Examination of Witnesses (Questions 60-79)
Mr Phil Wynn Owen and Mr Richard Heaton
27 NOVEMBER 2007
Q60 Baroness Deech: Excuse me for
interrupting but that applies to every department. There can be
no minister who does not want that.
Mr Heaton: It is certainly a blunt instrument.
First of all, since 1998 we have agreed with the committee that
Phil has mentioned, the Social Security Advisory Committee, that
they should certainly see Instruments during the six month period
even though they are not a formal consultee. More recently, on
the passage of the Welfare Reform Bill through Parliament we agreed
to go further with them and ministers agreed that they should
have a greater input into those six month regulations even though
by statute there is no formal consultation. We are undergoing
a pilot with SSAC to see whether we can properly engage with them
in that six month period. They are likely to report on the pilot
during next year and that is the point at which we will review
this provision and see if it serves a useful purpose. It is not
the difference between statutory consultation and no consultation
at all, that is really important, even where the six month provision
applies. First of all, we seek to involve SSAC in the way I have
described but sometimes there will be other statutory requirements
requiring us to make other consultations, and certainly we seek
to consult stakeholders as much as we can because that is part
of our culture in seeking to promote legislation. We do not try
and avoid consultation. We are freed here from the statutory requirement
to consult but I do not think there are examples where we simply
would not consult because we do not have to. It is not an all
or nothing situation.
Mr Wynn Owen: If I could just give one example
of that. Under the six months rule we were not required to consult
on the original Financial Assistance Scheme Regulations in 2005
as it was intended that they would be coming into force within
six months of the Act. Nonetheless we acknowledged that the scheme
was very controversial by its nature, there was a high degree
of both public citizen and professional interest, so we voluntarily
conducted a full consultation exercise on those regulations during
2005.
Q61 Baroness Deech: I am not persuaded
that your Department is different from any other. I do find it
even odder now that there should be this so-called six month clause.
I cannot see any good reason why there should not be the widest
possible consultation, as happens with all the other departments
that we deal with in receiving their Statutory Instruments. I
think that is important. Would you say that the impact of European
requirements has something to do with it? Do you feel overwhelmed
by European requirements and the need to get on with it?
Mr Heaton: No, it is not that because we are
not a big implementer of European legislation. As I said, it does
not excuse us and we do not seek to use it as an excuse not to
consult a Committee like this, SSAC or other bodies that can help
us develop good secondary legislation, it simply removes a particular
statutory requirement. I acknowledge that it is an odd one.
Q62 Baroness Deech: If the origin
of that statutory requirement is lost in the mists of time, which
is what it sounds like, I can see no particular reason to have
it.
Mr Heaton: I cannot say we have carried out
a full review of the utility of the clause but it is certainly
one that is on the table by virtue of the SSAC 18 month pilot.
It will be looked at in the course of the next year.
Q63 Chairman: I think that is what
we are saying, that since you cannot even remember why it is there
then maybe the time has come for its extinction.
Mr Heaton: We will look at it certainly.
Chairman: Perhaps you could write further to
us on that before we conclude our report.
Q64 Baroness Maddock: Something that
helps us in our deliberations is Impact Assessments and we have
made various comments to departments about this. Recently the
National Insurance Credits and Local Housing Allowance Instruments
failed to include Impact Assessments. I think we did drag some
of them out of you, but this takes time and we take longer to
deal with an Instrument if that happens because we have to come
and ask questions. Is it possible for you to undertake to provide
proper Impact Assessments for all your future Instruments?
Mr Wynn Owen: Shall I go first and answer both
your generic question and one of your case studies and then Richard
will pick the other up? It is certainly our intention to provide
Impact Assessments where that is appropriate. Under the Cabinet
Office guidance it is not always appropriate, there are circumstances
in which you are not expected to provide an Impact Assessment,
if there is no burden on the relevant bodies concerned, be it
business, charities, voluntary or—
Q65 Baroness Maddock: I was going
to have a follow-up question on this, so while you are talking
about it can I raise this issue. Particularly on things that deal
with benefits, Housing Benefit and so on, we have had several
where you have said there is no impact but if you work in the
CAB, by golly, you will know that there is an impact. Those are
the sorts of places where the impact comes and if you are a local
councillor or a Member of Parliament there is a huge impact. I
was quite surprised. There is another one we have got this week,
I cannot remember what it is, which is exactly the same and I
am quite sure that it will have an impact on the sorts of bodies
that give advice to people on benefits, Housing Benefit particularly.
Mr Wynn Owen: Change always has an impact on
people and I can assure you that we seek to develop change to
the public good, so I was disappointed to hear the perception
that pensions have an unfavourable impact on people from an earlier
question. Just to take your Local Housing Allowance example, and
I think there is a question both for us to take away and reflect
upon and also for the Committee and its staff. I looked into the
Local Housing Allowance case in preparation for this Committee.
There was a very comprehensive Regulatory Impact Assessment published
alongside the Welfare Reform Bill that included from pages 20
to 40 a full Impact Assessment of the intended LHA reforms. The
question it perhaps raises both for us and for you is whether
the Committee and its advisers would be happy to take greater
cross-referencing in Explanatory Memoranda to existing Impact
Assessments where there has been no material change in the circumstances
during the interim period. I very much regret, and with hindsight
I apologise, for the fact that we did not cross-reference in that
Explanatory Memorandum to the full Impact Assessment published
alongside the Welfare Reform Bill which included a 20 page Impact
Assessment on just this very measure. I think we could have done
better there. On the other hand, the Committee may wish to offer
the view, and it would be a generic one for departments rather
than just for us, that you are not satisfied with cross-referencing
to Impact Assessments.
Q66 Lord Tunnicliffe: I have no problem
giving you that view now. 1,200 Statutory Instruments a year we
cannot possibly cross-reference.
Mr Wynn Owen: In which case we will all need
to think, and you may wish to think about how you convey to departments
generally coming out of this review, as to the extent to which
you wish us to repeat or reprise in some way the relevant sections
of Impact Assessments from larger parent Bills. It is true to
say from these Statutory Instruments I have been looking at in
preparation for this Committee that many SIs, in and of their
own right, do not make that much sense, not in the sense that
they are unintelligible, but simply they are part of a wider reform
programme, which is why the Impact Assessment for this was published
within the context of the Welfare Reform Bill. Maybe we should
look at this more as departments, and I think Lord Tunnicliffe
has indicated he would like us to. Perhaps the Committee could
look at pulling out the relevant sections and attaching, or at
the very least cross-referencing.
Q67 Baroness Maddock: I think that
is what we need because we get our Instruments on Thursday and
we come here on Tuesday and we cannot always have access at weekends
to get into these cross-references. We do not require all of it
but we do require a minimum amount to help us.
Mr Wynn Owen: Perhaps we could liaise with the
Committee secretariat about what would be most appropriate, efficient,
economical and not chop down too many trees, but give you what
you need. As I say, the material in this case was in a previous
Impact Assessment to the Bill but was not attached.
Chairman: We will write to other departments
as to whether we feel that is coherent as well.
Q68 Viscount Eccles: Would you agree
it is always a good thing to put yourself into the mind of the
enemy?
Mr Wynn Owen: Who are you referring to?
Q69 Viscount Eccles: I leave it to
you to decide.
Mr Heaton: Can I add to the previous answer?
Q70 Chairman: One word will do.
Mr Heaton: Where there is no Impact Assessment
we would still seek to make the EM as helpful as we can and we
would welcome feedback from you and your staff on bits and pieces
that are missing from the EM.
Lord Tunnicliffe: Can I just make a very simple
point. The EM is useful if it can be read in its own right.
Q71 Chairman: The EM may also be
useful to real life out there in terms of interpreting what the
Statutory Instruments meant.
Mr Wynn Owen: I think Lord Tunnicliffe's remark
from a dedicated reader is very helpful and we will certainly
seek to promulgate within the Department that you want freestanding
material.
Q72 Baroness Maddock: You have picked
up about where people go for advice, they need to know about these
things.
Mr Wynn Owen: Looking at the Impact Assessment
published in the Welfare Reform Bill, there was a discussion on
page 31 of the Impact Assessment to the relevant Reform Bill about
the impact on the voluntary sector that you may wish to look at.
Baroness Maddock: I think we have made our point
about why we did not see that.
Q73 Chairman: Impact Assessments
tend often to focus on burdens. We are interested in the effectiveness
of policy, and it is part of our terms of reference to advise
the House when we think it may be open to question whether an
Instrument achieves its policy objective or not. That seems to
us to require that there be some explicit clarity about what the
policy objective of an Instrument is, albeit at times that requires
you to paint a slightly broader picture to make it more coherent.
From our point of view we start from the assumption that for any
significant Instrument, apart from any annual fee uprating or
something, you would expect to see in an EM an explicit statement
of what success would look like in terms of implementation and
hopefully measurable by some sort of time limits, "We expect
within three years that 80% will have behaved in this sort of
way". Would you agree with that and, therefore, would you
agree that it would be better for the Department and for Parliament
if such statements were made within EMs so that the House is better
sighted on what you are seeking to do?
Mr Wynn Owen: I agree to a very large extent
but I think it depends on the circumstances. Perhaps I could explain.
It flows from my earlier point that most regulations or SIs are
part of a wider programme of reform, often flowing from primary
legislation. The objectives and any criteria or measures of success
are usually contained either in the parent Bill or the parent
Impact Assessment in the case of Local Housing Allowance.
Q74 Chairman: Not often in quantifiable
or measurable forms.
Mr Wynn Owen: It depends on the circumstances.
It is absolutely right that we should be clear about the objectives
in the Bill, the Impact Assessment, the Explanatory Memorandum,
when we can. I would expect a good Impact Assessment of a typical
policy usually to explain our measurable expectations and outcomes.
For instance, in the Local Housing Allowance case, although it
is only for new tenants or people moving between tenancies, we
would expect within three years about 75%, about 600,000 of the
800,000 stock, to be on the new allowance because there is a lot
of churn in that market. However, let me just continue this point
to illustrate, we have already flagged, because it is inherent
in the way the Department operates and the Minister has said,
that we will do a rolling two-year evaluation and draw conclusions
at the end of two years after the introduction of Local Housing
Allowance. If we find, let us say, that we have not got that 75%
or 600,000 of the 800,000 stock on the new allowance, that is
not necessarily failure of the policy. There may have been other
things going on like different developments within the macro economy
or the nature of the housing market that may have affected the
development of the growth of number people on the allowance towards
that target. While our Impact Assessments give our best expectations,
there are quite often spans of uncertainty in our forecasts of
what will happen but, depending on the policy, that does not necessarily
mean that we are setting those as targets in any way. The Government
is seeking to reduce the number of targets it sets itself. As
you know, the Public Service Agreements have come down from 120-odd
in the old days to no more than 30-odd in the recent Comprehensive
Spending Review assessment. While we do seek to lay out the degree
to which we expect a policy to advance what its take-up or whatever
will be, the funnel of uncertainty, we are not necessarily going
to be bound to success criteria. We may be, it depends on the
policy and what is appropriate in the circumstances.
Chairman: I think we would assert that the absence
of measures of success and/or weak monitoring of effectiveness,
which we will come on to in a second, makes it all too easy just
to legislate, to regulate, without really having any clarity about
your effect and not leading to proper learning about policy effectiveness.
Q75 Lord Crisp: Let me just pick
up that point very briefly. You just mentioned in your reply an
example of monitoring two years on as to the impact. What is your
general policy on monitoring the application and impact of these
Instruments three years on, say? Do you have a general policy
about that? Let me just add the question; where would we find
out about the results of that monitoring? Where would the House
find out?
Mr Wynn Owen: On the latter question, we publish
our evaluations transparently, be they of pilots before a full
policy comes into effect or post-hoc evaluations, as part of our
research base on our website. To answer your question, do we have
a policy of a normal three year post-hoc implementation review,
the answer is we do not because circumstances differ and often
the elapsed time between the Act or the SI coming into effect
and policy action beginning is considerably longer than three
years. Whereas in the Local Housing Allowance it comes in next
Spring and we promise to evaluate it over a two year period immediately
after its introduction, in the Pensions Act 2007, for instance,
we have included a clause in which we have said we will review
the operations of the Act by the end of 2014, because you will
recall I said earlier most of the major elements of the Pensions
Act 2007 will not be coming in until 2009, 2010 or 2012, so it
would make no sense to have a three year review.
Q76 Lord Crisp: I totally get that
point. What percentage of acts and Instruments do you do an evaluation
of? Those are two examples where you have committed to doing one.
Mr Wynn Owen: I do not have the number available.
we do not measure it in that way. I am not sure it would make
sense to do so, because the social and economic materiality of
a large act like the Pensions Act as against an SI might be widely
differing.
Mr Heaton: Sometimes it may seem that legislating
is like you throw a rock into a pond, you look elsewhere and the
ripples go who knows where. When we are legislating on the Social
Security side we are legislating in the context of a system where
we are delivering and administering the system by virtue of JobCentre
Plus and our other delivery agencies. When we legislate to change
the rules on claims and payments, for example, first of all the
team I mentioned earlier has to do some guidance for decision-makers,
then decisions are made and those decisions are very often appealed.
We have an enormous network of feedback mechanisms. What I cannot
say to you is that those feedback mechanisms are collected into
annual reviews of SIs but there is no legislation on the Social
Security side that we let loose into the system without very,
very carefully tracking its process. Those tracking mechanisms
are built into the fact that we are delivering and responding
to appeals on decisions, if that helps.
Q77 Baroness Maddock: One of the
things that Parliament is sometimes interested in is how much
things cost and whether by actually changing it you are going
to save money. Sometimes that is the aim, to save money. It is
interesting for us to be able to find out whether this actually
happened and what was saved because I think some of us sometimes
suspect that this does not happen, and it is not a good news story
for Government, of course, if it does not happen. It might be
quite interesting to look over a period of time at how successful
savings have been, and whether you look at that at all.
Mr Wynn Owen: As we said earlier, we do post-hoc
evaluations according to the circumstances of an individual measure,
be it Local Housing Allowance over two years, or Pensions Act
2007 in 2014. We have an extensive research base that is constantly
updating our costings and forecasts of volumes for key major policy
delivery. If there were any particular issues that the Committee
were interested in that you wish to flag to us over time through
the secretariat for an update of Impact Assessments or whatever,
many of these programmes are big rolling programmes of reform.
So, again, thinking of my own patch, pensions, the Impact Assessment,
volume assumptions, et cetera, underlying the Pensions White Paper
of May 2006 are different from those underlying the Pensions Act
subsequently introduced which became the Act of 2007, just as
when we publish our new Pensions Bill to implement personal accounts,
a new way of low-cost saving for many people, shortly within this
Parliament, I would expect some of our volume assumptions there
to have changed marginally too. We are constantly conducting research
and changing costings, changing volume assumptions, to meet our
current best expectation of what will happen. One can track such
Impact Assessments which we have made substantially in the pensions
case over time and they are all available on our website.
Chairman: We thank you for that offer. All of
this is relevant to post-legislative scrutiny which the Government
will be saying something about and we shall certainly be saying
something about.
Q78 Lord James of Blackheath: A year
ago your Department gave a hugely helpful presentation to Members
of this House on the firewalls and protections built into the
system to guard against fraud and misuse. With all these Instruments
going through, to what extent are you able to take what effectively
amounts to a mass of micro changes and ensure that they do not
undermine the integrity of that system and open up scope for malpractice?
Is there a conscious process of assessment for each of these changes?
Collectively they add up to an immense amount of challenge for
a system which is obviously very carefully integrated and thought
through.
Mr Heaton: One of my responsibilities is for
the Departmental Security Team and they are tasked, and I task
them, with a challenge function to make sure that every new process,
because we deliver change not only through these Statutory Instruments
but through IS changes, as well as different ways of delivering
benefits, includes a proper security evaluation. Security has
to be part of the architecture, physical and cultural architecture,
if you like, of any change in policy. We take, as you would expect,
fraud and error both by customer error and by staff error extremely
seriously, it is a drain on public resources. We prosecute 8,000
to 9,000 cases a year from within the Department. Those are two
ways in which we take security and fraud and error extremely seriously;
building security into any new design and also making sure we
have the mechanisms in place to detect and prosecute fraud. Phil
may want to come in as well.
Mr Wynn Owen: The only thing I would add to
that is we have got a very complex system to operate, as I think
you have instanced in your question. Lord Turner of the Pensions
Commission described the pension side as what he regarded as the
most complex pension systems in the world. One of the major causes
of error both for our staff and our customers is if they cannot
understand the system they are operating or dealing with, hence
the point Richard was making earlier about the constant driver
of all our reforms now, be it on the welfare reform side or the
pension side, is to seek to simplify our systems to make them
more intelligible both to our staff and our customers. That should
have a significant contribution to make in terms of accessibility
for customers and reducing inefficiencies and errors in the systems
on behalf of our staff.
Q79 Lord James of Blackheath: The
particular concern I have is that the sheer weight of the SIs
which you generate in the course of a year are enough to distract
the integrity of the system and diverts attention away from areas
which might be weaker parts of the firewall.
Mr Wynn Owen: I think it would be true to say,
and I know you are not suggesting otherwise, very few of our staff,
and I would hazard a guess that none of our customers, would spend
their time reading SIs.
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