WEDNESDAY 30 OCTOBER 2002
Mr Archy Kirkwood, in the Chair
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.
(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.
(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.
(Mr Smith) Yes.
(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.
(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 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.
(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 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.
(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".
(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.
(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.
(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.
(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 -----
(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.
(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.
(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.
(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.
(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.
(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.
(Mr Smith) The answer is yes, I already have done and I will raise a report on precisely this issue.
(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.
(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.
(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?
(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.
(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.
(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.
(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 Smith) I will reflect further on that if I may.
Chairman: Can we turn to the area of housing benefit reform?
(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.
(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.
(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.
(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 -----
(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.
(Mr Smith) Yes, of course.
(Mr Smith) That would be my expectation, yes.
(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 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?
(Mr Smith) Some Liberal Democrats, I should perhaps have said.
Mr Goodman: One.
(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 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 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 Smith) I did not say that. I cannot come to the select committee and give the gracious speech.
(Mr Smith) In the area of housing benefits?
(Mr Smith) I am not aware of another example in housing benefits.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(Mr Smith) Certainly, if you start to see anything going wrong tell us and your suggestions will be very carefully considered.
(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.
(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.
(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.
(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.
(Mr Smith) Yes.
(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.
(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.
(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 ----
(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.
(Mr Smith) Yes.
(Mr Smith) As soon as possible after that I would expect.
(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.
(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.
(Mr Smith) As I said, the one has implications for the other.
(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.
(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.
(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.
(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.
(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.
(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.
(Mr Smith) I did not see it.
(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.
(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 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.
(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.
(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.
(Mr Smith) I have no reason for thinking that it will be on any different timetable than it normally is.
(Mr Smith) I think it is best if I give a note to the Committee on that.
(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.
(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.
(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 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.
(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.
(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.
(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.
(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.
(Mr Smith) There is not that much of this year left now, I would say early next year would be more practical.
(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.
(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.
(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.
(Mr Smith) It is variable, to be quite honest. We need to keep up the impetus to do more.
(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.
(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.