Members present:

Mr Archy Kirkwood, in the Chair
Miss Anne Begg
Ms Karen Buck
Mr Andrew Dismore
Mr Paul Goodman
Mrs Joan Humble
Rob Marris
Mr Andrew Mitchell
James Purnell
Andrew Selous
Mr David Stewart


RT HON ANDREW SMITH MP, Secretary of State for Work and Pensions, and MR NEIL COULING, Principal Private Secretary to the Secretary of State, examined.


  1. Ladies and gentlemen, can I declare the formal session of our evidence open and welcome Andrew Smith, the new Secretary of State for Work and Pensions. Thank you very much for coming. We were grateful that you responded to our suggestion that, rather than stick with the original slot we had earlier in the summer, which was literally moments after you had been transported to this new dizzy height of political appointment, it would make more sense for us both if we took a little time for you to get your feet under the table at the Department. I think that will make this morning's session a more meaningful for both of us. For the record, we welcome too Neil Couling, who is Private Secretary to the Secretary of State. This is a huge Departmental Report that we are to cover this morning so we would not expect you necessarily to have every detail at the front of your mind, and if Neil cannot come up with some of the detail then we will get it later by way of notes. We are perfectly happy to operate on that basis. I should say this, and I say this every year, but I mean it every year, that we get enormous help and assistance from, in particular, the liaison team of the Department but also from the rest of the departmental staff right across the whole estate of the Department. When we go on visits we are always treated extremely well and we get assistance which we appreciate. If you can find some way of reflecting that back down to the level of the front desk we would appreciate that because it is genuinely felt and meant. We get very good service from the Department in all of our work and that helps us enormously, and you should know that and that is said absolutely from the heart. That is the easy bit over. Now we can perhaps turn to the Department. There has been a huge change since your predecessor was here last year. We have got a new Secretary of State, we have got a new department, we have got a whole welter of change in terms of policy. Employment is at record levels and that is a significant factor for the new work aspect of the Department. We have had an industrial dispute, which was not easy, which we have seen in the last 12 months. There have been major reforms to the CSA. We have got some new ideas floating around about benefit sanctions that we have been hearing about over the summer, and of course there is a lot of controversy in the national press about pensions. There is a huge agenda. I noticed that you described yourself as feeling thrilled when you were appointed. Are you still thrilled and, if so, why?
  2. (Mr Smith) Thank you very much. I thank the Select Committee for arranging the meeting. I found it useful to have an informal session which we had in the summer and obviously it made sense to arrange things this way. I thank you very much for your very kind remarks about the support you get on your visits and the good working relationship and I will certainly be very pleased to pass those generous remarks on to all the staff concerned. I do on the whole prefer them to be nice and co-operative with the Committee. Can I also say that, especially given the scale of change which you have referred to, the dimensions of many of the issues that we are dealing with in these crucially important policy areas, a constructive working relationship with the Select Committee is especially valuable because you have got a very important role yourselves in informing the wider public debate which is the essential backdrop to everything that we do. I am very grateful for that good working relationship and I just want you to know that I value it. In terms of being thrilled, yes, I am still thrilled. It is an enormous privilege to be leading the Department through such an exciting period of change. It is especially rewarding given the key principles and goals that we are working to in terms of trying to ensure there is full employment in every region, in enabling all disabled people to make the most of their potential and enjoy full civil rights, tackling child poverty, ensuring pensioners have dignity and security in retirement. These are very important goals, very close to my heart, and so it is an exciting responsibility and I am privileged, as I say, to be able to be doing the job. As you have mentioned, one of the biggest challenges of course is that we are carrying forward new policies, new measures and reform whilst simultaneously attempting one of the biggest change programmes in Europe, completing the restructuring of the Department and our agencies, modernising our antiquated IT, ensuring that the 100,000 staff are working for a different agency than they worked for previously (and they are our greatest resource in all of this). Ensuring that that goes as smoothly as possible is a very big managerial task, so both on the policy front in terms of the social issues we are dealing with and in terms of management it is a very big job but I am greatly enjoying it and I do believe that building on the foundations that we have put in place we can and will deliver on our policies of work for those who can and security for those who cannot, that we will get more people into jobs, more children and pensioners out of poverty, reform benefits and transform the rights of disabled people in our community. A lot done, a lot to do.

  3. Before I ask colleagues to respond to that opening statement, a very brief question from me which is a predictable one. The Departmental Report does refer to it in some detail at the end. It is the question of the qualification of the accounts. This is obviously something that the Department has inherited. I see you have been talking to the NAO about trying to do something about that. It is a significant worry, is it not, that a big spending Department like your own cannot get the Comptroller and Auditor General to sign off the accounts? Is this one of your priorities in your stewardship of the Department that over a period of time, hopefully a short period of time, we will get clear accounts?
  4. (Mr Smith) I very much hope so. You are absolutely right. It is very important. I understand and share the concerns about this. I would see the modernisation which we are undertaking as being an absolutely key factor in ensuring that we can get accounts which do not have to be qualified and, as you say, we are working very closely with the NAO on this.

  5. So it is a priority for you?
  6. (Mr Smith) Yes.

    Mr Mitchell

  7. Secretary of State, can I open up the discussion and move on to what must be one of your biggest concerns at the moment, and I am sure will be touched on in many of the other things you mentioned in your opening remarks, and that is pensions? As the news, I am sure, has reached you, this Committee is going to produce a report. One of the biggest studies we are doing this year is in the field of pensions. We read every day in the press about the tremendous difficulties there are in this area. It will be enormously helpful for the Committee to find out how you think things are today and what plans you have for the future. I am conscious of two points about the world of pensions. The first is that by tradition the House has always tried to move where it is possible on a joint all-party approach to pensions because it is so long term. I was the Government Whip on the 1995 Pensions Act and I remember the extent to which the Committee work on that Bill was much more collegiate than adversarial. One of the things is that in so far as it is possible it does tend to get done on as all-party a basis as possible. Secondly, of course, in the area of pensions nothing tends to happen in a hurry but things build up over a period of time and there is no doubt that there is a huge crisis for people as they look towards whether they are going to have adequate funds and be able to retire. Can I ask you what is to be done, what your considered view is, having been in this difficult job now for some months? Have you ruled out setting up a Royal Commission, for example, to look into the future of pensions? It seems to me that amongst a number of grave difficulties facing the Government this one must be right at the top of the list and of course it lands on your desk.
  8. (Mr Smith) Indeed it does. Your reference to the all-party dimension to this is one that I share. As you say, pensions policy is by definition something for the long term and it is obviously in everybody's interests if there can be as much of a shared agenda as possible. That does not mean of course that where there are difficult policy choices to be made, as there are in this area, we are going to be able to agree about everything. Neither does it mean that the lowest common denominator approach would get you the best policy. It does mean that we need a well informed and wide-ranging public debate and that public debate is already under way but it needs to continue around the options for the future and it needs to be one that can establish as much agreement across and beyond party lines as possible. All these of course are issues for the Green Paper which we will be publishing later this year and you will understand if I cannot anticipate this morning what is going to be in the Green Paper.

  9. Can you say when?
  10. (Mr Smith) Later this year is as precise as I can be at this moment. As I have said previously though, it is quite clear that you need a partnership approach here, one in which of course Government has a very important responsibility to put the right framework in place but where there are also responsibilities for employers, employees, financial services, industry as well, and we need to get everybody working together on this. In terms of what is to be done in the challenge as I have stated it before, it is one that you will all be aware of, the remorseless arithmetic that people are living longer (which is a very good thing) and with us all wanting a good quality standard of living in retirement it does mean that between us we have to save more, work longer or some combination of both. That is why in the Green Paper we will be analysing and setting out the options for precisely the sort of framework which I have described. It needs to be one moreover quite clearly which simplifies the pensions landscape, and the fact that so much of this is an impenetrable maze for people is another reason why they do not think about it today and put it off until tomorrow and too often put it off until it is too late. There is an important agenda of simplification and minimising the regulatory burdens and making it easier for employers to make good schemes available and make it easier for people to raise their level of saving to the levels that they need and want. An important guiding principle here is one of informed choice and for informed choice people need clearly to be able to understand the options which are open to them; they need a simple range of products. I think they need - and this is what we are developing with pension forecasting and combined pension forecasts - as accurate an idea as possible of what income they can anticipate. All of these things and more will be in the Green Paper, building on what we have already done, of course, improving the basic state pension, introducing the pension credit, the new income guarantee and tackling the priority problem of poverty affecting today's pensioners, which was obviously something which we had to address as soon as we could after coming into office.

    Mr Dismore

  11. I just want to raise with you the merger of the two Departments and how you felt that was going because the particular concern I have in my own patch is that we are still operating from separate buildings. It is still operating effectively as separate organisations. I can illustrate that by a case which I would not expect you to know the details of, but it is a Miss Townsend in my constituency, a lone parent who, after eight years on income support, was able to get a job. She feels extremely disgruntled because she was effectively dealing with what was to her the DHSS who told her nothing about lone parent advisers, gave no advice on WFTC on which she lost out, and gave her no advice on the clothing allowance of 150 that she could have got. She only found out about these after the event when it was too late to claim them. They are trying to unscramble it but she feels very let down by the Department because, having heard all about the merger and so forth, effectively the DHSS half of the operation still did not know even of the existence of lone parent advisers. When she went back to complain about it she was told, "Oh, this is done randomly", which is clearly not satisfactory, so what is going on in terms of trying to merge the two halves of the Department where they are still effectively operating from separate buildings and unless and until that proper merger can be achieved it is, certainly in my patch, a long way off yet?
  12. (Mr Smith) First of all on the specific details of the case that you raise, if you would like to let me have those details I will look into this.

  13. I use that as an example.
  14. (Mr Smith) I do appreciate the point that you are using it to illustrate the general challenge of such a big structural reorganisation. The straight answer is of course that it takes time to implement a merger of that scale. We have rolled out the first 56 Jobcentre Plus offices. We have a programme of rolling out 200 a year over the next few years. There is a very big job of work, as I said in my introductory remarks, in the reorganisation of staff and, of course, as well as premises and IT, there is the question of training and the definition of roles and connecting up much more effectively than we have in the past the benefit side of the operation if you like with the job-seeking side. I know you have made visits and have seen this for yourself but where the integration has happened there is a transformation in the quality of service and the help which is available to people so, whilst I can understand your impatience that we are not able to do it more quickly, I can assure you we are doing it as quickly as any sensible advice would say it could be accomplished.

    Mr Goodman

  15. Following the publication of the Green Paper on pensions are you committed to legislating in this Parliament?
  16. (Mr Smith) That is something that I will have to set out in the Green Paper and I am not going to give commitments of that nature this morning, except to say that of course we will want to move as expeditiously as we can. We do want to get on with this. That has just reminded me that I did not answer the previous question about a Royal Commission. I am not this morning ruling anything in or anything out. Neither do I want to set hares running. My views on a Royal Commission, or other bodies that might be deployed in order to help build the broader consensus, are that it is one thing if you have discussion on the basis of the Green Paper and if there are specific emerging proposals where it makes sense to have a Royal Commission then I would not rule that out, but, as I say, neither am I setting hares running. I am not sure how impressed the public would be if we simply took this challenge now and said, "Actually, we are handing it over to a Royal Commission". I am not sure that they would feel that we were engaging with sufficient priority ourselves in addressing the very real policy challenges there are in this area.

  17. They certainly would not if you just handed them the problem but they might on the back of some government proposals for wider consultation and for some action to be taken.
  18. (Mr Smith) As I say, I am not ruling things in or out this morning. A commission or similar body can work best if there is a defined issue that they are dealing with within particular terms of reference. That points to there being a stronger argument in relation to the "how" than perhaps the "what".


  19. I want to go on now to areas of child poverty but can I ask you a brief supplementary about Andrew Dismore's important question? There was a press comment that 20,000 members of staff were going to be taken out of the system over the next two or three years. Is staff morale high at the sharp end of the delivery?
  20. (Mr Smith) I think people are excited by the changes that we are bringing about and, as they see the benefits of the investment, both in the more proactive approaches which are at the heart of our policy and in the investments in better premises and working conditions, I believe people can see that there is something in the deal for them here. Yes, it is a world of change. We are all in a rapidly changing environment. Yes, there are challenges. Of course, people have apprehensions when there is change but I believe they can understand the value of the reforms that we are bringing about and I believe they can see how we are able to give a better, more responsive service to the public in that way, so there are benefits for them. It is true that as a consequence of the way in which the business we are operating in is changing, not least as the benefits of the IT investment come on stream, the balance of the nature of work will shift more from routine processing tasks towards the front line engagement with members of the public, but there are rewarding and important jobs there. I think anybody who has spoken to personal advisers and heard about the remarkable experience of what they have contributed through the New Deal can see that there is an intrinsically important and rewarding job of work there. Yes, it will involve a net reduction in the staff, we think of some 19,000 across the next four years. We wrote to all members of staff about this. They heard it first from us directly and, yes, of course we are engaged with the trade unions and will want to carry it forward in a consultative way that carries people with us. It is worth underlining that our staff turnover is something like 9,000 a year anyway, so that shows how even what is a big change could be managed within the turnover.

    Andrew Selous

  21. Can we move on to child poverty? Your Department had a consultation over the summer in trying to measure child poverty through a series of indicators. Can you tell us when you are going to be able to bring concrete proposals forward in this area and if you believe that we will be able to have a robust and credible measure of child poverty?
  22. (Mr Smith) By next spring I would expect us to have published our response to the consultation. The consultation has gone well and there has been a lot of interest. Not only have we had written submissions but we have been able to draw on face-to-face sessions that have been held with poorer people and with younger people to get their perspective on the issue. Obviously, some of the submissions we have had are highly technical. This is a technical area as well as a very important and human area, and of course it is crucially important that if we do adopt further measures we get this right.

  23. You said that there is a technical area as well as a human area. I think it is probably pretty widely accepted that the relationship between child poverty and family breakdown is a very close one. This country either tops the league or is in second place in terms of divorce and relationship breakdown, lone parenting, with a quarter of children in single parent households as opposed to only one in ten in the Netherlands, and, for example, on things like infant mortality and teenage pregnancies we are either top or second in the whole of Europe. What do you see is the Department's role, liaising with other departments, in actually trying to do something preventative about this, rather than just picking up the pieces? There are estimates from reports like The Cost of Family Breakdown Report, from the Lords, the Commons and the Child Protection Group, that your Department picks up around 15 billion a year from these sorts of issues. How do you see your Department working with David Blunkett, who I believe takes the lead in this in trying to turn that tide, and perhaps getting us down to a situation more similar to the Netherlands?
  24. (Mr Smith) First of all, as you acknowledge in your question, factors such as low income, unemployment, housing problems, health problems, are all additional pressures which obviously can aggravate relationship difficulties and family breakdown. Obviously these are crucially important and are priorities for us.

  25. There are other countries in Europe who are perhaps less well off than us who seem to be doing better than we are in some of these other measures.
  26. (Mr Smith) As I say, it is none the less important to be delivering and making progress on all of those things. This is a challenge which confronts us across government and it does mean that cross-agency collaboration, what we are able to do in partnership with local authorities, is very important as well. I could point to the Sure Start initiative, for example. You ask what can we do that is preventative. That is very preventative. It is getting in right at the beginning, it is working -----

  27. Do you intend to roll that out across the UK? There are many areas in a constituency like mine which has significant pockets of deprivation where Sure Start is not there.
  28. (Mr Smith) There is a substantial further roll-out that is provided for in the spending review and of course we are learning from the experience and the benefits all the time and that programme has a great deal to commend it. There are other areas as well. What we can do in asserting and upholding standards as far as anti-social behaviour is concerned is a very important dimension to this wider challenge as well.

    Ms Buck

  29. I think we would all be impressed with the progress that has been made towards reaching a target in lone parent employment but there are some aspects of this where we do need to do a considerable amount of future work. One of the things I would like to ask about is, are you content, particularly with the extent to which the childcare component of the working families tax credit has helped lone parents and parents generally with the cost of childcare, because I believe (and I will be corrected if I am wrong) that the latest figure is around 160,000 families receiving help, which is actually a tiny proportion of the total lone parents and all families in need. The average award is less than 40 a week which is about a third of the cost of the average nursing place. What can we do to use the childcare component of the new tax credit to reach a larger proportion of people in need?
  30. (Mr Smith) Of course promoting its availability is very important and the advisory support that is given to lone parents through programmes such as the New Deal for Lone Parents is very important in that respect. I agree with you that there is a big remaining challenge here but we should not understate the progress that has already been made, the fact that we have for the first time more than 50 per cent of lone parents in jobs, the fact that childcare provision has been expanding very fast. Of course, we need it to expand still further and it is one of the reasons why the new unit, the Early Years, Sure Start and Childcare Unit, has been set up jointly under the DfES and the DWP. That does give more of a focus to the relationship between childcare and supply and take-up, and people moving into jobs which I very much welcome.

  31. I know there is always a balance to be struck with being positive about progress that has been achieved and I certainly do not want to underplay that at all, but do you not think it is a worry that after three years of the working families tax credit such a small proportion of parents are entitled to assistance through the childcare tax credit? What can we positively do to make sure that lone parents in particular, as we move into the new tax credit, actually do get more assistance towards their childcare costs?
  32. (Mr Smith) Of course the level of the credits, like everything else, is kept under review, obviously bearing in mind the evidence that you are pointing to in this area. I come back to what I said previously though. Certainly with the promotion of its availability and the right sort of advisory support the New Deal for Lone Parents is making good progress as a programme. We do not relax. We are not complacent. The other thing which is very important here though is the supply of childcare as well and how much confidence people have in its suitability for their children. That is something which the new unit is doing intensive work on. We are getting a better take on the numbers of places for childcare of different sorts which are becoming available, trying to analyse the reasons for and variations in that supply and what can be done to ensure that that supply is accelerated in a way that people have the confidence to take it up and use it.

  33. I would like to ask you a couple more questions on that but just before I do, and sticking to the issue of the tax credits, not specifically for lone parents but for all parents in poverty, I asked this question to Nick Brown when he came and did not get an answer and I really would like to know, and I would like to know whether there is some concern and some commitment to doing something about the extraordinary degree of regional variation in the claims for the tax credits. If you take, for example, the constituency of Tottenham, it ranks ninth in the entire country for unemployment. We also know from statistics that there is extensive low pay and yet it ranks at 237 for the number of people who are taking up the working families tax credit. Clearly in some parts of the country there is an extraordinary mismatch. Birmingham, Ladywood and Sparkbrook, which have the highest unemployment, also have the highest number of people taking up working families tax credit. Clearly something is not quite working but where there is unemployment and where there is poverty it is not necessarily the case that people will then be using working families tax credit as a step up.
  34. (Mr Smith) You raise a very important question as to whether there might be a distinctively London dimension to this. There is a study which I have just seen-draft reports by William O'Connor and Richard Boreham-that is looking specifically at lone parents in relation to the labour market and how far there are special factors at work in London. It is very interesting. It points out, for example, that the variation in employment is greater, comparing London with the rest of the country, for whites than it is for ethnic minorities, for example, and obviously I will be pleased to share this report with the Committee as soon as we can. They also say that analysing this - and research reports quite often say this - is proving a lot more complex than even they might have anticipated.


  35. It needs more research.
  36. (Mr Smith) They are recommending that we need more research but, having had a quick look at it, they may well be right. I share your concerns. We need to do more to get to the bottom of this. One can point to other factors in London as well. Housing costs are a factor and a perception amongst people against working might not be so great. More apprehension about their being able to get their housing benefit back if it has been changed when they have gone into work, the availability and suitability of childcare and issues about getting children to it might particularly be an issue. There may well be other factors as well. It will be very interesting to see the contribution which our proposed piloting of the standard housing allowance is making. I am not saying it is going to solve all of this but certainly, coupled with the rapid reclaim facility, it should at least, if promoted and explained to people properly, lessen their anxiety about the risk of losing housing benefit.

    Ms Buck

  37. That is very helpful. There is clearly an element to which the issue of information and advice and support contributes to this. I do not think that is the main reason but there is an element there. The work that lone parent advisers do in supporting people is absolutely critical but could I ask you whether you will guide the Department and make sure the Department is making better contacts, particularly with organisations like the Early Years Development Partnerships responsible for planning and overseeing childcare and creating new childcare places, because there is at the moment a very patchy record indeed about how the two areas of service relate, and there are not any integration targets so, for example, the Early Years Partnerships are charged with setting up targets for delivery of childcare but the Department for Work and Pensions lone parent targets do not relate to that at all and there is very little dialogue going on? A local example, which I am certainly not asking you to comment on, is that the Department for Work and Pensions commissioned some outreach projects, did the contracting process and hired some outreach projects, and the Early Years Development Partnerships had never even heard of them, did not know what these projects were. You have statutory organisations responsible for liaison with parents, responsible for planning childcare and delivering childcare, the perfect organisations to be part of an outreach process and yet an outreach process is planned completely independent of them. That has happened, there is nothing we can do about it. Can you assure me that you will try and get to grips with this and make sure it does not happen again?
  38. (Mr Smith) You ask me will I reinforce the importance of co-ordination in this area. The answer almost certainly is yes, and it is not only something I am saying we are going to do in the future. I believe the steps we have already taken, the joint responsibility which we now have with DfES and with the new unit which clearly is going to be our principal avenue of liaison and co-ordination with the Early Years Development Partnerships, but not only that but the decision we have also taken to have a childcare partnership manager in every Jobcentre Plus, are of crucial importance. The definition and operation of that role is going to be very important at the local level in more effectively bringing together the supply of the right sort of childcare with the labour market opportunities which are open to people.

  39. Will you make absolutely sure that how those posts are created and how they work makes sense in terms of what is already a statutory requirement for Early Years Partnerships and the Children's Information Services, because at the moment they are saying, "Here we are. We are the people responsible for providing advice and information on childcare", and suddenly along comes a new childcare co-ordinator in a different context? How are they supposed to fit together?
  40. (Mr Smith) The answer is yes, I already have done and I will raise a report on precisely this issue.

  41. We have already talked about the area initiatives and Sure Start and the nurseries initiative and things of that kind and they are generally wonderful, but the overwhelming majority of children in poverty, including lone parents, do not live in those areas of deprivation. What is the strategy for making sure that we reach those people in poverty and out of work who are not in the 20 per cent most deprived areas?
  42. (Mr Smith) Because we operate a national service and whilst some of the area based initiatives that are concentrating on localities where there are particular concentrations of deprivation will not be eligible for those, there are the other national programmes which people are eligible for and we expect Jobcentre Plus to be offering a service to everybody - and we have just been talking about childcare - just as our Early Years unit will be gathering information and monitoring progress in every community in the country.

  43. The problem, to take the childcare example, is that the actual local authority provision of childcare outside the statutory places for three- to four-year olds is declining, so what you have got is very positive measures in the most deprived areas but in other areas we are going backwards in some respects (not in all respects), to take the example of the provision of affordable childcare.
  44. (Mr Smith) Just going back to what I was saying about childcare partnership managers, I would expect their coverage to include the whole of the country.

    Mrs Humble

  45. I have to say in my dealings with lone parents, certainly in my constituency, there is not a shortage of affordable childcare for young children. The real difficulty is for the older group of children, the seven-13 or 14-year olds. There are many lone parents who delay going back to work until their children reach that age so they are cushioned when they first start their infant classes, and then they find that they cannot take full time employment or even part-time employment spread throughout the whole year because they cannot cope during the long school holidays. Can I urge you to look at that age range of children when you are having your dealings with the Department for Education and Skills because it is parents with children of that age who often find real barriers to work because there is nobody to look after their children?
  46. (Mr Smith) I will certainly take the point on board.

    Chairman: Can we move on now to the whole question of therapeutic earnings and the new permitted work scheme?

    Miss Begg

  47. I was very pleased that the rules on therapeutic earnings were changed. The old rules were very rigid, particularly for people with physical disabilities and a chronic condition where their doctor had to say that the work was therapeutic. It might be therapeutic psychologically but that was not why they were getting incapacity benefit. With that caveat, it was a very welcome change. However, the rules that have come in are only allowing permitted work for 26 weeks rather than indefinitely as it was under the old therapeutic earnings rule. That 26 weeks must have been up last week because it was introduced in April 2002. I am just wondering what is it that your decision makers are going to require as proof that they can extend their permitted work for the next 26 weeks that would allow anyone who is on the therapeutic earnings work to keep the higher level of earnings?
  48. (Mr Smith) I am grateful for your welcome for the reform. There are three groups we can talk about here. Universally, for earnings of no more than 20 a week, people have got the right to do that anyway. On the group that you are referring to, for those working less than 16 hours a week on average, with earnings no more than 67.50, they can not only work for that first 26-week period which you described but that period can be extended for a further 26 weeks if a person is working with a job broker, personal adviser or disability employment adviser who agrees that it will help them move towards work of 16 hours or more a week. That option will be open for a number of people. We did also, in response to concerns that were raised by disability organisations during the consultation on the change in the rules, widen the opportunities to maintain the position of people with special needs who were supported in work by professional health or care workers and they are not subject to the time limits to which you refer, so therefore that is that third group.

  49. Is there not a danger though for those who do not fall into the category of special needs that they may ping-pong backwards and forwards between the higher rate, the 67.50, and then, after the year is up, they are not ready to take on full time work so they come back down to 20 a week which is the permitted allowance under the therapeutic earnings? They are on 20 a week for a year, they try again, they get 26 weeks at the higher rate. What decision will your decision makers make and what evidence will they need to decide whether people can move on to the higher rate or no longer qualify for the higher rate?
  50. (Mr Smith) I certainly expect these rules to be applied with sensitivity and for advisers and those supporting people working in this way to be making a judgment about whether they need the ongoing support in work that the professional adviser advocates, the third category to which I referred, which is not time limited, but of course, also whether they can move to work more than 16 hours a week, whether they are aware of the availability of the tax credits and whether they could, after a period of this sort of work experience, be actually better off moving to slightly more hours and to a self-sustaining job. In other words, we want these new rules to work in a more flexible way than the old rules, to be a pathway into sustained employment, where that is possible, without denying reasonable opportunities to people for whom that is not possible. We will keep all of this very closely under review and I certainly would not want to see the ping-ponging which you describe.

  51. One of my concerns is that the leap is too wide. If you are looking at the 20 therapeutic earnings, that is about four and a half hours in a job that would pay the minimum wage, but the next barrier is 16 hours. It is quite a big jump for somebody who can manage four hours, even six hours, maybe even eight hours, to then try to make that big leap to working 16 hours a week which opens up all sorts of other benefits such as the disabled person's tax credit and all of that. Are there enough links or stages for somebody who starts off being able to work four to six hours a week to be able to increase their time to ten and then move up? I am not convinced that those stages are there at the moment.
  52. (Mr Smith) I am not saying that the stage of moving from the 20 a week to less than 16 hours is easy for individuals. It depends very much on their circumstances and condition, of course. I think there is flexibility there. This will be closely monitored and experience will have a lot to teach us, I am sure, but I think we should be looking also at those who can move from 15 hours - remember that if somebody for a period has had up to 20 a week earnings in a few hours as you have described them, and then has done one lot of 26 weeks of up to 16 hours, and has then done another 26 weeks, so that they have now been a year working at close to 16 hours, it is realistic at least to explore with them the possibility of that becoming 20 hours and then they are out of the benefit. I am not saying that is going to be the case for everybody but it would be wrong not to explore that opportunity.

  53. Is it still too early to judge whether the new rules are actually working and are encouraging more disabled people to test out working without fear of losing out?
  54. (Mr Smith) I think it probably is a little bit too early but under the old system something like between one and two per cent of incapacity benefit claimants were on therapeutic earnings. The original estimates that were being made for this new system were that we might get something like two to four per cent on it. It is very early days in terms of the numbers coming through the system. As I say, we will need to monitor it closely. I have not had any reports of lots of complaints or problems about it.

    Mr Dismore

  55. Can I raise a couple of very small supplementaries in relation to this? In relation to the change from April 2002 to April 2003, I can illustrate that again by a constituency example: Miss Durfield, who is 56 years of age, works in a charity shop for 15 hours a week and earns at the moment 61.50. She is worrying herself sick, even sicker beyond her disabilities, because she thinks she is going to lose her job next April because she will not be able to continue within these rules, and if she does that it will obviously have quite severe consequences for her and it would actually have entirely the opposite effect of what the whole thing is about. Is there any prospect of extending the transitional arrangements for people already in receipt of the old system, beyond April 2003, for people like her because otherwise effectively she is going to become unemployed at the age of 56 and probably unemployable for the future despite the fact that she only has a job which is feasible by the scheme?
  56. (Mr Smith) I will reflect further on that if I may.

    Chairman: Can we turn to the area of housing benefit reform?

    Ms Buck

  57. Secretary of State, I very much appreciate the fact that you were at a meeting last week when we were able to discuss in detail the issues on housing benefit. For the benefit of the Committee I think it would help to outline briefly some of the aspects of the reform that you are planning to introduce into the private rented sector. Can I ask you one particular question to start off with? As you are aware, I believe now that seven out of ten private sector tenants making an application for housing benefit will find part of their rent is not covered by housing benefit. In your statement you assured us that nobody would be worse off as a result of flat rate allowances. Does that mean that the "no worse off" comparison is taking as a standard point the fact that on average private sector tenants have a 19 a week shortfall between their housing benefit and their rent?
  58. (Mr Smith) It certainly is the case that no-one will be worse off in the pathfinder areas and the reason is because we are taking the reference rent level as the level for the standard allowance and also because where there are discretionary exceptions we are allowing those discretionary extra payments to be made as well. The beneficiaries will not only be those whose present rent is below the reference rent level. There will also be beneficiaries from those who are paying above the reference rent level but who are restricted to less than the reference rent level and they will not be paying as much extra as they are at the moment because of the difference between where they have been restricted and the reference rent level and it is on that basis that we can be sure that no-one will lose and indeed that around half will gain.

  59. On the pilot areas that you announced last week can you tell us whether the Department has satisfied itself that there is accommodation available at rents on or below the reference rent level, because again, as you know, many of us are concerned that the difficulty with the reference rent is that it is simply impossible to find accommodation? Again there are regional variations but in some parts of the country accommodation is not there at or below the reference rent level.
  60. (Mr Smith) We needed in the selection of the pathfinder areas a critical mass of private rental cases. Those will include cases that are below the reference rent level. We also deliberately selected a range of pathfinders that would include high cost areas where you would expect that to be a particular problem but also medium and lower cost areas where it might not be so much of a problem. Of course, one of the benefits of doing a pathfinder project like this is precisely to learn what actually happens, not just hypothetically how many people you think are going to benefit but find out how many do benefit, whether it does exercise a downward pressure on rents and to what extent, whether the simplification that is involved does make people feel more secure about moving into work, and whether it does help landlords deal with what is a pretty impossible system at the moment in a more efficient and effective way. There are all sorts of reasons in principle to expect this to be a significant step forward but we do need to see them in practice.

  61. Can you tell us what the timescale is for the evaluation of the pilots and that there will not be a roll-out until there has been a proper and sustained evaluation in the pilot areas?
  62. (Mr Smith) I certainly would not expect a more general roll-out before 2005 and we will want an ongoing evaluation of how it is going as soon as they get under way.

  63. What would you say your success measures would be?
  64. (Mr Smith) I think there will be a number of success measures, first whether the system works more efficiently in terms of claims being determined more quickly; secondly, whether tenants are able to exercise a greater amount of choice, because I think putting more power and responsibility in their hands -----

  65. Measured how?
  66. (Mr Smith) We will be interviewing the tenants themselves on their experience of the system, ditto the landlords and obviously getting the feedback from local authorities as well. Whether it has an impact on rent levels, what impact it has on the supply of adequate quality rental accommodation as well, would be two criteria, plus what I said about the benefits as far as people being readier to consider entering the labour market.

  67. And possibly also whether it has any implications for statutory homelessness issues. Would that be something that you would monitor?
  68. (Mr Smith) Yes, of course.

  69. I asked you last week and you may not have had an opportunity to check this for me, but can you indicate whether temporary accommodation is going to be excluded from this?
  70. (Mr Smith) That would be my expectation, yes.

  71. You have indicated that in the long term you would be interested in seeing how a flat rate allowance works out for another ten years. I have always been very keen on the idea of a flat rate contribution for low income owner-occupiers, a means tested contribution, because, going back to the lone parents and poverty debate, there is clearly some evidence that low income home owners feel trapped by their mortgage interest relief which they do not want to lose and that is one of the barriers to returning to work. First, do you have any blue sky aspirations to roll this out to low income owner-occupiers, and then, in the social rental sector you have indicated, and I think absolutely rightly, that until there is evidence of choice within the sector in all areas of the country you would not be able to do it? Do you think as a work incentive that it does make sense first of all to extend this to social housing rents as part of the rent restructuring programme?
  72. (Mr Smith) In your first question about its extension, we do have to take this stage by stage. There is a soundness to the principles which underpin this which does have wider applicability. We have not said that we are looking at it in relation to owner-occupation but I see the logic of the argument you are putting forward and that is something that might make sense to consider in the future. I think the extension to social housing would need to depend on progress on rent restructuring and on how far there is already choice and more mobility within the sector. One thing we will be keen to explore as the pathfinders get under way is whether in any of these areas there might be an interest in extending it to the social housing sector and if we were able to do that in a practical way I would be keen to extend the pathfinders but we do not know that just yet. Obviously, there is a lot of mechanics to this which we have to discuss with the local authorities themselves. We have invited the 10 pathfinders to take part. We have got a conference on this next Tuesday with them about it, but of course we need to get regulations through and we need them to go through meeting cycles and so on to get their confirmation, so it will be some way into next year before we can get it under way. Tempting though it is to consider how the project might be extended, there is quite a challenge in getting the core job of work done and I think it is very important that this works well on the ground. That is not just a question of designing the policy right and getting the systems in place. If this is to work tenants need to be engaged with it, landlords need to be engaged with it, so there is going to be an important job of work in terms of information, education and support out on the ground in the pathfinder authorities. We want to get the core proposal tested right before we elaborate it too much.

    Mr Goodman

  73. In February Frank Field introduced a Bill to remove housing benefit from unruly tenants which had previously been in the Government's Housing Green Paper. As you know, the Government is sympathetic to the aims of the Bill but it ran out of parliamentary time and the Prime Minister said in his speech to your party conference: "Anti-social tenants and their anti-social landlords who make money out of abusing Housing Benefit, while making life hell for the community, should lose their right to it." The question I am asking is, where do you go from here? Are you definitely committed to bringing in a Bill or might you, say, introduce a Green Paper on the subject? If the Government are going to introduce a Bill, what can be said about the timetable of that Bill and would that Bill be definitely produced by your Department or might it be produced by another department, for example, the Home Office in an amendment to the forthcoming Criminal Justice Bill?
  74. (Mr Smith) First of all let me repeat that I do believe that matching the rights and responsibilities is something which underpins the benefit system. The deployment of sanctions and the case for so doing have to be judged on a case-by-case basis across different benefits. For example, on jobseeker's allowance there is a general acceptance that that is an allowance for looking for a job and if you are not looking for a job and not co-operating with the system then a sanction is reasonable. With housing benefit, as I said in the House when I was challenged about this, I very well understand and sympathise with the position of people who are suffering hell from anti-social neighbours and think why is all that being subsidised by the taxpayer. I think though when examining particular proposal and policy measures, and you referred to Frank Field's Bill, we do have to look carefully at the practicalities and the consequences and workability of what has been brought forward. I think the Bill in the end was talked out, was it not, by the Liberal Democrats?

  75. Correct.
  76. (Mr Smith) Some Liberal Democrats, I should perhaps have said.

    Mr Goodman: One.

    Mr Mitchell

  77. Your first answer was perfect.
  78. (Mr Smith) There are some important practical questions here if you think about it. For those people who are not paying their rent and do not care if they pile up arrears, you have to think through what is the practical consequence of a housing benefit sanction just to shift money from one column in a local authority's ledger to another column; in other words, does it really impact on them? Yes, it might eventually as the arrears crank up and if they are evicted from the house but, of course, if they have got children they will know that Social Services will be under an obligation to house them somewhere else, possibly in more expensive property. We have to think through this in an end-to-end way and see if this sanction really does impact upon the behaviour that we are talking about. Of course, in a small way the reforms that we are exploring through the pathfinder pilots of the standard housing allowance might actually make it more meaningful to operate a sanction system because if you are paying people the money then we might be getting a new culture of people taking more responsibility for their rent paying and maybe a sanction will be more meaningful rather than if it is all going on over their head to the local authority. The other issue that we ran into with Frank Field's Bill was a legal issue about whether it was proper to sanction the benefit recipient, the householder, for the behaviour of other members of the family. Indeed, amendments had to be brought forward to narrow its scope in that way to make sure that it was compliant with legal requirements. I think both of these issues and other aspects of this are things that we need to examine further and we are examining them further. There are other measures as well in terms of anti-social behaviour orders, in terms of the measures that the Deputy Prime Minister is working up in relation to rogue landlords, in particular the exploitation of people in some low demand housing areas. There is work on this front going on in a number of Government departments and obviously I will keep the Committee informed on the progress.

    Mr Goodman

  79. In short, you are not guaranteeing a Bill in the new session?
  80. (Mr Smith) I think given the sorts of considerations that I have described I am not in a position to say this morning what the legislative situation is going to be. I would want to underline though that we take anti-social behaviour very seriously indeed. It is very important to get more effective co-ordination of the various agencies concerned. As any of us will know dealing with some of these cases in our constituencies, you have got one dimension of it which the school is trying to handle, another the police are trying to handle, another where it is the local authority, maybe the local residents' committee, Social Services, a whole plethora of bodies can be involved. I think more effective co-ordination and alignment of various carrots and sticks we have to deal with these situations is necessary.

    Mr Mitchell

  81. So plenty of words but no action promised.
  82. (Mr Smith) I have already referred to action that we are taking, for example learning from the experience on Anti-Social Behaviour Orders and making sure that those can work in a more timely fashion. I think this is an area where it does make sense to examine the end-to-end processes, the time it takes for cases to get referred to the relevant agencies, for action to be initiated in the courts, how long it takes the courts to deal with them. We are examining all of that precisely with a view to action to tightening and speeding things up.

    Mr Goodman

  83. Are you definitely saying that there will not be a Bill? It sounds very much like that from the drift of what you are saying.
  84. (Mr Smith) I did not say that. I cannot come to the select committee and give the gracious speech.

  85. In your research into the effects of the Bill have you found any country in your researches that has a similar measure on the statute books because the Library, I believe, is looking at this and in the countries it has looked at so far, which is about six or seven, it has not found a comparable one?
  86. (Mr Smith) In the area of housing benefits?

  87. Yes.
  88. (Mr Smith) I am not aware of another example in housing benefits.

    Mr Stewart

  89. Secretary of State, I want to ask you some direct questions about direct payment, what was known as ACT. Clearly there is a strong overlap with the Department for Trade and Industry who are responsible for post offices. I would like to ask you some particular questions. 15.4 million currently use the Post Office to withdraw their benefits and their pensions and we perhaps all in this room know the arguments for that: it is much, much cheaper to use direct payments and, secondly, it is an attack on fraud as well. I wonder today if you can perhaps confirm or deny to the Select Committee that there is absolutely no Treasury cap of three million on the number of Post Office card accounts that may be opened?
  90. (Mr Smith) There is no cap, I can confirm that. Obviously when you are planning a change such as this you do need to factor in some assumptions as to what you think the likely levels might be. It certainly was an assumption that that might be a likely level.

  91. Will benefit claimants and those who also have pensions have a real choice of having payments done through their own bank accounts, the basic bank account or the Post Office card account?
  92. (Mr Smith) The answer to that is yes. I anticipated that there might well be questions on this. We can pass them around now or you can look at them later but I have just brought two examples. One is the letter to the child benefit recipients which started going out from Monday and the letter from the Veterans' Agency which has been going out for a few weeks. You can see I have highlighted there that there is clear reference to people being able to access their benefits at the Post Office and via the Post Office card account.

  93. The reason I ask that is you will recall when we met previously informally that I raised the same point. We had an excellent meeting at the Burnley Pension Centre - to refer to a previous Parliamentary Question just last week - I was very impressed with the set-up there but what did concern me in the script, which is well done by and large, was the script default position was "if you are a new pensioner you will get your benefit paid through your bank account". There was no reference at all to the basic bank account. There was absolutely no reference to the Post Office card account. That has certainly been picked up in discussions I have had personally with Post Office employees. We went to my constituency and we had an informal session and there was great concern. This new set-up is well respected by the postmasters but the problem is there is next to no marketing, next to no promotion, next to no enthusiasm in a real way to promote this Post Office card account and without that I can see the demise of post offices across the length and breadth of this country.
  94. (Mr Smith) First of all, I would not want to suggest that I think the health or the success of post offices and the maintenance of the network depends solely or even primarily on the Post Office card account. Remember the Universal Banking Service aims to make basic bank accounts and other banking products available through Post Offices. There is the investment we have made, the 500 million in enabling the Horizon automation to take place and the 270 million that is going in to implement the Performance and Innovation Unit Report's recommendations. We are investing an enormous amount, as is the Post Office itself, in the modernisation of the Post Office network and the service they are able to give. I think it is through giving that service in a good, efficient way so that people want to use the post offices that they have the means to ensure that there is a good future for the network at the head. As I say, we are not capping the Post Office card account, people are given the opportunity to take it out. It is not going to be the right thing for everybody. There is not a direct debit facility. We should not forget the large number of claimants, currently 59 per cent of new retirement pension customers, who are choosing ACT at the moment. There is an extent in this to which people have been voting with their feet. It is very important that that pledge that where people want their money in cash at the post office we are able to deliver on that pledge. There is a significant number for whom the Post Office card account is the means of doing that and we want to make sure that they have that opportunity and that it works as efficiently as possible.

  95. That is all fine and well but the problem in my experience is simply this, that people do not know there are basic bank accounts, people certainly do not know there are Post Office card accounts, they are not being marketed. The Postmasters Association, and I am not a shop steward today, have made it clear to me - these are the experts, these are the people who are seeing these 15.4 million day in and day out - the Post Office itself is not promoting it particularly well. Because of financial services regulations postmasters now advise clients about this. I am very concerned about the low profile that Post Office card accounts and basic current accounts have had. I do not want you to just take my word for it, you will be aware that the Treasury Committee recently expressed disappointment at the progress of this and they called for "more proactive and innovative marketing if they are to be taken seriously", that is the government, "on their express commitment to overcome financial exclusion".
  96. (Mr Smith) Can I make two points in response to that. First, on the general question of direct payment, there is a big information and, indeed, advertising campaign being prepared which I think is due to start in January. Can I also say that as far as the choices confronting individual clients are concerned, I think it is sensible to phase this in over a period. If they are not going to need for some time to do something about this, I am not sure it is sensible to awaken a general feeling of anxiety "am I confronted with this issue?" In terms of responsiveness to customers and the efficiency with which we, the Post Office, the Inland Revenue and others are actually serving the public, it does make sense for this change to be grown through the system gradually rather than having new systems confronted with big bang surges in demand, which is just the sort of thing that very often makes IT and service innovation go wrong, not just in the public sector but in the private sector as well. I do not apologise if we are moving into this in an incremental gradual way. I just want to stress that we are not capping or steering people away from Post Office card accounts but it is fair and right to point out that there are other products which many people are choosing and which in many ways are advantageous.

  97. I think most people would agree with the migration period over the two year period. Letters are going out now to new pensioners and new parents for child benefit and this is up and running in April, as you know, we need to be selling these products now. I have got serious concerns about the lack of marketing and the lack of a high profile of this Post Office card account. It is not your sole interest to make sure that you have profitability for postmasters, I understand that, but for many post offices more than 40 per cent of their income comes from benefit transactions. Two things are going to happen. We can still have benefit efficiency for your Department and ensure that our rural network, particularly throughout the UK survives. I have major concerns that by taking away 40 per cent of Post Office income, which will happen for many post offices, we will see the closure of the Post Office network in many areas and also constituents do not know what the real choices are in my experience. I cannot talk for the whole Committee but I had impressed upon me during the Committee's visit in Inverness that there is a very low profile of the Post Office account. Postmasters themselves are telling me that day in and day out the public are saying "what do I do in April on the changeover?" Can you tell me on that question what are your estimates, obviously with your partners in the DTI, for Post Office card account use in the first, second and third years of operation?
  98. (Mr Smith) I think it would be wiser for me to send you those figures rather than give them off the top of my head.

  99. A final point. The big four banks, HSBC, Barclays, NatWest and Lloyds TSB, as you know have around 68 per cent of current accounts in the UK at present. Can you perhaps tell the Committee why only 14 per cent of basic bank accounts are within that very major group? Is it because there is a major lack of interest among major banks to set up these basic bank accounts, which is a crucial element in the Universal Bank Service?
  100. (Mr Smith) It is probably a question you really have to put to the banks rather than to me. I cannot answer for the priority that they give to different parts of their product range. I would say in developing universal banking it is good that we have been able to conclude agreements now with all of the major banks to get the basic service up and running. They are not always easy discussions. I am very grateful for the input from the banks that made this possible. This whole move to ACT, to direct payment, and in particular the establishment of the Universal Banking Service, this is a very difficult project, of course it is, bringing together the interests of millions of clients out there, our responsibility as government across different departments, the banks, the post offices, the important interests of those running the Post Office network. I think it is a tribute to all concerned that the project has got to where it has. Of course some people have anxieties and it is important that those are addressed. As I say, on promotion as the advertising campaign comes through and as people see the letters for themselves they will see that there is no hidden agenda here and will appreciate that this is a change which makes sense which will be more convenient for clients and which does, through the extension of banking services into the post offices, offer one of the principal means by which post offices can secure a good future for themselves.

  101. My very final point is to say that I am not sure I fully agree with your points about the banks' position. The universal bank approach is the government's baby and the basic bank account is something that we are negotiating as a government with them to try and develop. If the big four cannot develop more than 14 per cent of basic bank accounts we have got real worries. The point is it has not been promoted well enough. The second point is if you run a large bank like Barclays, why set up a basic bank account if you can get customers going into the mainstream accounts where you make more money? Perhaps you could give us figures on the development of the Post Office card account over the next three years and you could also give us your estimation with the DTI of the number of basic bank accounts that you think will be set up over the next three years because I was not successful in my question to the DTI so I thought I would try you.
  102. (Mr Smith) We will certainly supply such information as we can. It is, of course, difficult to estimate some of these things because it will depend on the choice of customers themselves.


  103. I want to support everything that David Stewart has said. I believe that the information you are getting does not really reflect the concern that is out in the country. I would just like to ask you two things. I would like to ask you more but we really do not have time, we have other areas to cover. Do you have a plan B? Supposing everything that can work well does work well, the universal bank is in place, the Post Office card account is up and running. I can see that that will still be a challenge but personally I think there are still very high risks associated with the scale and the way it is going. Do ministers know what they will do next if it starts to come apart at the seams? Is there a plan B? If there is not, I would be concerned about that.
  104. (Mr Smith) Yes, contingency plans have been drawn up and are being actively considered for contingencies that we might have to prepare for if confronted with the unexpected.

  105. For example, if the migration started to go wrong could you freeze the migration until you fixed it? You are not going to force this through the two year period if some of the mechanics, the transmission facilities and the universal bank start to produce unintended and unforeseen problems?
  106. (Mr Smith) With all of the other agencies, and the Post Office are such crucial partners in this, we are scoping the risks, drawing up contingencies and, indeed, taking the advice of others, like the Office of Government and Commerce, to ensure that the preparations that are being put in place are soundly grounded and we could change our plans were that necessary in the light of experience.

  107. So you would be willing to take representations if we started to see that happening, you would draw attention to that?
  108. (Mr Smith) Certainly, if you start to see anything going wrong tell us and your suggestions will be very carefully considered.

  109. Thank you. The second point from me - really it is a short circuit - is I am concerned that there are seven organisations working with Postwatch and they are still very concerned about, for example, the fact that there is no generic agreed material available in the post offices now. We are all being asked questions by our own retired populations about what they should do next. Worse than that, the rumours I have heard are that the Government have done a deal with the Post Office which will restrict agreed advertising and generic material that goes out. In fact it is worse than that, that they have signed a contract with the Post Office which limits the marketing of the card account. I do not know if these things are true or not but what I am going to ask you to do is they have been talking to officials today, they have not been able to get to see ministers. If Postwatch can set up a meeting - we are talking about organisations like Age Concern here - would you get the ministers to meet them because my concern is the same as David Stewart's, that you are not getting the true picture. I am not saying that people are hiding things from you but the concerns out there are actually much greater than perhaps they are within the Department. You would give some reassurance to voluntary organisations if you would agree to get ministerial colleagues, or even yourself, for a short time to try and talk through some of these things. It is not in anyone's interest if these rumours, if they are untrue, are taking root and are causing more trauma and worry than is necessary.
  110. (Mr Smith) Certainly if we can help assuage fears and provide information and otherwise help the whole process forward in a sensible way by meeting with others, including ministerial involvement, I am very happy to consider that. On your earlier point about people being concerned about what they have to do and by when, it is important to underline that until people are advised by letter that they need to do anything they do not need to worry about this.

    Chairman: Can we turn now to the Child Support Agency.

    Rob Marris

  111. It will not surprise you and I am sure in your usual Blue Peter way you will have prepared something about the IT aspects. Your letter to MPs on 19 September six weeks ago said there was still some way to go. Can you give us any idea of whether you have got an indicative date for "A-day", as your Department calls it, and for migration?
  112. (Mr Smith) I have little to add really to what I put in the letter. The testing is progressing. It is progressing quite well but until I can be certain that it makes sense to start on a particular date I am not going to give indications of when that might be.

  113. You seem to be piloting this on current cases according to your letter, which I have to say surprised me, I thought you were looking and had been looking in the Department, albeit before you yourself were in post, at going live in April for new cases. Is this a change or perhaps I misunderstood it?
  114. (Mr Smith) No, it is not a change in policy at all. As you say, "A-day", when it comes, will engage first with new cases and then "C-day", when existing cases convert over on to the new system, comes later. I think there is perhaps confusion here between the IT system and the Child Support reform system. Yes, some existing cases within the existing Child Support rules are being operated with the new IT, and this is perfectly sensible in bringing a new system into effect. You see if dealing with real cases it can handle things and you examine the scaleability because it is often the difference between dealing with a few thousand cases and dealing with hundreds of thousands of cases. Yes, when "A-day" comes that is when the new system comes into effect in terms of the new basis of calculation.

  115. You are expecting "A" before "C"?
  116. (Mr Smith) What we are really doing is using the testing now on real cases with real members of staff and real agencies to make sure that it really works before we bring the new basis of calculation in.

  117. So you are still expecting "A-day" before "C-day", are you?
  118. (Mr Smith) Yes.

  119. Who is primarily responsible for the delay? We are now six months into it, we appreciate that you were not there then, but is it Affinity and EDS or is it the DWP?
  120. (Mr Smith) It is delays in the IT system being ready. Of course, the responsibility for the delay and the costs of that are something which we are in negotiation with our suppliers about. I am not at liberty to expose those negotiations here. It was principally the vulnerability of the IT system, as my predecessor explained to the House of Commons, that made it sensible to delay things as we have done. Whilst I very well understand - I share it - people's impatience to want to see the new system up and running, I am absolutely convinced that it is right to ensure that this is tested properly and operating properly before it is exposed to handling real cases, especially in such a sensitive and often contentious area such as this.

  121. I want to refer to an issue that is not commercially confidential because it was given in open evidence to us by Doug Smith of the Child Support Agency when he came. He said "Our expectation is that the cost of processing new applications under the new arrangements should be about 20 per cent less", ie cheaper when the IT comes in. He also said that the structure of the contract does not provide for EDS to pay for those extra costs. Leaving aside whether it is EDS's fault and looking at the minutiae of the contract, who negotiates your contract? Is it done by in-house people or external legal advisers?
  122. (Mr Smith) I think it is probably best if I supply more information separately on these points. It obviously will be an in-house responsibility because ultimately these are the sorts of responsibilities which you cannot delegate. I am sure that we will be involving advisers and consultants as well as frankly is sensible given the complexity of some of the technical and commercial negotiations you get into on these things.

  123. Is that part of your IT strategy with you, that is who has input such as those advisers, whether internal or external?
  124. (Mr Smith) It is certainly an aspect of the IT review. The main objective of the review is not so much that, it is really ----

  125. I appreciate that but it is one aspect of it.
  126. (Mr Smith) It is an aspect, of course. I would not want to give the impression that is why we have got the review. The reason we have got the review is to ensure that our systems as a whole and our strategic approach are fit for purpose given the changes that there have been in the sorts of products which are available. Obviously with the rapid developments in IT capacity as well as the big changes we have had in the Department and our agencies it did seem sensible for the new group director with responsibility for IT to take stock and frankly to see whether the approach from the past, which had rather been geared to very big systems or interlocking bits to an overall monolithic system and bespoke approach, whether in the light of the changing needs of the organisation and the changing nature of the IT systems available it did not make sense to have something that was more incremental, more flexible, taking advantage of the flexibility and quality of some of the off-the-shelf products which are now available that were not available a few years ago. That is why we have got the review and I am expecting it to report by the end of this year.

  127. You are still on target for that?
  128. (Mr Smith) Yes.

  129. Have you any idea when its findings might start to be implemented?
  130. (Mr Smith) As soon as possible after that I would expect.

  131. Within three months?
  132. (Mr Smith) I would expect the findings to have a bearing on the way we carry forward our strategy pretty much straight away. Within three months, yes.

  133. That strategy might involve looking at the suitability or otherwise of your IT partners?
  134. (Mr Smith) We have commitments, contractual commitments, with our IT partners and these are long-term relationships. Whilst as in any long-term relationship and as in any commercial relationship there are some hard negotiations along the way, I do believe that a partnership approach makes sense. Of course we examine the opportunity, limited though it sometimes is in this area given the scale of the systems we are talking about, to engage different partners. It may well be that the conclusions of the review that I have yet to see might have a bearing on that balance. The review is really rather more about our strategic approach on the IT systems rather than on our overall strategy for the procurement or the management of contracts. That is something that has to be the subject of ongoing attention as well.

  135. Surely the two go hand in hand.
  136. (Mr Smith) As I said, the one has implications for the other.

  137. You probably will not be drawn on this but if your Department determined whether by litigation or otherwise that Affinity and EDS had let you down very badly on the CSA contract, would you consider dumping them or are you so locked in that you cannot?
  138. (Mr Smith) I think it would be fair as well to give credit where EDS and Affinity have done a good job. I say that because the pace, for example, with which the desktop PCs have been rolled out across the Department, including in some periods breaking the world record for the installation of this sort of equipment, is a case in point. We need to manage effectively our ongoing relationship with EDS. We do that within a spirit of partnership but, yes, with hard ball negotiation where that is necessary. Of course we develop and build on our relationships with other partners as well. I do not think it would be sensible for me to be drawn further than that.

    Mrs Humble

  139. Can I just clarify the nature of the testing that you are undertaking at the moment. Is it theoretical? In other words, are you looking at existing cases and continuing to pay those people out or doing the assessments of people receiving benefits in the way that they should under the existing formula and simply doing a theoretical analysis of how that would work under the new system and is it working properly? Are you actually paying out those people who are part of your testing under the new formula?
  140. (Mr Smith) There are certainly elements of the latter, so some real cases are being handled by the new system. One of the reasons that I thought it was timely to write to MPs was obviously a number of months had passed and I know people were asking questions about it. It was also round about then that letters would have been going out to some clients in some parts of the country actually generated on the new system and it is possible that people might have noticed a difference and I thought if MPs had a query about this they ought to know that the testing had got to that point and that is why it was.

  141. How did you pick these cases? How were they chosen? Was it at random or not?
  142. (Mr Smith) It would be, I imagine, on an area basis of which particular cases were going through that centre at the time.

    (Mr Couling) I think it is important to emphasise that they are not under the new rules.

    (Mr Smith) It is back to the point that I was making in answer to the earlier questioning. This is existing cases on the existing Child Support rules on the new IT system. It is not under the new rules, I think you understood that point.

  143. I am sure that you are aware of the enormous frustration and anger at these continued delays because a lot of people were waiting with eager anticipation for these new rules to come in and originally they were going to come in in 2001 and then April 2002 and now it is some dim and distant date. Do you have a fallback position on this? Will there come a point when you say "we are going to have to do something and this wretched new computer system is not working"? If you do come to that decision what are you going to do about it? Parliament has made its mind up. Parliament has changed the law. We have decided that this is what we want and the overwhelming majority of our constituents want it as well. What are you going to do if this drags on and on and on? The new system is a very simple percentage analysis. In the dim and distant past when I worked in the Civil Service we did these things manually and we are now coping with computers that cannot do the job. What is the fallback? How long are you going to let it go on?
  144. (Mr Smith) I fear that I might be drawn back into speculating about dates and when we are expected to be up and running. I just do not think it would be sensible.

    Rob Marris

  145. Feel free.
  146. (Mr Smith) Until I know that this thing can work I think it would be pretty unwise for me to start trailing dates. I do of course understand the importance of this, I share people's impatience and frustration that it has taken longer than we wanted. I am absolutely determined to get it up just as soon as possible once we have got the assurance from the testing. Were the worst to happen and the thing not to work at all and somebody to say "Very sorry, we got all this way through the testing but this system just is not going to work" then of course we would have to do something else and do it as quickly as possible, but I hope that we will not be in that situation, I really do.

  147. Finally, what message can I give my constituents and colleagues give theirs, especially those absent parents, parents without care of the children, who have found themselves in dreadful financial circumstances because of the way that the existing formula affects them who were in any case concerned because they were going to be phased in and for some of them the difference between their current payments and the payments under the new system are quite substantial, so they also know that even when it comes on-stream for them it will be phased in? I get people coming to me who say that given the existing delays, given the phasing in of the process, their children are going to be grown up by the time it comes in and in the meanwhile they are paying out under what they see as being an absolutely iniquitous system that is causing them real financial hardship. I am emphasising the same point in a different way.
  148. (Mr Smith) You are. I agree that it is really important. The message you can give back is there are a lot of people who are working very, very hard to get it up and running just as soon as we can but it would not be wise to do so until we had tested it properly.

    Mrs Humble: Pencil and paper.


  149. Did you see in July the press release, which is rare for EDS, when EDS was actually alleging that the reason for the delay was that ministers were changing the system requirements. That is a bit cheeky, is it not?
  150. (Mr Smith) I did not see it.

    Andrew Selous

  151. I would like to continue on with the CSA. I have a very real concern that the CSA is not taking the issue of enforcement now nearly seriously enough because of all these ongoing computer problems that we have heard about. If I may I would just like to quote briefly from the 2001-02 report of the Independent Case Examiner on enforcement where she says as follows: "It has been disappointing to find that the CSA has rarely tackled enforcement in a systematic and consistent manner. The CSA has the means of doing this by employing penalty actions along an escalating scale. However, the CSA's response has often been sporadic and piecemeal. We frequently find that the powers now available for the CSA have not been deployed or, if they have, their effectiveness has been minimised by flawed implementation of established procedures". I find that really concerning. It is my experience week in, week out at my constituency surgeries, and I am sure that of other colleagues here, that this is a very real issue to a large number of mothers, particularly in cases where the absent parent does not have regular paid employment. It seems the CSA more or less throw up their hands and are not prepared to be really imaginative and liaise with the Inland Revenue, visit these people where they are living. What about applying some of the sanctions that are available? I understand it is only one driving licence that has been taken away. There are large, large numbers of absent fathers who seem to think that they can just put up two fingers metaphorically to the CSA and have no care and concern for the mothers they have left behind and the children. I do not think it is just about the computer system. You could run an effective enforcement system out of a filing cabinet if you really put your mind to it. I am concerned about what is happening now.
  152. (Mr Smith) First of all I share your objective, people ought to pay, they ought to meet their responsibilities, and there are far too many who have just been walking away from them, which is why we need the CSA and we do need some good enforcement activity. It is worth stressing I am not blaming this on the computers. This is a feature of the system. There is no doubt there is a general consensus now that the original system was bound to consume far too many resources in calculating people's liability and you were going to have an imbalance between the effort going in there. We all know about the problems in that as well because we all get problems in our constituencies arising from the calculation of the liability. With such a complicated liability assessment that was bound, relatively speaking, to detract from the enforcement effort. This is the great gain of moving to the simpler system and the easier calculation of liability will release many more resources for enforcement. That having been said, there are a lot of people working very hard on enforcement in what are often very difficult circumstances where you are dealing with people who are using every trick in the book to avoid meeting their responsibilities. I want to praise the staff who are working hard on this. You referred to using all the penalties available and I agree with you that we should. I think with something like the withdrawal of driving licences, and when I ask about this this is the report back I get back from the staff concerned, the measure is not simply a case of how many have had their licences withdrawn nor even have had it actively threatened to be withdrawn, but the mere fact that in conversation it can be mentioned that you can lose your driving licence is a useful lever to secure greater compliance. Nobody is disputing that we need to be more effective at collecting the liabilities of those who owe the money. As I say, that would be the great prize of getting the new system in place.

  153. Those liabilities are huge, are they not? They are nearly 2 billion now of uncollected CSA debt, a massive amount of money. How serious is the CSA about really trying to recover that backlog of unpaid money?
  154. (Mr Smith) It is a very serious amount of money and it is unpaid debt, not just to the government but to the families who should have received the money. What the agency has to do is to make some overall estimate of what proportion of that debt is definitely collectable, what is possibly collectable. Some of it is deferred debt that has been held back as a carrot to induce compliance. With the passage of time that that has been outstanding longest is more likely to be in that category and there is some that it is going to be very difficult to collect. It does not make sense for them to evaluate it in that way. I do not hide the fact that this is a very large sum of outstanding money and it is a very serious challenge to ensure that collection is improved.

    Mr Goodman

  155. In June Alexis Cleveland of the new Pension Service came to the Committee and obviously she was questioned about the roll-out timetable for The Pension Service. At that point the direct local service was meant to be up and running now in October but she said to the Committee "We are a bit behind. It will not be October, it will be December." Will it still be December?
  156. (Mr Smith) Yes, I believe it will. I want to stress the progress that has been made since you had that conversation with Alexis Cleveland. I am assured that by the end of this month there will be more than 200 local service teams in place and they will be developing further the existing information and advice services available in local communities.

  157. In June we had a supplementary memorandum saying that at that point seven per cent of the staff necessary to run the service had been recruited. If you are confident of being able to go ahead in December can you tell us what percentage have been recruited now?
  158. (Mr Smith) I am not sure that I have got a figure immediately to hand. I can certainly get you one. If you have had a supplementary memorandum, I will get you another one.

  159. I am just making the point that it was only seven per cent then so there would have had to have been a very startling increase for it to be ready in December. We will be interested to see that. I am asking these questions because obviously you have got the Pension Credit roll-out next autumn and you are trying to hit a huge target group, it is 4.1 million of households who will become eligible, but at the moment, as you know, the take-up for the MIG has been really distressingly low. I ought to say at this point that I acknowledge there are good things about the MIG and the Pension Credit but the real weakness so far has been the take-up, has it not? Up to a third of those entitled to receive the MIG have not been receiving the MIG. I would like to ask whether you are confident you will hit your 67 per cent take-up target by 2004 when you have said that you will for the Pension Credit?
  160. (Mr Smith) Obviously I very much hope that we will not just hit the target but exceed it. I think it is worth stressing here that there are some questions around the measurement of take-up in this area on which we are doing further work. What you really need to do is to compare and link the survey responses which are often taken to estimate the extent to which there is not take-up, you need to cross-reference that really with administrative data on whether people really are eligible in order to narrow the range of estimation around what the extent or lack of take-up is. All I am saying is as well as doing everything we can which we must do to promote take-up it is helpful not least to inform the ongoing discussion and evaluation of performance to be accurate in measurements as well.

  161. Just a quick supplementary. At this time of year you usually release the income related benefit take-up figures but you are studying take-up generally. Do you know when you will be able to release those figures?
  162. (Mr Smith) I have no reason for thinking that it will be on any different timetable than it normally is.

  163. The point is that it already is on a different timetable because they are usually released in September but you are studying it so you are not able to tell us when you will be able to.
  164. (Mr Smith) I think it is best if I give a note to the Committee on that.

    Mr Dismore

  165. I have a couple of issues. Can I first of all raise the question of recruitment of staff in London and the South East where I know that you have a few problems, particularly in The Pension Service but more generally. One of the issues I raised with Alexis Cleveland before was to do with the citizenship requirement for civil servants. The way that it is presently arranged one in six Londoners are excluded from working in your Department even at the most junior clerical job, often in the languages that are needed to deal with the people making the claims. They are excluded simply because of the fact that they are not British or Commonwealth citizens from working for the Department. Have you any plans to try and look at that and see if that can be changed?
  166. (Mr Smith) There is obviously a wider issue for the Government and public service recruitment than simply our Department here. I agree with you that it is an important issue you raise. The Cabinet Office is aware of the difficulties nationally with restrictions placed on recruitment to the Civil Service and they are pursuing options for lifting those.

  167. Can you give us any idea when we are likely to hear the result of that investigation of options?
  168. (Mr Smith) I am not in a position to put a particular timetable on it but I will go from the Select Committee and discuss this further with colleagues in the Cabinet Office.

  169. The other issue I want to raise with you in this context is looking at the Invalid Care Allowance and the changes that are coming in. A lot of pensioners are very confused about this. Benefit has been extended to pensioners who are not on full pensions, as it were. Part of the problem is I do not think the changes have been explained to pensioners properly. The alterations to the rules are not being properly understood by pensioners and some advisers think that anyone over 60 or 65 can now claim entitlement and then they find that they are not entitled to it if they are on a full pension. Can you explain what has been done to try to clarify which pensioners can now claim ICA. Has there been any thought given as to what the cost would be of extending it generally to pensioners rather than the restricted extension there has been and the general principle that pensioners who are beyond the income support level but caring for others are not getting any extra help at all to do that?
  170. (Mr Smith) I think the first point I would stress is with the development of the dedicated Pension Service, both through the advice we give through the pension centres and the call centres and through the development of the local services as well, we will have a better network there for disseminating accurate information to pensioners and, indeed, will be better placed to be able to respond to their enquiries on precisely these sorts of issues. If it is a case of examining the guidance that is given or the way that we disseminate leaflets and information, I am very happy to look at that.

    (Mr Dismore) There are two issues, one is getting information out and the other is the basic principle pensioners who are carers who will probably not qualify for any official help may think that is an injustice.

    (Mr Smith) We do not have any present proposals to change the policy. I take on board the argument you have made.

    Chairman: Can we move on to the whole new area of work we have inherited since the summer, the Health and Safety Executive.

    Mr Dismore

  171. A couple of years ago at the Party Conference there was an announcement we were going to have a health and safety bill to do with a whole range of issues and we also had to update legislation because it has not been updated since 1974, when the Health and Safety Work Act came out of the Rovers Report. Things seem to have gone very quiet since September 2000, what progress has been made towards a health and safety bill? I am not expecting you to give a gracious speech to the Committee, are we likely to see legislation in the near future on this?
  172. (Mr Smith) I think that amounts to pretty much the same question. I cannot anticipate the announcement of the legislative programme. I do, of course, appreciate the importance of making progress in this area, particularly on Crown immunity.

  173. Apart from the very detailed issues, which I will not press you on now, there are two or three very important key questions about health and safety law, one is to reflect the changing nature of work and the fact that many people do not work in the traditional employer/employee relationship, there are self-employed people and home workers who are excluded from all, if not most, health and safety legislation. There is the question of Crown immunity, which there is increasingly concern about. The other one is the extent to which private prosecutions might be allowed in the health and the safety legislation without the consent of the DPP. They are all very key fundamental questions which go beyond the detail. I was wondering whether you can give us any idea on the views you have on those three issues?
  174. (Mr Smith) They are all very important for the reasons that I gave you. As I said, I am not in a position to confirm what we will be able to do and when by way of legislation in these areas. I might say more generally though that I believe with the responsibility for the Health and Safety Commission coming to DWP there are obviously positive opportunities which we should be making the most of for collaboration between our role more generally in the labour market in good employment practice and the work of the Health and Safety Commission in relation to the work place. Whilst we have overall sponsorship responsibility for the Health and Safety Executive obviously there are other very important areas in relation to transport, nuclear safety, and so on, which will remain the responsibility of the secretaries of state in those areas.

  175. The last point is the question of corporate killing, I have been asking questions about this since I first got here in 1997, and I have been campaigning since long before that. I brought my own Ten Minute Rule Bill on this a couple of years ago. As a response to that the government did set up an inter-departmental working party to produce a consultation document, we got response to the consultation two years ago and ever since then it has been analysing the outcome of that through the inter-departmental working group. Your Department is now involved in that process, can you let us know when there is likely to be any progress on that issue, because it is one that is causing a lot of concern in the outside world, particularly in the context of transport accidents, obviously more widely as well.
  176. (Mr Smith) As you refer to the Home Office being the lead Department I best confer with David Blunkett.

    Mr Dismore: It was a manifesto commitment.

    Andrew Selous

  177. Can you tell us what discussions you have had, if any, with the Health and Safety Executive in regard to the possible fire strike that we may be about to see, particularly about nuclear power stations and industry? They, I understand, are the body that will take the decision whether public safety is compromised by those fire strikes. Can you share anything with the Committee?
  178. (Mr Smith) The Department is, of course, represented in the coordination and discussions which take place in government, not least with the Cobra Committee and, of course, the Health and Safety Executive is supplying appropriate advice. As I said earlier in relation to nuclear safety and transport safety there is an important interest for the responsible departments as well. That advice is being supplied and it is being acted upon.

    James Purnell

  179. I would like to ask a few questions on employment in the New Deal. The Committee was genuinely grateful for the generally positive response you gave to our inquiry on the New Deal. One of the general thrusts of our argument is that the New Deal should be made universal, instead of having a number of specific schemes there should be more flexibility of delivery of the New Deal with more discretion for advisers. You said in your reply you were actively considering moving in that direction. Could you tell us the time scale you plan to bring proposals forward and if you could outline your general thinking in considering those proposals?
  180. (Mr Smith) Thank you for your kind remarks and we welcomed the Committee's Report. We are examining not only the role of advisers and the discretion that they have, which I think is a useful lesson we have learned, not least from the experience of the employment zones, but also more generally how we might simplify the New Deal programmes. I think they have been a great success. Earlier on I was referring to the New Deal for lone parents, the New Deal for 25 plus and the New Deal for disabled people we have been rolling out. I think from the perspective both of the client and indeed from the perspective of employers it is perhaps an unnecessary over-elaborate array of options and variants and we are therefore looking closely and as quickly as we can as to how it would make sense to rationalise. The adviser role is very important in that we are developing the advisers discretionary fund anyway, which gives them up to 300 flexibility to deploy resources in a way that can most immediately help someone overcome barriers to moving into work. We are moving quite quickly ahead on all of this.

  181. Does that mean sometime this year or slightly more medium term?
  182. (Mr Smith) There is not that much of this year left now, I would say early next year would be more practical.

  183. One of the things I was surprised by in the inquiry was low effectiveness of education and training options in getting people into work. From our visit to America I was struck by the great focus in the institutions we visited there in getting people into work, are you satisfied that the job outcomes, education options and the way that education training is delivered in New Deal or do you think we should be moving towards giving people more general skills?
  184. (Mr Smith) Yes, people certainly need to have the basic skills and the soft skills. Of course, as far as basic skills are concerned the screening and the opportunity to require people to go on remedial programmes is important. On the question about the effect of the full-time education and training option, I think this has been an issue since the beginning of the New Deal. Whilst we tried earlier on to ensure the sort of courses that were available were really geared towards the labour market, I think too often people were on courses that might have been getting them a good outcome qualification but perhaps were not taking them that much closer into the labour market. This has already been changed with the opportunities we have opened up in the programmes for employers who offer in-house training, for example, through the availability of shorter, more work focused courses. I do think, coupled with the soft and basic skills which you rightly say are important, that is the right direction in which to go. Training and skills have a very important part to play in helping people into jobs but it is important that it is actually meeting real demands and the labour market is linked with progress into a job and is not simply filling time as an alternative to someone taking a job.

  185. Where people do require longer training or more intensive training, is there a case for allowing advisers to lift the 16 hour rule, which is the amount people can study without losing benefit, on an individual basis as part of the greater discretion that you are looking at?
  186. (Mr Smith) There is obviously a case for looking at it. I would not want to prejudge what conclusion one could come to. It is important that the benefit system is not there as a system to support people in study. You would have to be very careful of opening up an expectation that it might be used in that way. As I said earlier, when you actually analyse the statistics, training often is not as good a route into a job, or a better job, as is sometimes supposed and the best route into a job is to go and get a job.

  187. You said earlier that where appropriate you thought there was a responsibility on government to look at the rights and responsibilities agenda and there has been some speculation that there will be an extension of conditionality in the proposals that you bring forward. Can you tell us which areas you are looking at in respect of conditionality?
  188. (Mr Smith) We have already got the mandatory programme, the Step-Up Programme, and so clearly we will want to learn from the experience of that. I think we can also review how well the sanctions regime is working as well.

  189. Finally, given what you were saying earlier about the importance of recruiting people into the public sector, do you think that the public sector has done enough to take on New Deal trainees?
  190. (Mr Smith) It is variable, to be quite honest. We need to keep up the impetus to do more.


  191. One of the things that we will need to think through a bit more carefully is the results of the motions last night which will allow the carry over of Bills. Can I just leave you with the thought that as a Committee we are quite keen to look at potential pre-legislative scrutiny, pieces of legislation within the Department, as appropriate. I would just like to leave that thought with you. I understand you cannot anticipate the Queen's Speech but if there are pieces of draft Bills or pieces of legislation that you think can benefit now we have a longer period before the axe falls at the end of the legislative process, that is something that we will actively encourage you to consider in the future. You might just like to reflect on that.
  192. (Mr Smith) I very much welcome that invitation. I think pre-legislative scrutiny opens up very important opportunities for the executive and the legislature to work in a very constructive way, so I will examine that.

  193. Finally, can we make the plea that you arrange for a less thrilling year over the next 12 months. It is a facetious way of making the point but there has been a welter of change in the Department and maybe there is a case for doing nothing for the next three years, although that is hard for you because I am sure you want to set your own goals. I think the policy makers at the strategic level in the Department do have to have a care. There are so many pilots going on just now that it is impossible to find an area in the United Kingdom which is not already subject to a pilot to do another pilot in. There is a serious point about letting policy work that has been done bed down before we move on in new directions. I am sure you are conscious of that.

(Mr Smith) I take it and accept the advice. When we have the scale of change in our organisation, in our IT systems, in the redeployment of personnel and we have these big delivery changes we have on Pension Credit, the Pension Green Paper, Child Support, Housing Benefit, childcare, Jobcentre Plus roll-out, what we need to do to focus more help on the hardest to help in our labour market interventions, the Pension Service, Universal Banking, it is a very, very big and demanding programme out there. I am sure for the year ahead, as well as the policy issues we have to address in areas such as pensions, that ensuring we get delivery in all of these areas is going to be a very important focus of my activity.

Chairman: That is a very good point on which to end., Secretary of State, thank you very much.