Chapter 5 Delivery of a reformed system
Summary
A 21st century welfare system requires a 21st century delivery solution.
More work would be needed to decide the most cost-effective approach to delivery, including how best to define the relationship between the Department for Work and Pensions’ delivery agencies, HM Revenue & Customs and Local Authorities.
We envisage an integrated IT system to manage all claims, and a single payment system to apply a withdrawal rate and pay the correct entitlement. These would not be entirely new systems and could be built on our existing IT and capabilities.
HM Revenue & Customs is consulting employers and payroll providers on mechanisms that could support more frequent or real-time collection of Pay As You Earn data. Such a system could also enable the use of real-time earnings data to calculate net entitlement, removing the need for claimants to notify different agencies when their earnings change.
1. As described in chapter 2, the process of claiming benefits can be complex and confusing, with large numbers of different benefits available for similar or overlapping needs. Customers often have to deal with at least three different layers of national and local government, providing the same information multiple times. A simpler, fairer and less costly system which reduces these difficulties would be welcomed by customers, staff businesses and taxpayers alike.[38] [39]
2. A new delivery system could lessen bureaucracy and reduce the risk for people moving from benefits to work by making the system more responsive to fluctuations in earnings. People would be able to access support without endless form-filling and waiting.
Reforming delivery
3. Our ideas for structural reform have significant implications for the way support is delivered and for how individuals interact with the system. We will ensure that our approach to delivery maximises the opportunity to increase efficiency, improve customer service and reduce the cost of administration. The goal is a delivery system fit for the 21st Century.
4. The ideas in this paper raise a number of choices about delivery routes. More work will be needed to identify the most cost-effective approach to delivery. Knowledge of our customers will be essential in ensuring that any new system is genuinely simpler and easier to use.
5. We envisage that customers would be able to make a single application for all major entitlements, ending the excessive form-filling of the current system. Within a household, one person would make the claim and receive the payment. The claims process would be as simple as possible and would build on existing plans within the Department for Work and Pensions to develop full online services.
6. We would also need to consider carefully the current organisation of work between the Department for Work and Pensions, HM Revenue & Customs and Local Authorities. We will work with all delivery agencies to establish how delivery can best be integrated and what this might mean in practice not only for all individuals but also for all types of business.
Assessing entitlement and making payments
7. The IT changes that would be necessary to deliver a more integrated system would not constitute a major IT project, but two developments building on existing technologies.
8. A system to manage contact with customers, gather evidence and assess a household’s entitlement to support could be built using existing technology in everyday use in both the public and private sector.
9. A second system would be required to bring together a household’s total entitlement and information on their earnings. It would then use these pieces of information to apply the withdrawal rates and make the correct payment. This payment system could be built around the BACS system which is already used to pay benefits to 96 per cent of Department for Work and Pensions customers. Payments for self-employed people and others not covered by the PAYE system would need to be delivered differently but would be part of the system.
10. Alongside this paper, HM Revenue & Customs is seeking views from employers and payroll providers on mechanisms that could support more frequent or real-time collection of Pay As You Earn data. Under a new system that used real-time data, employers would report their employees’ earnings to HM Revenue & Customs at the time those earnings are paid, rather than only at the end of the financial year.
11. Such a system could also present opportunities to use real-time earnings data in the calculation of entitlement. Access to real-time earnings data would remove the need for customers to notify changes of income, and make the system more responsive to fluctuating earnings and movements into or out of work. This could largely resolve the issue of overpayments and subsequent repayments, which hit the poorest hardest.
12. However, welfare reform could still be delivered if HM Revenue & Customs does not take forward changes to Pay As You Earn. This could entail a series of fixed period awards with customers required to notify any changes of income; a similar system to this was previously used in Australia.
13. More work will be needed over the coming months to decide on a preferred approach.
Tackling error, overpayments and fraud
14. The causes of error, overpayments and fraud in the current system fall into three categories.
- The complex and fragmented nature of the system. This causes staff and customer errors and enables customers to represent themselves differently to different parts of the system.
- Means-testing rules. We rely on customers letting us know about their earnings, savings and other sources of income, which introduces opportunities for error, overpayments and fraud.
- Rules on non-financial circumstances. We similarly rely on customers letting us know accurately about personal circumstances such as where they live, whether they have a partner and whether they have children.
15. Significantly reducing complexity would allow a customer’s details to be seen as a whole. Reducing system complexity should translate into less error and fewer overpayments through fewer mistakes made by staff and customers while navigating the system. Overpayments and subsequent recoveries often lead to hardship amongst those who can least afford those recoveries.
16. Having one main gateway for customers to access the system should make it impossible for customers to represent themselves differently to different parts of an organisation and so would further drive down levels of error, overpayments and fraud.
17. Access to real-time earnings data would allow for a significant reduction in the current levels of error and fraud due to unreported or inaccurately reported earnings, as well as the current high levels of overpayment. A single gateway would also enhance our ability to pick up on error and fraud associated with non-financial customer circumstances. By making intelligent use of data, it could be possible to obtain information on a number of customers who are illegitimately claiming while living with a partner or fraudulently claiming in more than one area.
Transition to a new system
18. A new delivery system would be more straightforward for customers to understand, remove the need for the same information to be collected and held several times over and speed up key parts of the process. This should be considerably more efficient to deliver than the existing system both for Government and for businesses. However, we would need to plan carefully to ensure that we can move customers smoothly and efficiently from the old system to the new. This would be a substantial project, potentially affecting millions of customers and businesses.
19. The introduction of a new system would also need to align with existing plans to better target support and simplify the system by closing previous incapacity benefits and moving people to more active and work-focused regimes (Employment and Support Allowance or Jobseeker’s Allowance, depending on their circumstances). We are aiming to re-assess over 1.5 million people on incapacity benefits over a three-year period. We envisage that most people will have migrated onto their new benefit before a new system could be introduced.
20. In planning the transition to the new system, we would be guided by our principles of simplicity, fairness and affordability.
Conclusion
21. To deliver welfare reform we would need to work with all delivery agencies to consider carefully the most cost-effective and efficient delivery structure.
22. A new delivery system would not require a major IT project but two smaller developments to existing infrastructure. If HM Revenue & Customs takes forward reforms to the Pay As You Earn system, real-time earnings data could offer significant opportunities to streamline the payment process and respond more quickly to fluctuations in income.
23. The reduced complexity of the system and access to real-time earnings data could lead to reductions in error, overpayments and fraud.
Question 11
What would be the best way to organise delivery of a reformed system to achieve improvements in outcomes, customer service and efficiency?
This consultation is now closed.
One of the major problems relates to the system whereby the DWP has allowed one supplier – ATOS Healthcare, to monopolise the provision of medical reports. This organisation has been sole suppiler to the DWP over the last 10 years, and yet even the most basic internet research demonstrates the failings that need to be addressed. By allowing itself to be associated with this company and continue in a sole supplier relationship, the DWP is not taking any steps to address the many concerns raised.
Please see sites such as:
http://www.whywaitforever.com/dwpatosveterans.html
http://www.cpag.org.uk/esa/
http://www.unimportant.blog.co.uk
http://www.bbc.ouch/atos
The comments from the Scottish CAB – that ATOS was not fit for purpose and similar comments from Danny Alexander MP, make interesting reading.
ESA has become the most appealed benefit, and it seems tha that complaints are currently running at 8000 per month. the cost of dealing with this, to the DWP., the Tribunals and so is immense and the tax payer shoulders the burden of costs rather than the supplier at the heart of the process.
Until the DWP addresses the issues of working with ATOS at all, as well as the uncompetiveness of having a sole supplier that appears to escape accountability, no real and meaningful progress can be made in relation to the reform of benefits where medical evidence is required.
I agree that the current system is bureaucratic and does not work well for users as well as the government. However,I am not entirely sure of the wisdom of a system involving HRMC at this stage but I do think that a kind of benefits PAYE system has merit. People pay tax on pensions why not on benefits? I think this would help people psychologically feel that being on a benefits is part of a continuum, where at one end we support those unable to work and at the other we are in full time work and inbetween there is a raft of benefit/work options. I do think it is not simply a case of adding to the current system which in our experience does not work well. My husband was made redundant and when he got a new job at a much lower salary we were told we were eligible for tax credits for that year but when we tried to claim it bacame a nightmare,the left hand didnt know what the right hand was doing and in the end we gave up. The job centre were completely useless. They knew nothing about manufacturing, made basic admin errors over details such as names, were repeadly unsure of our benefit entitlement and gave poor advice. They actually wanted my husband to apply for retirement (early 50s) without any consideration as to whether he wanted to or could afford to.
I think we need consistent (national) benefit levels and centralised (Dwp/HRMC) administration of benefits but really local advice/mentoring centres to help people access work/support services.I am concerned about the emphasis on ‘household’ rather than individual for benefit entitlement and wonder how that will impact on parents who are still caring for severely disabled adult sons or daughters at home.
Another loophole in Housing Benefit claims is where a person rents a room in a hotel for say £160 a week and in order to satisfy HB gets a letter from the hotel stating such with a months supply of receipts, then when the claim is processed usually after a couple of months the claimant simply checks out and seeks refuge with a friend or into one of the many tourist hostels which charge around £10 a night and then pockets the difference.
i.e £160 from the HB plus any other benefits like JSA /ESA (usually £65-95) on top.
so £160+£65/95= £225/55 – say lodgings at £10+7 nights=£70 a nice balance of £155/85 a week spending money.These people then just collect there mail from the hotel so it is not returned to the council who would query it.The council then review it annually but in fact don’t ask for any proof and continue payments.
I’ve heard that it happens on a bigger scale with tenancy agreements and the sky’s the limit.Rent a house on a 6 month agreement for £500 a week and never pay the private landlord just sit back and accumulate the HB credits(£12000) wait to be evicted (3 months)you could amass £18000 from HB by the time your evicted..nice little earner.
I advocate using the European method of just giving claimants on JSA,ESA a fixed amount of say £110 a week on top of there benefits to cover there accommodation and thus cut out bureaucracy and fraud.Its ridiculous to be able to rent a house or flat for £250-300 a week whilst on benefits when the claimant could not expect reasonably to afford this if they were in a full time work, whats the incentive to get a job??
Makes sense to me!!!!
Housing Benefit is paid to people in full time work if their earnings are low.Any of the scenario above would involve complicity on the part of the hotel owner and or landlord.
housing benefit is payed to people who earn not more than £65 a week anything over this is deducted from there rent payment.
regarding complicity from the hotel owner or landlord they are often unaware of this situation thats why these characters are ripping off the HB benefit system.
The law needs to change so that single people who are unemployad and not living at home must live in hostel accommadation (£70-100 per week) and housing costs must be in line with there JSA allowances in order that high rents will not prevent them from being fully employed.
Who sees that what these Appeal Tribunals determine happens ?? If there is no discretion in administrative system how do those in discretionary areas get a fair hearing or a duty of care . Is this not civil liberties human rights abuse ? And we are supposed to be democratic just contact these enquiry advice lines who set you up as a vexatious litigant raising issues??!! There is noone overseeing that discretion is happening even in the Regulatory Offices and the Legal; system.
Great idea, but in the current economic climate can we afford the millions it would take to set it up and implement it properly? Perhaps we could use the unemployed IT consultants etc to do it as a condition of them receiving unemployment benefit? (Note: last bit not intended to be totally serious!)
OK. Lets go the whole hog shall we.
Workers employers send wages to HMRC.
HMRC send balance to DWP.
DWP send payments to workers and claimants, adjusting where needed according to circumstances.
Workers in excess of benefit level get wages.
Workers and claimants below benefit level receive supplementary payments.
One ID, One bank account, One payment per person.
Yes, you may be getting close to that.
Yes thats what needs to happen an integrated system so as soon as you enter the national insurance number you can see all benefits that are being claimed and if your currently employed..fraud finished.
re benifit fraud.
I recently had to take time off work due to heart probs. while waiting for hospital treatment i was encoraged to keep active,i did this by walking round local auctions, car boot sales and farmers markets, I soon realisedthe people buying at the auctions could be found later in the week selling at car boots.It soon became clear to me this was an on-going scam as there was no records of any profit made and benifits could not be touched.similarly farmers markets are being used as un-taxed shop outlets,iknow of a baker who regularley takes £600.00 tax free in one morning.
I hope this helps in some way.
thats alot of pastries@50p each…1200…surely some mistake..which farmers market did you say you worked at…lol
Regarding Benefit Error and Fraud – Whilst working for DWP in benefit delivery in 2008 I identified a problem with several benefit claimants receiving tax credits to which they were no longer entitled. Following discussions with staff in other teams in my office, I realised that this was a widespread problem, which, if it was addressed, could save huge amounts of money (potentially millions of pounds)being paid out incorrectly, with little hope of recovery. I tried to inform HMRC, but was told that they could only stop paying Tax Credits if the customer informed them of a change of circumstances!!
I devised a simple method of informing HMRC and even contacted a team that would handle such information and pursued this matter through DWP senior management, but was told that DWP could not pass information about incorrect payments to HMRC as “a statutory gateway did not exist under the Data Protection Act to facilitate it”. When I suggested that such a geteway be set up, I was ignored and the whole matter went no further.
Totally fed up and angry, I took early retirement at the first possible opportunity!!!