Select Committee on Social Security Minutes of Evidence

Examination of witness (Questions 40-59)



  40. Where have I heard that before? My last question is something that I have had a particular concern about, I think, because of some of the issues arising with the interaction with housing benefit. Is that group of families, and children within those families, who are growing up on incomes that are substantially below Income Support levels, in many cases, not exclusively, because they are subject to restrictions on housing benefit, and therefore are having to subsidise their rent out of their Income Support, would you agree with me that that particular group do deserve attention in a number of different ways, to try to deal with that, and that really we should, as a matter of principle, seek not to have children growing up at a level below Income Support, however that can be addressed?
  (Mr Darling) Certainly, I agree with you that we need to make sure that incomes in households where people are not in work are maintained at an acceptable level. You are right, housing benefit has many problems, and, as you rightly say, there are parts of the country, your own is one, where people are subsidising their rents. We are looking at that, as you know, and housing benefit is one of the areas where it needs significant reform; it will take some time to sort it out, but we are trying to sort out the administration at the moment. We need to look at the way the present system works with a view to improving that and then move into longer, structural reform. But we also need to look at the negative effects that it can have on some people because of the way it works at the present time. So, yes, I do agree with you, it is something that we are giving attention to; it will take time to do it because it is so big and there are so many people that depend upon it, but it is one of the areas in which I have looked to be making significant progress in the next Parliament.

  41. Can I just flag up, and I am not really expecting you to respond to this, but could I just make a plea, allowing for the fact that long-term reform, by definition, will take time and be complex, that, as a more urgent requirement, we do look at the impact of restrictions, because I think there are, at any given time, tens, if not hundreds, of thousands of families who are caught in that situation?
  (Mr Darling) You mean things like the single room rent?

  42. There are lots of different practicalities; the single room rent, I know, there has been movement on, and that is very welcome, but there are many families who are also caught in the short term with £40, £50, sometimes, subsidies, and I do not think really that can wait for long term. So I would just flag up that I would ask for short-term consideration as well?
  (Mr Darling) When I say a short-term reform, it will take some time to see the reforms through, but the idea is that each year we make changes that in themselves are beneficial, both from the administration as well as the structure of these benefits, so I would hope that each year we will be able to see some improvement. But the point I am making is that it will take some time to see these reforms through to their conclusion, simply because the structural changes that are necessary are dependent upon other things, such as the rent restructuring that is necessary at the same time, as you know.


  43. I would just underscore that point. I am astonished, coming from the area that I do, that the rents are being paid, and the restrictions that are being inflicted on some of the areas, like Karen and Andrew represent; there is a sense, in my mind, that the Department is not really just too sure about who is in charge of housing benefit. It is a bit betwixt and between; it is a housing issue, obviously, it is a policy issue as well as a departmental issue. Supposing the decision was taken to do something about the point that Karen has just raised, would you expect to take that forward, or would you expect the DETR to take that forward?
  (Mr Darling) We have policy responsibility for housing benefit, but as the Housing Green Paper, which was published last year, recognised, housing benefit cannot be looked at in isolation from housing policy, because the two are related, so both Departments are involved in it. But, in terms of making the structural changes to housing benefit, and the administration of housing benefit, that is the responsibility of the DSS. As and when we move to changing the structure of housing benefit, clearly, the Inland Revenue, or certainly the Treasury, become involved, not only because of any costs but because if we move towards something more akin to tax credits then they will be involved as well, but the policy responsibility for housing benefit rests with the Department of Social Security.

Mr Thomas

  44. A very general question, Secretary of State. I think you have been Secretary of State for over three years now. You have mentioned the professional groups who do not tend to have a shortage of opinions about a whole range of issues to do with the benefits system, many of whom are very competent, very capable and have given evidence to us on technical issues, and, as you know, it is a very technical area. It is a personal question really, how do you ground yourself to the reality, from the point of view of the users of the system, how do you make sure that your political positions are in touch with the realities at grass roots level, from a customer point of view? And, just to follow on from that, is there a formal procedure for canvassing the views of the users of the system?
  (Mr Darling) No, there is not a formal procedure. I suppose the ultimate answer is that I, like you, and everyone else round this table, who is not a Clerk, are elected by the people of this country to exercise our judgements. If you look at the changes we have made in social security, I hope that they have been for the benefit of most people. I use my judgement, along with my colleagues, we are all collectively responsible for the changes that we have made; we did what we were elected to do, to change the welfare state, both in delivery, both in terms of the increasing support for pensioners and families, and so on, and we did that, and the mandate we got was through the ballot box. One of the problems we have got, as you rightly say, Gareth, there are a number of groups who make constructive criticisms, there are lots of people with views which, of course, we will listen to, but there are very few people in this country who are not affected by the DSS, they may not know it but they are, indeed, anyone who has got a pension is, so that is most of the population. There are no groups of whom you could say, "These people are truly representative of our users," if you like; in many ways, we are, and we have been elected, that is the way the democratic process works. I am happy, and indeed you have only got to look at the Pensions Service, for example, you were asking earlier about what is the front end going to look like, well we are having discussions with people like Age Concern, to say, "Well, what sorts of things would you like to look at?", we might want to use some of their premises, and so on. But, ultimately, decisions about anything to do with Government must lie with the elected Government, rather than with lobby groups, though their views, of course, are listened to with great interest.

Dr Naysmith

  45. Just a very quick one. I was not entirely happy with your answer to Karen, really, about the research and funding research; a cynic might say that is an area of research that you do not want to fund because you might not like the answer when you get it. Now I would not dream of suggesting that, Alistair, that would be very unfair. But I know the Department does do research, and it commissions research as well, so how do you choose what research you undertake, how are the decisions made?
  (Mr Darling) As you rightly say, and you know, we commission an awful lot of research; and, just to contradict what you were saying, much of it comes up with answers that I suppose the Government sometimes finds it would not like to hear, that is the nature of research, but no-one should be afraid of that. If you look at the poverty report, for example, you know the "Opportunity for All" that we produce each year, as the years go on, we are going to be held to account for what we promised and what we actually deliver. Now Governments in the past have never done that, because it would have been embarrassing to them, because, you imagine Lady Thatcher doing such a thing, it is unlikely, I think. So I am not afraid of commissioning research that sometimes goes into areas that might be difficult. What I was saying to Karen and what I say to you is that when it comes to the bit, whenever that day comes, I would rather stand up and say, "We have increased the amount of money we're paying to the poorest children in this family on Income Support, going up from £17 to £30 a week, the Minimum Income Guarantee helping two million pensioners living in poverty, Working Families' Tax Credit, all of these things we have done and we have done because we, as elected politicians, an incoming Labour Government, said they needed to be done, because these are changes that were needed to the welfare state." And I did not need an academic study to tell me that there was poverty, or that we needed to do something about it, or that we needed to find the money to do something it, we have done it because we had the political will to do it. Now lots of research has been done into these things, lots of it, and some of it will be funded by us and others will be independently funded. I have no difficulty with that. Equally, I have no difficulty in acknowledging that there are still problems that need to be tackled. But what I say to people is that if we are given the support then we can tackle them and we will tackle them.

Mr Dismore

  46. Gareth just raised the first issue which I wanted to discuss with you, so perhaps we will go on to the second issue, which is what the Department is doing to look at its responsibilities under the Race Relations Amendment Act, in terms of the ethnic communities, because there is a new duty on public bodies to do what is needed to eliminate unlawful discrimination. And one of the themes that has come through a whole series of our reports, practically all our reports, I think, is the extent to which the Department responds especially to the ethnic communities, and certainly when we were doing the pension inquiry we went to my constituency and heard from some of the ethnic pensioner groups that they have needs which really they felt were not being addressed by the DSS. One of the problems is that there is no ethnic monitoring of claimants and outcomes from ethnic communities. What do you think the Department needs to be doing to meet its responsibilities under the Act, and is it going to look at whether or not ethnic monitoring, both of claimants and of outcomes, should be taken into account?
  (Mr Darling) As I was saying, we need to make sure that we meet our obligations under any statutory requirement. The Department does have some information, collected through the Labour Force Survey, for example. You mentioned pensioners, in particular; you are right, that if you look at pensioner poverty there are areas where there is a greater incidence of pensioner poverty amongst the ethnic minorities than there is elsewhere. Now, obviously, our benefits system will always be universal, they will apply across the board, no matter where you live, no matter who you are; but in terms of the accumulation of pensions, and so on, because that depends on work and various other things, then, of course, you do need to look at these things to see what else needs to be done. What we are doing is looking to see what further information we need to make sure we have got the right information, so that we can then provide the services we need for people who may be suffering from disadvantages which are peculiar to them, rather than ones that are more generalised and which you would expect to see across the board.

  47. If I give you some further examples, obviously, you are right that the pension is a universal benefit, but there are other cases, for example, we looked at the Benefits Agency Medical Service, which threw up all sorts of criticisms as a scheme. And without a system which actually monitors whether or not ethnic people are getting a fair deal from the system, in other words, that they are getting the same benefit irrespective of their ethnic origin, people will inevitably assume that they are being discriminated against if they do not get what they perceive to be fair treatment. When we talk of the Social Fund, for example, where the decision whether or not to give somebody any money is entirely discretionary, within the overall framework, how can you be sure that the decision being taken by the decision-makers is not influenced by ethnicity? Now the only way that can really be done is by monitoring of claimants and outcomes, surely?
  (Mr Darling) And I agree with you, you do need to make sure that, on something that is pretty discretionary as well as entirely discretionary, you do not have prejudice entering into it so that people are being discriminated against. You mentioned the medical services. I think you will agree that there are problems within that service that are quite substantial; we are in the process of addressing these at the moment right across the piece. But I do agree with you that it is very important that there is no actual discrimination, or if there is even perceived discrimination that you deal with that and you deal with it quickly. But the whole way in which the Medical Services work is something that we are looking at, at the moment, because it is an area where I think substantial improvement is required in service delivery as well as the sort of general outcomes. But on the central point you are making, that we are making sure the Department does not discriminate and that people do not have that perception, that is critically important, because I have always said the system needs to have popular support, and that popular support means just that, it has to be support across the piece, and not with a group of people feeling that they are not getting what they are entitled to.

  48. But how can you achieve that without ethnic monitoring or monitoring of outcomes?
  (Mr Darling) If you take the Social Fund, for example, we do monitor the outcomes, but one of the things that we are reflecting on at the moment is whether or not we need to get more information in order to see whether or not there is that problem, or, if nothing else, to reassure ourselves that there is not any problem with discrimination. I take entirely the concerns you are expressing, and we are reflecting at the moment on what we might usefully do to address that.

  49. One other point, about our Social Fund report, and I think it is more general. I think, to an extent, you touched on this earlier on, and it is the extent to which applicants feel they are not getting fair treatment from staff in the Department. What do you think you could do to help people, particularly in the Social Fund, at a particular crisis, when they are particularly stressed, to access the benefits, both immediate Social Fund assistance and more generally, in terms of perhaps encouraging the staff, empowering them actually to start to give advice as well as just processing the claims?
  (Mr Darling) Part of the philosophy of Jobcentre Plus, of course, is to help people, give them more, that to which they are entitled but also to give them advice. But bear in mind that the Social Fund, by its very nature, is the lender of last resort and that if the request is declined, for whatever reason, it is unlikely that the person who has their request turned down is going to think extremely highly of the person who made that decision. In fact, as you know, we have increased the amount of money going into the Social Fund, there are more people benefiting from it than did in the past, and I think that is important. But I think the key thing is, you rightly identify, to make sure that, as well as dealing with the symptoms of poverty, we deal with the root causes of poverty. And the root causes of poverty will be dealt with, in part, by helping some people improve their situation, improve their incomes, not just by getting benefits to which they are entitled but, where it is appropriate, getting them into work, or, where clearly it is somebody who is not expected to work, like pensioners, for example, making sure they have got everything else that they are entitled to. But we do try, year on year, to make sure that our customer service improves; but, as I say to you, you will know that as an MP, if you tell a constituent "No", and there are ways of doing that, of course, you do not always get the gratitude to which you might expect you are entitled.

Dr Naysmith

  50. I just want to turn to Part Three of the report, Human Resources and Other Departmental Activities, it is headed, but what I really want to focus on is fraud and official error; and the figures that are given in the report say that fraud and error show a reduction of 6.5 per cent this year, equivalent to £1.32 billion. Are you happy that the Area Benefit Reviews and the other anti-fraud measures are cost-effective?
  (Mr Darling) The Area Benefit Reviews, of course, look at the mechanisms that we have got in place; now you are right that one of the encouraging signs is that, for the first time ever, we have seen a significant fall in fraud and error in Income Support and JSA, that is something that never happened in the past and it is now happening. I have always been cautious about this, and that one swallow does not make a summer. We have an awful lot to do, the Department still loses too much through fraud and error, but we are trying to reduce that. I was just looking at the figures, you asked about official fraud and error, there is a reduction in official fraud and error which is about 6 per cent in IS and—

  51. I hope there is not too much official fraud?
  (Mr Darling) No; this is mistakes made, which, as you rightly say, are error, but there has been a reduction. In round terms, if you take Income Support, four years ago two out of every five cases were not right; that has been halved, it has saved a billion pounds this Parliament. So we are steadily bearing down on that. The other thing you might be interested in knowing, because I do not think this is in the departmental report, is that, if you look at the BA generally, because it is the Benefits Agency you are talking about for the most part here, what we found was there was a huge variation in offices, some offices have very good accuracy rates, up in the 90 per cents, others were pretty bad. Now there was one in particular that I was looking at, in west London, its fraud and error rate was about 64 per cent in January last year, it is now just under 80 per cent; the reason is, we sent in one of the performance action teams, we have helped reorganise things, improve the management, and so on, it is cutting down on mistakes, on errors being made, which is, for the most part, official error. So we are bearing down on that. We are also trying to make sure that the information we collect from the public is more accurate. But there is a significant reduction in fraud and error, for the first time, but, clearly, we have a significant way to go. The new IT that we talked about earlier in this hearing will go a long way to enable us to make sure that we get the right information, and, having got it, it then goes through the entire organisation and it can be cross-checked, so that if somebody turns up somewhere else with a different story they can be spotted immediately, rather than, at the moment, in some cases, not spotted at all.

  52. What you say about variation between offices is extremely interesting, because I was invited in, a few weeks back, to Lodge House, in Bristol, which is the big office, it is not actually in my constituency but it deals with a lot of cases in my constituency, and I was invited in by the fraud section to see what they do; and this probably goes back a little bit to when we were talking about morale of staff. I cannot go into detail too much, but the impression was clearly there that if they had been given better conditions they could have produced a lot more in the way of returns, and their idea was that maybe some kind of incentive could be given to encourage people—they were talking about things like lack of overtime, and it may have changed a bit, but they felt that if there was a bit more overtime and salaries were a bit better. They also claimed they were losing experienced staff. And what I am really getting at is, do you subscribe to the principle of what they were putting to me, because they were claiming huge returns were possible if they were allowed and able to work a bit longer and a bit more efficiently?
  (Mr Darling) I think it is fair to say that the overtime restructuring in Bristol did cause a number of the officers there to complain, and, indeed, I met one of them, at a routine gathering.

  53. I met about six of them.
  (Mr Darling) What we have done is, what we have been far better at now, and I think the figures are beginning to show this, is profiling the risks to which the BA and the Department generally are exposed to, which means concentrating your efforts. And part of the reason that we set up a national organisation to deal with organised fraud, one of the reasons we brought in a senior official to look at the risk profiles and where we are actually losing the money, is because we wanted to make sure that our resources were targeted in the best possible way. Now you will always get, in every office, you will find somebody in the office, for one reason or another, who has got some complaint they want to make; but we are, I think, targeting our resources a lot better, and also making sure that we incentivise our staff in the right way. In crude terms, it is all very well to send lots of staff out on lots of visits and tick off, "I did X visits today," but if they do not actually come up with the result then there is not much point. If, on the other hand, you may have got the staff doing fewer visits but actually they come up trumps, having got somebody, or a ring of people, then that helps the Department a lot more. The other thing is that there is a recognition, I think, certainly over the last two to three years, that you need to look at fraud and error in the round, and you need to ask yourself, because sometimes it is difficult to establish people's intentions, and so on, it is important that you put more attention than there was in the past on the front line, the people who sit at the desk and actually make the calculations, and all these things, as I say, are beginning to bear fruit. So I understand perfectly well what the chap from Bristol said, because I am pretty sure I met really the same chap and had a meeting with him; but I think we are actually getting better at profiling the risks and actually dealing with them, and, as I say, the figures are beginning to suggest that our approach is right. But, as I say to you, this is going to take some time to turn things round, though I think we are on the right track.

  54. That is fine; but just looking at the other side of the coin, the figures for official error are not indicated in the Area Benefit Reviews in the report, but they are estimated to be as much as a third of a million pounds, something like that would be 1.4 per cent of Income Support and as much as 5.6 per cent for Jobseeker's Allowance. Now the rate of official error does not seem to be reducing?
  (Mr Darling) No; the figures I was looking at here are Income Support and Jobseeker's Allowance, and accuracy, which is what official error is, is improving, and it is steadily improving, and we are talking about the various offices where we knew there were problems, where there was a lot of official error, and sending in teams from outside is making a significant difference and reducing the amount of official error, or, put another way, improving the level of accuracy. Now those figures will start to come through in the years to come. But, as I said to you right at the start, significant effort has gone into trying to refocus the DSS generally and being far better at identifying what the problems are. You look at the DSS overall and you just see big numbers in a vast organisation, you do not see the whole thing; you need to start looking at what is happening in the individual units and the individual offices. Now that we are starting to do that, it is beginning to show some results.

  55. Do you think that the amounts recovered as a result of fraud and error are increasing?
  (Mr Darling) We are increasing, as we are increasing the amount of money.

  56. And that is the trend, is it?
  (Mr Darling) It is.

  57. One swallow does not make a summer, I think you said, but, you know, clearly the same trend then?
  (Mr Darling) We recovered £122 million in 1997, it was £180 million last year, for 1999-2000, so it is going up. Part of the problem with recovery is, of course, that where you are recovering with somebody on benefit there is a limit to how much you can recover every week, for perfectly obvious reasons. However by far the best way of dealing with this problem of overpayments is to stop them happening in the first place; it is to that that we are directing significant effort.

  58. If we can just change the subject finally, and this is the very last question from me, there is a new anti-fraud incentive scheme for local authorities, to assist them in tackling fraud in housing benefit and council benefit, and that is also in the report. Do you have any indication of how many authorities are taking up this option?
  (Mr Darling) Many of them are. What I can say is that I think that housing benefit administration, in too many local authorities, was seen as something of a poor relation, they did not always have their best people or the best organisation; but I think that is beginning to change. I am quite convinced the incentive system we have now got is far better, and the National Audit Office has welcomed our approach, whereby we incentivise local authorities not to let fraud into the system in the first place, rather than the old system where you rewarded them for finding it, because that opens an encouragement to find it. But I think there has been quite significant improvement, over half of local authorities have taken up the various initiatives; there is a range of initiatives that we have been putting in place, and, of course, I announced earlier this year, the expert teams which we are sending in to some local authorities. To give you an example, in Northampton, where I issued directions last summer, because I can do that under various powers I have got, requiring them to improve things; they enlisted help from outside and it is turning things round, there is a significant improvement going on in there. But one of the problems in housing benefit is, it is administered by 409 different authorities, some are very good, some are not at all good, and what we are trying to do is to drive up the standards of all local authorities so it is better administered. We have got to play our part, by some simplification, some improvements, that will help them in administration; but that is very, very important.


  59. I think that the Area Benefit Review process is a very much more positive way of looking at bearing down on fraud; is there any expectation that it will be extended beyond JSA and Income Support?
  (Mr Darling) Yes, it will be.

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