Departmental Work (Hansard, 31 October 1995)

§ Mr. Burt

We have a clear strategy for social security. The principal objectives are to focus benefit on the most needy, to encourage personal responsibility, to improve incentives to work and save, to bear down on fraud and abuse and to ensure that the system does not outstrip the nation's ability to pay. Social security has cost £440 billion in real terms since 1990 and provides one of the most comprehensive safety nets in the EU.

The Department has focused benefit on those who need it most. Disability living allowance was introduced in April 1992. Expenditure on help for customers below pension age with care and mobility needs has increased by more than 50 per cent. in real terms since 1992. In addition, the Disability Discrimination Bill will ensure that disabled people are not discriminated against in the workplace or when seeking access to goods and services.

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Incapacity benefit, which replaced sickness benefit and invalidity benefit on 13 April this year, provides a better targeted and more affordable system of provision. A more objective medical test will focus help on those genuinely incapable of work because of their medical condition.

The Department has encouraged personal responsibility and the Pensions Act 1995 encourages increased self-provision. Pensioners in all income groups have seen their income rise since 1979 and on average are 50 per cent. better off. About 88 per cent. of recently retired pensioners have incomes other than state benefits. The UK is the largest investor in private pensions in the EU, with more assets invested in pension funds than the rest of the EU put together.

In 1993, the Child Support Agency was launched to implement the Child Support Act 1991 and to operate the new system of child maintenance for parents who live apart. The new Child Support Act 1995 includes wide-ranging improvements to the scheme which will be fairer, improve service and ensure maintenance is paid regularly. This year the Child Support Agency is on track to collect or arrange £300 million in maintenance and achieve a reduction in the bill to the taxpayer of £1.4 billion since its launch.

The Department has improved incentives to work and save. Reforms since 1988 have significantly alleviated the unemployment trap, where people are better off unemployed than working, and the poverty trap, where net income falls even though wages go up. We will reinforce incentives as result of the Jobseekers Act 1995. This country has pioneered the use of in-work benefits. Family credit expenditure has helped to boost earnings for families on low income, and over 5.2 million awards have been made since 1990. We have announced plans for the first ever pilot of a benefit, earnings top-up, for low-earning single people and couples without children.

To bear down on fraud and abuse the Benefits Agency has developed a security strategy ensuring that the right money is paid to the right person at the right time and has delivered fraud savings of record £706.8 million in 1994–95 against a target of £654 million.

The Department has a proud record of efficiency, particularly following the establishment of agencies, where 97 per cent. of our staff now work. Agencies have consistently met or exceeded efficiency targets, resulting in savings of over £500 million being made over the last five years. In the Benefits Agency, output per member of staff has increased by 26.4 per cent. since 1989–90. Further efficiencies will be delivered through the Department's plan to apply an extensive and innovative range of efficiency techniques over the next three years.

The Department is at the forefront of public sector management and service delivery. Nineteen offices of the Benefits Agency have been awarded the charter mark. The Benefits Agency achieved an 84 per cent. satisfaction level of an independent and comprehensive customer survey in 1993–94, an increase on the previous year. The Information Technology Services Agency achieved the international standard for quality accreditation for the whole of its business in 1994. ITSA was one of the first next steps agencies to achieve such recognition for all areas of its business.

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Under the Government's private finance initiative, the Contributions Agency has awarded the contract for the development and operation of the replacement national insurance recording system. This was the first major IT contract to be awarded under PFI. Work is also progressing on plans to automate payment of benefit at post offices. The Benefits Agency aims to start issuing benefit payment cards during 1996. Full roll-out of the card will take two to three years and will be funded under PFI; a procurement exercise is now under way.

Over the last several years we have undertaken many measures that have reduced the burdens on business. These include simplifying the rules and requirements of statutory sick pay and introducing from April 1996 a national insurance holiday to encourage employers to take on employees who have been unemployed for two years or more.

We have taken steps to align the tax and national insurance schemes wherever possible. The Contributions Agency, Inland Revenue and Customs and Excise have also established an extensive programme of work which will deliver real benefits for business in practical terms by reducing bureaucracy and duplicate handling.

By focusing help on those in need and encouraging personal responsibility we will achieve savings reaching £4 billion a year during the next Parliament, and more than three times that amount next century.