List of conclusions and recommendations
In this List, conclusions are set out in plain type
and recommendations, to which the Government is required to respond,
are set out in italic type.
Benefits up-rating
1. Studies have
shown that people on low incomes spend a higher proportion of
income on rent, heating and food, which are often subject to higher
inflation rates than general expenditure. The average annual rate
of inflation that the poorest people face may therefore be significantly
higher than that incurred by wealthier people. This may mean that
people on benefits are likely to be hard hit by a 1% limit on
benefit up-rating. We recommend that the Government monitor the
impact of this reform on benefit claimants, particularly as many
of them may also be affected by other reforms, including those
to housing benefit, the introduction of the benefit cap, and changes
in entitlement to disability benefits.
(Paragraph 13)
Personal Independence Payment (PIP) implementation
2. We agree with
the Minister that the current level of service offered to PIP
claimants and the length of time claimants are waiting for decisions
on their PIP applications is not acceptable. People should not
be forced to wait six months or more to find out whether they
are entitled to financial support towards the additional costs
of living with disabilities and health conditions. Urgent action
is required. We recommend that DWP closely examine its own systems
and that it work with the contracted providers to resolve the
current dire situation. Penalty clauses (service credits) contained
in the contracts with providers should be invoked where necessary.
We also recommend that DWP clear the existing backlog of claims,
and reduce the average time taken to process new claims to the
expected 74 days, before it extends the natural reassessment of
existing DLA claims to other parts of the country. (Paragraph
48)
3. We agree with
the National Audit Office that DWP needs to address the stress
and uncertainty being faced by PIP claimants suffering delays.
We support its recommendation that DWP set out a plan for informing
claimants about the delays they are likely to face. We also recommend
that DWP takes immediate steps to ensure that claimants are given
accurate and timely information when they raise queries about
progress with their claim with either DWP itself or with the contracted
providers. (Paragraph 49)
4. It is particularly
important that claims from terminally ill people are expedited
and that as much of the stress as possible is removed from the
process they have to go through to claim PIP. We recommend that
DWP set a target of seven days for processing PIP claims from
terminally ill people and that it devotes all the necessary resources
to ensuring that this target is met. (Paragraph
50)
5. We recommend
that DWP also take steps to establish a mechanism for expediting
claims from people who may not have a terminal diagnosis, but
who have rapidly deteriorating conditions, resulting in a similar
need for immediate financial support.
(Paragraph 51)
6. The fact that
claimants are taking longer to return written PIP claims forms
and to provide supporting evidence suggests that the claim form,
and the guidance for claimants on accompanying information, need
improvement. It may also be the case that the four weeks allowed
to return the form and supporting evidence is insufficient. These
factors may be contributing to the higher than expected level
of face-to-face assessments deemed by the providers to be required.
We recommend that DWP consult stakeholders on the adequacy of
the PIP claim form and the accompanying information provided to
claimants and make amendments to both if these are found to be
necessary. The time allowed to submit the completed form and supporting
evidence should also be reassessed and extended if necessary.
(Paragraph 52)
Local welfare assistance
7. It is often the
most vulnerable people who rely on being able to access hardship
payments, previously available from the discretionary Social Fund,
in emergency situations. Local authorities are using widely different
eligibility criteria and application processes for these schemes.
This change has also taken place at the same time as significant
reforms to other benefits, particularly support for housing costs.
(Paragraph 62)
8. It was the Secretary
of State's impression that local authorities may not use their
full allocations for local welfare assistance schemes in this
financial year, although he acknowledged that it was still too
early to tell. However, if this does prove to be the case, it
is likely that, at least in part, this is because this is a new
responsibility and authorities may understandably have been reluctant
to allocate too great a proportion early in the year when they
were not in a position to accurately predict demand. This may
also have led some local authorities initially to impose very
exacting criteria for accessing these funds. (Paragraph 63)
9. We believe that
it is essential that the Government ensures that sufficient funding
is available to local authorities to cover the costs of providing
the localised welfare support schemes which have replaced elements
of the discretionary Social Fund. We recommend that this is done
in one of two ways: either DWP should continue to transfer funding
to local authorities beyond April 2015, until it has a clear picture
of the level of demand; or the local government settlement administered
by the Department for Communities and Local Government should
be increased by the full amount that would have been allocated
for these elements of the discretionary Social Fund, and this
sum should be ringfenced for local welfare schemes.
(Paragraph 64)
Pension charges
10. We previously
recommended that member-borne consultancy charges—charges
imposed by pension consultants for providing advice to employers,
which are then deducted from scheme members' pension pots—should
be banned outright. Following our report, the Government announced
its intention to ban consultancy charges in automatic enrolment
qualifying schemes. This ban came into effect from 14 September
2013. We very much welcome this step. (Paragraph 68)
11. We welcome the
Government's decision to bring forward regulations to ensure greater
transparency in transaction costs in workplace pension schemes.
The range of charges and costs which scheme members incur can
make an enormous difference to the size of the individual's pension
pot when they reach retirement. (Paragraph 74)
12. There has also
been some progress in tackling the wider issue of high pensions
charges in the form of the Government's consultation on a possible
charge cap. Although we understand the reasons for the Government's
announcement that no steps to implement this important change
will be taken for at least another year, it is disappointing that
there will not be earlier progress. We reiterate our view that,
at a time when millions of people are already being automatically
enrolled into workplace pension schemes, it is vital that they
are protected from excessive charges imposed by some pension companies
and that the charges which are levied are transparent and comprehensible.
(Paragraph 75)
Annuities
13. The Financial
Conduct Authority's intention to carry out a market study of retirement
income products, following on from its thematic review of annuities,
is welcome. However, the Government and the regulators have had
clear evidence for some time that the open market in annuities
is not yet working in the best interests of the majority of pension
scheme members, many of whom face the risk of substantial financial
loss in purchasing an annuity from their pension provider. We
recommend that the Government and the FCA take urgent action to
make the open market option a realistic one for all those who
purchase annuities, not just the minority who are currently able
to negotiate it successfully. We reiterate the recommendation
from our 2013 report: that, if improvements in the annuity market
do not occur soon, the Government might, as a last resort, have
to consider taking steps to separate the function of providing
pension schemes from that of providing annuities.
(Paragraph 79)
Defined Ambition and Collective Defined Contribution
pension schemes
14. The Government
launched a consultation on its plans for Defined Ambition workplace
pensions in autumn 2013. We expected to be invited to carry out
pre-legislative scrutiny on the resulting proposals for broadening
the range of pensions available to employers, but these final
proposals have not yet been published. We are concerned that the
momentum for bringing forward these proposals may have stalled.
It is important, as auto-enrolment widens out to the whole of
the working population, and with the continuing closure of private
sector Defined Benefit schemes, that employers and employees are
offered new ways to share risk and to maximise retirement income.
There is additional urgency in that the new arrangements ideally
need to be in place by the time contracting-out of DB schemes
ends in 2016. We look forward to seeing the Government's legislative
proposals for these changes very shortly. (Paragraph 87)
Child maintenance reforms
15. The impact
on parents of charging for using the new statutory child maintenance
scheme needs to be carefully monitored, particularly given that
a full evaluation will not take place until 30 months after charging
begins. The behavioural impacts, including to what extent charging
deters parents from having any maintenance agreement in place
at all, are particularly important. We recommend that DWP
publish interim updates on the impact of charging on use of the
statutory system and on the level of family-based arrangements,
in advance of the full evaluation. (Paragraph
104)
16. We welcome
the Government's use of a pathfinder to introduce the 2012 scheme
as a means of ensuring that the new Child Maintenance Service
was functioning effectively before it was opened to all applicants.
However, replicating and maintaining the service levels achieved
in the pathfinder in the national implementation is clearly a
challenge. We recommend that DWP monitor this carefully and publish
regular updates on standards of service provided to parents. (Paragraph
106)
17. The Government's
motivation in introducing the new child maintenance scheme is
to encourage parents to come to voluntary arrangements. However,
many parents will need effective support to enable them to come
to arrangements which are workable and acceptable to both parents,
and parents will need to know at an early stage where they can
go to find this support. We welcome the funding of around £10
million provided for voluntary and third sector organisations
as part of the Innovation Fund to test and evaluate interventions
that can help parents work together in the best interests of their
children. We recommend that, in response to this report, DWP sets
out how these projects will be evaluated and what the process
will be for extending, funding and publicising the schemes identified
as the most effective. (Paragraph 109)
18. DWP's strategy
for dealing with child maintenance arrears—both historic
arrears and those in the new 2012 scheme—needs to be shown
to be practicable. It is not yet clear whether the steps introduced
to prevent new arrears arising are feasible; nor what the prioritisation
of historic arrears for collection means in reality for those
parents with care who are owed money. DWP needs to ensure that
the decisions it takes regarding the collection of arrears are
transparent and communicated clearly and promptly to all parents
affected by the new arrangements. (Paragraph 114)
Use of DWP statistics
19. DWP releases a
great deal of statistical information about benefits. We have
commented before that it needs to exercise care in the language
used in accompanying press releases and ministerial comments in
the media. 2013 saw heightened and quite widespread concern—including
from the UK Statistics Authority and organisations representing
disabled people—about the DWP commentary accompanying releases
of benefits statistics. (Paragraph 141)
20. The Government
is doing a great deal to promote a positive image of disabled
people, including in the principles behind its Disability Strategy
and the Disability Confident campaign to help disabled people
into employment. However, this positive action risks being undermined
if the language used in DWP press releases and ministerial media
comments accompanying releases of benefit statistics adopts a
tone which feeds into negative preconceptions and prejudices about
people on benefits, including disabled people. (Paragraph 142)
21. We agree with
our colleagues on the Public Administration Select Committee (PASC)
that Government statistics should be presented in a way that is
fair, accurate and "unspun" and that this is especially
the case when they are being used to justify a particular policy
or a particular allocation of resources. We reiterate our view
that DWP should avoid feeding into negative public views about
people who receive benefits, and that statistics should be used
objectively to shed light on policy implementation, not to prop
up established views and preconceptions. We recommend that, in
response to this Report, DWP sets out the specific steps it has
taken in response to the comments from PASC, the UK Statistics
Authority, and this Committee, to ensure that statistics are released
in a way which is accurate, and fair to benefit claimants. (Paragraph
143)
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