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One of the points raised in the report concerns the equation between means-testing and complexity. It is an important point, to which we shall doubtless return during the debate. We discussed it earlier today in the context of the statement on pensions. Even given the Government’s planned pension reforms, the Pensions Policy Institute forecasts that in 2050, 45 per cent. of pensioners will still be receiving a certain amount of means-tested benefit in retirement. That is an area in which the issue of means-testing and complexity is critically important.

The report also gives examples of circumstances in which people must undergo multiple different assessments in order to secure multiple different benefits. That too could be rationalised. It was interesting to hear the sensible proposals of the Minister for Pensions Reform today. He spoke of linking pension credit applications with applications for other benefits, including housing benefit, by means of a single telephone call. If such improvements can be achieved in that relatively small but important section of the claimant population, surely they can be achieved throughout the benefits system.

Complexity obviously gives rise to issues related to data sharing and the way in which data are transferred, highlighted recently by the loss of data and concern about data security. During the passage of the Bill that became the Welfare Reform Act 2007, considerable new information-sharing powers were agreed between the DWP and local authorities with a view to both providing better anti-fraud measures—which is important—and allowing, potentially, a more joined-up system for processing claims. All such practices carry risks related to data sharing, and the Minister may wish to say something to reassure claimants about the Department’s data-sharing practices. A raft of questions on the subject that I tabled a couple of weeks ago still have not been answered. I look forward to receiving, in due course, a bit more information about the way in which those systems currently work.

The report also refers to complexity at the point of receipt of benefits, and to the electronic benefit payment system that is used in California. I believe the Committee visited California.

Mr. Rooney: Briefly.

Danny Alexander: Such trips are beyond the purview of the Scottish Affairs Committee, on which I serve, but it seems to have been a very useful visit. In their response to the report, the Government describe the Post Office card account as having been modelled on the Californian system. It would be interesting to hear from the Minister what stage has been reached in the process of awarding a new contract for the Post Office card account, which has been going on for some time.

The degree of complexity in the system clearly has the potential to cause worrying and damaging consequences, which are highlighted in the report. The first involves benefit take-up. I believe that there is considerable evidence that it is partly because of that complexity, the confusion that arises from it, and a sense that the system is highly intrusive, that many older people who are entitled to pension credit do not claim their entitlement. Last week the National Society for the Prevention of
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Cruelty to Children warned that, as well as worries about information sharing and the security of data, a sense of being at the margins—particularly among the most vulnerable claimants—might affect decisions on whether to claim benefits.

The hon. Member for Bradford, North dealt effectively with issues of fraud and error. There is clearly a relationship between complexity and fraud, and the detection of fraud, but it is important to bear in mind that what is described as fraud often starts as a straightforward misunderstanding caused by the complexity of the system, which can build up over time.

It is interesting to note that although the fraud figures have been falling, which is welcome, the figures for official error have not; in fact, they have been going up. One wonders to what degree that is a consequence of either the complexity of the system or the fact that there are significant ongoing staff reductions and changes within the administration of benefits which then cause official errors to increase. If we have a system where fraud has been cracked down on but official errors are increasing, there is an element of taking with one hand and giving away with the other.

The Government must ensure that there are proper systems in place, particularly as in the end it is claimants who suffer from official errors, especially when they result in benefits not being paid or benefit payments being delayed. I have certainly noticed an increase in such cases in my constituency; they might involve the time taken to pay benefits, paperwork getting lost, or the centralisation of benefit claims in large call centres causing problems in terms not only of getting through, but of information being recorded accurately and processed in a timely way. All those problems are, at least in part, consequences of the complexity of the system, which needs to be ironed out.

The report also highlights the important area of work incentives. Particularly in relation to high marginal deduction rates, work incentives can suffer as a result of a highly complex benefit system, especially one that is so hard to understand. It is now almost always the case that someone would be better off in work—we might talk about that further—but many people do not understand that they would be better off in work because the system is so fiendishly complicated. Reference has also been made to the impact that this entire process has on staff—on staff morale and staff understanding of the system. That is an important point, and the Minister must address it.

The report addresses in particular the question of the better-off calculation. It is almost impossible for any ordinary mortal to calculate for themselves, starting from whatever their circumstances happen to be, whether they would be better off in work. The Government have recently proposed that everyone who goes into work will be at least £25 better off—a better-off guarantee, so to speak. However, I was worried to note that that guarantee does not, as I understand it, take into account the impact on passported benefits, such as free school meals and prescription charges. Although the Government might well be able to make that guarantee in terms of the basics of benefits and tax credits, account must also be taken of the wider impact that that extra income will have in other areas of people’s lives. Travel costs must also be taken into account. I noticed that the Government statement referred to the concept of reasonable travel
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costs, but there might be quite a difference between what are considered reasonable travel costs by a constituent of mine in the highlands and by someone using the bus system in a big city—or by people in other rural parts of the country. A great deal more needs to be done in understanding what truly is a reasonable travel cost. That must be done, if that better-off issue is to be properly addressed.

My next point is that a complex benefits system leaves many claimants confused and having difficulty in understanding how the amount of money they receive is calculated—how those calculations are arrived at, and why they might or might not be entitled to different benefits at different times. That is made worse by the often lengthy form-filling processes people have to go through. Recently, a constituent came to my office asking for help in filling in the housing benefit application form, which was a lengthy document with an even lengthier set of explanatory notes. I think I was just about able to help, but it is an extremely complex and difficult process. Such processes can often lead to frustration, as information that is recorded on a form might be entered—perhaps inaccurately—into a computer system, and there is the “computer says no” phenomenon, in which people get a letter saying, “Your benefit application has been refused” and they then need to go through a lengthy process to put things right.

The Select Committee report also addressed the important question of costs, particularly in terms of telephone systems. It rightly identified the use of 0845 and 0870 numbers for helplines and in call centres. They are proliferating in the benefits system now that face-to-face contact appears to be a thing of the past in the Department for Work and Pensions. Those costs are enormous. Although the assumption is often made that people have a landline, so the rates are relatively cheap, the social fund’s evidence is that up to half of the calls it receives are made from a mobile phone. Depending on the network operator, when someone calls an 0845 number, or even an 0800 one, from a mobile phone it can cost up to 40p a minute. They might end up being on the phone for anything from 10 to 50 minutes, depending on the helpline that they are calling and the reason for doing so. That soon adds up to a substantial sum that people are being asked to pay simply to get what most would say is their entitlement under the welfare system, which is supposed to be available to all.

Rob Marris: I entirely agree with the hon. Gentleman. Does he agree that paragraph 15 of the Government’s response, on the 0845 numbers, is rather a weak response and that it is based on a misunderstanding? I understand that calls to 0845 numbers cost four or five times the cost of a regular landline call, so a local call on the regular landline might be 1p a minute whereas an 0845 call might be 5p a minute. We all know how long people may have to wait on the phone, and these interviews can be lengthy. Is he also aware that last December Lord Warner, who was then a Minister in the Department of Health, put out a circular specifically discouraging general practitioners’ surgeries from using 0845 numbers? These numbers are another proliferation of back-door charging, but they are particularly distressing in respect of the Department for Work and Pensions, which deals with some of the most vulnerable and poorest people in our society.

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Danny Alexander: I could not agree more. The hon. Gentleman rightly points out that these calls are more expensive even from a landline, and they can be massively expensive from a mobile phone. The Government often respond by saying that they do not obtain any financial benefit from these numbers, but that is not the point, because our constituents pay that money. It does not matter who the money is going to. We are talking about people who might be seeking to claim benefits amounting to £40 or £50 a week, so if they spend 50 minutes on their mobile phone calling a helpline that charges 40p a minute, I believe that that adds up to £20—the hon. Gentleman is better at maths than I am—and a significant chunk of the money that they hope to claim.

The Government need to do two things. They must make 0800 numbers standard throughout from landlines, and they must work with mobile phone operators to get the costs as close to nil as makes no difference.

Rob Marris: Or 03 numbers.

Danny Alexander: Or 03 numbers, as the hon. Gentleman says. It is a consequence of a situation that I described earlier that these systems appear to be set up in the interests of the system and not in the interests of the claimant. It is crucial in the development and simplification of the benefits system that the claimant’s interests come first. This could be a quick win for the Minister, because the sort of instruction that was issued to GPs could equally be issued across the DWP, and I am sure that new phone systems could be put in place so that people calling the social fund helpline before Christmas do not have to pay huge sums. I hope that she will explain what she will do to make that happen. This situation is a consequence of what my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) and I have described as the faceless state. The DWP is at the forefront of an increasingly faceless and bureaucratic system, where the system’s interests are put far ahead of the claimant’s.

I have been asked what can be done to promote the simplification of the benefits system. The first and crucial point, which the Committee makes in its report, is the need for drive and vision at a high level behind this process. The report is striking, and the language that it uses is strong for a Select Committee report. I did not mean to scare the hon. Member for Bradford, North, who is its Chair, but it came across powerfully to me that the Committee’s analysis was that there is not a great deal of drive or vision at a high level behind the benefits simplification process.

Even in the hon. Gentleman’s attempt at the close of his remarks to be kind to the Government in this area, he damned them with faint praise. He mentioned one or two small-scale improvements, but the report makes it clear that that drive at the high level does not exist, that the benefit simplification unit is simply not able, on its own, to deliver and develop this agenda, and that without the high-level commitment this agenda will not progress as it should. That is particularly the case in respect of another point on which I strongly echo the Committee; there is a need for a joined-up approach between the DWP and Her Majesty’s Revenue and Customs, and between the benefits system and the tax credits system. The tax credits system is part of the
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benefits system and should be seen as such, and there needs to be a much more joined-up approach.

We have talked about the idea that the DWP should be responsible for tax credits as well. The programmes are trying to do the same thing. The Chairman frowns; perhaps he thinks that the DWP is not up to it. It certainly seems clear from its performance that HMRC is not up to it, which prompts the question of who would be up to it under this Government. That question may be outwith the scope of this debate.

One area that could provide that joined-upness is the Social Security Advisory Committee. I am deeply disappointed that the Treasury is still unwilling to give it the same remit on tax credits as it has on the benefits system.

The “tell us once” initiative and the shared application process is another area where simplification could proceed. Today’s announcement for pensioners was an example of what can—and should more often—be done.

Another area that causes people to suffer is benefit assessments. A constituent of mine was being assessed for incapacity benefit, industrial injuries disablement benefit and disability living allowance. Those three medical assessments took place in the same centre with the same doctor, each separated by a week. Over a three-week period, that person had to go back and forwards three times. I went to the centre to ask for an explanation, and I was told that the problem was that the benefits were handled in different areas. The systems did not talk to each other and they could approach the claimant only once they received the message that he needed an assessment. The idea that someone should have three separate assessments for three separate benefits in the same place three weeks in a row is absurd. In relation to disability benefits at least, the Government should consider developing a core assessment, so that it can be shared between the different systems to try to make the process easier.

The Committee rightly refers to the idea of a single working-age benefit and sets out a model for that in annex A of the report. The Institute for Public Policy Research has also made recommendations along those lines and my party adopted it as a policy objective at our recent conference. David Freud’s important report refers to it as a key aspiration. The Chairman of the Committee is right to highlight the complexity of making a change on that scale and the associated difficulties, but the idea has important advantages in principle and in practice. There would be a clearer difference between a benefit designed to replace lost income and those benefits that are there to meet the extra costs that people may have, for example, through disability. Eligibility for those extra cost benefits would not depend on whether someone was out of work, as incapacity benefit does, or employment and support allowance will.

Miss Anne Begg (Aberdeen, South) (Lab): On pensions policy, I know that the Liberals want a universal citizen’s pension. Would they also like to see the end of the contributory principle when it comes to welfare payments?

Danny Alexander: The contributory principle is important, and it was addressed in the report, which makes it clear that there are real difficulties, not least in terms of people’s understanding of the benefits system.
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We have not proposed the abolition of the contributory principle across the board, but the Committee’s report makes interesting reading for anyone who might want to further that agenda. The contributory principle certainly has implications for the complexity of the system and thus for people’s understanding of it, so the hon. Lady makes an interesting and important point.

The single working-age benefit would also have advantages in terms of incentives to work. As identified in the report, drive, vision and leadership are needed to set that high-level objective and make progress towards it over time, in the way in which the Government of New Zealand have done. I had the chance to discuss that with some of the officials in the department working on the issue in that country, and they recognised the complexity of the transition, including grandfathering existing claimants and so on. Nevertheless, it would be a clear objective. I think that is the right direction for our benefits system.

Rob Marris: Does the hon. Gentleman agree that the next logical step might be to have a guaranteed minimum annual income, depending on an individual’s circumstances?

Danny Alexander: That is not my party’s policy, but I noted with interest what the Committee proposed in its report. The suggestion in Government’s response had many of the characteristics of a minimum income, and it is certainly worth further debate. The objective is the right one, and the main questions are to do with implementation.

The simplification of benefits is crucial for the system’s future, especially given that millions of people rely on the money that they claim to stay out of poverty. I therefore hope that the Minister will take careful note of what the report says, and of the points made in this debate. The simplification agenda needs a good kick from someone at ministerial level to replace the lack of vision and drive that the Committee has rightly—and sadly—identified.

5.41 pm

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): It is a great pleasure for me, as a member of the Work and Pensions Committee, to contribute to this important debate, and to follow on from what our Chair said earlier. He outlined in detail the Committee’s recommendations, and set the historical context for the simplification of benefits payments. The system has been growing in complexity over 30 years, not just the past two or three, and it is about time that we looked at the wider picture.

I shall begin by running through some of the problems identified by the Committee. We noted that people frequently encounter problems with computer-generated letters and with long waiting times at the end of a telephone, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) reported. In addition, difficulties are caused by contact centre staff who follow their scripts in a rigid way that means that they do not respond flexibly to those who ring them up. Problems also arise out of the complex interaction between benefits and tax credits, and people find it hard to acquire and understand the “better-off” calculations. In addition, the legacy benefits system to which my hon. Friend the Member for Bradford, North (Mr. Rooney) referred is both costly and complex.

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