Press Notice No. 36 of Session 2005-06, dated 27 April 2006
THIRTY-SIXTH REPORT: TACKLING THE COMPLEXITY OF THE BENEFITS SYSTEM (HC 765)
Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today:
“There will always be a degree of complexity in a benefits system if it is to operate fairly and be sensitive to the needs of people who live in varying circumstances in the real world. We find ourselves now, however, with a system which has become increasingly arcane, unwieldy and baffling to both benefit staff and customers.
“Successive governments have recognised the need for simplification of the system. Complexity makes it easier to commit fraud and for staff and customers to make mistakes. It cannot be stressed too often just how much money is being wasted through fraud and error: an estimated £2.6 billion in the single year of 2004-05. And complexity can lead to low levels of benefit take-up by vulnerable claimants. But simplification is not an easy option. Any significant reform is likely to involve a trade-off with fairness and, as a result, the creation of ‘losers’.
“The Department for Work and Pensions has started to pursue simplification, including the creation of a benefit simplification unit in response to the concerns of this Committee. This is welcome but developments so far have been piecemeal and, without any objective criteria for measuring complexity, no one knows whether any progress has been made.
“The drift towards greater complexity does not have to be inevitable. The DWP must address the task of reversing that drift both vigorously and on many different levels. It must explain its intended actions more clearly; develop a simplification strategy with specific targets; drive to improve knowledge of benefits among its staff; introduce easily understandable measures of progress; and give more information to Parliament on the potential effects on the system of new legislation. Perhaps one of the most important actions the DWP can take is to banish all gobbledegook from its leaflets and letters.”
Mr Leigh was speaking as the Committee published its 36th Report of this Session.
The complexity of the benefit system is a key factor affecting the performance of the Department for Work and Pensions (the Department). Much complexity is intentional and some is also inevitable, and allows the Department to tailor the regulations to the varied needs and characteristics of the population, administer it cost-effectively and protect public funds against abuse.
The system has grown over many decades. There are few forces working against additional complexity, and the well-established processes of consultation and scrutiny of legislation do not act as a brake. Between 2000 and 2004, there were 364 statutory instruments, although not all of them of course added to complexity. Since 1990-91, the Child Poverty Action Group’s guide to welfare benefits has nearly quadrupled in size.
The consequences of complexity include high levels of error by staff and customers. It also helps create a climate in which fraud against the benefit system can more easily take place and go undetected. Fraud in key benefits has reduced since 1997-98, but levels of error have increased recently, in part because of the organisational change within the Department. In 2004-05 fraud and error still stood at £2.6 billion. Complexity is also a factor deterring the take-up of benefits by groups such as pensioners, and in contributing to decision-making errors, which result in 250,000 appeals a year. The Pensions Commission has identified that complexity in the pension system - state and private combined - is an important factor in discouraging millions of people from considering their future pensions arrangements. Complexity also affects the ability of staff to administer benefits efficiently, and the ability of many customers to understand easily what is expected of them.
The Department recognises that complexity is a problem and has taken opportunities to reduce it, for instance in the design of Pension Credit, in systematically removing anomalies from Housing Benefit, simplifying claim processes for several benefits, better sharing of information with local authorities, and using technology to protect customers from complexity. However, these are rather piecemeal developments and it is difficult to tell whether the system as a whole has become more or less complex as there is currently no objective way of measuring it.
Some of the steps taken to simplify processes for customers are a way of managing complexity, rather than eliminating it. Managing complexity requires well-trained staff supported by accessible guidance and assistance and efficient information technology systems. There is evidence that some staff are reluctant to offer information as they fear misleading customers. Yet the number of people who seek help in dealing with their benefit claims each year - 1.3 million go to Citizens Advice alone - shows the scale of assistance needed. The Department should also improve its written communications with customers, which appear to have improved little in six years.
The Department has made a number of commitments for further action and intends to give greater priority to tackling complexity. It will report to Parliament annually on actions taken and is setting up a small Benefit Simplification Unit to act as a further internal counterweight to increasing complexity. The Unit will, amongst other things, look to develop a way of measuring complexity.
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