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Danny Alexander: The hon. Gentleman has made an important point. Is he aware that, taking unclaimed tax credits and unclaimed benefits together, about £10 billion was not taken up last year?
John Penrose: There are numerous different estimates of the size of the problem, but I completely agree that there is a significant problem with low take-up. The Government have admitted that too; they have put aside a reserve for improvements in take-up if that can be achieved. They also aim to deal with the problem and they appreciate that it has a financial impact.
The third and perhaps most important advantage of simplification is the potential improvement in work incentives. During this debate, we have heard about the better-off calculation. It might help if we pause to understand what that involves: a half-hour interview with a benefits expert in a benefits office. The expert has the advantage of a large and complicated piece of software to do the calculation. I am sure that everybody here will agree that that is not a work incentive. Even if the better-off calculation comes out positive, as it does in most cases nowadays, the person has to go to somebody else’s office, sit down with them for half an hour and have a complicated and intrusive conversation to work out that they would be better off. That is the very opposite of a work incentive, which has real force only if the job offer or job advertisement in the jobcentre or anywhere else makes a person think, “Aha! If I take that job, it will pay me.”
Waiting for three weeks for an appointment and going through the process that I have just described is not a work incentive in any meaningful way, although it might be arithmetically correct that the person would be better off after the calculation. Simplification and making the point abundantly clear to everybody when they make the personal decision about whether they should go for a job, rather than later on, is essential and will be a vital and significant advantage of simplification if it can be achieved.
What are the Government doing to move towards that agenda? To be fair, the Committee noticed significant signs of progress in some respects. We were particularly impressed by the Lean pathfinders, which are an attempt to produce an almost Toyota-like continuous improvement cycle by asking staff who are involved in benefits processing how to improve what they are doing, then taking their ideas, getting them into the system fast and putting them into practice. That struck all of us as a wholly admirable initiative that should be rolled out quickly. Secondly, there is “My DWP”—an attempt to solve some of the problems of multiple different application forms, with a pilot in Wallsend. That could also be tremendously valuable. Thirdly, let us not forget the efforts of the benefit simplification unit, which is small but none the less has a role to play and has had some success in preventing the problem whereby successive waves of improvements stemming from suggestions in this House add to complexity. The unit provides a valuable service in spotting which proposed improvements will add to complexity and which will reduce it. That is an essential service that has been long neglected.
The problem with all three of those Government initiatives, important as they are, is that they are essentially bottom-up. They try to create improvements in administrative efficiency and better processing in the
existing system but make no attempt to address some fundamental problems of benefit design. Four of the six causes of complexity that I mentioned relate to means-testing, changes in circumstances, having too many small benefits with too many tightly drawn eligibility rules, and the linking rules. None of the initiatives addresses the fundamental design problems that cause those difficulties. They address two of the six causes of complexity—regular amendments and initiatives and administrative inefficiency—but not the four most difficult and fundamental causes. The Government’s approach is rather like that of the man who was found in the middle of the night searching for something under a street light. When a passer-by asked him what he was doing, he said, “I’m looking for my keys.” The passer-by, trying to be helpful said, “Where did you lose them?” The man replied, “I lost them about 100 yards down the road, but there’s no street light down there so I’m looking for them over here instead.” The Government are not looking where the real problem is. They must face up to the fact that if they are to make significant progress on these fundamental design issues, they will have to try an awful lot harder and face up to some much more knotty problems than they are currently willing to address.
It would be perfectly reasonable to say, “This is hard, and we haven’t got all the answers.” Nobody has all the answers. However, the Committee’s criticism, which was echoed by the hon. Member for Inverness, Nairn, Badenoch and Strathspey, was that we do not see sufficient evidence of vision and drive in addressing the four, admittedly difficult, fundamental problems in our benefits system. I am hoping to hear from the Minister about that. In our report, we attempt to start a national debate. As the Chairman of the Committee said, a commission on benefits reform may be necessary.
The Committee’s proposal is not perfect or complete —we all admit that it has plenty of flaws—but we all signed up to it as a thought-starter: a way of getting the debate under way and trying to tickle from the Government some sort of statement about their vision in terms of creating a drive towards the kind of simplified benefits system that we describe. We are saying to the Government: “Here is a starting point for this debate. Please will you either come up with a better vision or tell why this one is wrong, so that we can at least start to create the sort of national conversation that will be needed to create the democratic consensus across the political spectrum and get this solved?” It has been done already; the Government had the courage to do it on pensions reform, and a similar sort of initiative is required in this case.
We came up with such an idea. It is in annex A to the report, and I am pleased to hear that the hon. Member for Inverness, Nairn, Badenoch and Strathspey has taken the trouble to read it. That probably makes three of us who have actually got through the thing. [ Interruption. ] Three of us outside the Committee, I should point out. We had high hopes on the Committee that the Government would use that idea as a starting point, and as a springboard. We hoped that we would see some sort of attempt to engage with it in the debate.
The idea has flaws, but there are at least two things that are seriously worthy for consideration as a thought starter, which might lead to the building of a
consensus. One is the idea that we should combine working age tax credits, jobseeker’s allowance, income support and the new employment support allowance in one overall benefit, with the condition placed on it that a person would have to be willing and able to work before it was paid to them. That may or may not be a good idea, but it is seriously simpler than what we have at the moment, and it avoids an enormous amount of the problems related to change of circumstances and to the cycle of people going in and out of work that I described before. It also avoids the problems relating to the linking rules.
We proposed a marginal deduction rate as a clawback mechanism to avoid the problems of means-testing, where anyone who went into work would have their benefit withdrawn at a particular rate to be decided by the Government. Such a system would be an awful lot faster and simpler to administer than the current tax credit system, because it would simply require the Department for Work and Pensions to inform Her Majesty’s Revenue and Customs of a single number for every person earning a wage, which would then be withdrawn through their tax code. Again, that may be a good idea or it may not, but all we wanted was a constructive and considered response from the Government. I am sad to say that that is not what we got. On page 18 of the Government’s response, they afforded the entire idea only this:
“The Committee’s model is more radical—a form of Citizens Income”—
incidentally, it is not. Then went on to say:
“As described it appears, at least at first sight, to carry a risk of both very high expenditure and reduced work incentives.”
As an attempt to start a debate, that is absolutely pathetic. I am sad to say that it is not just pathetic, but also intellectually lazy, complacent, arrogant and weak, and I believe that it shows that the Government are scared. I know that we need to do better, and I sincerely hope that the Minister will say how the Government propose to do better.
6.17 pm
Miss Anne Begg (Aberdeen, South) (Lab): I intend to speak for only a few moments because I do not want to repeat all of the points already made by other hon. Members. We all agree that the benefits system in this country is extremely complicated. We all agree that it should be simplified, and I suspect that we all agree that we are not quite sure how that might be achieved. Achieving that end will probably be a lot more complex that it first appears. The hon. Member for Weston-super-Mare (John Penrose) was perhaps slightly modest in not explaining that most of the ideas in annex A, which he has just outlined, were his own, but he is right to say that the rest of the Committee bought into them.
I have been attracted to the concept of a single working-age benefit since I joined the Select Committee on Work and Pensions in 2001. However, the longer I have looked at how it might work in practice, the more I have realised that a single working-age benefit would be much more complex than some of those who propose it lead us to believe. It is superficially attractive because it seems simple and clear, but we need to ensure that those who lead
complex lives or have complex needs continue to get the support that they do under the present system, despite its complexities and all the forms that individuals have to fill in. As a country, we need to decide a way forward, and work out the best way to simplify the benefit system in order to get the son of Beveridge; 60 years on, our country is a different place, and we need a very different benefit system.
The proposal in the Select Committee report for a welfare or benefits commission along the same lines as the Turner commission on pensions is the right way forward. There has been a unified voice in the Chamber this afternoon, saying that that would allow the Government to take time, stock and even a step back and begin to consider the benefits system as a whole rather than its individual pieces, and instead of tinkering with improvements and reforms here and there. We all know that reforming one part of the benefits system often has unintended consequences and knock-on effects on other parts. Therein lies the problem and the complexity.
Often, for the best of reasons, attempts have been made to simplify benefits, but we have ended up with historic rights, which the Chairman of the Select Committee mentioned this afternoon. For all the reasons to which he referred, and because we still operate systems to ensure that individual claimants are not worse off in cash terms, we have a complex system.
The Government now have an ideal opportunity to act because, for the first time in several years, a brand new benefit is being introduced—the employment and support allowance. The basis for that allowance could be the basis on which a single working age benefit could work. Some of the groundwork has already been done, but we need a much broader investigation into what a benefits system in the 21st century should be and how the different elements should interact.
I honestly believe that a commission, led by someone of the stature of Lord Turner—I do not think that he would necessarily take it on—could build political consensus. In the same way as we needed political consensus for a pensions system that would last not for 10 or 20 but for 50 years, we need to build a welfare system today that will, like that of Beveridge, last for 60 years. We cannot do that without all-party support, or without engaging with not only people in this place but those who depend on the welfare system, and wider society.
I genuinely encourage the Minister to consider seriously the proposal to set up some sort of welfare or benefits commission to ascertain whether we can progress and have holistic change, which makes sense. That would ensure that we were not back here in five years—
Chris Ruane (Vale of Clwyd) (Lab): I hope we are back here in five years.
Miss Begg: Yes, I, too, hope that we are back in five years, but talking about the commission, not still discussing how awful and complex the benefits system is and how it continues to fail the most vulnerable people in society. I hope that the Minister will take our comments and the proposal for a commission seriously.
6.23 pm
Harry Cohen (Leyton and Wanstead) (Lab): I, too, will try to be brief because I support the comments of my colleagues on the Work and Pensions Committee, who made good speeches, and I endorse the report, to which I contributed and was happy to sign up.
Before I came here, I was in discussions with my caseworker. The Minister will receive a bit of an angry letter about my constituent, Mr. Brandon of Leyton. He is suffering from cancer and has survived two attacks of C. difficile. I do not say that the Benefits Agency was not trying to be helpful—it was, initially. It offered him benefits for which he might have been eligible. However, in the end, the position was too complex for it and for him. He has written a sad letter saying, “I now withdraw my claim.” Yet I can look at the case and say that I am sure that he is eligible for other benefits. That is an example of the complexity of the benefits system.
We have a high level of poverty in this country. Indeed, reducing child poverty is one of the Government’s targets. There are two main reasons for that: the fact that benefit levels are too low—I want to make a quick point about that while I have the chance—and the complexity in the system. There is a high level of unclaimed benefits, which just go back to the Treasury coffers and are not redistributed to alleviate poverty. Although that money is allocated initially, it makes no impact, which is a great shame.
Benefit levels are too low. The Child Poverty Action Group has given as an example of that the category of families with disabled members. Under the heading “Adequacy”, the group says:
“The poverty line for a couple with children aged 5 and 14 years is £306, but the out of work safety net income is £204.44—just 67 per cent. of the poverty line income. DWP’s own research suggests that DLA is insufficient to meet the extra needs of disability.”
Only yesterday the Royal National Institute of Blind People lobbied for higher levels of disability living allowance for blind people. I agree with that and with the point that the hon. Member for Weston-super-Mare (John Penrose) made about child benefit being effective and about its big take-up. That could have an impact on meeting our child poverty targets. I argue—I have the floor, so I have the chance to argue—for a higher level for second and subsequent children, which is also part of an ongoing campaign.
On complexity, the main point in my speech is about the case for co-ordinating the criteria, so that organisations such as Citizens Advice can make applications that then link up with each other, and so that if someone is eligible for a benefit, they receive the other benefits for which they are also eligible. When we were in the United States as part of our investigation for the report, we saw that in operation. One particular charity group—the equivalent, almost, of Citizens Advice—had a form on the stocks that could be taken forward and applications made. We are long way from that in this country, which is a great shame. We need to combine a number of the benefits or link the criteria for them.
That relates to the other points made by the Child Poverty Action Group, about a rights-based ethos,
which would enable decisions to be challenged where they were thought to be wrong and act as
“a powerful lever to improve decision making.”
The group’s briefing continues:
“Claimants should have access to the information and advocacy that will help them understand and access their welfare rights.”
I have two more brief points to make, about Help the Aged’s representations to us. First, the charity says that there should be more automatic payments of benefits, saying that they should be
“driven forward urgently in order to tackle the problem of low take ups. If implemented well over 500,000 pensioners could be taken out of poverty.”
Help the Aged’s other point is that the Pension Service should have
“the investment it needs to offer Pension Credit, Housing Benefit and Council Tax Benefit to all pensioners over the phone rather than just offering these three benefits to those eligible for Pension Credit.”
The Pension Service currently just has to send out a 28-page form if it thinks that a pensioner could be eligible for those other benefits. We can do a lot more in that field.
A lot more can and should be done. The Committee was right to draw attention to the need for a vision and the drive to implement it. I urge the Minister to that end.
6.29 pm
Mr. Mark Harper (Forest of Dean) (Con): I congratulate the hon. Member for Bradford, North (Mr. Rooney) on securing this debate and on chairing the Committee, and the members of the Committee, many of whom are here today, on their diligence and hard work in holding the Department and its Ministers to account, as is their proper role.
Interestingly, at the beginning of the debate, the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) spoke about the purpose of the benefit system. There are many different analyses of that. A report by the social justice policy group chaired by my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) contained a particularly pithy definition:
“The benefits system plays a crucial role in tackling economic dependency on the state.”
However, it also highlighted the tensions:
“It is necessary to ensure that the most vulnerable people in society are protected against the ravages of poverty, while at the same time avoiding traps for those who could otherwise be earning a living.”
That is important, because most people agree that there is lots of evidence that the best route out of poverty is work. It is important to note, however, that some people are genuinely unable to work, and the benefits system must provide them with the level of support that allows them to live in dignity.
There is general consensus, reflected in the Committee’s report, that the UK’s benefits system is hampered in achieving that by complexity. The Committee’s Chairman highlighted the hugely increased complexity of documentation since his time as a welfare rights adviser. The Committee’s report concluded that, while a welfare system trying to cater
for millions of people with many different needs will never be simple, the UK’s benefit system has an,
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