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Many of us who were in the House at the time remember the absolute chaos when the disability living allowance was introduced by a wonderful Minister, Nicholas Scott. He was a super Minister for the disabled,
and was widely praised, but the administrative chaos that took place because the scheme had not been geared up properly was horrendous. People were waiting for up to two years for their initial claim to be paid. The intention was good, but the practice and operation was different.
Dr. Phyllis Starkey (Milton Keynes, South-West) (Lab): One example of a policy objective not being carried out relates to a benefit that my hon. Friend has not mentioned yet: council tax benefit. It was introduced to try to make council tax fairer. Does my hon. Friend agree with the argument made by the Select Committee on Communities and Local Government, which I chair, that it should not be considered as a benefit, but as a rebate? It should be decoupled from the thresholds and rules relating to other benefits so that it serves better its original purpose of making council tax fairer.
Mr. Rooney: I would hate to venture on to the territory of trying to make council tax fair, but my hon. Friend is absolutely right. It is a rebate because no cash ever enters an individual’s pocket. It is a credit against their council tax liability. I would have no qualms at all about changing its name to council tax rebate because that is what it is. There is no cash payment.
For reasons that are beyond me, and I defy anyone to explain it, in 1983, the system of housing support moved away from the Department of Health and Social Security into local authorities, and was called housing benefit. Again, for about two years there was absolute chaos. No end of people were evicted, and tens of thousands more were threatened with eviction, because of the inability of local authorities to gear up for that big change. At the time, my authority of Bradford—the fourth biggest authority in the country; I will just stick that in—had a small department dealing with the old rent allowance. It was informed by the Department of Social Security that it would need an extra six staff to deal with the new legislation. At its peak, it had an extra 130 staff, and it is now down to about 100. It never staffed up for that change because it was not told it would need to, and by the time it had the right number of staff, incredible backlogs had occurred.
Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): With regard to housing benefit, my hon. Friend will also be aware of the chaos caused by the introduction of the verification framework. It was introduced for perfectly good reasons: to reduce fraud and to ensure that benefit was given in the right way. Does he agree that that, too, caused huge chaos for local authorities, for individuals who should have been receiving support for their rent and for landlords, who often did not get their rent paid?
Mr. Rooney:
My hon. Friend is absolutely right. It is not my place to defend the verification process, but I shall make a case for its defence. The process threw up an incredible amount of fraud in the housing benefit system. One of my bugbears about social security legislation is that an awful lot of it is aimed at the 0.2 per cent. who wish to defraud the system, which inconveniences the 99.8 per cent. who find themselves in difficult circumstances, want a bit of help while they sort themselves out and then move on. An awful lot of
regulation could simply be deleted from the statute book. Let us not forget that such complexity impacts on customers, staff and advisers such as citizens advice bureaux and whatnot. I shall just make a little observation at this point—anyone who claims to be an expert in social security legislation is either a liar, or leads a very sad life.
Rob Marris (Wolverhampton, South-West) (Lab): Are you an expert?
Mr. Rooney: I am not an expert, but I do lead a sad life.
That cannot be good or right. Social Security Advisory Committee people tear their hair out at proposals that are always well intentioned but frequently work to the detriment of everybody.
The Department has been tremendously successful at driving down client fraud and error. However, most client fraud begins as innocent omission and failure to declare something. Suddenly, clients realise two years down the track, because they have talked to somebody else, “Oh, I should have told them that, but nobody’s noticed, so I’ll carry on.”
There are seven different earnings disregards, depending on the benefit someone receives—for example, whether someone is a lone parent or part of a couple and so on. If people are told that they can earn £20 without telling anybody, they think that that is correct. The figure is, indeed, £20 for lone parents. Strangely, it is £20 for income support, but £25 for housing benefit. The same individual could receive two different benefits, with two different levels of disregard. It is therefore easy to understand how omission starts.
However, at some point, omission translates into serious client error/fraud, which gets extremely expensive over time for the Department. It always generates overpayment, most of which, in the big cases, the Department never recovers. I have experienced cases of overpayment of £40,000 and £50,000. The individual’s financial circumstances mean that it is repaid at a rate of £5 a week. When that person dies about 30 years later, £20,000 is still owed. It is in nobody’s interest to reach that stage.
Changes of circumstance make an impact on individuals, and there is no single point of contact where people can give information and everything is done. The four major changes of circumstances are: change of address; acquiring a partner; losing a partner; getting a job, and having a child. A highly successful joint pilot between the Department, Her Majesty’s Revenue and Customs and others has taken place in Wallsend—I am sure that the Minister for Employment and Welfare Reform will comment on it later—whereby an individual tells one person about a change of circumstances and all the relevant people are notified. In this day and age, we should be able to do that for everybody. I understand that the pilot is being rolled out in other places, but the sooner it happens nationally, the better.
It is ironic that one of the difficulties is data protection legislation. With the best intentions, successive Governments have passed legislation that prevents one Department from sharing data with another. Much of that difficulty has been removed, but some of it remains. The general public think that that is stupid. To them, the Government are not a series of separate Departments but a single entity—the Government are the Government.
Mark Pritchard (The Wrekin) (Con): I am grateful to the hon. Gentleman, who is the distinguished Chairman of our Select Committee, for giving way. He is making an excellent speech and his last point strikes at the heart of many issues in the Select Committee’s report—for example, the unnecessary duplication of basic information, such as name, address and other contact details. I concur with his remarks that the system needs to be simplified to minimise error and inadvertent fraud.
Mr. Rooney: I endorse the comments of my hon. Friend from the Select Committee. He makes a useful and telling contribution.
I believe that the Department’s primary function is to receive claimants who are in distressed circumstances, minimise the period for which those circumstances apply and get those people back into work in the shortest possible time. Sadly, the complexity of the benefits system discourages some people from the latter. For example, there is a genuine problem with lone parents in London. Of especial concern are individuals in the private rented sector, with its high housing costs, and what happens when they move into work.
We have heard innumerable examples of people who prefer a low income, with the security of knowing that it is there every week, to earning a higher income in the world of work, but with the insecurity of not knowing when a new claim will be set up, because, it has to be said, lots of authorities in London are pretty poor at administering housing benefit. In many cases people accept a much lower level of income with the security of knowing that it is there. I take no offence at a lone parent with two or three young children who says, “Blow that, I’ll stick where I am—at least I know what I’ve got. I can budget for that and I can manage it.” That is an unintended consequence of the complexities in the system.
Another wonderful progressive change by the Government was to abolish the horrendous therapeutic earnings and introduce permitted working for those with disabilities. [ Interruption. ] There are a load of notes coming in from the officials—I have not said that much. The Government introduced permitted working, which was a major step forward, particularly in terms of the dignity of people with disabilities. Unfortunately, there are four sets of rules for permitted working under four different types of circumstance. If we introduced one rule and allowed everyone on incapacity benefit the highest level of earnings, of about £89 a week, the notional loss to the Exchequer would be minimal, but the ease and comfort for disabled people would be enormous. As a side point, there might also be some political kudos to be gained. Again—I have already mentioned the various earnings disregards—good intentions have been somewhat tarnished by the complexity.
We are victims of the age that we live in, and among all this, Departments such as the Department for Work and Pensions, sadly, cannot operate without IT systems—well, they could if there were about 1 million civil servants instead of 80,000 or 90,000, but I do not think that anybody wants to go to those lengths. It is fair to say that the Department has been let down by contractors—I would not put it any more strongly than that.
Mr. Rooney: Indeed. Over the years, failure or inadequacy of performance in IT systems has caused horrendous heartache and serious disruption in the Department’s ability to function. That has been a major issue in the Child Support Agency over the past few years. For many years, what was known as NIRS2—the national insurance recording system—could not tell people who were due to retire how much they were entitled to. A number of projects have also been abandoned. Interestingly, at least the contracting basis for the CSA system was changed, with the Department contracting to rent a system that worked. When the system did not work, the Department did not pay anything and since it never worked the Department never paid anything. Previously when Departments bought systems, they had to fork out for people to come and put them right when they did not work. Departments have got a bit smarter with how they deal with IT systems. The IT systems have never before worked as well as they do now—but that is not a difficult achievement, given the history.
In this day and age, some 60 per cent. of the population have performed a transaction online. That figure is increasing all the time, and it is totally erroneous to say that claimants are incapable of using the internet. They might have a financial inability to acquire it, but then we need to consider other access points. Telecommunications, the internet and online transactions are the future, and it is nonsense to say otherwise. However, that brings additional hazards and consequences, which I hope the Minister will pick up, although I will leave it at that—I am conscious of time and others want to speak.
The Department has had a number of successes. They have all been relatively small-scale, but the creation of the benefit simplification unit nevertheless indicates a change of focus. Its staff is still too small, but at least the issue is back on the agenda. I understand that announcements about significant further work on simplification will be made in the new year, which is welcome. Much of the work done by the Pension Service on pension credit has been great. A single point of contact to deal with council tax benefit, housing benefit and other matters has been established. Some of the deregulation in relation to occupational pension schemes, which was proposed by the benefit simplification unit, is good. The local housing allowance is a major simplification. Sadly—returning to the legacy issue—people move on to the new system only when their circumstances change. Two systems will therefore be running for who knows how long, but there we are.
It has escaped public notice that from next April people will not be required to produce their final wage slip when they leave work and move on to benefit. Trying to track down the final salary payment is a horrendous task for those who deal with claimants. Benefit used to be held up until that payment appeared. Whatever the cause, such as reluctant employers, it created enormous difficulty out of all proportion. I am glad that the Government have abandoned that requirement.
The Select Committee had a lot of discussion about whether complexity is inevitable in a world in which individuals have different circumstances and lives. It is
fair to say that there was some disagreement. I think that it is inevitable. There is an eternal tension between universal and means-tested, and contributory and non-contributory benefits, and in finding the right balance. Norway has a relatively uniform system, but my goodness what a cost of living it has—it is extortionate. There are always pluses and minuses.
We put forward two additional recommendations for consideration. One is the concept mentioned by Fraud—sorry, Freud; a Freudian slip—of a single working-age benefit. There is an air of utopia about that—the hon. Member for Weston-super-Mare (John Penrose) will probably say a lot about it. But there is potential, and the embryo of an idea, which might give us the simplicity that we want. There are all sorts of problems with introducing it—there will be arguments about winners and losers and so on—but it is an idea.
As to the other recommendation for consideration, we reflected on the success—first in analysis, then in presentation of solutions and then in public acceptance—of the Turner commission on pensions, and suggested that perhaps it was time for a welfare commission. Beveridge assessed what sort of society we would have post-war, and what sort of social security system we wanted for that society. There has been no real consideration of the fundamentals since 1945—it is 60-odd years since Beveridge published his report. There are serious grounds for going back to basic principles, and saying, “This is the society, labour market and mobility—or lack of it—that we have. What sort of benefit system do we need that allows that society to function but that also removes all barriers and disincentives to people to work?”
We are firmly of the view—I evangelise about this—that this country has enough people with sufficient credibility, academic rigour and intelligence to staff a commission such as the Turner commission. They could take two, three or four years—I am not bothered—but they would present for public debate and to Parliament a possible model for where we will be in 10, 15 or 20 years’ time.
I repeat: this Department affects about 25 million people and has a £120 billion budget, which represents the largest slice of Government expenditure. We are duty bound to try to simplify it as much as possible.
Mr. Eric Pickles (Brentwood and Ongar) (Con): On a point of order, Mr. Deputy Speaker. You will be aware of an important written statement made today on the reorganisation of local government within England. Further to that statement, have you had any indication from the Prime Minister whether he intends to come to the Dispatch Box to answer the serious allegation that he summoned the chairman of the boundary committee to him this week and instructed him to find a solution for Norfolk and Suffolk together? That goes against the express wish of his own Secretary of State, so we would like to know whether the Prime Minister is running the country to further the best interests of its people or on the basis of satisfying his mates.
Mr. Deputy Speaker (Sir Michael Lord): I hear what the hon. Gentleman says. I have no knowledge at all that any such statement to the House has already been organised, but the Government Front Benchers will have heard the hon. Gentleman’s remarks, which are now clearly on the record.
5.14 pm
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I congratulate the Chairman of the Select Committee first on an extremely useful, clear and well thought through report on an absolutely critical issue facing the benefit system; and secondly, on the characteristically strong and clear way in which he explained the Committee’s recommendations, providing the historical context to show how the benefits system has become so complicated. He closed with a reference to Beveridge, which is a very good place to start. If we read the original Beveridge report, we find that his objectives for the welfare system included a degree of simplicity—not complexity—in order that the principle of incentive be clearly embodied within the benefit system. That is one important issue addressed in the report’s extremely wide-ranging recommendations.
The hon. Member for Bradford, North (Mr. Rooney) asked whether complexity was an inevitable consequence of having a welfare and benefits system in the modern age. He was right to highlight the wide range of different circumstances in which people live, which the Minister will no doubt want to talk about. None the less, it is certainly possible to have a benefits system that is a great deal less complex than the current one, which has been characterised by some as the most complex welfare and benefits system in the developed world. Our system includes 51 different benefits with 250 different rates and numerous additional components—disregards, rules and so on. It is fiendishly complicated. The Chairman of the Select Committee seems to have reached an understanding of the system; it takes the amount of time and effort that he has put in to understand the full range of its complexity.
It comes through very clearly in the report that it is nigh-on impossible for a claimant even to attempt to understand the complexity of the particular part of the system with which he is trying to interact. I shall come on to that in more detail later, but one of the key points that emerged from the report was the need to put the interests of the claimant at the centre of an understanding of how the system can be simplified and reformed.
Rob Marris: I quite understand the need to put the claimant at the centre, but it is clear from the hon. Gentleman’s own argument that people live their lives in quite different ways. I was a member of the Select Committee in the last Parliament and I well remember the not very successful Doug Smith, chief executive of the Child Support Agency at the time, saying words to the effect that one of the reasons why the system was not working very well in the CSA was that it had not realised what complex lives people led. Fortunately he resigned, but that presents a real difficulty. Because of the complexity of people’s lives, if we try to make a system claimant-centred, it will either be complex or very expensive.
Danny Alexander: I do not entirely agree with the hon. Gentleman. I shall be identifying some areas, many of which the Committee’s report also identifies, in which the system can be simplified in a way that is in the interests of the claimant and does not necessarily involve the enormous costs that the hon. Gentleman seems to fear.
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