Supplementary memorandum from the Secretary
of State to the Chairman of the Committee
1. At the Select Committee hearing on 30
October I promised to provide you with additional information
to supplement the evidence given on the day. I hope you find the
following information helpful.
2. You asked for estimates of post office
card account use in the first, second and third year of operation.
We have already announced our operating assumption that there
will be 3 million card accounts by the end of conversion to direct
paymentin 2005. This is an assumption, not a forecast.
Actual numbers of accounts and the way in which they are used
will depend on:
total numbers of benefit and tax
the rate at which benefit customers
convert from order books and giros to direct payment into an account;
the choices that customers make between
different types of accounts;
the way in which post office card
account customers choose to use their accounts: they will be able,
if they wish, to withdraw smaller sums of cash more frequently
than they can when using an order book or giro.
3. In addition we expect to see increased
use of other banking services at post office branches. Benefit
and tax credit customers who choose to be paid into a bank account
can already withdraw cash, free of charge, at a post office if
they use a current account of one of the banks that has a banking
partnership arrangement with the Post Office. From next April
all the major banks plan to provide free cash withdrawals from
their basic bank accounts at post offices.
4. DWP IT contracts are negotiated by a
team comprising of senior managers from the relevant project and
a central team of contract negotiation experts who work to our
Group Director. The Group Director has responsibility for delivering
the modernisation programme.
5. In negotiating and administering these
contracts, the experienced in-house team is supported by various
external advisors: legal and financial, as well as drawing on
external consultancy as necessary. The contracts take into account
best practice from across the UK, and Treasury IT PFI guidelines
in order to satisfy a number of external stakeholdersnotably
National Audit Office, Treasury and the Advisory Council of Partnerships
6. PUK independently assessed the child
support reform contract, and formally approved award before the
contract was signed by the Department.
7. 1,125 customer liaison managers (CLMs)
and partnership liaison managers (PLMs) are now in post. This
represents 70 per cent of the target April 2003 complement for
CLMs and PLMs.
8. Overall the local service complement
now stands at 1,544 which represents 63 per cent of the April
2003 target. A further 554 [23 per cent] staff have agreed start
dates leaving a balance of 347 [14 per cent] vacancies.
9. National Statistics determine the publication
date for take-up statistics. Statisticians expect to announce
publication plans later this month, once they have received and
begun to analyse the final tranche of this year's research to
improve the quality of Minimum Income Guarantee take-up statistics.
I have asked my statisticians to publish results at the earliest
possible date consistent with National Statistics good practice.
10. Following analysis of the findings of
the inter-departmental working group on corporate manslaughter
the Government is now conducting a brief regulatory impact assessment
(RIA). The Home Office has lead responsibility for this exercise.
11. The RIA, which started in September
this year, is an important part of policy making in areas in which
the Government intends to legislate. It is necessary in order
that policy aims are proportionate to the costs that may be incurred
by businesses and other organisations concerned. The RIA, which
I expect to be completed by the end of the year, will inform the
process of deciding what the legislation will look like finally.
12. As you already know, the Government
has a manifesto commitment to legislating in this area and will
do so when parliamentary time allows.
13. In addition to the above information,
I thought it would be helpful if I were to clarify one or two
other matters that arose at the evidence session, specifically
the qualification of DWP accounts and Housing Benefit reform in
relation to temporary accommodation.
14. At the evidence session you asked me
whether my Department might reach a position where DWP accounts
would not be qualified, to which I responded that the modernisation
programme should take us towards that position. By way of elaboration,
the Department has targets for every aspect of the qualification
including fraud and error targets which are being met. The modernisation
programme is one aspect of a series a measures that will help
the Department reduce the level of internal fraud and error.
15. However, whether or not we could ever
reduce the level of customer fraud and error to a level that would
lead to the removal of the qualification is a matter for the Comptroller
and Auditor General. An exchange of correspondence with the Comptroller
and Auditor General indicated that if customer fraud and error
could be reduced to below one per cent such a proposition might
be possible. But even in such circumstances it would still be
open to the auditors to qualify the accounts because of the amount
of money involved.
16. The Committee asked whether our Housing
Benefit reforms (that is, the standard local housing allowance
which we plan to test out in pathfinders) would exclude people
in temporary accommodation; I replied that I expected that to
be the case. I can confirm that will indeed be the case for the
vast majority of people in temporary accommodation.
17. However, since there is no convenient
definition of "temporary accommodation" in the Housing
Benefit rules I thought I might explain in more detail what we
18. Most people living in temporary accommodation,
where local authorities have a duty under the homelessness legislation,
are in properties that are owned or managed by a social landlord:
either the council or a local housing association. As such, they
would be outside the scope of our new standard housing allowance,
which will only apply to private tenants.
19. However, in the minority of cases where
the local authority places people directly in private tenancies
with a private landlord, any resulting Housing Benefit claim would
be subject to the standard allowance. Of course, claimants receiving
the standard allowance will be at least as well off as under the
existing rules. And, although the benefit would normally be paid
to the tenant, we will build in safeguards to allow the local
authority to set up direct payments to the landlord if the claimant
has difficulty budgeting.
20. Finally the Committee asked about the
therapeutic earnings provisions. We do not envisage changing the
transitional arrangements but as I said to the Committee we shall
be monitoring their impact. For those already working close to
the 16 hour threshold they may have the opportunity of moving
to a position where they could take advantage of the extra help
offered by the new tax credits.
21. Please let me know if you require any further
information on any of these matters.
Rt Hon Andrew Smith MP
5 November 2002