Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 180 - 199)

MONDAY 21 MAY 2007


  Q180  John Penrose: It is not that it is wrong, it is that it is not being claimed?

  Ms Lunn: Yes; we do not normally know if it is wrong.

  Mr Fothergill: I have sort of known about the Ferret better-off calculator system since the early 1990s, and it was not being used then but it was quite difficult to use then, they had not worked out all the nuances to make it a better piece of software. Certainly it is there, it is a well-recognised, or it should be well-recognised, piece of software to assess someone's benefit claim; but I think, as I said earlier, it takes a long time to go through really complex claims and they are the ones that people really want to know about. When they have got a whole raft of different benefits, they are really interested to find out exactly how that is going to translate into work, but Personal Advisers really do not have the time to do that. We have got our front-line service delivery, our Transitional Spaces project, we have coaches there; they have used the Ferret software because they are co-located in the Jobcentre Plus office. Okay, the person who is using it is quite an expert in welfare benefits, but she said she found it quite easy to use, although it does take some time.

  Q181  John Penrose: It is not that it misses out the fact that you lose your eligibility for free eye care, or whatever it may be, it gets all that correct providing you spend the time on it, is what you are saying?

  Mr Fothergill: As long as the input is fine.

  Ms Howard: The system is as good as the person administrating it, so if you have got a skilled person who knows the right questions to ask and who is very thorough about it I think it can be very useful; it is how it is done, and also the honesty of the person being asked the questions.

  Q182  John Penrose: We discovered at Stratford as well you could do an awful lot with automatic data population because an awful lot of the data is already known about in other systems, which would cut down the time. Just to summarise what the three of you are saying, are you saying that actually if it is done properly it is broadly correct?

  Mr Fothergill: Yes.

  Ms Howard: That is certainly my understanding.

  Q183  John Penrose: There is no systematic problem with the better-off calculator, providing it is done properly?

  Mr Fothergill: No. It is time and data input, I think.

  Q184  John Penrose: One of the things which has been surprising me in our session so far is that when we talk about tax rates and we talk about marginal tax rates people talk very strongly about disincentives to work, and anything over 40% people starting saying, "Oh, well, you know, higher earners will leave the country," or whatever it is. Yet when we talk about benefits withdrawal rates we are talking blithely and glibly about 65, 70, 80% rates of withdrawal, and yet we seem to be assuming that if a better-off calculator says "Well, if you're ten quid a week better off then you'll automatically want to go into work," but if that is actually a 90% or 70% withdrawal rate of benefit then I just wonder if you have got any evidence, any facts, about at what stage that rate of withdrawal starts to affect people's `back- to-work' decisions. Do they look at it in terms of percentage withdrawal rates, or do they just say "It's got to be above a certain pound value better off per week before I'm going to go back into work"? Where does the threshold start to bite?

  Ms Lunn: I think there is so much else going on, about getting up at a certain time of the day, all the other things that go with working full-time, so you have got to be earning quite a significant amount more than those benefits I think for people to start feeling it is something they want to do. I think that is what we find; it is about building that confidence, to see all the other things you get from it, like mixing with people, being able to progress, learn new skills, I think you have got to get that through to people. We have introduced a programme which is very much about working within the industry so that they can get that experience, so that they can start to feel confident with people. It is like we said before, if you have got third generation unemployment and people have not been used to working in those environments, it takes time. Money is important, but it is all the other things as well.

  Q185  John Penrose: We are talking about the benefits system, for the moment, at least. Assuming that you have done this great sales job and they are mentally and emotionally prepared and wanting to work, and then you do the better-off calculation, at what stage do they go, "Well, that's all great, but actually it's just financially not worth my while; I'd love to, but ... "? When does that start to happen?

  Ms Howard: It varies from person to person. I would not like to generalise.

  Mr Fothergill: It does. In that report I was talking about earlier there was anecdotal evidence to say, "I'm not going to get up for five days a week just to work for an extra £10 on top of my benefit." I know it is about benefits, but certain places do not support people in work either, so people living in not so good hostels that have not been through the Hostels Capital Improvement Programme do not seem to want to do that either, and that is quite understandable because it is not the right environment. There is quite a lot of anecdotal evidence about, to say "I'm not going to work for that."

  Q186  John Penrose: I guess what I am asking is, is there any quantified evidence about is it a minimum amount per week, or is it a minimum percentage increase in what they were getting before; what is the mental trigger? I guess it may vary by different types of claim as well?

  Mr Fothergill: I think, as Abigail said, it is very much down to the individual circumstances, and whether someone is actually supported through that period as well and does know the reality of how better or worse off they are going to be in that situation.

  Q187  John Penrose: I understand, Michael, you were saying earlier on, if someone has got a withdrawal rate of 65% they are not going to want to go into work, that we should try to improve that taper rate, I think was one of the comments you made. The policy-makers' response to that is going to be, "Well, how much of an improvement would it take and how much is that going to cost?" That means we have got to have some sort of quantification about, well, if it goes down from 65% to 55%, how many more people are going to feel like it is worthwhile going back into work and how much is that going to cost the taxpayer; and I am struggling to find some sort of quantification for that?

  Mr Fothergill: That is quite a complicated area which actually I do not think has particularly been hit upon yet. My current job is developing the Right Deal for Homeless People, which is a New Deal which was always mooted years ago, but is actually an holistic service for homeless people, and part of that would be a costed model to say, if all of these things happen which need to happen, including this whole benefit issue around Working Tax Credits and the Housing Benefit taper, then this is how cost-neutral that will be to the Treasury. There will be a report coming out at the end of this year, but I do not know of any other ones.

  Q188  John Penrose: I do not think we have had any other information about this, but it strikes me we are all making assumptions here about what the change in the benefits taper will be, and actually no-one has yet come up with any concrete evidence for us. I am afraid, you have got more anecdotal back-up to the fact it is important but you have not got concrete stuff either. We have already talked about the interaction between benefits and tax credits and I think mentally you are considering them as part of the same issue, you have to take them as an overall, integrated system if you are going to assess the impact on the decision to go back to work and to remain in work. What is the opportunity for simplification then or for aligning those incentives better if you have two different Cabinet ministers responsible for each bit?

  Mr Fothergill: It is quite interesting to look at that, because obviously in the days when there were the Benefits Agency and the Employment Service, which have now been integrated into Jobcentre Plus, and you would think that would work better because they are both working to the same government department, but there is some kind of a point between benefits provision and job provision where job basically, at the moment, is king, really, and is about getting people into work. I think, and certainly from my own experience, that X benefit staff feel like the second-class citizens; in fact, the `plus' in Jobcentre. It does not work. When you have had two separate organisations administering two separate things, you have got these two areas of expertise and they do not join, and then you would have people sitting on the front line, in Jobcentre Plus, who historically have been about jobs, expected to give benefits advice. Obviously, with the cuts, the Gershon Review and the cuts in staff, there is a whole raft of issues there as well about not having enough people actually to do the job in the first instance. Certainly, as far as separating out government organisations, as far as the Inland Revenue is concerned, we have got a real, big issue at OSW about this. As part of that into-work calculator, I am trying to push the whole raft of trying to upskill front-line HMRC workers, because historically these are not the type of people they have been dealing with, and I challenge whether actually they have the skills to deal with them, and that is a big issue in itself, not actually understanding the complexities of people who are in this situation.

  Ms Lunn: I think I said already earlier actually, I cannot quite understand why it has to be like that. It would make much more sense to have it under one department.

  Ms Howard: Certainly I think that is how clients perceive it, as part of one system. I do not know much about the interaction between the two, but certainly I think it would make more sense to have a system that was a streamlined, integrated system, as opposed to two separate entities.

  Q189  Chairman: From each of you, is it the case that, the clients that you are dealing with, they look to yourselves for benefit advice, they do not expect to get it anywhere else?

  Ms Lunn: I think that the first point is, whoever they are working with. As you saw, with the Team programme, it is the issues that they suddenly face and so they go to the person they are working with, and, as you saw, our Team Leaders spend so long working with Jobcentre Plus staff, trying to sort out the issues. They would not go to the Jobcentre often, they would be looking for someone else to work with them on the issues.

  Ms Howard: I think many of our clients would have expected to get it at Jobcentre Plus but did not do so necessarily, and then, when they come to us, we start to work with them, so expectations may be a different thing. Certainly where they get the advice is either from us or we would signpost them to Citizen's Advice or to another agency which might have more expertise than we have.

  Mr Fothergill: Certainly that is the place where people should be going to get advice because that is exactly what they are paid to give. As I said before, it is quite a transient population within Jobcentre Plus and lots of people move in and out of the jobs, and the skills base, I am not saying everywhere, there are some very, very good people out there, that is for sure, but there are also some people who really do not know the complexities of it, and why should they when they have been in the job for only six months or so. The people we deal with, who are very vulnerable, do build up trust with people and sometimes that takes a very, very long time, and that is the person they will deal with, and they are quite scared of officialdom. If you go into Jobcentre Plus and the first thing someone is going to say to you is "Go and use a warm `phone and speak to someone" wherever the centres are, in Cardiff, or wherever they are, is not the issue for them. It gets worse because, certainly the call centre in Pembroke Dock, in Cardiff, Jobcentre Plus did not have the staff to man it, so they were making people redundant who actually worked in this building. The vast percentage of the staff who ended up manning the `phones were people who had never worked for DWP or Jobcentre Plus and were giving out benefit advice from a script, and had absolutely no idea what they were talking about and could not go away from the script if someone had different needs from your Joe Bloggs customer. It was just horrendous, in the first instance, and I do not know how much better it is now. Our customers do not find it the most welcoming place really and they do need advocates and people to act on their behalf.

  Ms Lunn: As I said before, probably it is the time that they need, which often they do not have.

  Ms Howard: I think trust as well is an important one. I think a lot of clients see the remit of Jobcentre Plus being partly to get them off benefits, so sometimes there is a bit of a trust issue.

  Q190  Chairman: Is the issue the training of individual advisers, or better-off calculators, or whoever it is, or is it a communications problem within DWP generally? I am quite amazed at how many times we have to point out to our local Jobcentre that IB is now 104 weeks, it is not 52. If a basic thing like that is not getting communicated, obviously there is a problem somewhere, is there not? Is it more a communication problem or is it a training problem, or is it a combination?

  Ms Howard: I think it is a combination of the two. We work across several different areas and we see a lot of inconsistency from region to region in how certain rules are implemented or certain processes are implemented. Also I think skills is a big issue. They need to have a lot of expertise and time in a job to build up that experience and understanding; so I think definitely it is a combination of the two.

  Mr Fothergill: I agree.

  Q191  Chairman: We are talking here about new claimants; if a new claimant thinks they have been either badly advised or just let down, they are not then going to have any confidence in things like the better-off calculation, are they, so that is going to make your job even more difficult, getting people back into work, is it not?

  Mr Fothergill: I think that is why there is that need for the way we deal with this into-work calculator, because it is too complicated for people to use, it is just too lengthy to use really for Personal Advisers. Also I think, as an outside organisation, you have to buy it, which organisations are not willing to do, because there are other calculators out there which are quite simple but do not actually cover into-work, they are more about Housing Benefit. St Mungo's have got one on their website but it covers only a very, very small area of personal circumstances. The trust and faith with people who have these multiple needs is being lost; also, historically, Jobcentres and Jobcentre staff, as was, never had to deal with people who were on Incapacity Benefit. Obviously, with the introduction of the Employment and Support Allowance, this is going to get more interesting for Jobcentre Plus staff, because they are going to have a raft of people with a whole raft of problems which they have never had to cope with before because they were working with work-ready people.

  Ms Howard: There is certainly a lot of anxiety amongst clients and I think the worse your experience is the more anxiety you have and the more reluctant you are to think about employment.

  Q192  Chairman: Abigail, the Wise Group is a DWP contractor; does Wise Group see it as a core function of its staff that they are experienced benefit advisers?

  Ms Howard: It is not a core function of their role but certainly they need to have a good understanding of the benefits system to help their clients. I think we see their key role as being supportive of people, in whatever way they need to be supported to get a job.

  Q193  Chairman: Does every one of your staff have to be given that level of benefits knowledge or do you designate two or three people, or whatever?

  Ms Howard: Actually I do not know. I think there are a few members of staff in each project who probably have that knowledge but not every single member of staff has that level of knowledge and expertise.

  Q194  Chairman: Each of your organisations essentially is about getting people in very difficult circumstances back into work. Could we not cut through all this complexity if we had, say, just a three-month roll-on of the existing benefits and you kept your wages as well? Would that not help get over a lot of this; or are you just preparing the way of the problem?

  Ms Lunn: In some ways, I think that is back to what we have talked about, but it is giving that period of time where you build the confidence and the trust in the people being able to work, so I think it would make it better, if you did that.

  Mr Fothergill: I think the roll-on is important but not a block grant roll-on which remains at the same amount for a considerable number of years. A short period of time, or a tapered period of time, where gradually it rises up to reality, because you cannot just give someone that and say, "Okay, go into work but we'll still carry on paying 90% of your rent," or "your rent in full," because it is going to give them a completely false sense of reality. Then if that stops suddenly, as with Working Tax Credit, you just do not know where you are and you cannot afford to carry on working. There have to be roles and responsibilities on both sides.

  Q195  Chairman: If we stick just with Housing Benefit, one of the issues is the disparity of the administrative competence of different Housing Benefit authorities. If you are looking to live in an area where they process a new claim within four weeks probably you can cope with that; if it is one of those that is taking 26 weeks, and particularly if you have got children, are you really going to risk the roof over your head on a wing and a prayer that the Housing Benefit will be sorted, probably you are not. On this general thing of, particularly, Mike, what you were saying about the second year, the in-work credit that some groups of claimants get for the first year, does that just compound this problem of the second year or actually does it help to bridge that first-year gap?

  Mr Fothergill: Obviously we are talking about a particular client group who do not necessarily have the opportunities to progress quickly in work. If someone is going into work in the first year and they have got quite a high rate of Working Tax Credit but then did progress and the next year they got a reasonable pay rise which actually would counteract that, and would carry on doing so, then they would progress through work. As far as our customers are concerned, the vast percentage of them are not necessarily going to progress in year two or year three, they are still going to be on National Minimum Wage, but, as I say, the Working Tax Credit disappears completely, so it is not going to help anybody really. I do not know what the answer to that is, whether you actually give the person a chance and say, "Oh, go for it in year one and see what happens." Realistically, actually to enable that person to progress in work, they need all of this in-work support as well and some kind of progression tool to enable them to move up the ladder, and not just kind of dump them into work and say, "Right, that's it, you've got a job; it's sorted," because certainly it is not.

  Ms Howard: Part of that is being given skills in financial management and beginning to plan ahead for that happening, and I think that is an area on which a lot of work could be done.

  Q196  Chairman: You may not have noticed but DWP have introduced some simplification measures. What is your experience of them; are they good, bad, you probably will say they are not far enough, but have they been useful, the ones that have been made?

  Ms Howard: To be honest, I spoke to people in my work and no-one knew about it. I have read about it and I know some of the suggestions they have made seem very sensible, but I do not think we have really noticed an effect on a day to day basis, as yet.

  Ms Lunn: The same for us; we have not seen a lot.

  Mr Fothergill: I think actually it is quite interesting, because I `Googled' the Benefits Simplification Unit quite a few times today and, apart from debates in the House, I did not really get much at all, and the debates in the House were all about the Employment and Support Allowance, which is a whole raft of interesting issues in itself. There is also a notion that there is one working-age benefit and taking away age restrictions. For the life of me, ever since I worked in that Department, I never understood why someone actually needed less money at 24 than they do at 25, which is bizarre, and why they need to pay less rent at 24 than they do at 25. As far as simplification with the Employment and Support Allowance coming in, it seems quite an interesting approach; my worry is about the whole conditionality and sanctions element of the ESA and the holding rate and the higher rate which, okay, is going to be slightly above the current Incapacity Benefit rate, allegedly, but what hoops do people have to jump through to get up to that higher rate. Also there is a sliding scale between the holding rate and the higher rate, so, to me, it is sounding like, okay, it is one benefit coming in but then there are all these complexities throughout where you have to satisfy certain conditions for work-related activity. How all of that works, I do not know, it seems to be going in one direction and then thinking, "Well, actually, we're going to move away from that because of all the conditionality issues." I have a real worry about people with mental health concerns being asked to engage in work activities, which I think is only right and good, but people not really understanding the multiple complexes of people with mental health issues and actually treating them in the right way and putting them into a situation that they cannot possibly sustain.

  Q197  Chairman: If I can throw just a couple at you, which I hope you have got experience of; first of all, the massive change to linking rules for people on IB, it used to be eight weeks, now it is 104. That has got to be a good simplification, I would have thought. Similarly, the changes, limited though they are, to permitted working?

  Mr Fothergill: ESA(?) is good, IB is good, yes, both of those.

  Ms Howard: I do think it makes a massive difference, once people know about it.

  Q198  Chairman: Mike, can I just check something. It is alright if you are thinking about 24 and 25 year olds; similarly, at the other end, is there any reason why people over retirement age should get more? Be very careful.

  Mr Fothergill: I will. David Freud talked about getting rid of the term `pensioner' and getting rid of retirement pension but paying something else in some other way, which is interesting; so that is already out in the public arena. The working age is obviously changing and increasing, and the whole thing about limiting people working when they are 65 obviously we are moving away from as people get older. To answer your question whether or not people at the age of 65 should get more money or not, I do not know; that would open a whole new can of worms really, would it not?

  Q199  Chairman: I will not hold you to it. As organisations yourselves, do you see it as inevitable that you will become some sort of shield between the individual and the system, or do you think it is just a consequence of the way things are?

  Ms Lunn: I suppose, as we work, we would see ourselves trying to add value so that we can support some of the best work we have done as well, we do have people based in Jobcentre Plus, for example, and they can work alongside. I think it is critical that anyone working for Jobcentre Plus sees the value of what organisations like we all are can offer to help in their work. I think, probably as you saw on your visit last week, often it is seen as competition, or people are not really sure of what you are doing and do not see it as helping people get work, and I think they need really to understand what value the voluntary sector can bring.

  Mr Fothergill: I think there needs to be a whole mindset change about how the VCS and Government work together. Certainly both DWP and the VCS have specific skills to deal with different types of people, and I think the expertise should be used in the best way and funded in the best way, and funded flexibly in the best way. It is not all about just job outcomes, it is about soft outcomes and measuring people's progression to work and I think we could work mutually much better together. I think part of the Freud recommendation about hand-over period and JCP dealing with year one and VCS dealing with years two to four, or whatever period that may be, could work and be mutually supportive and people could learn from each other. There is also cross-skilling that needs to be done as well, because people need to know the constraints that there are in Jobcentre Plus and they have very rigid targets and a very short time in which to achieve them, and that is what it is all about. I feel very, very sorry for people working in that regime but also they have to realise that clients with multiple needs need a much longer term to work with, a much more flexible approach and much more flexible funding which will actually support that.

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