Examination of Witnesses (Questions 40-59)
Mr Phil Wynn Owen and Mr Richard Heaton
27 NOVEMBER 2007
Q40 Lord Crisp: The question I am
going to ask you have partly answered at least. It is about what
internal control mechanisms you have to check that policy is properly
thought through. The reason I say that, to take a particular example,
is the Committee was particularly concerned about the appeals
mechanism for the Pension Protection Fund apparently being added
on as an afterthought.
Mr Wynn Owen: Shall I answer that both at the
macro and micro level, because you have really asked two questions?
First of all, I should say that the Department is very proud of
its policy and analytical capacity. That is not to say we do not
make mistakes and cannot learn lessons and we practise continuous
improvement. But, for instance, the Cabinet Office Capability
Review of DWP last summer, from which I think we as a Department
emerged reasonably well within our peer group, gave us our highest
marks, a green rating, and with the word "strong" for
what it described as "bases choices on evidence", what
I call fact-based policy analysis. We feel that we are operating
within a strong context, but you are only as good as your next
SI or your next Bill. I did explain some of the mechanisms, as
a DG with Adam Sharples and how it works at the Directorate level
and Better Regulation Unit, so I will not repeat those. There
are a couple of things I want to add which perhaps reinforce that
message of what we feel is generally our strength and depth. Particularly
on the welfare reform side we use very extensive pilots, and this
is a way of engaging with our customers on a small scale and testing
how something will work before we roll it out nationally. Because
this Department has significant responsibilities, like health
or education, across society and it cannot afford usually to do
a big bang approach, because if you get it wrong you could do
a lot of damage rather than good. We have used pilots recently
in the Pathways to Work field, checking that we could move people
more swiftly off Invalidity Benefit which will lead directly to
the Employment and Support Allowance being introduced next year,
offering an evidence-base established from those pilots. We have
also used the Pathfinders Scheme within the Local Housing Allowance,
with nine specific pilots and nine other local authorities that
effectively copied the pilots, and that will lead to the national
roll-out on a phased basis for people who are either new claimants
or moving house from next April. That is one thing we do to gather
and collect evidence. We also have very well established consultation
processes. In my own field of pensions, not only did we use an
independent reviewer who did their own consultation in Lord Turner's
pensions report, with John Hills and Jeannie Drake, which lasted
three years, and I would say is the best independent review that
I have worked with within Government, we also followed it up with
our own consultation both at the level of extensive consultation
with stakeholders, but also in something like the national pensions
debate, which we did in six cities on one day covering a thousand
people on a Census based sample. We directly approached individual
members of the public and asked them what they thought about the
ideas. Those are just two examples of piloting and consultation
that I add to some of the internal checks I described earlier
in the way we approach our checking that we have the right procedures
in place.
Q41 Lord Crisp: Could you say something
about what happened on the particular case I asked you about?
Mr Wynn Owen: Yes, I could. The Pension Protection
Fund was not in the original December 2002 Green Paper which simply
asked for views on what was then termed as the Central Discontinuance
Fund, so the plans to establish the Pension Protection Fund were
not actually announced by Ministers until June 2003 at which time
much of the rest of the material towards the Pensions Act 2004
Bill was quite well advanced. The real work on it started then.
It was a first in the UK. The only precedent we were copying was
the USA's Pensions Benefits Guarantee Corporation, the PBGC, and
we were very anxious to avoid some of the mistakes that had been
made there where, for instance, the airlines had done soft landing
and take-off, dumping their pensions liabilities and doing phoenix-like
recreations. We had a lot of very innovative policy work to do
in what proved to be only eight months before the Bill was published.
The PPF was needed urgently because when you announce that you
are going to set up an insurance scheme of that sort for defined
benefit occupational schemes there is a degree of moral hazard
established and you may change the behaviour and customs of both
companies and pensions trustees. We had to move quickly to a Bill
in February 2004. I do not think it is surprising, given that
only eight months elapsed between the announcement of the PPF
in June 2003 and the Bill being published in February 2004, that
many of the clauses in the Bill for the PPF were actually dummy
clauses, or that we decided to introduce subsequent secondary
legislation to implement much of the PPF. It would be true to
say that everyone involved with the Pensions Act 2004 has learnt
an awful lot from the process and the way in which it was implemented.
There was something of a hand-to-mouth existence as the policy
evolved. But we should also remember that in substance the outcome,
given the quite high demands that Parliament collectively placed
upon the new creations of the Pensions Regulator in Brighton and
the Pension Protection Fund in Croydon, has so far been pretty
good. The NAO published a report about a month ago praising the
activities of the Pensions Regulator. Paul Thornton's independent
review of the pensions institutions arising from the Pensions
Act 2004 gathered extremely positive feedback from stakeholders
about the way Lawrence Churchill and Partha Dasgupta were running
the Pension Protection Fund. The substance, so far, on a difficult
task is looking quite capably administered and in line with what
was intended in the Act, but the process of getting there, I freely
admit, was something from which we all learnt.
Q42 Baroness Butler-Sloss: Mr Heaton,
you were talking about your responsibility for the timetable of
Statutory Instruments. You manage to have your significant peak
of activity towards the start of the financial year and over the
last three years approximately a quarter of all the Statutory
Instruments have come out at that time, sometimes quite a considerable
number in one week. It is remarkably inconvenient for everybody
else, although it may be convenient for you. Why can they not
be laid earlier or distributed throughout the year? Both of you
have expressed exactly how well you are doing everything but this
particular area could be better done it seems to me.
Mr Heaton: That is a very good question, if
I may say so. I do not think we have cracked the bunching thing.
I freely acknowledge the problems that bunching causes scrutiny
committees and we absolutely acknowledge the importance of the
scrutiny committees to the production of decent legislation. I
looked at the figures and at first sight I thought our performance
had been improving significantly because the headline figures
go from 41 down to 36 down to 18, that is for successive Marches,
but if you take percentages we have not got down below 23%, which
is what we are heading for this year. Can we do better? I hope
we can, and we are going to try and do better for March next year.
The Committee will have heard from lots of different departments
how different departments have different pressures on their calendars,
and we have a pressure at the beginning of the financial year
because that is when we tend to uprate Social Security benefits,
so there is a certain clutch of Instruments that turn up for coming
into force at the beginning of April and the biggest one is the
one I'm holding here, which is the Social Security Uprating Order
for the year. That bit of the timetable is fixed. Can we pull
the preparation of Instruments forward? We can certainly do what
we can. I think I am right in saying that this year this Instrument
was laid in draft in late January or February, so that is an improvement,
but there were negatives that were consequential on this that
we could not make until this one had been approved by Parliament,
so there is bound to be a slight bunch because of the uprating
and this year I think that accounts for six or seven of our 17.
There is also bunching to do with Instruments under the Pensions
Act and Phil has mentioned how the Pensions Act has not been an
entirely happy experience in implementation and we hope that is
a peak that we will not replicate year after year after year.
I asked my Senior Civil Service lawyer colleagues about the bunching
issue, trying to find out whether there are March Instruments
that we think we can shift further, and there may be room for
shifting. I will just mention a couple of things. First, there
is sometimes a tension between the need to group some Instruments
for the convenience of users and stakeholders where it is helpful
to have a group of Instruments put together and the need to avoid
bunching. With the help of your Committee secretariat, we are
trying to push towards a 35 day norm for negative Instruments
which go beyond the regular 21 days. We are trying to push towards
35 days but I am not quite sure we are there yet although that
is the direction of travel we are hoping to achieve. There are
four further Instruments in this year's bunching at March that
we might look at to see if we can possibly reallocate in the calendar.
But there are some other pressures on our calendar which are simply
customary, as opposed to the inflationary annual uprate. For example,
we tend to have two main packages of amendments in March and October
on miscellaneous Social Security amendments and I hope we might
be able to shift those, but I cannot give any promises. I am trying
to pick out the ingredients of this bulge and trying to work out
what we can shift and what we cannot. I think, and I hope, we
can probably do a bit better next year but there are some external
pressures on our calendar which we have to work around.
Q43 Viscount Eccles: I want to follow
up the 2004 Act and the implications. What is a dummy clause?
Mr Wynn Owen: A dummy clause might be a clause
—I do not think it is a legal term.
Q44 Viscount Eccles: I am sure it
is a term of art. I think Parliament is completely unaware of
the description but we would be interested in knowing what a dummy
clause is.
Mr Heaton: I think what my colleague meant was
a clause which serves a purpose, by indicating to Parliament what
the rough content is going to be but in the knowledge that there
will be a Government amendment coming along to flesh it out in
more detail. I think that is basically what a dummy clause is.
Q45 Viscount Eccles: Are you agreeing
that the 2004 Act made great difficulties for Parliament at the
stage of primary legislation?
Mr Wynn Owen: What I said was I thought—
Q46 Viscount Eccles: I heard what
you said, I am asking whether you agree or not.
Mr Wynn Owen: I think the 2004 Act, the passage
and process of it, was a challenge for all concerned because—
Q47 Viscount Eccles: Thank you very
much for the answer. Would you agree that the secondary legislation
made great problems for this Committee?
Mr Wynn Owen: I do not know of the individual
circumstances of this Committee. It is undoubtedly—
Q48 Viscount Eccles: With respect,
you should. There were 60 Instruments and they came pretty scattered
and sometimes rather late, up against deadlines that were very
close. I just wondered whether you would say, "Yes, it probably
was rather difficult for you".
Mr Wynn Owen: It was a challenge for all of
us and we will try to do better in the future.
Q49 Viscount Eccles: A challenge
will do as an answer. We have got some more Pensions Bills coming,
I believe.
Mr Wynn Owen: We have, and we will seek to do
better in the future.
Q50 Viscount Eccles: No, no. Will
you do better?
Mr Wynn Owen: While I am in charge of the pensions
side of DWP and evidenced by the last three years, which I will
talk about if you would like me to, we will seek to do that.
Q51 Viscount Eccles: Not at all,
absolutely not at all. Time goes on. I was just looking for an
answer to the question. May I suggest one or two ways in which
you could do better. One would be that you produce drafts of some
of the secondary legislation during the process of the Bill going
through Parliament. This is done by many other departments, they
produce drafts of the secondary legislation, so although it is
not on the face of the Bill, and there is always an argument about
whether it should or should not be, as you well know—the
tendency I suspect amongst ministers and their departmental advisers
is to prefer that it is not on the face of the Bill, that argument
goes on—what does help Parliament a great deal is to have
some drafts of the secondary legislation. Are you going to produce
some this time around?
Mr Wynn Owen: Whether we can do that depends
on the circumstances of the Bill and how quickly due after the
Bill the actual implementation is likely to take place. In the
case of the Welfare Reform Act 2007, enacted in May of this year,
in October 2006 draft regulations were published in a single document
during the Commons Committee Stage, which is what I think you
are saying you find most desirable and best practice. I would
acknowledge that this is best practice when the measures are due
for implementation swiftly thereafter, like the Employment and
Support Allowance. To take a different example, the 2007 Pensions
Act, enacted in July of this year, which I think enjoyed a much
smoother process through Parliament than the 2004 Act we were
talking about. Most of the measures in the Pensions Act 2007 are
not for implementation until 2009, or in most cases 2010, so we
have got a plan and a structured approach. We did not publish
full draft regulations during the passage of that Bill, that was
not possible, although we had a very full delegated powers memorandum
and Ministers gave as much information as they could during Committee.
What we are planning to do, and this is Richard's point about
trying to get the balance between bringing forward things in bunches
but phasing them, is we have got a programme for next year where
there are three key bunches of regulations coming from the Pensions
Act 2007 that we will seek to phase throughout the year so you
do not receive them altogether, but you do receive coherent bunches
of Statutory Instruments around issues like the definition of
carers or GMP conversion or the single contribution conditions.
We are seeking to plan and balance the flow, but in that case
there is time before implementation to bring the regulations forward
after enactment, but still with plenty of time prior to actual
implementation.
Q52 Viscount Eccles: Would you accept
that description would leave us with the impression that your
agenda is more important than Parliament's?
Mr Wynn Owen: No. Why do you say that?
Viscount Eccles: Thank you for the answer, you
do not think it does.
Q53 Chairman: I am pleased to hear
that you will have an implementation plan for the two Bills that
we have been talking about, the Pensions Bill and the Welfare
Reform Bill. We were shown, and swooned when we saw it, a chart
by DCFS showing their implementation plan for aspects of their
legislation. Can we see a copy of the plan that you are preparing
for these Bills?
Mr Wynn Owen: We can certainly write to you
elaborating on the point I made about the implementation of the
regulations arising from the 2007 Pensions Act if you would find
that helpful.
Q54 Chairman: We would.
Mr Wynn Owen: We are also planning to bring
forward some regulations implementing the equalisation of the
State Pension age from way back to the 1995 Pensions Act enacted
by a previous government and we will also seek to include that
in the letter to show you how we are seeking to phase the introduction
of these SIs.
Q55 Chairman: We are not being totally
self-serving on this, it is not just for our convenience or Parliament's,
although it has a relevance because we cannot scrutinise effectively
unless we understand what is going on, but your stakeholders would
benefit from seeing a coherent plan for implementation and seeing
the big picture clarified and why various elements add up and
that may help compliance.
Mr Heaton: We also have a Bill on child maintenance
in Parliament at the moment and, if I am right, we have either
circulated for Parliament and others draft regulations or a detailed
briefing file. That is a technique I have seen in my previous
departments, that if you cannot do the draft regs you can at least
do a fairly detailed piece of paper saying what you intend to
do.
Chairman: Exactly.
Q56 Baroness Maddock: Mr Heaton,
I think this gives you a chance to expand as promised earlier.
We have commended your Department on consolidation and you mentioned
the Blue Books, which we also talked about, particularly consolidation
of Housing Benefit, which is important, but Social Security legislation
is very complex. Have you got any other plans for consolidation
in other areas, having done some good work already?
Mr Heaton: First of all, thank you very much
for the compliment you paid to our consolidation on Housing Benefit.
It was hard work. I will say a bit more about how useful we think
consolidation is and the advantages and difficulties surrounding
it. We take it seriously as a Department, we do it both formally
and informally. Speaking personally, as a tidy-minded lawyer,
I am a huge fan of consolidation, I wish we could consolidate
everything as soon as it has been amended a couple of times. Your
Committee has long championed consolidation so I need not labour
the advantages but I will just mention two advantages that sometimes
gets overlooked. One is if that I come to draft an Instrument
that has been recently consolidated my draft is going to be more
accurate, so consolidation leads to subsequent accuracy. The second
point, which I think your Committee has made, is the longer you
leave it the more difficult it becomes, which stands to reason.
We now have some Instruments that are 20 years old and they are
going to be very, very difficult to consolidate. Difficulty and
: resources are not a block to consolidation, I am clear on that.
Consolidation requires resources but if you get your consolidation
into your forward business plan, that is the real key to it. No
department or legal team is suddenly going to be able to achieve
consolidation at the drop of a hat, it has got to be planned.
That is a key point. It is rare to do a plain consolidation, and
in some ways the word "consolidation" does not really
fit in the SI context. For consolidation in the parliamentary
primary process, you get a special channel through Parliament
because you are not amending substantive law. If you are doing
an SI you do not have that external constraint, you are free to
amend the substantive law, and human nature and the drive for
better law and lighter touch regulation and all the rest of it
means that you are bound to make changes to the substantive law,
so you very rarely engage on a plain consolidation. At the very
least you are going to be seeking to simplify the underlying legislation,
rewrite it and put it into modern English, but there is also going
to be the temptation to make substantive policy changes. You have
a choice: you either impose on yourself an internal constraint
equivalent to the parliamentary rule that you cannot make substantial
changes, but then all you achieve is rewriting law that may be
inherently very, very complicated and that does not achieve very
much; or you can say you will set out to revisit, restate and
simplify the law and produce a better corpus of law on, say, Housing
Benefit or Income Support. In practice one would steer a course
between those two things. Certainly we steered a course on Housing
Benefit, but it was a long, hard project because of the policy
input that kept coming in, "Well, if you are doing that,
why not do this?" With stops and starts it took the best
part of two years to consolidate those 200 Instruments. These
are really, really big projects. Another difficulty that we find
with consolidating is what you do about case law. On the Social
Security side we have something like a quarter of a million appeals
to the tribunals and the commissioner, so you have got a quarter
of a million case law precedents, how much of that stuff does
the drafter try and get into the law that he or she is consolidating?
That is a really difficult legal question. Consolidation is a
long, long way from cutting and pasting. The drafter has to decide
how much case law to put in. We also have to decide where to start
and which Instruments are best to consolidate.
Q57 Baroness Maddock: I think we
were interested in what your forward plans were.
Mr Heaton: I am so sorry.
Mr Wynn Owen: I think you asked for any examples
and I can give you an example from the Pension Protection Fund
field. We do recognise that the Multi-Employer Scheme Regulations,
which this Committee has seen, are relatively complex to use in
practice, from the feedback we have had from our regular stakeholders,
lawyers, et cetera. There is work underway in DWP among both Richard's
staff and mine to produce revised and consolidated regulations
in that Multi-Employer Regs field for the PPF.
Mr Heaton: We have an enormously ambitious plan
to make the benefits system, which includes benefits legislation
and the entire system and the administration of it, simpler, not
just in black letter law but simpler in how it is administered
and, crucially, in how we engage with citizens, customers, who
have the fortune or misfortune to be receiving benefits or seeking
to get into work. It is a fearfully complicated system. We have
set up a Benefits Simplification Unit which has kicked off the
task of trying to mainstream simplification into everything that
the Department does, so now all submissions to ministers on benefits
have to include impact on simplification. We are planning all
sorts of black letter simplification so, for example, the Local
Housing Allowance is much, much simpler than the previous method
of calculating Housing Benefit. In April next year we are abolishing
the lower ceiling person rate of Income Support and Jobseeker's
Allowance, which results in a simplified system. We are introducing
Employment and Support Allowance in October next year which replaces
two benefits, Incapacity Benefit and Income Support, with just
one. There are all sorts of black letter simplifications like
that, which we are hoping to achieve. We are also embarking on
a departmental change programme which aims to put the customer's
experience right at the heart of how we organise ourselves, how
we communicate, how we present, how we join up one arm of the
Department that delivers pensions with the arm that delivers Jobseeker's
Allowance and how we are joined up with HMRC in terms of tax credits
and so on. We are really, really ambitious and have got a awful
lot going on in trying to make the system work better for the
citizen we are providing a public service to. That is the focus
of our attention but I think I have rather skated over a lot of
it.
Baroness Maddock: No, thank you very much.
Chairman: Thank you. We shall watch with interest.
Q58 Lord Tunnicliffe: We have this
widely experienced and talented Social Security Advisory Committee
and yet you apparently ignored their last three adverse reports.
In a sense, what is the point of having it if you are going to
ignore it when it reports adversely?
Mr Wynn Owen: Perhaps I could answer that because
I act as the departmental steward to Sir Richard Tilt who chairs
the Social Security Advisory Committee. I am delighted to announce
that my Secretary of State has announced today that he will be
reappointed for a further three years from 1 January. To answer
your question, SSAC is fairly unique across Government and in
a small way does for us what this Committee seeks to do across
Government. It has a unique role looking across much of DWP's
secondary legislative process with mandatory scrutiny of most
of our proposals for social welfare reform. It enjoys good working
relations with us but we regard it as a critical friend. The SSAC
role is very open and transparent when it publishes reports disagreeing
with our proposals. The way the process works is if the Secretary
of State of the day nonetheless decides to lay regulations despite
an adverse report from the SSAC, Parliament gets a statement explaining
the extent of compliance if some changes have been made in relation
to SSAC's recommendations or why they have been rejected. It is
true that in three instances recently the Secretaries of State
by and large chose not to reject all of the SSAC's recommendations
but some of them. The SSAC have advised us that since the late
1990s, over the last nine years, they estimate some 60% of the
regulations that they have looked at and have made a recommendation
on have led to a substantive change in the regulations subsequently
made by the Department or in the guidance the Department issues
to its staff. Having attended it, having worked closely with Sir
Richard Tilt, and I was at their stakeholder forum recently consulting
with many stakeholders, I feel the committee does make a very
real difference just by its very existence. The discipline for
our officials at all policy levels to attend that committee is
in many ways very good preparation for attending a Committee like
this one.
Baroness Deech: Given that the work of your
Department has a terrific impact on everyone in the country and,
sadly, often in a disappointing way, and you mentioned child maintenance,
pensions and so on, uniquely your primary legislation often has
a provision that means you do not need to consult if a measure
is put forward within six months of the section being commenced,
and I do not think that applies in other departments, so you do
not get the benefit of consultation. I wonder what the explanation
is for that and how you justify it?
Q59 Chairman: Are you going to leave
it like that or not?
Mr Heaton: I cannot announce any plans to abandon
it but let me answer the question, if I may. It is an interesting
clause and it is the kind of boilerplate clause that we find in
lots of DWP bits of primary legislation. I was trying to track
its history at the end of last week and I got back to 1985 but
it probably goes back beyond that. The purpose of the provision
is to ensure that when the Government seeks to implement quickly
soon after commencement there is no delay built into the system
by having to do a statutory consultation, so the Department can,
where necessary, seek Royal Assent and implement very, very quickly.
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