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“unacceptable amount of dysfunctional complexity”.
Therefore, there is a fair amount of work to do.
One underlying theme of the Committee’s report is that the simplification process needs to focus on people—both the experience of those who claim benefits and, as several Members mentioned, the experience of those who run the system, whether in a front-line Jobcentre Plus or in a headquarters, to which the hon. Lady referred. That is why we are considering approaches that have more involvement from charities, voluntary bodies and private companies that already have a great deal of expertise in the area—in particular, an understanding of the personal, emotional needs of people and of how to make the system ever more responsive.
The Committee Chairman acknowledged that good intentions, which are prevalent in this area, often fail to deliver good outcomes. I am happy to acknowledge that the Government and the Prime Minister have a desire to combat poverty, although a number of indicators suggest that they have not been entirely successful. Five million people are on out-of-work benefits, and nearly 1.5 million have been on incapacity benefit for more than five years—up by nearly 250,000 since 2001. The number of young people out of work is rising—1.25 million young people between 16 and 24 are not in work or full-time education, which is almost 20 per cent. more than in 1997. The number of children in workless households is the highest in the EU. Obviously, those issues need to be tackled, and many would be improved were the benefits system less complex.
Part of the complexity comes from having different parts of Government dealing with the system. One or two Members mentioned that tax credits are delivered by Her Majesty’s Revenue and Customs, while many other benefits are delivered by the Department for Work and Pensions. In its recommendation 14, the Committee concluded that
“any attempt to simplify the benefits system must take tax credits into account.”
The Government’s response referred to a number of joint working arrangements between the two Departments. If the DWP and HMRC are to work closely together, it is essential that data are protected. We all know the problems that there have been with HMRC, and it would be interesting if the Minister set out the arrangements that the DWP has in place. I tabled a number of questions due for answer last week about exactly what procedures the DWP had in place for protecting personal data. I am still waiting for answers to those. If all those procedures are in place and well understood, answering those questions ought to be relatively straightforward. The fact that they have not been answered suggests that there might be gaps.
One of the other problems of complexity is error, which several Members have mentioned. I am perfectly happy to accept that some progress has been made, but it is still the case that in 2005-06 there was almost £1 billion of official error and £1 billion of customer error. In fact, error is now a much bigger problem than fraud, as I think the Chairman of the Select Committee acknowledged. That should clearly remain an important focus.
Another problem with complexity is the impact on personal behaviour of means-testing. One or two Members mentioned that up to 40 per cent. of pensioners entitled to the pension credit do not claim it. Proposals in a statement earlier today to make some of the claiming processes more straightforward were welcome. Indeed, the hon. Member for Milton Keynes, South-West (Dr. Starkey), the Chairman of the Communities and Local Government Committee, referred specifically to council tax benefit take-up. A range of issues about data transfer between Departments are relevant to making that more straightforward. That problem clearly needs to be tackled.
Another issue that has not been mentioned was the focus of a report by the right hon. Member for Birkenhead (Mr. Field). As is made clear in that excellent recent report, the tax credit system brutally discriminates against two-parent households because it does not correctly reflect the cost of the second adult in the family. The report specifically concluded that the Government should take the “single immediate step” of ensuring that any new money for the tax credit system
“should be used to lessen and then abolish the system’s discrimination against two parent households.”
That would help towards targeting help
“towards the largest group of poor children”,
which would make a big impact on the Government’s child poverty targets. I am very pleased that at our recent party conference, my right hon. Friend the Leader of the Opposition committed us to removing the couples penalty and moving the working tax credit that couples receive to bring them into line with the rest of the benefits system. According to the Institute for Fiscal Studies, that would mean 1.8 million of the poorest couples with children gaining on average £32 a week.
Mr. Rooney: For purposes of clarity and honesty, what we have had from the hon. Gentleman is a statement, but with no commitment to putting in the money to match the promise.
Mr. Harper: I thank the Chairman of the Select Committee for the opportunity to say what I was just coming on to in my remarks. The source of the funding for that promise will come out of our reforms to the welfare system and our getting more people back to work. One of the first calls on those resources will be removing the couples penalty.
Danny Alexander: Will the hon. Gentleman give way?
Danny Alexander: Will the hon. Gentleman list what the reforms are? He referred to the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), but it is interesting to note that not a single reform to the benefit system was included in his 600-page social justice commission report. It concluded at the end that the issue should be handed over to another commission. Ideas seem to be thin on the ground, unless the hon. Gentleman is going to mention one or two more.
Mr. Harper: It is very clear that we can save money by moving more people back into work—an objective that the Government share. There are 5 million people on out-of-work benefits and the Government accept that 4 million of them are capable of working. If we make a significant amount of progress towards that objective, we will clearly save a great deal of money.
Mr. Rooney: That is just an aspiration.
Mr. Harper: It is indeed an aspiration. I am pleased to be accompanied on the Front Bench by my hon. Friend the Member for Hertsmere (Mr. Clappison), who is working on our policy in this area. We have had our recommendations from the social justice policy group, which is continuing with further work, and my hon. Friend will take those measures forward to produce our policy proposals for the next general election—unlikely to be upon us very quickly, giving us more time to flesh out some comprehensive and well- developed proposals.
The Chairman of the Select Committee raised the question whether complexity was indeed inevitable. He suggested that a certain amount of it was. The hon. Member for Aberdeen, South (Miss Begg) said that she had examined our proposals, largely put together by my hon. Friend the Member for Weston-super-Mare (John Penrose), for a single working-age benefit. She said that the more she studied them, the more she was struck—particularly on the basis of evidence put to the Committee by the Every Disabled Child Matters group—by the fact that a very simple benefits system may not be able to deal with people who have more complex needs. Some of the evidence submitted to the Committee referred to the tension between a simple system and one that ensured that help reached those who were most in need. That is clearly an issue with which the Government will grapple.
I want to say something about the benefits that may be claimed by disabled people, although I shall be able to spend slightly less time doing so than I expected. The hon. Member for Blackpool, North and Fleetwood read out a long list of such benefits, and my hon. Friend the Member for Weston-super-Mare mentioned the ten-minute Bill introduced by my predecessor in this job and gave a very good illustration of the human impact.
If Members were to look at all the questions that a disabled person applying for a range of benefits might have to answer, they would be looking at well over 1,000 questions covering hundreds of pages. The tragedy is that fewer than a fifth of those questions are unique. Forty per cent. are repeated on at least three forms and 16 per cent. are repeated on half the forms, which is certainly complex.
I should be grateful if the Minister would consider whether, at least at an initial stage, a single benefit such as disability living allowance could serve as a gateway benefit. Perhaps, with the claimant’s permission, the data provided could be shared and could act as a gateway for other benefits. I think that a Labour Member mentioned that idea earlier. It is not simple, in that it would involve the development of IT systems, with which the Government have not had a huge amount of success so far—although, to be fair, that is a problem with which all Governments grapple—but I think that it would be a positive step.
That may have been suggested by the Conservative party, but the Government like taking ideas away, and we would congratulate them if they took this one away and shared it. In fact, the Select Committee considered a similar idea in some detail during its trip to California: the one-stop application system mentioned by the hon. Members for Leyton and Wanstead (Harry Cohen) and for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander). I commend it to the Minister.
The hon. Member for Leyton and Wanstead mentioned, in the context of a constituency case, people who suffer from ill health and who feel that the last thing with which they want to deal is benefits. Back in 2006, my hon. Friend the Member for St. Albans (Anne Main) presented the Attendance Allowance and Disability Living Allowance (Information) Bill. It dealt specifically with people who, having been diagnosed with a terminal illness, are entitled to claim a range of benefits and find that there is no effective gateway between the diagnosis and the benefits system. That is another issue that the Government could consider.
The hon. Member for Wolverhampton, South-West (Rob Marris) seemed to criticise the Government’s weak response to recommendation 11. That was particularly interesting, given that he is Parliamentary Private Secretary to the Secretary of State for Northern Ireland. It is unusual for someone in that position to be brave enough to criticise the Government, and I hope that it does not cause the hon. Gentleman any disadvantage.
I can think of no better way of ending my speech than quoting the Committee’s own words:
“We conclude in this report that whilst efforts are being made to simplify benefits, the piecemeal approach that the Government has taken so far is ‘nibbling at the edges’ of our vast and hugely complex social security system. We do not deny that tackling dysfunctional complexity is an epic task but we are disappointed that the Government has not set out a clear vision of a simplified system.”
The words “clear vision” probably resonate with the Minister. The Prime Minister, of course, has told us that he will set out a clear vision of the future of his Government. We are still waiting, but perhaps the Minister will nudge us towards that vision when she winds up the debate.
“If simplification is indeed a priority, the Government should outline what a simpler system might look like, steps to reach this goal and set out a timetable to achieve it.”
I hope that the Minister will make some progress towards addressing the Committee’s conclusions.
6.45 pm
The Minister for Employment and Welfare Reform (Caroline Flint): This has been an informative debate, and I congratulate hon. Friends and other Members on their constructive contributions. In all parts of the House there has been an acknowledgment that for decades, Administrations of all persuasions have been caught in a cycle of constantly adding to the system without necessarily trying to get hold of it in a way that enables us to look forward to change. I shall try to address that subject, as well as the individual points raised by Members.
I congratulate my hon. Friend the Member for Bradford, North (Mr. Rooney), the Chair of the Work and Pensions Committee, on securing the debate and on ably opening the discussion. He has also brought to bear his experience as a welfare rights adviser.
I have done a quick count, and I think that the Department for Work and Pensions provides 22 benefits, five of which are no longer open to new claims; local authorities pay two benefits; Her Majesty’s Revenue and Customs pays four benefits if we include tax credits; and four statutory payments are made by employers, making a total of 32. Therefore, this matter clearly raises challenges for us, but I must add that it is also about the complexities of needs, and that raises a lot of issues in terms of whether we should have a blanket approach. That could be hugely costly to the taxpayer, and having just a single approach across the piece might not be fair in terms of addressing the requirements of those with complex needs. However, we have heard enough evidence this afternoon that there is undoubtedly more to be done in trying to reduce the complexity in the system and in having some analysis of the way forward. The approach must be not only for next year or the next five years, but, as my hon. Friend the Member for Aberdeen, South (Miss Begg) indicated, there must be a generational change for the future, so that we can at least take some steps on a journey towards a destination that—I hope we can achieve a consensus on this—is better than where we are today.
We have set up in the Department a dedicated benefit simplification unit. Every submission I get has a little note from the unit attached to the bottom on whether or not this is helping the system. I hope the House will accept my assurance that I have not had too many disagreements with it on that front, and it is pleasing to see the notes attached to the submissions because they act as triggers for thought. A number of changes have been made in the first year, such as aligning the treatment of charitable, voluntary and personal injury income across all benefits, consolidating more than 200 statutory instruments introduced since the start of the housing benefit scheme way back in 1988, and aligning the capital limits across the working-age benefits.
Further simplifications were included in the Department’s 2007 budget settlement, such as ignoring all final earnings, including holiday pay and pay in lieu of notice, on new claims to benefit. That removed the need for about 1.7 million inquiries to employers each year. My hon. Friend the Member for Bradford, North made that point. I am pleased to be able to say on that front that although the original proposal was that we would do that from April 2008, we actually introduced it from October this year. Again, we met our aspiration of making greater progress in the timing and delivery of that change.
Another simplification was to pay all Jobcentre Plus working-age benefits a minimum of two weeks in arrears on a common pay day. That will remove the current mix of different pay periods and the confusion caused when customers change from one benefit to another. Yet another simplification is aligning the treatment of income from sub-tenants across the benefits system by introducing a flat-rate £20 disregard. Today Members will have heard the uprating statement
which announced a further substantial package of measures to simplify the state pension system, including process improvements to enable housing benefit and council tax benefit to be claimed over the telephone at the same time as state pension and pension credit. I think we would all agree that that is the right way forward, and it sets an example of what might be achievable in other areas. Due credit has been given to the way that, particularly in the Pension Service, the opportunity has been taken to look more innovatively at practices and how to carry them out.
We are also simplifying the structure of income support and jobseeker’s allowance by removing the lower rate for 16 and 17-year-olds so that from April of next year single 16 to 24-year-olds will all be paid the same rate. That is another way in which we have removed complexity from the system.
We are redesigning our benefits services. It is the ambition of us all that customers should not have to go from one place to another to get the help that they need. The Department’s change programme will bring in a no-wrong-door approach, which aims to meet the majority of our customers’ needs through a single contact. I appreciate the comments about how we are looking at the Lean ideas and how they can be applied within the Department for Work and Pensions—I was interested in how they could be used in the national health service when I was a public health Minister. Our staff who have been engaged in that work have found it satisfying. They sense that they can have an input that will be listened to, because they are on the front line and know where things work and where they do not.
We are trying to improve our self-service channels. From next spring, customers will be able to access a secure online account via Directgov. As has been said, the future is online. This is about examining people’s need to access these sorts of services. The work that we have done to provide them in community settings for those who could not necessarily afford to have the technology in their own home is one of the ways in which we provide a more inclusive service for people, rather than a service that is exclusive. I shall touch on the important issue of data protection later.
Part of the reason for having that online service is the fact that it will be able to answer a few simple questions in the initial stages. It will then advise customers what benefits they might be entitled to, and work out how much they might be entitled to receive. Importantly, our ambition is that it will signpost them towards other services of which they might not be aware, such as pension forecasts or our internet job bank. We are examining how we can group and package products together to meet the needs of specific groups.
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