Decision making and appeals in the benefits system - Work and Pensions Committee Contents


2  The Decision Making and Appeals (DMA) System: 1998 reforms to present

DMA reforms since 1998

9.  DWP's decision making and appeals (DMA) system was established following the introduction of the Social Security Act 1998. This legislation paved the way for a major overhaul of the DMA process with the aim of improving the accuracy of decision making and reducing error. There were four areas in which significant changes were implemented: responsibility for decision making; challenging decisions; responsibility for appeals; and monitoring standards of decision making.

10.  In its 2003 report, the NAO produced a flow-diagram to illustrate the complex DMA process. We have reproduced this diagram at Annex B to the report.[3]

RESPONSIBILITY FOR DECISION MAKING

11.  Section 1 of the Social Security Act 1998 transferred responsibility for all decision making from adjudication officers to the Secretary of State. Before the 1998 reforms, decisions regarding legal entitlements to benefits or child support were made by adjudication officers or child support officers, under the authority of the statutorily independent Chief Adjudication Officer, whereas administrative decisions (such as those concerned with information collection) were taken under the authority of the Secretary of State.

12.  The consultation that preceded the introduction of the Act found that respondents who were in favour of the creation of a single status decision maker supported the proposal because they believed it would help to create a simplified and efficient system, which in turn, was expected to improve decision making accuracy. Those who opposed the change, argued that the transfer of responsibility for decisions from adjudication officers to DWP decision makers would compromise the independence of the decision making process.[4]

CHALLENGING DECISIONS

13.  Prior to the 1998 reforms, claimants had three months in which to appeal against a decision. For some benefits, such as Disability Living Allowance, there was an in-built formal review before an appeal, whereas for other benefits, such as Income Support, adjudication officers could only review decisions where there was an error of law, a mistake in material fact, or a relevant change of circumstances.[5]

14.  Following the reforms, the process of challenging a decision changed in two fundamental ways. Firstly, Section 9 of the Social Security Act 1998 introduced the possibility for decisions to be either revised, without needing to establish grounds for a review, or to be superceded. A revision would replace the original decision and take effect from the date that decision was first made. A supersession would insert a new decision that would take effect from a date later than the original decision. Secondly, the time limit in which claimants were able to request that their decision be either reviewed (reconsidered) or superceded was reduced from three months to one month.

15.  Again, the consultation elicited different opinions on these proposals. Those in favour of the introduction of new methods of reconsideration, particularly if, as the Green Paper suggested, they could be conducted "by telephone or interview", supported the extension of grounds on which a review could be undertaken and argued that the changes could reduce the number of "unnecessary" and "hopeless" cases progressing to appeal.[6]

16.  Respondents who opposed the introduction of the new review procedures voiced their concern that claimants who were unsuccessful at this stage may feel discouraged and decide not to pursue an appeal they might win. Others argued that the introduction of a formal reconsideration process would create an additional tier that may increase the complexity of the DMA process for the claimant. In order to address these concerns, a number of respondents argued that the Benefits Agency (the body then responsible) should produce a written record of the review proceedings or a written, reasoned decision if appropriate.[7]

RESPONSIBILITY FOR APPEALS

17.  Section 4 of the Social Security Act 1998 created a system of unified appeal tribunals, to replace the Independent Tribunal Service, which was responsible for social security tribunals, along with the Pensions Appeal Tribunal, the Industrial Tribunal, the Independent Review Service, the Irish Social Welfare Appeals and the Land Registry Tribunal. In its place, the Appeals Service was established, which comprised the tribunals responsible for the judicial functioning of appeals, headed by a President of Appeal Tribunals and an executive agency responsible for the administration of appeals.

18.  The tribunal system was amended again in 2006, following the Leggatt review, which aimed to create a more coherent and rationalised structure by creating the Tribunals Service.[8] In its memorandum to the Committee, the Tribunals Service explained that amendments to the administrative structure meant that:

"Tribunals outside the Ministry of Justice and its predecessors transferred into the new organisation, as well as new jurisdictions being added. One of the most significant impacts of the then Appeals Service (now SSCS) joining the Tribunals Service was the separation from DWP and the visible independence this brought by physically establishing the division between First Tier Agency decision makers and those responsible for the administration of appeals."

19.  Further reforms, following the Tribunals, Courts and Enforcement Act (2007), created a new judicial framework by bringing all tribunals into a two-tier system made up of expert judges, with total independence from Government.

MONITORING STANDARDS OF DECISION MAKING

20.  The Social Security Act 1998 brought in new methods of evaluation for decision making. Prior to the Act's implementation, standards of decision making were monitored by the Chief Adjudication Officer (CAO), who reported annually to the Secretary of State. When the role of CAO was abolished under the Act, new duties were introduced for the Secretary of State and the President of Appeal Tribunals. Section 8 of the Social Security Act 1998 called upon the Secretary of State to:

"[…] prepare, either annually or at such times or intervals as may be prescribed, a report on the standards achieved by the Secretary of State in the making of decisions against which an appeal lies to an appeal tribunal." [9]

21.  Schedule 1, Section 10 of the Act stated that:

"Each year the President shall make to the Secretary of State a written report, based on the cases coming before appeal tribunals, on the standards achieved by the Secretary of State in the making of decisions against which an appeal lies to an appeal tribunal; and the Secretary of State shall publish the report."[10]

22.  DWP also established a Decision Making Standards Committee, which is a non-executive body, that provides advice to the Chief Executives of Jobcentre Plus and the Disability and Carer's Service. According to the Committee's website, it was set up to "maintain an independent element within the decision making reporting process."[11]

Impact of reforms to DMA

23.  The reforms made following the 1998 Act have now been in place for over a decade and DWP have told us that the current system "is accessible, thorough and comprehensive".[12] We have considered in turn the major changes since 1998 and the ways in which their impact have been measured, including payment accuracy, claim clearance and error rates and appeals statistics.

ABOLITION OF THE ROLES OF CHIEF ADJUDICATION OFFICE (CAO) AND ADJUDICATION OFFICER (AO)

24.  HH Judge Robert Martin, the President of the Social Entitlement Chamber of the First-tier Tribunal, argued that the abolition of the CAO and AO roles and the restructuring of responsibility in the decision making process had compromised objectivity by transferring responsibility from independent officers to departmental officials. He suggested that the previous system placed:

"[…] a premium on professional independent decision making. After the change which vested decision making in the Secretary of State and officers under the Minister there was a loss of that independence and operational pressures focusing on targets, which essentially were about the throughput of claims, took pride of place. I believe there was a deterioration in the quality of decision making through that internal reorganisation."[13]

25.  The Administrative Justice and Tribunals Council (AJTC) agreed that the post-1998 arrangements for DWP Chief Executives to have ultimate responsibility for decision making is "not generally perceived to be as independent as the former Chief Adjudication Officer".[14]

26.  We note the concerns of some witnesses that the transfer of responsibility for decision making to the Secretary of State for Work and Pensions from the Chief Adjudication Officer has led to a reduction in the independence of decision making and even a deterioration in the quality of decision making. We ask DWP to set out how the existing system safeguards objectivity in the decision making process.

MEASURES OF DECISION MAKING STANDARDS

27.  The Department provided three alternative measures of its decision making standards: payment accuracy, claim clearance rates and official error.

Payment accuracy and clearance rates

28.  In 2008-09, the Department had either reached or exceeded all but one of its targets for payment accuracy and claim clearance rates:

Figure 1 : DWP performance against payment accuracy and claim clearance rates targets
Benefit
Payment accuracy

(%)
Payment accuracy target (%)
Average claim clearance rate

(days)
Target for average claim clearance rate (days)
Carer's Allowance
99.4
98.0
12.4
13.5
Pension Credit
92.1
92.0
15
15.0
Housing Benefit / Council Tax Benefit
98
Not provided
26
Not provided
Disability Living Allowance[15]
92.2
94.0
29.8
38.0
Attendance Allowance[16]
94.1
94.0
12.3
16.0

Source: Ev 139 para. 5.3

29.   The table above provides data on benefits administered by the Pensions, Disability and Carers Service (PDCS) and does not include data for Jobcentre Plus benefits. We asked DWP for figures on payment accuracy and claim clearance rates targets for Jobseeker's Allowance, Incapacity Benefit, Income Support, Employment Support Allowance but were told this data is not validated and is therefore not suitable for publication.[17]

Fraud and error

30.  The DWP has seven Departmental Strategic Objectives (DSOs) which underpin its contribution to achieving the Government's cross-departmental Public Service Agreements (PSAs). DSO 6 encompasses the DWP's decision making standards and commits the Department to "pay […] customers the right benefits at the right time."[18] Progress against this objective is measured using the Office for National Statistics Fraud and Error Report. The 2009 Departmental Annual Report states that DWP has made "some progress" on this DSO, as fraud and error levels and benefit processing times had remained constant despite the increasing claimant count.[19]

31.  Jeremy Groombridge, Jobcentre Plus' Director of Transformation and Product Management, outlined some of the initiatives that the agency had undertaken to tackle official error:

"Very recently we have taken steps to appoint what we call error reduction champions in each part of our business in our contact centres, benefit processing areas and the customer service directorate. We support them with error reduction teams and generate important new products and checks to ensure that particularly our newer staff—we have recruited very large numbers of staff to cope with the recent downturn and consequent rise in volumes—are both checked and trained effectively."[20]

32.  Similarly, Vivian Hopkins, Chief Operating Officer at the Pension, Disability and Carers Service (PDCS) explained that the Agency has:

"[…] a whole programme of activities to deal with new and repeat claims which include extra training for decision making, pre-payment accuracy checks and some sophisticated checking afterwards, highlighting the more complex cases or those where it is easiest for the customer or us to get it wrong, or where people are most likely to try to get it wrong."[21]

33.  The latest fraud and error statistics were published in November 2009. Those statistics showed that overpayments due to fraud and error had come down from 3.2% of benefits paid in 2000-01 to 2.2% in 2008-09. However, this figure masked an increase in overpayments due to official error from £0.4 billion in 2000-01 (or 0.4% of benefits paid) to £0.8 billion (or 0.6% of benefits paid) in 2008-09. Total underpayments resulting from official error and customer error have also increased from £0.8 billion (or 0.7% of benefits paid) in 2004-05 to £1.2 billion (or 0.9% of benefits paid) in 2008-09. Official error resulting in underpayments was responsible for £0.4 billion of these underpayments in 2004-05, rising to £0.5 billion in 2008-09.

Figure 2: Estimated overpayments due to fraud and error since 2000-01


Figure 3: Estimated underpayments due to fraud and error since 2004-05


34.  We commend the Department's performance against its targets for payment accuracy and claim clearance rates for a number of benefits. However, we were surprised to learn that the equivalent data for Jobseeker's Allowance, Employment Support Allowance, Incapacity Benefit or Income Support is not validated and is therefore not suitable for publication. We ask the Department to explain why it does not publish data on payment accuracy and claim clearance rates for these major benefits and recommend that it begins to do so as soon as possible.

35.  We acknowledge the work the Department's agencies are undertaking to address error, including the appointment of "Error Champions" in Jobcentre Plus and pre- and post-payment accuracy checks in the Pension, Disability and Carers Service. We ask the Department to monitor the impact of these measures and to ensure that agencies share information about measures that are successful in reducing levels of official error.

36.  However, we believe that the cost of official error due to overpayments of benefits is still far too high at £800 million in 2008-09, and we are concerned that this figure has risen significantly since 2000-01. We are equally concerned by the increase in the total amount of underpayments resulting from official error since 2004-05. In light of the 1998 reforms of the decision making and appeals system, which were designed to improve decision making, we ask the Department to explain why levels of official error have risen since 2000-01.

MONITORING STANDARDS OF DECISION MAKING

Report by the Secretary of State

37.  The Social Security Act 1998 formally introduced reporting duties for the Secretary of State on standards of decision making. Since then, the Secretary of State has produced three reports on standards of decision making; the most recent was published in 2006 and covered decisions made in Jobcentre Plus, The Pensions Service and the Disability and Carers Service during the period 1 January 2002 to 31 December 2003 and in the Child Support Agency for the period 1 April 2002-31 March 2004.

38.  The infrequency of report publication runs counter to assurances given in the House of Lords, during second reading of the Social Security Bill. The then Parliamentary Under-Secretary of State, Baroness Hollis of Heigham said:

"I can assure the House that it is our intention to produce reports annually or as near to each year as possible."[22]

39.  The most recent report included the Secretary of State's percentage breakdowns of the accuracy of initial decisions; the accuracy of reconsidered decisions; appeals statistics; and overpayment recoverability decisions. It also outlined initiatives that DWP's agencies were undertaking to improve decision making. The document also included a report from the Comptroller and Auditor General which concluded that the Secretary of State's assessment of the percentages of decisions that were correct and of the accuracy of both child support maintenance assessments and appeal submissions presented "a reasonable representation of the quality of decisions" made by DWP. However, he concluded that he could not validate the majority of data provided in the Secretary of State's report, particularly:

a)  Information on the percentage of reconsiderations found to be correct ;

b)  Data on the applications for revisions and their outcome;

c)  Information on benefit appeals lodged, the number of appeals heard and appeal success rates;

d)  Percentage of appeal submissions meeting required standards; and

e)  Percentage of overpayment recoverability decisions found to be correct.

40.  The Comptroller and Auditor General concluded:

"I have been unable to confirm that a substantial part of the information set out in the Secretary of State's report is fair and balanced. The introduction of new material to the report in line with recommendations I have made previously to the Department is welcome. However, unless all such performance data is subject to satisfactory quality assurance processes as to its robustness, the resultant report will be of limited utility as a measure of the Department's success in improving the accuracy of decision making."[23]

41.  It is unacceptable that, despite the Government committing to publishing a report by the Secretary of State on the Department's decision making standards "annually or as near to each year as possible" the most recent report was published in 2006 and only covered the 2002-03 period. The failure of the Secretary of State to provide an assessment of decision making in the last six years means the Department is not fulfilling promises made by the Government during the passage of the Social Security Act 1998. We ask the Secretary of State to explain why the Government's commitment to publishing an annual report on decision making standards has not been fulfilled and to announce when reports will be published for the six years since 2003.

42.  We note with concern that the Comptroller and Auditor General was unable to confirm that a substantial part of the information set out in the last report by the Secretary of State was "fair and balanced". We are further dismayed by his conclusion that the information within it would be of "limited utility as a measure of the Department's success in improving the accuracy of decision making". Reliable data are crucial to ensuring that decision making accuracy is measured effectively and the Department's failure to collect this information reduces the likelihood of appropriate improvements being made to the system. We also ask the Secretary of State to provide evidence to demonstrate that data collection on decision making and appeals has improved since the last report was published.

President of Appeal Tribunals Report

43.  The Social Security Act 1998 imposed a duty on the President of Appeal Tribunals to make an annual report, based on cases coming before tribunals, on the standards of decision making achieved by the Secretary of State. The President's report was based on a sample of cases coming before the tribunal. In 2007-08, the sample size was 1,886 and reflected the range of appeals by benefit type.[24]

44.  In 2008, the final President of Appeal Tribunals annual report was published. The Tribunals, Courts and Enforcement Act 2007 wound up the Appeal Tribunals from 3 November 2008, along with the role of its President. The Act did, however, confer a duty on the Senior President of the new tribunal to provide systematic feedback to the Secretary of State on standards of decision making.

45.  The 2007-08 report summarised the key themes that have emerged since publication began in 2001, as follows:

a)  DWP should engage in more face-to-face contact with claimants;

b)  There was no consistent evidence of the effectiveness of reconsiderations;

c)  Some medical reports have underestimated the severity of disability; and

d)  Benefit claims and the appeals process could be particularly difficult for people with specific disabilities such as mental health issues or sensory impairments.[25]

46.  The former President of Appeal Tribunals (now the President of the Social Entitlement Chamber of the First-tier Tribunal), Judge Robert Martin, told us that, despite raising similar concerns each year, he believed "no one" within DWP had listened to the conclusions and recommendations detailed in the President's annual report.[26] He explained that he had, in the past, asked for examples from the Department, which could demonstrate how the President's report had influenced or changed DWP decision making. He told us that, despite his request, he had received no examples from DWP to illustrate the report's value.[27]

47.  We are surprised and disappointed to learn that the President of the First-tier of the Social Entitlement Chamber had seen no evidence that the Department has listened to the feedback provided in the annual reports of the President of Appeal Tribunals. We recommend that the new Senior President of Tribunals should continue to produce an annual report on standards of decision making and that the Secretary of State should undertake to publish a response to it within two months of its publication.

DWP Decision Making Standards Committee

48.  As part of the DMA reforms, the then Benefits Agency set up a Decision Making Standards Committee, as an additional means of reviewing DWP's decision making standards. In February 2003, the Benefits Agency Decision Making Standards Committee was replaced by the DWP Decision Making Standards Committee. Like its predecessor, this remained a non-executive body, which monitors the standards of decision making in benefits across DWP and reports to the Chief Executives of Jobcentre Plus, and the Pension, Disability and Carers Service. In 2008, the Committee dropped "Decision Making" from its title to become the "DWP Standards Committee".

49.  The Standards Committee's webpage outlines its three key objectives:

a)  to provide independent advice to senior executives on whether reports on the standard of benefit decision making are accurate;

b)  to identify and make recommendations on the areas where standards can be improved; and

c)  to look at specific issues raised by the Agency Chief Executives that may affect the standard of decision making.[28]

50.  The Standards Committee is currently composed of a Chair and three members, who are independent of DWP, and provide objective advice on the decision making process.[29] DWP explained that the Standards Committee agreed its programme of work with Jobcentre Plus and PDCS, and focused on areas that might require improvement.[30]

51.  In 2005, the Standards Committee criticised DWP for failing to give decision making a big enough priority. In 2008, the Committee again expressed concern about decision making standards, concluding that there was an over-reliance on the medical model when making decisions on disability benefits and that some staff had "entrenched views" which impacted upon their approach to decision making.[31]

52.  Lancashire County Council Welfare Rights Service told us that one of their advisers participated in the Standards Committee's Representatives Group and had reported that the Committee "dealt mainly with general issues […] and was somewhat removed from effecting change in the frontline DWP decision making processes".[32] The Administrative Justice and Tribunals Council (AJTC) argued that the Standards Committee's reports are "perhaps not generally perceived to be as independent as the former Chief Adjudication Office".

53.  The Standards Committee produced four annual reports between 2003 and 2008, which have each identified areas where decision making needs to be improved. The first three reports included appendices which provided clearly presented updates on the progress the Department has made towards the recommendations made in the previous year's report. However, the style and format of the most recent report, published in 2008, has changed. Rather than providing a single written summary, tables of recommendations are given for different executive agencies throughout the report, whilst responses to those recommendations are given in a series of different tables.

54.  The Standards Committee was established to monitor decision making within the Department and we believe that this important role should be more formally recognised. We recommend that "Decision Making" should be reinstated in its title to ensure that its main purpose is clear, both to internal and external stakeholders. We also recommend that the Department publish a response to the Standards Committee's recommendations within two months of the publication of a report of the Committee.

55.  The change in format of the Standards Committee's annual report has resulted in an esoteric document, which we found less accessible than previous reports. It is important that the Standards Committee's conclusions and recommendations are clear and readily understandable. We ask the Standards Committee to reintroduce a summary of how the Department has responded to the previous year's recommendations.


3   Adapted from National Audit Office (2003), Getting it right, putting it right improving decision making and appeals in social security benefits, HC 1142 Session 2002-03: 7 November 2003  Back

4   Department of Social Security (1997) Consultation on Improving Decision Making and Appeals in Social Security: Analysis of responses pp 24-25 Back

5   Department of Social Security (1997) Consultation on Improving Decision Making and Appeals in Social Security: Analysis of responses p 29 Back

6   Department of Social Security (1997) Consultation on Improving Decision Making and Appeals in Social Security: Analysis of responses pp. 31-32 Back

7   Department of Social Security (1997) Consultation on Improving Decision Making and Appeals in Social Security: Analysis of responses pp. 35 Back

8   Leggatt (2001) Tribunals for Users One System, One Service: Report of the Review of Tribunals by Sir Andrew Leggatt, March 2001  Back

9   Social Security Act 1998, Part IV, Section 81 Back

10   Social Security Act 1998, Schedule, Section 10 Back

11   DWP Decision Making Standards Committee webpage: http://www.dwp.gov.uk/publications/specialist-guides/dwp-decision-making-standards/what-we-do/  Back

12   Ev 126, para 1.3 Back

13   Q69 Back

14   Ev 147, para 13 Back

15   For DLA and AA the accuracy is measured in terms of the quality of the decision itself. Back

16   For DLA and AA the accuracy is measured in terms of the quality of the decision itself. Back

17   Ev 164 Back

18   DWP (2008) The New Performance Framework  Back

19   DWP (2009) Departmental Report 2009, Annex A, p 79 Back

20   Q93 Back

21   Q94 Back

22   Offical Report, 20 April 1998; Column 926 Back

23   Report by the Secretary of State for Work and Pensions on the standards of decision making in Jobcentre Plus, The Pension Service, Disability and Carers Service and the Child Support Agency 2002 and 2003, p 19  Back

24   Apart from child support maintenance appeals, which constitute just 1% of appeals therefore are over-represented to allow meaningful analysis. Back

25   Tribunals Service (2008) President's Report: Report by the President of Appeal Tribunals on the standards of decision making by the Secretary of State 2007-08, p 7 Back

26   Q71  Back

27   Q71 Back

28   http://www.dwp.gov.uk/publications/specialist-guides/dwp-decision-making-standards/standards-committee/ Back

29   Ev 132, paras 7.1-7.4 Back

30   Ev 132 Back

31   DWP Standards Committee (2008) Annual Report 2007-08 Back

32   Ev 124 Back


 
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