Select Committee on Work and Pensions Written Evidence


Memorandum submitted by DWP

SUMMARY

  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

    —  Why it matters

    —  What the department is doing about it

  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 many years.

  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 system.

1.  THE CURRENT SYSTEM

  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 rates—National 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 the claim.

    —  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 requirements.

  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:

    —  Jobcentre Plus—helping 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 and HMRC.

2.  COMPLEXITY IN THE SYSTEM

  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 certain groups.

  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."[7]

  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 input;

    —  sharing information;

    —  using technology to protect customers from complexity; and

    —  making the most of external scrutiny mechanisms.

3.  WHY DOES COMPLEXITY MATTER?

  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 detect.

    —  The customer may be put off claiming because they find it difficult to navigate their way around the system.

    —  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 training programmes.

  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 appeals.

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 THE DEPARTMENT DOING TO SIMPLIFY THE SYSTEM?

Short Term

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 can understand.

  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. These include:

    —  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 business strategy.

  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 error—Getting 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 burdens.

  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 Fund.

  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.

    Statutory Sick Pay

    —  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 policy certificates.

    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 requirements;

    —  stakeholder pensions;

    —  trustee returns and reports; and

    —  protected rights.

  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

Direct Payment

  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.

DWP Communications

  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 Credit claim.

  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 and advice.

  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 Carers Service;

    —  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 fuel poverty.

Jobcentre Plus

  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 work;

    —  receives over 23,650 jobs from employers;

    —  conducts 43,000 adviser interviews;

    —  processes over 15,000 new benefit claims;

    —  prosecutes 40 people for benefit fraud;

    —  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 departments.

  4.42  The Service continues to receive positive feedback from customers, with 83% satisfied with the service they receive with fewer people feeling dissatisfied—in 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 service.

  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 Tax Benefit:

    —  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 Service—and 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 payments.

Joint Working Between DWP and HM Revenue and Customs (HMRC)

  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 territory—these organisations already seek to share information as part of many core processes—but 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 in-work entitlements;

    —  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.

Medium Term

  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.

Continuous Improvement

  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.

Customer Insight

  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.

Pathfinders

  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 Allowance claims.

  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 April.

  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 operate; and

    —  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 DWP.

JSA Pathfinder

  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:

    —  Northumbria District—Newcastle City Jobcentre.

    —  Newcastle Benefit Delivery Centre—at 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 customers—a 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 Pathfinder

  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 Grimsby;

    —  Jobcentre Plus Benefits Delivery Centre in Wakefield; and depending on how far the scope fans;

    —  Jobcentre Plus Jobcentre in Wakefield; and

    —  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 developed.

Pensions Reform

  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 State Pension.

    —  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 earnings—or around £135 in today's earnings terms—before any private saving.

Introducing a Single Contribution Condition

  4.69  This would mean:

    Before

    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 years—one 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 years—one of them through paid contributions

    After

    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:

    Before

    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.

    After

    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:

    Before

    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 points—there 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.

    After

    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 system.

  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 credits—known 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 2020.

  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 age 65.

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 understand.

    —  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 system.

    —  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 administrative savings.

LONG TERM

  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:[8]

    "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

8   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


 
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