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§ Dr. Vincent Cable (Twickenham) (LD)I am grateful for the opportunity to introduce this debate. I apologise to the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), and to other hon. Members for the late change in debate title, which may account for the rather low interest in it.
I was driven by three sets of considerations. The first is constituency matters, as is often the case. I have been struck by the large and growing numbers of people caught up in the complexities and practical difficulties of the benefits and entitlements system, and that is the case on a much greater scale than ever before. I do not mean issues of benefits policy, although they do arise; I brought up a case in the main Chamber when the Minister was present a few moments ago, and he dealt with it efficiently and graciously as a policy matter. The kinds of issues that I will describe now, however, are enormous problems and hardships caused simply by administrative difficulties. We, as MPs, essentially deal with the agency concerned rather than the Minister when problems are administrative, but there is clearly a pattern behind the problems.
Secondly, aside from the worm's-eye view of the benefit recipient and the practical problems there, there is what one might call a bird's-eye-view problem of the growing evidence of difficulties of delivery, particularly associated with information technology systems. Just as Parliament broke for the recess, there was a report from the Select Committee on Work and Pensions, and it would be useful to have some feedback about the Government's response to it. That is one of a succession of points that could be made on similar themes.
The third, related point can be approached not necessarily from the side of the Department or the client but from that of employees and is about growing difficulties and stresses within the benefit system. One example, which I will refer to again, involves a lady in my constituency who is close to retirement and who has described events in her local jobcentre to do with jobseeker's allowance. A new system has been introduced, and calls have to be routed through Makerfield in the north of England. The problem is not only that none of the clients can get through to Makerfield, but that none of the staff at the centre can get through either. Large numbers of people are being left without their allowance and are becoming increasingly agitated. My constituent describes fighting breaking out in the local centre because of the considerable administrative difficulties. Such problems are widespread, as I am sure the Minister is aware.
I will start by giving a few concrete examples, which are the primary reason why I wanted this debate. There is a human element to these issues, and I want to bring to the surface some individual cases. The first relates to different aspects of the benefits and entitlements system—not to one pocket of that but all over the place. With regard to jobseeker's allowance, a lady came to me only a few weeks ago. Very many people are in the position of being temporary workers who are able to work for a while and who then lose employment and are normally considered for jobseeker's allowance. The lady in question had never had a problem in previous years, 403WH and she came along this time with a virtually identical set of circumstances but was refused and was given the extraordinary advice that whether she qualifies for jobseeker's allowance depends on who makes the decision. She has now tried to survive for several years on a growing loan.
Another example involves a very conscientious gentleman who had not been out of work before. He applied for jobseeker's allowance and meticulously followed the instructions given by the officials helping him. A slight error was made, entirely on the advice of the departmental officials in the centre that he attended, and he was overpaid by a large sum. He is unable to pay it back and is being pursued very aggressively on the assumption that he is acting fraudulently.
With regard to income support, there are other cases from the past few days. A very elderly lady—she is 88—has been trying to receive income support for the past year with the help of her daughter who lives overseas. She is unable to get replies to telephone calls and correspondence. Like the others, she has had to come to her Member of Parliament to resolve what is essentially an administrative problem.
Another gentleman who has been on income support for some time was cut off six months ago for reasons that were not explained or, perhaps, inexplicable. Despite my repeated intervention with the head of the agency concerned, nothing has been done and no explanation has been given. The gentleman survives on cash provided by his family.
Two cases are connected with different parts of the agency, but illustrate the kind of problem that I describe. They relate to pensions. One gentleman who qualified for his pension last December was not paid and repeatedly sought an explanation. In August, the Department acknowledged that the matter needed to be investigated, but it has still not been resolved. Letters have been going backwards and forwards to Alexis Cleveland, but, as far as I am aware, the issue is still as it was.
An even worse case involves a gentleman who qualified for his pension last December. Again, he was not paid. Eventually, through my intervention, it was acknowledged that there had been an administrative error and that he should be paid. However, that decision was made eight months after the start of the delay, and he was told that only three months' payments could be backdated.
There are hundreds of such cases; we all have them. My concern is that they are, perhaps, multiplying and that there is some systemic, underlying problem. That systemic problem comes under several headings: the information technology systems operated by the Department; the growing complexity of the system of application for benefits and their processing; and the system for dealing with errors, which is becoming a major issue. How does one deal scientifically and fairly with large numbers of errors? The fourth heading would involve consumer service: points of contact through call centres and by correspondence. How is that monitored, and how does one deal with what, patently, are failures?
First, I shall say a little about information technology deficiencies. I recognise that the Department for Work and Pensions has a massive information technology task. It does not deal with simple problems; they are 404WH inherently big and difficult. It has been said—this may or may not be true—that the Department's IT system is the largest in the world. I understand that 35 different systems are in operation. As the Minister knows, they have been subject to frequent scrutiny in Parliament and frequent criticism. There have been the reports by the Comptroller and Auditor General and the Public Accounts Committee on the Child Support Agency and its three operating systems, the errors with the state earnings-related pension scheme and the general problems of benefit data being scattered between lots of different computing systems.
There have been some more recent disasters, notably involving the national insurance recording system, two or three of which have occurred in the past few months and are causing real hardship and difficulty. The first disaster relates to the Child Support Agency entitlement system. The report produced just before the summer by the Select Committee on Work and Pensions concludes:
Despite some signs that aspects of the service are improving, the performance of CSA's IT programme and new telephone system remains unacceptable.Many of us have seen that in practice, and it is two years since the system was supposed to be operating fully and efficiently. I know that my hon. Friend the Member for Northavon (Mr. Webb) has done serious research on that issue. I believe that something of the order of 95,000 people have been missing their payments, many of whom are single parents and in considerable difficulty. Will the Minister say whether, as the former Secretary of State, the right hon. Member for Oxford, East (Mr. Smith), hinted a few weeks ago, the system is now so bad that it will be scrapped? Is that the intention, or is the intention to try to make the system better? If so, what will be the time frame and the specific targets?Unlike the Treasury, and the Paymaster General in particular, the Minister is not directly responsible for the second system that is working extremely badly: the child credit and the working families credit. I was given a good insight into how that system is operating when an official who works for the agencies wrote to my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) about their experience as a recipient of child tax credit but from the standpoint of someone who had dealt originally with national assistance for the best part of 20 years. The official stated:
I am driven to writing to you because my experience as a recipient of Child Tax Credits leads me to believe that a poorly designed scheme has produced a third rate service to the public, a demoralised work force, and is costing a large and probably unquantified sum on sorting out a high error rate.The system was explicitly and rather brutally criticised in the recent report of the Public Accounts Committee. For example, paragraph 6 states:The Department and EDS"—the computer operator—had not foreseen that the new tax credit systems would prove unstable and not fit for purpose.That case is already well made and well recognised.Another instance of IT systems failing dismally and causing enormous problems for our constituents occurred a few weeks ago. I am sure that the Minister is well aware of the difficulties with Post Office card accounts. Many pensioners who took up the offer of a 405WH Post Office card account found that they could not receive cash through the post office or that they received excessive amounts. The system had to be closed down. Again, I am sure that the Minister will give us a report on that incident, but it would be useful to know how he proposes to deal with the residual problems associated with it, making sure that that does not happen again. It also leaves a legacy: will the pensioners or benefit recipients who have already received their money be required to pay some back, and under what circumstances will that happen?
§ Mr. Steve Webb (Northavon) (LD)My hon. Friend refers to specific incidents. Did he come across the problem that postmasters who wanted to use the emergency mechanism available to them when faced with a member of the public desperate for cash could not get through on the emergency helpline?
§ Dr. CableNo, I had not encountered that problem, but it adds further grist to the mill. It is clear that the whole system is surrounded with enormous practical difficulties, many of them originating in the fact that the software and the system are not functioning properly.
The Department and the Minister will have to digest the Work and Pensions Committee's conclusions on how the Department's IT projects are working, but it might be useful if the Minister gave us some preliminary indication of how he judges the matter. One general conclusion in the unanimous report of that Select Committee is particularly worrying. It states:
We heard evidence that DWP is growing into an 'intelligent customer'. However, despite the undoubted progress, a number of witnesses were not optimistic that major IT failures were a thing of the past.There is a large number of recommendations in the report, and I do not propose to go through them all. However, it might be useful to have a preliminary indication from the Minister as to how he would deal with them.The problems that I and others have encountered could fall under a second general heading of complexity. The complexity in the benefits and associated entitlements system is staggering. With his background, the Minister will understand the difficulties that such complexity poses. Two years ago, the National Audit Office reported on the problem. At that time, there were 23 different substantial benefits, 16 of which were connected to each other in 30 different ways. There are now 35 basic benefits, as opposed to 23, and of course the complexity has multiplied exponentially.
The complexity is not simply in the sheer number of benefits and their connection to each other but in the way that our constituents have to apply for them. As I understand it, the new pension credit application form has 12 pages and there are 16 pages of explanatory notes. Many elderly people are totally unable to handle that, so they have been offered a helpline; but under helpline procedure, a considerable amount of quite sophisticated information must be collected before any help can meaningfully be offered. For many other key benefits, applying is extremely complex. For example, 406WH attendance allowance has a 19-page application form. It is not surprising that the Child Poverty Action Group's current chief executive says:
The system is very complicated and it is far from easy to make a claim".I became heavily involved in the issue of Post Office card accounts as a result of recent changes in the Post Office and because I spoke on Post Office matters until recently. The problem with the Post Office card account operationally—as opposed to in principle—was that there were eight separate steps before a benefit recipient or pensioner could get a card. As a result of intervention from the Deputy Prime Minister, action was taken to reduce the number of steps from eight to seven, but the process is still causing enormous problems.My hon. Friend the Member for Northavon has done some work on that, and he established through the Library that a significant number of people, particularly pensioners, were getting trapped between the invitation stage and the next step in the application. Many have simply not been able to proceed with their card applications, and large numbers of applications are missing. It would be useful to hear how Post Office card accounts are proceeding. Are there are any blockages, and how do the Government propose to deal with them? What happens to people who have got to the invitation stage but do not proceed any further? Do they come under the default mechanism, whereby people are sent a cheque through the post, rather than being required to use a bank? There are many uncertainties about that process, and it would be useful to have help on them.
Some of the letters to which I referred earlier deal with what might be called error management. Any system will generate error; that is understandable, and in a big and complicated system, there will be many and various errors, but it is important that there is a good, speedy, courteous and efficient system for dealing with them. The problems are considerable, particularly in relation to the tax credit system, under which there have been large overpayments. There is a history of people being aggressively pursued for repayment of very large sums that were acquired through no fault of their own, and people find it exceedingly difficult to pay. It would be useful to hear how the Minister, who clearly is not directly responsible for the matter, views the interaction between benefits payment and tax credits where errors have occurred.
Some constituents have told me that their benefit payments are being cut because an overpayment error has been made in the tax credit system. There is a danger that they will be faced with a double demand for repayment through the Inland Revenue. Perhaps the Minister could explain how error management is being looked after. What is the degree of co-ordination between his Department and the Inland Revenue in ensuring that there will be no escalation of the problem of excessive demands being made of people who have been overpaid?
There is a particular problem with the Child Support Agency; as the Select Committee report produced just before summer points out, the error rate is between 10 and 14 per cent. The report's most optimistic prediction is that the error rate will be halved to 5 to 8 per cent. My understanding is that the National Audit Office figure for an acceptable error rate in an efficient Department is about 1 per cent. What is the time path for getting the system to approach some level of acceptability?
407WH My final general point is about consumer service. There is little doubt that most employees of the Department do their best under difficult circumstances to be helpful and courteous. Many are outstanding individuals, and in many cases I give them credit for working under difficult conditions. However, there are clearly areas where customer service does not work. I shall highlight just one case, that of call centres. People make many calls and are unable to get replies or, in many cases, cannot even get through. Is there such a thing as a protocol governing what is expected of call centres and the way in which call centres relate to clients? It has been suggested to me that people who work in call centres on behalf of the Benefits Agency are specifically told not to make outgoing calls, which makes it difficult to deal with people who have left messages and made genuine inquiries.
One big change that will affect the Department for Work and Pensions in the coming months is the large cut in manpower, which we understand to be of the order of 40,000. It is perfectly possible to reduce manpower in that Department without a reduction in efficiency of service. I am not totally committed to the idea of jobs for life and of preserving jobs the way they are. None the less, it is difficult to see how the stress on the Department, including the management of the IT systems and the high error rates, can possibly be overcome in an environment where there is a large reduction in the numbers of staff.
It is said that staff cuts will not take place on the front line, but if they take place in back-office services, does that not imply a reduction in the support for IT systems and the efficiency of call centres? I have no idea how the reduction will be managed, but it would be helpful if the Government explained where the cuts will take place, in terms of occupation and geography, how they will be managed, who will be involved and the time frame in which the process of staff contraction will take place.
§ Mr. Steve Webb (Northavon) (LD)My hon. Friend the Member for Twickenham (Dr. Cable) is noted for the calm and analytical way in which he carries out his work in the House, and we have all benefited from the way in which he has brought to the House's attention just a sample of the large number of constituents who encounter problems with the welfare system, broadly defined. His analysis of IT issues, the system's complexities, the response to errors, and consumer service provides a structure that we might follow through the debate to ensure that the Minister provides us with a response on each area.
The Child Support Agency as an organisation has gone from bad to worse. It had a very unhappy birth, having been set targets that were unattainable from day one. From the beginning, therefore, it pursued the easy cases, the people who were already paying, in order to get them to pay more. It was much easier to meet targets not by doing what it was supposed to do, which was to chase the people who did not pay at all, but by chasing those who were paying in order to try to get more money out of them. The CSA alienated many people, and it has not recovered from that.
408WH Several pieces of child support legislation have changed the way in which the CSA operates and how maintenance is calculated and collected. Yet, well over a decade after its introduction, it is as shambolic as it was in the beginning.
Many constituents, represented by Members from all parties, find their dealings with the Child Support Agency among the most maddening things that they do. My hon. Friend the Member for Colchester (Bob Russell) remarked in a debate in this Chamber that the CSA is not exactly part of the healing process. It is anything but, and it often makes matters worse.
My hon. Friend the Member for Twickenham raised the issue of administration of child support. All hon. Members who want to provide a quality service to their constituents are perfectly happy to contact the CSA on their behalf, but we would far rather be redundant in that role and see a mechanism whereby people received quality of service first time round, at least in the 99 per cent. of cases to which my hon. Friend referred, and see a similarly effective mechanism for resolving their problems in the remaining 1 per cent.
Only this lunchtime, as I checked my incoming e-mails, I received one about the CSA from a constituent I had been trying to help and who had been on to the CSA's hotline. I appreciate and pay tribute to the knowledgeable and thorough staff who respond on the MPs' hotline. I was in touch with them some months ago about the case, but because I had stopped pushing, the situation had been put on hold. My constituent said that it was six weeks since anything had happened. She was told six weeks ago that her case was urgent, but when she rang yesterday she was told that nothing had happened in those six weeks, that it was on someone's desk and that, if she was lucky, it might be dealt with next week. There is no sense that the agency has got a grip on what it is meant to be doing. It simply does not seem able to cope.
We talked about the new computer system. I bring to the Minister's attention the feedback that I get when I ring the MPs' hotline for the Child Support Agency. The first question is whether the case is a new or an old one. In other words, is it on the new, multi-million pound flash computer or on the off-the-shelf, rubbishy one from the 1970s? If I say that it is a new case, they groan. They say, "We are sorry but we can't tell you much because we don't have much information. The new system doesn't enable us to tell you what you want to know. If it were an old case, we'd have a notepad and could give you information for your constituents, but the new computer system is not as good."
I find that extraordinary, because when the Government said to the House that they wanted hundreds of millions of pounds for a flash, new computer system and that they wanted to reform the entire child support system, the reason they gave was that the system was running on a rubbishy old computer that had been borrowed from the Americans in the 1970s, which was not fit for purpose. They said that all would be better when we got the new computer. However, here we are, and I guarantee one thing: the Minister will not today give us a date or tell us when the new computer will be working properly. I do not know whether it will ever be working properly, but people want to know.
409WH My hon. Friend the Member for Twickenham referred to the fact that the date at which we switch to a new computer system is not just an administrative point but one that makes a substantive difference. People on the new system would be allowed by law to retain some of their maintenance—£10 a week—but under the old system, they cannot get that money. How much longer should parents and children have to suffer financially because of the incompetence of EDS, the Child Support Agency and the Government when it comes to managing IT projects? It is children in poorer families, living on income support, who are affected by that. In the perhaps insufficient number of cases in which some maintenance can be got out of the former partner, is it not outrageous that, because of the Government's incompetence at managing computer projects, the children do not get the £10? For every extra week that the Government delay and that the system does not work, the children will not get £10. That seems to me totally unacceptable, and I think that the Minister owes the House an explanation about when it will come to an end. All we get is bland assurances: "We do not want to change to the new system until we're sure that it's working". Of course we do not, but when will that be? Does not the House deserve to know that? Perhaps the Minister can break with tradition and tell us.
My hon. Friend mentioned something else: the other side of the coin. We have the customer—the member of the public—who deals with the agencies, but we also have the poor souls who work for those agencies. They often have to deal with wholly inadequate IT systems and with irate members of the public. While I would not defend aggression towards, or abusive treatment of, public servants—that is totally unacceptable—I see the flipside, which is that people who work for the agencies have to put up with a lot of angry people.
It is no coincidence that, as the House may be aware, the Department for Work and Pensions consistently fails to meet its targets for staff sickness. The Department set targets to cut staff sickness, yet sickness has gone up. Within the Department, the Child Support Agency has one of the worst records for staff sickness, because at times it is a horrible place to work, because workers have to deal with rubbishy computers and members of the public who are given a rubbish service. I wonder when the Department will become a better employer so that members of staff want to turn up to work in the morning and do not have to deal with the wholly inadequate structure that the Government have put in place.
It would be nice to think that the Child Support Agency, which has been a source of dissension for a decade or more, was the only example of that problem, but the Government have contrived to invent new ones. As my hon. Friend said, the tax credits system is perhaps the classic example. I liken the experience of members of the public who receive tax credits to that of being on a rollercoaster. One month they are quids in, the next month they are down, then they get a claw-back, and then an overpayment, and they never know where they stand from one month to the next. They do not know whether the call or the knock on the door will come that says, "Sorry, but you were never entitled to that money that we gave you and we want it back." Ministers give 410WH us assurances that that will be done terribly humanely and that discretion will be shown and some of it written off, but the Inland Revenue does not seem to know that.
I had a case recently where someone had had a substantial overpayment and it looked odd. He could not understand how he could be entitled to all that money—given the rhetoric of Ministers, though, he thought that maybe it was that generous, as he had certainly been told how generous it would be. He rang up the Revenue and said, "Are you sure this is right?" He was told, "Yes, that's right." He double-checked that the figure was right, and thought, "Fine. I don't understand how the thing works." The credit is, of course, fiendishly complicated. I served on the Standing Committee that considered the relevant Bill, and I do not quite understand how tax credits are worked out. Members of the public are given a figure, and if they ring and check it is correct, they have a right to assume that they can rely on that money.
The gentleman in question paid his father back money he had owed him for years, which he had been given for an emergency. He said, "I thought at long last I could clear my debts. We went on a holiday. It's been brilliant." But I think the whole House knows what is coming next. The Revenue said, "Terribly sorry. We set your income at zero, so we have given you far too much money." Now, the Treasury made that assumption in relation to something called the working tax credit, and I hope that the Minister will explain to me how someone can receive the "working" tax credit but not have any earnings. I find that rather confusing.
The Revenue is now after the money, which runs into thousands of pounds. The Revenue's letter says that it accepts that the mistake was its fault, but that my constituent should have realised he was getting the wrong amount. He did smell a rat, it did look wrong, so he rang up and checked, and the benefits people said, "No, it's fine." How much more does a member of the public have to do? How far do people have to understand these fiendishly complicated systems? This comes back to the important point mentioned by my hon. Friend the Member for Twickenham: errors will be made in the best of systems, but how do we respond to them? His comment is quite right: we need proper protocols for responding to errors. The gap between the rhetoric that we hear in this House about the tax credit system and the reality for our constituents is a gulf.
What can we do about this rollercoaster? When errors are made by a Department and members of the public could not realistically be expected to understand what is going on, they should be written off. It is unacceptable to claw that money back, especially when it has already been spent. The tax credits fiasco has been CSA mark 2. A big Government IT project par excellence has messed up the lives of thousands of people.
It is interesting that with the exception of the new pensioners mentioned by my hon. Friend, all the other cases he referred to related to the means-tested benefits system in one way or another. It tends to be the case that the more complicated the system and the more involved it is, the easier it is for officials and the public to get things wrong, and the more difficult it is to put things right.
If we are to deliver financial support to people on the basis of their annual circumstances, which is what the tax credit system does, we are asking for trouble. We are 411WH expecting a household—these are household means tests—to report every change in circumstances during the course of an entire year. I have sat down with constituents who have got depressed, stressed and angry trying to explain every change in their circumstances to the people on the helpline, which is not always appropriately named. It was literally a case of explaining, "Last week, my wife did overtime, and this week she wasn't well so she was on sick pay for half the week, and I did some extra hours, which took me over this threshold." The system must look good to the whiz kids in the Treasury and the Department for Work and Pensions on their microcomputers, screens and charts, but it does not fit the complicated lives of real people.
Government policy must surely be directed towards simpler systems with a minimum of bureaucracy, which do not need to be changed every time someone's life changes and do not require the state constantly to keep track of people's individual circumstances. The Government have gone in precisely the opposite direction.
On delivering the money, my hon. Friend mentioned payment through the post office and, again, the infamous IT problem. As I understand it, we are talking about the Monday before the August bank holiday, and, for historical reasons, people with order books expected a double payment. The computer—I am not sure that computers just do things; I think someone probably tells them to—dished out double payments to about 190,000 people, mainly pensioners but not exclusively so. The story I have been told—the Minister may have a better version—is that someone realised that this was happening and metaphorically pulled the plug. However, that someone was in America. He pulled the plug and then went home. So when British customers started trying to get money out of their Post Office card accounts in Britain, the system was not working, but the people in America were tucked up in their beds. That may be a myth, but I do not understand why systems have to be transatlantic. One hears about such systems being subcontracted to low-wage call centres in Asia, but I am bewildered that the banking aspects of the Post Office card account have to be run from America. That is certainly not designed to provide a better quality of service, because it adds another dimension of complexity.
The ultimate irony was that the people whom the Government bullied into giving up their pension books and going over to the Post Office card account could not get their money. However, people who had hung on to their pension books were able to hand them over and get their money, because they still worked perfectly well. Is that not a parable for our age? The Government drive people into systems that, in many cases, they do not want to be part of, but fail to deliver or to keep their promises.
The Government spin is that the system is an antifraud measure, but they cannot even do the basics right and deliver people's money. Even when the postmasters rang the emergency helpline, they could not get through. What kind of a farce is that? One wonders what the Government can run if they cannot run an emergency helpline.
Pensioners were not the only ones affected that day. I encountered a mother with her children. She had run out of cash. She goes to one of the post offices in my 412WH constituency on a Monday to pick up her income support, then takes the cash to the supermarket down the road to do the week's food shopping for the children. I understand that she literally had pennies left in her purse when she turned up to be told, "Come back tomorrow." That is unacceptable. The Minister is smiling but I do not think that it is funny. It is totally unacceptable that people should have to put up with that quality of service—if that is even the right phrase.
My hon. Friend also referred to the Department's plans to shed tens of thousands of staff. The principal reason given is that the IT is so wonderful that people can be moved from the back office, and some will go to the front office to provide customer service, but the rest will no longer be needed. It beggars belief that the current system can be regarded as so good and efficient that there is surplus capacity and that the priority for that surplus is to get rid of staff. If all those people are sitting around doing nothing all day, which I find it hard to believe, why do we not get them to sort out the backlog at the Child Support Agency or answer the phones for the tax credits system? Why not use them to improve quality of service rather than sacking them? We have heard many examples of poor customer service, and I am sure that we will hear more from the hon. Member for Wycombe (Mr. Goodman). However, the Department will have fewer people processing claims and dealing with applications, so it is hard to understand how what we see on the ground fits with the rhetoric about how the IT will sort the problems out.
Where do we go from here? Clearly, the direction of the Government's policy and strategy has been wrong. We all accept that there will always be a case for a residual means test. There will always be people whose circumstances are extreme or unusual and do not fit, so there must be a safety net or a catch-all to ensure that nobody falls through. However, that should be for the few, not the many, and I do not apologise for using that phrase again. It should be a way of catching those who fall through or for whom there is no alternative approach. What we get instead is mass means-testing of our elderly or of the working-age population, which forces vast numbers of people through immensely bureaucratic systems. Money that could be spent on helping people is being spent on bureaucracy.
The typical pension credit claim costs about £4 a week—£200 a year. Tens of thousands of people do not even receive that much from the system. I accept that there are teething problems in getting people on to the correct retirement pension. My hon. Friend gave some examples, and I have also found some, of people hitting pension age and not always getting their correct pension from day one. The NIRS2 computer, which my hon. Friend mentioned, is another legendary fiasco of the Department. Getting people on to the correct pension is sometimes tricky, but once they are on it, it is—widowhood and similar factors apart—basically straightforward for the rest of their lives. However, the vast majority of pensioners are in a system whereby they are means-tested for the rest of their lives, and changes in their circumstances mean reassessment. Huge amounts of money are devoted to the bureaucracy of administration—not always high-quality administration—and not enough is devoted to getting money to people.
413WH I thank my hon. Friend for raising this broad topic, because those of us who spend all our time in this subject area often get bogged down in the minutiae. Today, he has stepped back and said that there are common threads running across different Departments and Select Committees. He described a Government who simply cannot get the IT right and who generate problems for themselves by making the system more and more complex and dependent on means-testing. They are completely out of touch with what our constituents find week in, week out, which is that the quality of service that they have a right to expect is not being delivered for them.
§ Mr. Paul Goodman (Wycombe) (Con)I congratulate the hon. Member for Twickenham (Dr. Cable) on securing the debate and on putting at the heart of it what he called the human element when he raised, quite rightly, a series of constituency cases. The human element applies to the person who finds the amount of form-filling required excessive, the person who cannot get through to where they need to on the telephone, the person who is not sure what official has the right to set their benefit at whatever level and, above all—the hon. Gentleman rightly stressed this—the person who believes that there must be a more systematic way to address the increasing number of errors that appear to be creeping into the system.
I hear similar stories from my local citizens advice bureau in High Wycombe and from my constituents in High Wycombe and Marlow. Indeed, all hon. Members will have heard the same stories. That is why the hon. Gentleman should be congratulated. I also congratulate him on his timing. When he secured the debate, he may not have thought that his timing was all that good, given that it clashes with two debates that his party is having in the main Chamber. However, I think that on reflection he will agree that the timing was extremely apposite, because this is the first opportunity that we have had since the appointment of the new Secretary of State for Work and Pensions to debate the operation of the benefits system.
Before moving on, I would like to pay tribute, as I have not yet had the chance to do so, to the former Secretary of State, the right hon. Member for Oxford, East (Mr. Smith), simply by saying that whenever I had dealings with him, which were in fact few, I was always struck by his great courtesy and decency in debate.
The reshuffle has made it clear that the complaints that the hon. Member for Twickenham aired, and the difficulties to which he referred, have crept up, so to speak, to the ears of Downing street. It now appears to believe that there is a connection between the complexity of the system that he described and the strategic direction being taken by the Department, to which the hon. Member for Northavon (Mr. Webb) referred at the end of his remarks. A considerable debate is clearly going on between Downing street and the Department about where social policy will go now.
Will the problems and difficulties to which the hon. Member for Twickenham referred be satisfactorily addressed? We read over the weekend in The Sunday 414WH Telegraph that Downing street now wants to scrap the disability premium and, in other papers then and since, that it wants in effect to scrap the entire pension settlement that Conservative and, I think, Liberal Democrat Members believe is the creation of the Chancellor of the Exchequer. We read that Downing street wants to do so by variously scrapping or reducing means-testing—I shall return to that in a moment—which is the foundation stone of present pensions policy, and possibly by introducing compulsion and hiking national insurance by 1.5 pence in the pound.
There is a direct connection between the chaos and confusion that now appear to be engulfing the Department's policy and today's debate. As the hon. Member for Twickenham effectively conceded, any country with a welfare system that in theory covers 60 million people will also have one that in practice does not work perfectly. The key to having a system in which benefits and tax credits are paid in full and on time, and in which people receive payments to which they are entitled and do not experience the sort of problems that the hon. Gentleman referred to, is for the system to be as simple as possible. Instead, it is now as complex as possible.
We warned the Government when they originally introduced the tax credit system that there was a great problem at the heart of it: the Inland Revenue and the Department for Work and Pensions—formerly the Department of Social Security—exist for different purposes. The hon. Member for Northavon referred to that. He referred to the difficulty that has come about from trying to turn the Inland Revenue, which is used to examining what people do annually, into a Department, which, like the Department for Work and Pensions, is used to trying to find out what people have been doing each week. Traditionally it has not been the Inland Revenue's purpose to try to establish where one was last week, where one might have lived, what one's income was and whom one might have been with. Great problems have come about as a result of meshing those two systems together.
It is worth running through the record. In the space of four years between 1999 and 2003—we are not even talking about between 1997 and 2003—the Chancellor abolished family credit; introduced the working families tax credit; introduced the disabled person's tax credit; introduced a child care credit; introduced an employment credit; introduced the children's tax credit; introduced the baby tax credit; abolished the working families tax credit; abolished the disabled person's tax credit; abolished the children's tax credit; abolished the baby tax credit; introduced a child tax credit; abolished the employment credit; and introduced a working tax credit. I could not remember all that without notes, and I doubt whether the Minister or the hon. Member for Northavon could either. I am certain that scarcely one, if any, of my 74,000-odd constituents could.
In a system that complex, two main structural problems will arise that will affect the administration and delivery of benefits—besides the attack on independence, privacy and dignity that most pensioners, and such interest groups as Age Concern and the National Pensioners Convention, believe means-testing represents.
415WH The hon. Member for Northavon alluded to the first such problem, which is the scandalously low take-up rates that arise from systems that are that complex. The take-up for the minimum income guarantee was 66 per cent. before it was taken up into the pension credit. That means that the non-take-up rate was 34 per cent. In other words, one third of the most vulnerable pensioners did not receive a penny from the MIG.
According to the latest figures, take-up for the pension credit is 3.1 million pensioners out of 5.1 million. In other words, almost 2 million pensioners are not receiving the pension credit to which they are entitled. The non-take-up rate of pension credit is almost 40 per cent. and, therefore, almost two out of five of the most vulnerable pensioners are not receiving a penny from the pension credit. It is worth pointing out that that is not because the Government want low take-up but because of the massive complexity of the systems involved, the difficulties of getting through on the helpline, the form-filling, and the fact that the pensioners concerned may come to believe that they will not get enough back from the pension credit to make it worth their while dealing with the administration.
Even if the Government hit their own target for 3 million households to receive pension credit by April 2006, that still means, according to the Government's own projections, that 1.4 million of our most vulnerable pensioners will not be receiving it. Even under the Government's own plans, for which Ministers budget, it is assumed that one in five pensioners will not benefit from the pension credit, and they are almost always the very poorest pensioners in our society. That is why The Guardian reported this morning that the Government's social exclusion unit has found that the pensioners and those who claim benefit who are hardest to help—such as, I suspect, some of my ethnic minority constituents in High Wycombe—are not being helped by such systems.
Such take-up problems were shown in their most extreme form earlier this year by the debacle to which the hon. Members for Northavon and for Twickenham referred and which accompanied the launch of the child tax credit. At one point, approximately 800,000 families who had made a claim were not receiving the money to which they were entitled and some children were missing out on free school meals and milk tokens.
That story neatly illustrates the other main structural problem—the first being the expansion of means-testing—that affects the administration and delivery of welfare entitlement. The serious problems with the computer system used by the Department to deliver that entitlement have been referred to several times already this afternoon. I want to visit the crash on 24 August of the computer system that administers direct payments and which affected so many of our constituents so badly, to which the hon. Members for Northavon and for Twickenham referred. On 24 August, my hon. Friend the Member for Havant (Mr. Willetts) wrote to the then Secretary of State posing a series of questions. He has not yet received a reply, and I suspect that he will not receive one from that Secretary of State. Will the Minister tell me whether the American story related by the hon. Member for Northavon was correct? How many pensioners were affected? When did the computer system stop authorising payments? At what time was normal service resumed? Was the breakdown triggered by the bank holiday the following week, as was claimed? 416WH Can the Minister assure pensioners that the new system will be able to handle holidays in future? Did the system crash after some pensioners received four weeks' money instead of two and, if so, how many pensioners fell into that category and what was the total value of overpaid benefits? Can he give categorical assurance that those problems will not be repeated? If he cannot do so, can he say whether the Department has any plans to introduce a back-up system and, again, if he cannot, will he suspend the plan to withdraw pension books by March next year? I note in passing that the contract to run the Inland Revenue's IT services during the next 10 years has been taken away from EDS, of whom we have heard so much, and given to Cap Gemini.
Then there is the Child Support Agency. At present, 74 per cent. of cases are still on the old system waiting to be transferred to the new system. There is no date on which those cases will be transferred, which means that, as the hon. Member for Northavon said, single parents have missed out on £45 million a year in benefits. Meanwhile, one in three customer calls are apparently abandoned because of the failings of the new system and £2 billion of uncollected child maintenance has been written off by the Department. The hon. Gentleman said that staff sickness rates are among the highest—when I last looked they were the highest—of any section in the Department.
As the Minister knows, there is now consensus that the Government's computer strategy is not working in many respects. The report of the Select Committee on Work and Pensions, on which I serve, to which both hon. Members who have spoken in this debate have referred and on which the Government have, of course, a majority, said in its recent report that Whitehall was hiding "an appalling waste" of public money behind a "cloak of commercial confidentiality".
That is one consensus, but there is also consensus that the Chancellor of the Exchequer-driven mania for means-testing is also not working and that we need a simpler pensions and social security system. That is agreed by organisations ranging from the National Pensioners Convention to the Association of British Insurers.
Either the Minister is as baffled as the rest of us by the reports in the media, which clearly emanate from Downing street, that the Government's pensions policy should be reversed and the welfare system thus simplified, or he is in Downing street's confidence and knows how the apparent struggle between the Prime Minister and the Chancellor is going to be resolved, in which case it would be useful if he were to reply to the points that have been raised in this debate and to tell us what the Department's plans are to make the system simpler. He should also make it clear whether the major step of making the system simpler by retreating from means-testing in pensions and adopting a policy that is nearer to that of my party—linking the basic state pension with earnings—is on the desk of any Minister or about to go to any Minister.
§ 2.6 pm
§ The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)I congratulate the hon. Member for Twickenham (Dr. Cable) on securing the debate and on raising important issues about the 417WH complexity of what he describes as the benefit system and the difficulties of delivery, as well as about some of the stresses in the system. While he raised in a thoughtful way some of the issues his constituents have brought to him, I would not like him or other hon. Members to lose sight of how people's lives have changed in recent years as a result of some of the changes that we have made. That was highlighted in yesterday's "Opportunities for All" report. It showed that more than 1.9 million more people were in work than in 1997, that around 2.1 million fewer children and 1.8 million fewer pensioners were living in the absolute poverty they experienced just seven years ago, and that half as many people experienced fuel poverty.
There have been real and considerable improvements in the circumstances of the people we have been discussing—the very poorest who depend on the benefit system—and we are well on the way to meeting our targets. They are ambitious targets, which have never before been established by any Government. They are to halve and then eliminate child poverty.
I want to deal with some of the issues addressed by the hon. Member for Twickenham and raised in the contributions of the hon. Members for Northavon (Mr. Webb) and for Wycombe (Mr. Goodman). The first of them is complexity. The hon. Member for Twickenham is right to draw attention to the fact that the benefit system is complex. It seeks to meet the needs of people in very varying circumstances who often have very different needs. It is a system that has developed over the years. It not only draws on our post-war welfare settlement; that itself draws on many of the provisions of the period 1909-11. Therefore, by definition we have a system that is complex.
Wherever possible and bearing in mind the need to ensure that simplification does not compromise fairness, the Government are determined to ensure that the system is as simple as possible and that it delivers to our customers in a way that is as easily understandable to them as possible. Therefore, in areas such as council tax benefit and disability living allowance, we have made significant moves to simplify the forms. In the local housing alliance this morning, I launched a new phase in our reforms of housing benefit, which replace a very complex system of housing support with a simple standard local housing allowance for each locality that varies only according to the size of household. We are piloting it in a number of pathfinder areas.
In the Pension Service we have devised a new mechanism by which people can claim pension credit. They can do so from the comfort of their own home over the telephone—one of our staff will fill out the form for them —or through a home visit from the local service.
We have heard much about the failures of IT and telephony in the Child Support Agency system, but hon. Members are aware that we are seeking to replace a complex system of assessing maintenance liability, under which up to 100 different pieces of information were needed to make the assessment, with a much simpler, straightforward system. The new system will help parents with care and non-resident parents to understand how much should be transferred from one parent to the other.
418WH We have invested heavily in delivery; over the past two spending reviews, some £2.8 billion has been invested in modern IT infrastructure, Jobcentre Plus and the Pension Service to enable us to operate more efficiently while delivering a high level of service for our customers. For example, as I have said, pensioners can now easily apply for pension credit by telephone or through a visit at home by the local service, instead of being required, as in the past, to visit a drab benefit office. In most cases, once they have made that telephone call and their claim has been verified, pensioners over 65 need not be troubled further for up to five years.
I have to tell the hon. Member for Wycombe, who referred to the take-up of pension credit, that we are proud of what we have achieved in getting 3 million people in receipt of it already. I can confirm that there are no plans at all to allow one in five pensioners not to benefit from the credit in the longer term. We now have a more stringent target, which is to ensure that 3.2 million people receive pension credit, but we will not rest until all pensioners entitled to that help get it.
A recent Age Concern report showed that for most applicants—70 per cent.—the application process was considered easy, and simpler than that for the minimum income guarantee. Some 85 per cent. said that they would recommend to others applying for pension credit. I do not think that that reflects the picture painted by hon. Members of the complexity of claiming pension credit. I must tell the hon. Member for Wycombe that the credit is a targeted benefit because we needed to make sure that we got help to those who needed it most, after many years in which pensions were badly eroded under the previous Government, and in which there had been a substantial increase in pensioner poverty.
We are also improving the processing of benefits, so that more of our operations are automated and more staff can be released to focus on front-line work. Jobcentre Plus will increase the number of customer-facing staff by 15 per cent. We have also been able to reduce the number of offices we use by combining the old Benefits Agency with Employment Service networks to make new customer-focused agencies—Jobcentre Plus and the Pension Service. By centralising processing work in Jobcentre Plus and the Pension Service and making bespoke larger centres, we can achieve further economies of scale.
The reality of all of that is that we need fewer staff to continue to deliver a high level of service to customers, thanks to improved services and more efficient ways of working. The hon. Member for Northavon asks why we do not simply move those staff to the CSA or to work on tax credits to improve the quality of customer service, but I can tell him that customer service is improving. Although we are able to reduce the overall number of staff as a result of the investment that we have made, particularly in DWP, we have given a commitment, and our emphasis is on front-line staff and quality of service.
All hon. Members have referred to difficulties with the CSA as illustrations of what they wish the House to believe are failures of IT systems. As I have said previously, I am as frustrated as other hon. Members that we are not yet able to deliver that new and simpler system of assessment. Hon. Members are aware that we 419WH have had considerable problems with the IT and telephony in the CSA. We have worked closely with EDS, our IT suppliers, to try to overcome those problems. Over recent periods, as the Select Committee knows, we have withheld 15 to 20 per cent. of payments to EDS, to take account of the failures of delivery on IT and telephony.
Things are improving. Some 25,000 parents with care now receive the child maintenance premium. The hon. Members for Northavon and for Wycombe said that they would like to see all parents who are entitled to that premium receiving it, and I concur with that. The reality is, however, that that premium is a feature of the new system and not of the old, and until we can transfer the old cases to the new system, we cannot pay that premium across the board. I am afraid that I cannot make a commitment to a date when that transfer will be made. I repeat that we will not and cannot make the transfer of old cases to the new system until we are convinced that the IT is working effectively. It would be irresponsible to do otherwise.
The hon. Member for Northavon also referred to the tax credits system; he described it as a fiasco. At that point in his address he was becoming increasingly theatrical—he talked about it messing up the lives of thousands of people. Neither I nor most of my constituents would recognise that as reality.
The tax credit system, which represented a transfer of some 6 million people to a new and more generous form of family support, was perhaps the biggest change in family support since Beveridge. Inevitably, in the early stages of making a transfer of that size there were stresses on the system. However, the system is now working much more effectively than it was in the early stages, and I am sure that the hon. Gentleman will acknowledge that many of the problems have been overcome. The tax credit system is an essential part of our programme, which aims to halve child poverty by 2010 and to eliminate it by 2020.
I shall now address the points made by hon. Members about the Post Office card account system and direct payment. The hon. Members for Twickenham and for Northavon made the allegation that we are bullying people into giving up their order books and moving to direct payment, whether to the Post Office card account or a form of bank account. I reassure the House that no bullying is going on. We are ensuring that people understand their options and can make a real choice about the way in which they wish to receive their benefits or pensions. The aim is to overcome the financial exclusion that blights so many people's lives and to offer a more secure and flexible method by which people can receive their payments. Moreover, more than 90 per cent. of pensioners already have a bank account, and we should be wary of being patronising towards pensioners by assuming that, for some reason, they cannot operate a bank account.
§ Mr. WebbThe Minister used the word "patronising"—the right word for him to use. If, faced with an informed choice about those two options—direct payment into a Post Office card account or a bank account—a pensioner says, "No, I know my 420WH circumstances and my preferences, and I prefer the present method of payment", is it not patronising to tell them that that is the one choice they cannot have?
§ Mr. PondNo, that is not patronising. It is a reality that we have decided to phase out the order books. They were introduced at the same time as ration books and would have been abolished in 1998, if the previous Government had remained in office and their plans had come to fruition. As the hon. Gentleman knows, 100 pensioners have their pension books stolen every week, and there was an understanding that it is a very expensive method of transferring funds to pensioners. The funds should go into the pension, not the method of delivery. Most pensioners already operate bank accounts; I do not think it at all patronising to assume that the rest, in time, will wish to do so. Some will be unable to operate those accounts, and that is why we have announced a system of cheque-based payments for those who really are unable and unwilling to operate any form of bank account.
The hon. Member for Twickenham suggested that we were making it difficult for people to take out Post Office card accounts. More than 3.8 million people have requested POCAs and more than 3 million have opened such accounts—that does not suggest that people are finding that overly difficult. Independent research commissioned by the Department for Work and Pensions suggests that there are high levels of satisfaction among customers who have transferred to direct payment. Some 91 per cent. of customers stated that they were satisfied with the process of making the arrangements to receive their benefit by direct payment; 93 per cent. were satisfied with the process of having payments made into their accounts. We recognise that some people, including many pensioners, find the final stage of opening a Post Office card account difficult—the stage of returning their account details to the Department for Work and Pensions. We understand that people find it difficult to see any distinction between the Post Office and a Government Department. We are talking to the Post Office and to postmasters to establish whether there is a way of making that simpler.
A number of Members mentioned the events in August—I should say to the hon. Member for Wycombe that 23 August was the date. Having spoken to the chief executive and other senior Post Office managers to get a clear understanding of exactly what happened, I should like to clarify what appears to have happened on that occasion. The hon. Member for Northavon was right in saying that somebody from JP Morgan, the Post Office's subcontractor, apparently turned the system off, having found that multiple payments had been made to certain people. That person did so without the authority of the Post Office, and certainly with no authority from the Department for Work and Pensions. The Post Office card account is a Post Office, not a DWP, product. It was not a system or IT failure, but a management failure—a failure as a result of human error.
We have sought the Post Office's assurances that that will never happen again. There must be safeguards to ensure that, and to ensure that, if it does happen again, the fall-back mechanisms will not fail and people will be able to find out exactly where their payments are. It is unacceptable that pensioners should have been left— 421WH even for three hours and 53 minutes, as was the case on 23 August—without any means of accessing their money. I have made that point clearly to the Post Office and I know that it accepts that. I have also asked it to pass the message on to JP Morgan.
The hon. Member for Northavon raised the question of whether pensioners and others will be pursued for any overpayments that occurred as a result of that error by JP Morgan. I have made it clear to the Post Office, and asked it to make it clear to its suppliers, that we do not expect any pensioner or any other of our customers to be pursued for the repayment of an overpayment that was no fault of their own. In response to the hon. Member for Wycombe, we are in receipt of the list of questions sent in a letter by the hon. Member for Havant (Mr. Willetts). We delayed responding to the detailed points until after we had received clear responses from the Post Office about exactly what happened, but we will shortly issue a response to the specific points along the lines that I have just outlined.
The hon. Member for Twickenham raised a serious point about some of his constituents who had been pursued for overpaid benefits in a way that he considered unacceptable. As background, fraud and error overall cost the Department and the taxpayer some £2 billion a year, or £80 for every family in the country. We are making considerable progress in reducing the amount of fraud and error. The reduction of 29 per cent. for income support and jobseeker's allowance, which are the main working-age benefits, is well on the way to meeting our public service agreement target of an overall reduction of 33 per cent.
The hon. Gentleman will recognise that we have a responsibility to recover overpayments, even if they are the result of official error. If payment is made over and above the amount that has been authorised—for example, someone may be paid twice for the same period—the Department may invite repayment. In exceptional circumstances, a person's failure to respond to the invitation to repay could lead the Department to consider recovery through civil action, but we are very sensitive on such issues. If the hon. Gentleman will let me have details of the particular cases to which he referred, I will happily pursue them on his behalf and determine whether they have been dealt with properly.
Finally, I wish to address some of the points about pensions, which are of vital concern to all our constituents. In a short time, we will have an opportunity to debate the matter on the Floor of the House on a Liberal motion. The Pension Service has been operational for two years, and it is clear from customer and partner feedback that it is making a 422WH difference. Some 81 per cent. of respondents to customer surveys said that they were satisfied with the service that they received. The quality of the staff and information, and the professionalism of the service were commonly identified as the best things about the service. More than nine out of 10 respondents agreed that staff in the Pension Service were polite, treated customers with respect, were easy to talk to and were patient. A network of pension centres provides a primarily telephone-based service for more than 11 million pensioners. It is supported by locally based services that are delivered in partnership with other organisations, offering face to face contact with customers who need it through home visits and at outreach locations.
The new approach to the delivery of benefits and services to our customers means that we have to be smarter about our business processes. As I said, we have increased investment in our IT systems and in our processes overall, and our target for paying pension credit has been increased to at least 3.2 million pensioner households by 2008. That demonstrates our continuing focus on tackling poverty and our confidence in meeting challenging targets.
The substantial investment has meant a transformation of the DWP into an organisation that is focused around the needs of customers. Investment and reform are transforming the welfare state into an efficient system that is tightly focused on actively supporting and empowering people so that they can achieve their potential and get the help to which they are entitled. Modern IT and improved processes mean that we can now get more resources to the front line so that we can continue to deliver a high-quality service with increasing efficiency.
I understand that for our staff this is an unsettling time. That investment, those extra efficiencies and the way in which with fewer staff we are able to provide a higher quality of provision to our customers means that many people who work in the organisation will not be needed in the long term. Although any job losses are regrettable, by improving efficiency we will release resources to make further progress on child and pensioner poverty and get even closer to full employment.
I pay tribute to our staff. The achievements that I outlined at the beginning, from our report, "Opportunities for All", are a tribute to them and something that I much appreciate. I know that other hon. Members of the House will want to join me in paying that tribute.
§ Sitting suspended until half-past Three o'clock.