationalise the product set and simplify the content and language
used in them. The new suite of leaflets will be published between
April and July 2007 and will be pitched at the national average
reading age, have Plain English accreditation and be tested with
customers from the relevant section of society before being made
generally available to the rest of our customers. These new products
will cover the benefits and services offered by the Department
as well as specific life events such as bereavement, becoming
a carer, becoming a pensioner and losing your job. These life
event leaflets will make it simpler for customers to navigate
the Department by signposting them to the relevant parts of the
Department that deal with the benefits and services associated
with those life events as well as directing them, where appropriate,
to other Government Departments and independent sources of information
4.23 Improvements have also been made for
customers of other benefits. The revised Attendance Allowance
claim form, introduced nationally from October 2003, has been
halved in size from 37 pages to 23 and Rapid Reclaim procedures
have been introduced for people returning to Housing Benefit,
Council Tax Benefit, Income Support, Jobseeker's Allowance and
Incapacity Benefit within 12 weeks of the previous claim which
require customers to complete a much shortened claim form.
The executive agencies and customers
The Pension Service
4.24 The Pensions Transformation Programme
has fundamentally changed the claims process for State Pension
and State Pension Credit. Applications for State Pension and State
Pension Credit are much quicker and more straightforward, and
as they can be made over the telephone, there is no need to sign
a form; and for straightforward applications, customers are given
their provisional State Pension and State Pension Credit entitlement
at the end of the call.
4.25 In addition, The Pension Service now
has an integrated claims process for State Pension Credit, State
Pension and Housing and Council Tax Benefit. This means that potentially
customers have access to "four benefits in one phone call".
When a customer applies for State Pension Credit, where they have
a rent or council tax liability, they are invited to claim Housing
and Council Tax Benefit. Local Authorities use The Pension Service's
assessment of income and capital to calculate entitlement for
those customers in receipt of Savings Credit. This reduces the
amount of information that the customer has to provide to the
local authority. The Customer Advisor completes a three page form
on the telephone, and then sends it to the customer to check,
sign and return to their local authority in a pre-addressed envelope.
4.26 This process commenced in July 2006
and customers are now encouraged to apply by phone, if they can.
The average time for a State Pension claim is 17 minutes and for
a State Pension Credit/Housing Benefit and Council Tax Benefit
claim it is 20 minutes. Where all four benefits are claimed (State
Pension, State Pension Credit, Housing Benefit and Council Tax
Benefit) the combined length for the call would be reduced as
there is no need to repeat information.
4.27 From Spring 2007 The Pension Service
plans to introduce an additional question in the State Pension
Credit application process to identify relevant caring responsibilities
in order to invite, where appropriate, the customer to claim Carer's
Allowance using a new shortened claim pack specifically for people
over pension age. The new shortened Carer's Allowance claim pack
is 10 pages long with 51 questions compared to the old 28 page
form with 197 questions.
4.28 To increase take-up amongst eligible
non-recipients The Pension Service has written to every pensioner
household to tell them about State Pension Credit. The direct
mail initiative "You're Missing Out" was targeted
at around 1.5 million customers. From 12 February of this year
The Pension Service has also targeted friends and family of eligible
non-recipients to raise awareness amongst them of the benefits
and services to which the customer is entitled. Pension Credit's
appeal has been broadened by focusing much more on pensioners'
needs as a whole, and wording invitations to apply in the context
of other pensioner entitlements rather than State Pension Credit
alone. For example Local Service are offering a holistic "benefit
entitlement check" under the Take a fresh look at your local
Pension Service campaign, and have found that this helps to overcome
State Pension Credit specific resistance and maximises the amounts
of benefit paid to customers from a single intervention.
4.29 Local Service teams are scheduled to
undertake over one million home visits to vulnerable pensioners
this year, offering full benefit entitlement checks. The teams
have been given increased autonomy and flexibility to target local
take-up activity based on local knowledge and community needs.
This allows for a more responsive local service that reflects
the diverse needs of the community. Local service has developed
good relationships with partners in ethnic minority communities
and has undertaken benefit awareness sessions, presentations and
regular Information Point appointments at a wide variety of locations
including community and day centres for ethnic communities.
4.30 Local Service is also working with
Local Authorities and voluntary organisations to create "Alternative
Offices" (for example in community centres and other local
locations). There are currently in excess of 430 designated live
Alternative Office sites. These offices are able to:
receive claims from people aged 60
or over for State Pension Credit and other benefits, or people
aged under 60 for benefits administered by the Disability and
collect and verify information and
supporting evidence in respect of those claims; and
record the date a claim form (or
where appropriate, an intention to claim or request for a claim
form) is received at an Alternative Office.
4.31 Since 2005 The Pension Service has
worked with the energy company EAGA to identify new State Pension
Credit customers who could also qualify for a Warm Front Grant
for home insulation. The Pension Service is working across government
with the Department of Trade and Industry and the energy industry
to support a new industry funded Energy Advice Line aimed at attacking
4.32 Launched in April 2002, Jobcentre Plus
brought together the Employment Service and parts of the Benefits
Agency that delivered services to working age people. Its aim
is to help more people into work and more employers fill their
vacancies, and to provide people of working age with the help
and support to which they are entitled.
4.33 Every working day, Jobcentre Plus:
helps around 6,700 customers find
receives over 23,650 jobs from employers;
conducts 43,000 adviser interviews;
processes over 15,000 new benefit
prosecutes 40 people for benefit
takes around 78,000 calls every weekday
to our contact centres;
receives over 298,000 visitors to
our website; and
receives over 915,000 job searches
on our website.
Centralisation of Benefit Delivery
4.34 The Department is investing over £80
million in a new benefit processing infrastructure, which involves
reducing the number of sites, creating better work environments
and enhancing people's skills through the use of new technology
like the telephone system. Centralisation of benefit processing
allows Jobcentre Plus to build centres of expertise which will
enable it to improve standards of customer service, develop greater
expertise in meeting customers' needs and move work around the
country to meet changes in local demand, so reducing delays for
customers. In addition fewer, larger, benefit delivery centres
and Jobcentres are better able to provide the assistance that
people need to find work.
4.35 In September 2004 benefit processing
took place in approximately 650 sites. Since then the number of
sites processing claims has reduced steadily as part of the rationalisation
of our overall business and estate. By March 2008, benefit processing
activities will have been centralised into 77 sites. The latest
position is that over half the Benefit Delivery Centres will have
gone-live by the end of April 2007.
4.36 Jobcentre Plus business processes have
been simplified with a single 0800 number to claim Jobseeker's
Allowance, Incapacity Benefit or Income Support. Customers will
be able to make their benefit claim in a single telephone call
rather than in two calls previously.
4.37 Jobcentre Plus is contributing to the
DWP Customer Information Leaflet Review which will simplify the
type of information about benefits and services provided to customers,
and significantly reduce the volume of leaflets. Site navigation
on the website www.jobcentreplus.gov.uk, which receives over 2
million visits weekly, is being simplified and information aligned
more closely to the printed leaflets, with improved signposting
to delivery channels by simplifying telephone directory information
and an easy-to-use postcode search facility on our website.
Disability and Carers Service
4.38 Disability and Carers Service has a
strategic business objective to improve the experience of its
customers and stakeholders. A significant percentage of its customers
come through the voluntary sector and they are almost all customers
of other DWP agencies. It is therefore important in designing
future services to ensure that current services are as customer
focused as possible. To ensure the design of the outward aspects
of its service so they meet the needs of customers Disability
and Carers Service have set up the Disability and Carers Advisory
Forum. It comprises representatives from national voluntary organisations.
This arrangement has allowed Disability and Carers Service to
involve customers and their representatives from the outset in
developing change initiatives in the business and provides a forum
for them to identify areas where services might be improved.
4.39 Disability and Carers Service has set
up a number of sub-groups of the Forum to look at specific aspects
of its service. The Family Carers Group provides Disability and
Carers Service with a means of engaging organisations that represent
the needs of children, young people and their families.
4.40 Disability and Carers Service continues
to meet all of its benefit targets; there is a greater consistency
in decision making, fewer cases are going to appeal and fewer
are being overturned. It is investing in its staff through the
Professionalism in Decision Making and Appeals programme. This
programme of learning and development for decision makers is enhancing
skills with the result being accreditation for decision makers
by an external academic body. This is a trailblazing project within
Government and is attracting interest across Whitehall.
4.41 The Disability and Carers Service Helpline
compares with the best across both public and private sectors
in terms of quality of service. The Helpline has been re-accredited
by the Contact Centre Association for the second year running
and the Benefit Enquiry Line has now also been accredited. On
28 November 2006 the DCS Helpline won the Cabinet Secretary Award
for Outstanding Performance at the Whitehall and World Civil Service
Awards, in competition with over 600 nominations across 28 government
4.42 The Service continues to receive positive
feedback from customers, with 83% satisfied with the service they
receive with fewer people feeling dissatisfiedin the last
survey those who "expressed dissatisfaction" with the
service reduced by 6%.
4.43 The Fairer for Carers project has helped
improve the experience of pension age customers in gaining their
rightful entitlement to State Pension Credit Carers Premium. This
also led to the "Are You Being Served?" project, which
is helping integrate customer service with The Pension Service.
These are both good examples of joint working driven by the needs
of shared customers.
External stakeholders have acknowledged that
the Customer Case Management pilots have improved the claim form
and medical guidance as well as increasing contact with customers.
We are now looking to roll-out all but the IT elements to all
units. Our staffing ratios have also changed to help support frontline
delivery and our staff are recognising this shift towards customer
4.44 DWP, Department of Health and the Disability
and Carers Service have been working with Macmillan cancer support
to identify ways to develop better ways to signpost disability
and other benefits. The process will be woven into the "information
prescription" proposals for England that Department of Health
are developing with DWP involvement. The information prescription
will signpost people to sources of information on their condition
and to treatment and services at points along their care pathway,
including at the point of diagnosis.
Housing Benefit and Council Tax Benefit
4.45 The Department has made a number of
useful simplifications for customers and local authorities in
the making and processing of claims for Housing Benefit and Council
As outlined above, it is now easier
for people claiming State Pension Credit to claim Housing Benefit
and Council Tax Benefit by shortening the claim form from 26 pages
to three pages. Most of the information needed for Housing Benefit
and Council Tax Benefit is taken from the State Pension Credit
claim. It is filled in by The Pension Serviceand since
December 2005 all completed over the telephone.
The need for people to re-claim Housing
Benefit every year, regardless of whether their circumstances
had changed, has been abolished. Before, Housing Benefit could
generally be awarded only for a maximum of 60 weeks, and had to
be reclaimed each time.
From April 2004 the need for the
vast majority of people moving into work to complete a fresh claim
has been removed. Instead, it is treated as a change of circumstances.
At the same time the rule in Council Tax Benefit which restricted
people in property in bands F, G and H to band E has been abolished.
From October 2003 people who have
reached the qualifying age for State Pension Credit (60) can have
their Housing Benefit and Council Tax Benefit backdated for a
year, or back to the date they reached 60, if that is less than
a year, without having to demonstrate good cause.
From April 2004 the Housing Benefit
and Council Tax Benefit run-on for people starting work has been
widened. This used to be for people getting Income Support and
Jobseekers Allowance (income-based) and the run-on has been extended
to people in receipt of Incapacity Benefit and Severe Disablement
Allowance. Broadly, the run-on means that people who qualify get
their "out of work" Housing Benefit and Council Tax
Benefit for the first four weeks in a new job.
From April 2006 the rules for the
date from which a change of circumstances applies have been simplified.
4.46 A new allowance, Local Housing Allowance,
is currently being tested in 18 local authorities. National roll
out is planned for April 2008 depending on the progress of the
Welfare Reform Bill. The allowance applies to the deregulated
private rented sector only and is a flat rate allowance based
on household size and location rather than the rent charged. It
removes the need for each case to be referred to the rent officer
before a decision on entitlement can be made and in doing so makes
the system simpler and helps speed up the administration of housing
Joint Working Between DWP and HM Revenue and Customs
4.47 DWP, HMRC and North Tyneside District
Council have over recent months been developing and testing possible
service improvements in a trial in the North Tyneside Local Authority
district in the North East of England. This has focused on delivering
improvements in the client experience during the transition into
and out of work through closer working and service integration.
This is not wholly new territorythese organisations already
seek to share information as part of many core processesbut
it represents a potential step-change in the scale and impact
of that activity.
4.48 When an unemployed person in the trial
area leaves benefit to take up work, Jobcentre Plus staff will
work with them to initiate and partially populate a claim for
Tax Credit at the same time as they close the benefit claim. They
will similarly pursue possible Housing Benefit/Council Tax Benefit
claims or changes in conjunction with local authority staff. This
ensures that people are aware of, claim and much more quickly
receive in-work benefit and Tax Credit entitlements.
4.49 Conversely, when someone leaves work
and claims Jobseekers Allowance, Jobcentre Plus staff share information
as appropriate with colleagues in HMRC (so that appropriate Tax
Credits can be stopped immediately, thus avoiding overpayments
and debts) and the local authority (to initiate or amend a claim
for Housing Benefit/Council Tax Benefit).
4.50 In the initial stages the trial has
involved some co-location of staff. This has helped to break down
organisational barriers, in particular increasing levels of trust
between people working in the different organisations so that
one is prepared to take the authority of another as sufficient
evidence that information is correct. It should, however, be possible
to achieve similar results without co-location.
4.51 It is too soon for evidence to be available
on the impact of the trial on employment outcomes but the initial
impact has been very positive:
more claimants are aware of potential
claimants moving into work are having
Tax Credits processed within three days; and
people moving out of work are receiving
both JSA and Housing Benefit within around 17 days, compared to
a baseline for the latter of around 37 days.
4.52 In the medium term the Department needs
to make further improvements to both customer service and efficiency.
It is implementing a new business strategy which will transform
the way that we deliver for customers. To support the strategy
we are designing new benefits to reduce complexity: including
reforming benefits for people of pension age and replacing Incapacity
Benefit and Income Support for working age customers with a new
benefit, Employment and Support Allowance.
4.53 During 2007-08 the new business strategy
will take some important steps to:
pilot continuous improvement initiatives,
delivering major efficiencies by streamlining processes across
all business activities;
understand better what customers
want through a newly established Customer Insight team;
work more effectively across business
and government boundaries;
prepare to take on cross-Government
responsibility for DirectGov from 2008; and
develop better on-line enquiry services
for customers giving them more information across a range of entitlements.
4.54 Customer Insight is the comprehensive
understanding of customers and their needs drawn from their preferences,
behaviour, experiences and beliefs, and the application of that
understanding to the design and delivery of services to them.
4.55 The Department currently takes a product-based
view of its customers. In the future, through Customer Insight,
it aims to understand:
what customers want and need from
the Department's services;
how products and services come together
in groups for individuals;
how those individuals would or could
access those products and services and how DWP might target its
service delivery to meet customer needs in the most efficient
way possible; and
how the service to customers may
impact upon policy outcomes and, therefore, how to prioritise,
design and deliver services in order to maximise positive outcomes.
4.56 Three Pathfinders have been identified
to test out a continuous improvement approach. The three Pathfinders,
in order of implementation are:
Carers Allowance Unit in Disability
and Carers Service.
Jobcentre Plus North East, focusing
on the Jobseekers Allowance New Claims process.
Jobcentre Plus and Disability and
Carers Service focusing on Incapacity Benefit and Disability Living
The Jobseekers Allowance and Incapacity Benefit
and Disability Living Allowance Pathfinders will last up to 10
weeks and the Pathfinder phase for all three will end around mid
4.57 All three pathfinders have adopted
a Lean approach and have used some of the Lean Tools. Lean is
a management system used for years in manufacturing companies
and also more recently in service companies and Government. It
has three main components:
lean processes, which are efficient
and very customer focused;
a culture that puts customers first
and encourages everyone to work continually to improve how we
a management infrastructure that
supports the Lean culture and processes.
4.58 The findings and evaluation results
from the Pathfinders will provide DWP Change Programme with information
that is helpful in shaping how the Programme moves forward on
all aspects of full implementation of Continuous Improvement across
4.59 The Pathfinder scope is the Jobseekers
Allowance New and Repeat Claims process, from first contact to
the benefit decision. The Pathfinder is based in North East Region,
and will operate out of:
Newcastle Benefit Delivery Centreat
Cobalt House Newcastle.
Middlesbrough Contact Centre.
It will test a range of possible improvements
across a live operational area to determine what works best. The
objectives are to develop new ways of working that better serve
customers; to become more efficient; and to enable staff to contribute
to the improvement of the organisation.
4.60 Staff and managers from the North East
are working with the DWP Change Programme team to agree what works
best for Jobcentre Plus's customersa small local project
team is already in place and leading the project, with consultancy
support. Staff from across the three sites will be involved in
designing new processes, which will then be trialled across the
three sites (numbers of staff to be involved are yet to be determined).
The Pathfinder is scheduled to run for 10 weeks and will finish
by 13 April.
Incapacity Benefit and Disability Living Allowance
4.61 The scope is to examine the experience
of current Incapacity Benefit customers who go on to claim Disability
Living Allowance. Therefore, the starting point will be from first
customer contact at point of claim for Disability Living Allowance.
From this point on the pathfinder will fan out and examine their
experience throughout their entire (end to end) customer journey.
It is operating out of:
Disability and Carers Service Disability
Benefits Centre in Leeds;
Jobcentre Plus Contact Centre in
Jobcentre Plus Benefits Delivery
Centre in Wakefield; and depending on how far the scope fans;
Jobcentre Plus Jobcentre in Wakefield;
Medical Testing Centre in Leeds.
4.62 The Pathfinder is in the earliest stages.
A small core project team has been inducted using staff sourced
from the above sites (with others on standby dependent on the
direction of travel). The Pathfinder is scheduled to run for 10
weeks finishing 20 April.
Carers Allowance Pathfinder
4.63 The Pathfinder scope is to transform
the processes and methods of operation that will be used to deliver
Carers Allowance benefits in the future.
This Pathfinder is funded by the Disability
and Carers Service Change Programme. They have had consultancy
support since 18 December and DWP Change Management have been
working with the Pathfinder since the beginning of February.
4.64 The project is based in Preston over
3-4 sites that are closely located across a single office centre.
The Carers Allowance Unit employs about 900 staff, of which 800
deal with the operational process of the benefit (across all of
these sites). On 29 January they started to pilot new processes
with two teams and compare the results with two control teams.
This involves around 50 staff and it will run up to Easter, when
results will be evaluated and a more detailed implementation plan
4.65 The Pensions White Paper represents
the most ambitious pensions reform programme in 50 years and provides
a solid response to the long-term pensions challenge. The Government's
radical reforms of the pensions system are scheduled to take place
in two stages. The first Pensions Bill (currently approaching
3rd Reading stage in the Commons) primarily takes forward reform
of the state pensions system and represents a root and branch
simplification of rules on access, scope and coverage of State
Pensions. The second Pensions Bill aims to encourage more people
to make private saving by a process of auto enrolment and the
introduction of personal accounts.
4.66 This year's Pensions Bill provides
a simpler, flat-rate system that will be a foundation for individual
saving. It will:
Simplify the contribution conditions
for state pensions to increase access and coverage.
Modernise the contributory principle
so that it reflects the social and economic realities of the 21st
century and provides a fairer deal for women and carers.
Reform the State Second Pension so
that it becomes a simple, flat-rate weekly top-up to the basic
Link the basic State Pension to rises
in average earnings. The objective, subject to affordability and
the fiscal position, is to do this in 2012 but in any event at
the latest by the end of the next Parliament.
Raise the State Pension age in 2024
from 65 for both men and women in line with the growth in average
life expectancy. The State Pension age will be increased by one
year over a two-year period from 2024, and then again in 2034
and in 2044. This will signal the need for a behavioural change
towards working longer as we live longer.
4.67 Taken together, these reforms will
produce an affordable, sustainable and fair system, in which each
generation will spend a similar proportion of their lives contributing
to and receiving pensions.
4.68 Under the new system, anyone meeting
the simpler entitlement conditions will receive a full basic State
Pension worth about 20% of median earnings. Years spent working
or caring will boost this amount through the reformed State Second
Pension, so that someone working or caring for around 40 years
can expect to retire on around 30% of median earningsor
around £135 in today's earnings termsbefore any private
Introducing a Single Contribution Condition
4.69 This would mean:
Currently, an individual needs to pass two contribution
conditions to gain access to any basic State Pension. The 1st
contribution condition requires that they must have one year of
paid contributions from earnings (or paid voluntary Class 3 contributions);
and then have a further 9 (for women) or 10 (for men) years of
either contributions or credits to give them 25% of the qualifying
years currently required for a full basic State Pension (39 for
women, 44 for men).
This means a woman needs 39 qualifying years
for full basic State Pension, but to get any basic State Pension
at all she must have 10 qualifying yearsone through paid
contributions. Similarly, a man needs 44 qualifying years for
full basic State Pension, but to get any basic State Pension at
all he needs 11 qualifying yearsone of them through paid
Under the reforms both women and men reaching
pension age from 6 April 2010 will need only 30 qualifying years
for full basic State Pension, but just one qualifying year will
give entitlement to basic State Pension. Also this one qualifying
year may be achieved through paid or credited contributions and
gives 1/30th of the full rate of basic State Pension.
It is estimated that around 40,000 people could
benefit from the removal of the 1st contribution condition and
the 25% de minimis in 2010, rising to around three quarters of
a million in 2025.
Replacing Home Responsibilities Protection with Weekly
National Insurance (NI) Credits
4.70 This would mean:
Home Responsibilities Protection was introduced
in 1978 to assist people who have caring responsibilities and
are either not in paid employment or have low earnings to build
up entitlement to basic State Pension. However, women have lost
out because only full years can be recognised for state pension
purposes shorter periods do not count.
From 6 April 2010, Home Responsibilities Protection
will be replaced with a weekly NI credit which will provide entitlement
to basic State Pension and State Second Pension (and relevant
bereavement benefits). The credit will be available to parents
who are awarded Child Benefit for a dependent child under age
12, and registered foster parents. Unlike the old system, where
they were different age limits for accruing rights to basic State
Pension and State Second Pension.
The new weekly credits for relevant carers will
make the scheme fair, more transparent and significantly improve
State Pension outcomes for women. The new credit will reward parenting
equally with paid contributions.
State Second Pension
4.71 This would mean:
Current State Second Pension is extremely complex
and very few people are aware of its value. It is based on a system
of accruals bands linked to earnings pointsthere are currently
four such points. Accruals bands also change each year because
of the differential uprating of the various earnings points. It
is therefore very difficult for a contributor to work out the
amount of state second pension they are entitled to even using
the Department's guides.
Under reforms in the Pensions Bill a new flat
rate amount of £1.40 a week pension for each qualifying year
will replace the great complexity of the existing S2P flat rate
calculation. This will be introduced at the same time as we restore
uprating of the Basic State Pension with earnings:
The £1.40 will be re-valued
with earnings during a working life and with prices in retirement.
A residual earnings related scheme
for those earning above £12,500 will gradually be withdrawn
over about 20 years.
Contributors will be able to see the value of
their state pension in the future in terms that they can understand
now. The state pension will provide a reliable foundation on which
people can base their savings decisions.
Abolition and Phasing Out of Adult Dependency Increase
4.72 The state pension scheme currently
includes provision for a man or woman's State Pension to be increased
if another adult is financially dependent on him or her. These
increases are known as adult dependency increases.
In developing our proposals for pensions reform
we have reconsidered the rationale for adult dependency increases.
We have concluded that they are out of step with other measures
of pensions reform are now an outmoded element of the State Pension
Adult dependency increases will be abolished
for new claimants from 6 April 2010. But provision will be made
for existing claimants' entitlements up to this date to be protected
up to 5 April 2020.
Those for whom adult dependency increases would
otherwise have been payable and who are unable to work will be
eligible for the usual range of working-age benefits. In the minority
of cases where there is still an adult dependency increase in
payment in 2020, the individual and his or her spouse will receive
advice on other possible benefit entitlements.
Abolition and Phasing Out of Autocredits
4.73 Since April 1983, National Insurance
creditsknown as "autocredits"have been
available to men aged 60 to 64. They were introduced in 1983 as
a response to high unemployment alongside the ending of the requirement
that men aged 60 plus had to register as unemployed to qualify
for supplementary benefit. The 1993 White Paper on Equality in
State Pension proposed that autocredits should become available
to women, on the same basis as currently applies to men, as female
State Pension age was increased from 60 to 65 between 2010 and
In developing proposals for reform of the State
Pension scheme the Department has reconsidered the rationale for
these credits and have concluded that:
they are out of step with other measures
the Government is taking to encourage people to extend their working
lives to their full capacity; and
under our proposals to widen access
to basic State Pension they will become largely redundant.
Therefore the Government proposes that autocredits
should not become available to women from 2010 and should be phased
out for men in line with increasing female State Pension age up
to 2020. This means that the credits will only be available to
men for the tax year in which they reach female State Pension
age and any succeeding tax year before that in which they reach
Employment and Support Allowance
4.74 The Employment and Support regime will
be a single new benefit, bringing together the existing National
Insurance benefit (Incapacity Benefit) and Income Support for
those people with health problems or disabilities, combined with
a robust work focused support regime for those who can benefit
from work and condition management support. In this way the structure
of the Employment and Support Allowance will be similar to Jobseeker's
Allowance which brought Unemployment Benefit and Income Support
together in 1995. This approach brings all customers together
under the same system, so helping to make the system easier to
understand for customers and to smooth administration.
4.75 Employment and Support Allowance simplifies
the current system for both staff and customers:
A single claim process for both
elements. This is better for the customer: currently two benefits
need to be claimed, so this reduces the scope for someone inadvertently
missing out on any income-related benefit that they could be entitled
to. However, it will be possible to claim only the contributory
element if that is appropriate for the circumstances of the customer.
Assessment Phase: there will
be an initial period of 13 weeks during which a rate of benefit,
based on the basic level of Jobseeker's Allowance, is paid. During
this period we will avoid making judgement about the most appropriate
benefit for that individual. Adopting this transparent, simplified
and uniform approach during this initial period, ensures that
the same basic approach applies to all customers pending their
passing through the Personal Capability Assessment single gateway.
Benefit calculated on weekly basis:
Income Support and Incapacity Benefit are both calculated differently.
Income Support is a weekly benefit, whereas Incapacity Benefit
is calculated on a daily basis. Employment and Support Allowance,
like Income Support, will be a weekly allowance and entitlement
will normally be calculated over that period, thereby bringing
both strands together and treating them in the same way. This
will make allowance rules easier for customers to understand and
will simplify benefit administration, particularly where a customer
claims both contributory and income related elements. For example,
currently income is treated differently within Incapacity Benefit
and Income Support. The contributory (Incapacity Benefit) benefit
would administer a change in income on a daily basis resulting
in a part week calculation, where the change in income is attributed
only for the days in the benefit week following receipt. However,
the income related benefit would attribute the change from the
beginning of the benefit week resulting in complex calculation,
particularly on the Income Support side where Incapacity Benefit
is also in payment and therefore taken into account as an additional
income. This is not easily calculated or explained.
Date of entitlement: waiting
days currently exist within Incapacity Benefit, but not within
Income Support. Employment and Support Allowance will bring both
strands together and so waiting days will apply to both the contributory
and income-related elements. This will mean that entitlement to
both strands of Employment and Support Allowance will arise on
the same day making the system more easily understood by customers
and also a valuable administrative easement for staff.
The Personal Capability Assessment
(PCA) will be the single gateway onto the higher rate of benefits:
this approach simplifies the existing procedures by which customers
may qualify for premia and longer-term rates based on the tenure
of their claims or by passports from other benefits, such as Disability
Living Allowance. However, it should be noted that the PCA will
not affect entitlement or be the gateway to either the Severe
or Enhanced Disability Premiums within income related Employment
and Support Allowance.
Main Phase Components: only
if the PCA is satisfied will the customer move onto the higher
rate of allowance (the main phase), unlike the existing contributory
Incapacity Benefit, which increases over time, rewarding the longevity
of the clam. This simplifies the benefit rules for contributory
customers as it reduces the number of progressive increases to
the benefit, and provides clarity as to why and when changes in
income will occur.
Young peoples' main phase rate:
young peoples' rates will not be applicable in the main phase
of Employment and Support Allowance. This is a simplification
for the income related Employment and Support Allowance benefit,
as young people's rates currently apply in Income Support. As
well as a simplification in benefit procedure, it will also be
administratively less complex and will benefit the customers involved
by increasing the basic level of benefit that they receive.
Age Additions: there will
be no age additions within the Employment and Support Allowance
regime, aligning both strands of the benefit and reducing complexity
for staff and customers, making the allowance rules easier to
Adult Dependency Increases (ADIs):
There will be no ADIs within the Employment and Support Allowance
regime, thereby reducing the number of changes of circumstances
which need to be processed. This simplifies and modernises arrangements
so that dependents are taken into account only within the income-related
Changes of circumstances:
bringing together both the contributory and income related cases
into Employment and Support Allowance will reduce double handling.
Employment and Support Allowance is one benefit instead of two.
We will therefore only need to process changes of circumstances
once. This is more efficient administratively and will mean fewer
opportunities for error to creep into the process, which in turn
could affect the amount of benefit in payment. Additionally, this
will reduce the number of times that we need to contact customers
to verify evidence connected to their claim.
Transitional arrangements for
existing cases: over time, we will migrate existing cases
across to Employment and Support Allowance. Although transitional
arrangements will initially be put in place to protect the cash
levels of existing customer's benefit, in time our aim is to bring
all customers onto Employment and Support Allowance rules as far
as possible, under the same single system, in turn helping to
smooth administration and reduce complexity.
Information Technology: the
new Employment and Support Allowance regime will be less complex
than its predecessors. Bringing together the contributory and
income related rules on to a single IT system is an improvement,
as opposed to delivering benefits through two separate systems.
It will therefore be possible for the processing of Employment
and Support Allowance to include more automated IT processes,
requiring less intervention from Jobcentre Plus staff and hence
4.76 The greatest scope for simplification
would come from addressing, as part of longer term reform, the
current complex structure of the benefits system and problems
for customers arising from the interactions between different
benefits and in moving from benefits to work.
4.77 In the Green Paper A New Deal for
Welfare: Empowering people to work, the Government said that
there may be advantages in moving in the longer-term towards a
single system of benefits for all people of working age.
4.78 This idea was explored further by David
Freud who said on page 9 of his report:
"There is a strong case for moving towards
a single system of working age benefits, ideally a single benefit,
in order to better support the Government's ambition of work for
those who can and support for those who cannot. A range of international
evidence suggests that complexity in the benefit system acts as
a disincentive to entering work, and that badly designed systems
create unemployment and/or poverty traps."
4.79 Chapter 7 of the Freud report went
on to consider the principles of benefit reform and the relative
advantages and disadvantages of three broad options for a future
single system. It also looked at the scope for individualising
benefit payments to couples and at the case for more integrated
delivery of Housing Benefit and Council Tax Benefit. However,
the report did not make a firm recommendation, recognising that
none of the options was straightforward and that substantial further
work and time was required to analyse the potential impacts and
to undertake consultation and evidence gathering.
4.80 The Government intends to publish a
response to the Freud report in the summer and in the meantime
has invited comments on the various findings and recommendations.
The Government would be very interested in the Committee's views
on the chapter on benefit reform.
7 National Audit Office Press Notice 18 November 2005. Back
Reducing dependency, increasing opportunity: options for the
future of welfare to work: An independent report to the Department
for Work and Pensions by David Freud (5 March 2007). Back