Comprehensive spending review 2007
What it needs to deliver on child poverty

Improve the quality of delivery and gear it to the needs of the poorest families

To support the policy developments called for elsewhere in this paper we feel that greater attention also needs to be given to the mechanics of how policy is implemented. Alongside pre-existing delivery problems (for instance in the Child Support Agency), the staffing cuts following the review under Sir Peter Gershon have reduced the numbers in both HMRC and the DWP. The pre-announced settlement of 5 per cent real budget cut over the period of the next spending review also marks the territory as one where the Government expects to reduce the amount it is spending on administration. At the same time, significant delivery problems have been occurring in Jobcentre Plus, the tax credit system and the Child Support Agency. Alongside the existing problems, the DWP faces significant challenges in delivering the current operational improvement plan in the Child Support Agency and reforming it, along with rolling out the Pathways to Work extensions proposed as part of the welfare reform legislation currently before Parliament.

Existing administrative challenges are great and where poorer families do not receive effective, appropriate services this directly undermines attempts to reduce child poverty. Examples of current problems are not hard to find - for instance, delivery of child support policy has been widely criticised, not least by the Sectary of State ultimately responsible for it:

The overall performance of the CSA has fallen well short of expectations. Only a minority of cases handled by the CSA receive any maintenance. There is a backlog of around 300,000 cases. Debts of over £3 billion have built up with limited prospects of recovery. There is a net cost to the taxpayer of around £200 million per year. And levels of customer service, although they have improved recently, have never reached the standards of quality and consistency the public are entitled to expect.64

Significant problems - both policy and administration - with the delivery of the tax credit system have compromised its impact, with the harsh recovery of overpayments and often impenetrable administrative systems for reporting changes of circumstances. Major policy and administrative reforms were announced in May and December 2005, which are welcome and will have a significant impact in reducing poverty in the medium and longer term. However, these changes are not yet fully implemented, and the IT support for the scheme appears inflexible to policy and delivery need - demonstrated by the length of time required to implement the December 2005 changes (still underway in late 2006). Above and beyond these, much more work is needed to ensure forms are comprehensible, the administrative process is better understood by claimants, and access to information and advice is improved.

Recent reforms in Jobcentre Plus have shifted delivery from being based primarily on local offices to a network of contact and processing centres, underpinned by the IT Customer Management System. The introduction of the new model was heavily criticised by the Parliamentary Work and Pensions Committee in March 2006:

We conclude that the service delivered by many Jobcentre Plus Contact Centres to their customers suffered a catastrophic failure in the summer of 2005. This led to additional hardship among the most vulnerable in society.65

In its response, the Government rejected the extent of this criticism, although it did accept there had been many problems.66 These may have been most acute while the system was in transition in summer 2005, but a more recent CPAG survey of advice agencies dealing with Jobcentre Plus shows continuing evidence of extreme difficulties in getting through, of advisers not being informed of service changes, and of lost paperwork and official error.67

The DWP has announced it will poverty-proof new policy. CPAG believes this should extend both to policy and to administrative mechanisms of delivery. These should, therefore, be developed to cater effectively for the most disadvantaged claimants, rather than being driven primarily either by the desire to save resources or to deliver for the 'average' claimant.

Non-take-up

Non-take-up of many benefits and credits - including income support, child tax credit, working tax credit and disability living allowance - is common, with around £8 billion going unclaimed in means-tested benefits and a further £5 billion in tax credits.68 The principle reasons for non-take-up of benefits are structural and administrative; they are about the complexity of understanding entitlement criteria, dealing with forms and processes, the hassle of dealing with benefits administration, and about the - often stigmatising - ways in which claimants - and 'benefits dependency' are described. As the causes and solutions are structural, the ultimate responsibility for failing to deliver rights lies with official agencies.

Government - including through the DWP's benefit simplification unit - needs to work to simplify the experience of claiming benefits in order to make it easier for people to take up entitlements and to challenge wrong decisions. It should also be more careful about the way in which benefits and claimants are described, including in its messages on fraud, disability and worklessness, by avoiding stigmatising those rightfully entitled. Encouraging public prejudice discourages take-up and thereby worsens poverty. The public service agreement to deliver pension credit to three million households by 2006, and its successor target,69 are a welcome acceptance that the state has the responsibility to deliver rights - and not just that individuals have an entitlement to claim. There is a greater potential for both more exploration of the barriers to take-up and the use of targets to help drive policy to increase the proportion receiving their entitlements.

Error, delays and poor decision making

Errors and delays are a clear indicator of system complexity and system failure to work effectively. Error shows up both in departmental estimates and in the successful appeals against decisions - if initial decision making were good, the rate of claimants overturning decisions at tribunal would be low, yet for income support nearly half of cases (44.8 per cent) are overturned and awarded at appeal. For disability living allowance, this is 55.2 per cent, for incapacity benefit (for cases going through the personal capability assessment), this is nearly two in three (57.2 per cent).70 Delays in making decisions or processing paperwork also place families at great risk and are shown through the use of other provision (including private debt, the social fund and charities). Social fund crisis loans made to cover 'alignment periods', gaps between first payments of benefits or wages, take up 37 per cent of social fund expenditure.71 As well as evidence of poor service in itself,72 using loans in this way reduces the amount the social fund has to spend on the poorest families73 and shows the extent to which the social fund picks up the pieces of delays from other parts of the system.

Though fraud usually hits the headlines, error is far more substantial in cash value terms. For income support, jobseeker's allowance and pension credit in 2004/05,74 1.9 per cent of resources were overpaid as a result of fraud, and 3.3 per cent because of error (1.3 per cent claimant error and 2 per cent official error). In 0.4 per cent of cases, claimants got less than their entitlement as a result of their own error, while more than double this proportion got less because of official error. Analysis of recent trends for income support and jobseeker's allowance shows that fraud has reduced by 57 per cent since September 1998, official error reduced by much less than this (33 per cent) and claimant error actually increased by 38 per cent. Data from the first year of the operation of the tax credit system75 shows the occurrence of error (not separated into official or claimant) massively outweighing fraud, with 1,130,000 estimated cases of error ('favouring the claimant'), compared with just 30,000 cases of fraud. Using data from the first year of operation of the scheme does not account for the subsequent improvements noted earlier, nor does it account for the impact of the systemic fraud attack which resulted in HMRC closing the online claim facility (the 'e-portal') in late 2005, rather it reinforces the point that much greater emphasis should be placed on reducing error rates. In terms of the DWP experience, though, clearly the Government has an interest in fraud reduction; this is already falling in line with official targets. What is not falling at the same rate is error.

Reducing error and delays should be a key focus, and this can be achieved both by simplifying systems, where appropriate, and by improving the ability of staff to cope (by IT improvement, better training and addressing work pressures) where processes are inherently complex to meet complex need. CPAG has argued elsewhere76 that the importance here is the felt experience by claimants and the strength of backroom processes. Likewise, delays in decision making or processing, which often result in the use of crisis loans, show up in one part of the system having to deal with the problems of another - speedier decision making in these cases would reduce hardship for families caught between systems.

Accessibility

Both HMRC and the DWP rely heavily on telephone-based systems for initiating claims and reporting changes of circumstances. Though clearly this route of communication may suit the needs of many claimants, it does not and cannot work for all claimants. CPAG has particular concerns about the poorest claimants, who have often the most complex needs, and for whom telephone-based services may not be the most accessible, either because of cost (if calling from mobile telephone), language (where either English is not the first language spoken or literacy is poor), numeracy (especially important in understanding tax credits) or confidence. For these groups, we believe that readily available face-to-face access to HMRC and Jobcentre Plus services remains an extremely important (often unmet) need. Since face-to-face information is a need for many of the poorest and most vulnerable families, gearing the system to meet their needs first and foremost means providing face-to-face access through home visits or local offices alongside good-quality helpline-based services.

Independent advice

Independent advisers are crucial to provide information and advice on the maze of entitlements, enabling families to access their entitlements and advocating on their behalf. Yet despite the Government acknowledging the sector's value, there is a dearth of advice on some key areas, such as child support, and financial pressure in others, while different government agendas seek to influence voluntary sector organisations in conflicting ways.

The DWP is clearly aware of the value of the voluntary sector and is looking to private and voluntary contractors to deliver Pathways to Work and to be more involved in child support policy. CPAG understands the governmental need to develop capacity quickly, but we do not believe the voluntary sector exists to deliver state services, and for it to do so risks perverting its ability to advocate on behalf of claimants. CPAG is especially worried about the possible impact - on claimants and on the sector - of the powers being proposed to allow decision making and ultimately sanctioning by the private and voluntary sector providers of Pathways to Work.

At the same time as the DWP is looking to the voluntary sector to help with delivery, the Department for Constitutional Affairs (which holds the legal aid budget) is seeking to concentrate civil legal aid funding in ways which concentrate on specific local centres (community legal and advice centres) and networks (community legal advice networks).This risks excluding smaller under-funded community groups which would result in less diversity of provision, exacerbating problems of access and hindering the desired plan to target groups that often do not access current services. CPAG is concerned that this model may also develop to exclude solicitors from being part of the Community Legal Service, thereby reducing access to justice where a client's problem can only be progressed through a solicitor. The growing use of discretion in the fields of welfare benefits and tax credits where legal challenges can only be made via a judicial review increase the need for access to solicitors. At the same time, the plan for the Community Legal Service has overlooked the strong need for the second-tier provision77 to support the front-line sector in giving high-quality advice.78

To protect and develop independent advice provision so that advisers can fully play their role in helping individuals take up entitlements and reducing poverty, there needs to be a clearer acceptance from the Government that the independence (from government) of the sector is important and a more joined-up and strategic approach to developing funding streams to support (including second-tier) advice.

Notes

64 John Hutton MP, ‘Statement to House of Commons on Child Support Re-design’, 24 July 2006, at
http://www.dwp.gov.uk/aboutus/2006/24-07-06.asp
65 Work and Pensions Select Committee, The Efficiency Savings Programme in Jobcentre Plus, Second Report of Session 2005–06, HC 834-I, March 2006, para147
66 See Work and Pensions Select Committee, The Efficiency Savings Programme in Jobcentre Plus: Government response to the Committee’s second report of session 2005-06, HC 1187, June 2006
67 See Child Poverty Action Group, Jobcentre Plus: changes to service delivery, September 2006, at
http://www.cpag.org.uk/cro/Briefings/CPAG_JobCentrePlus_survey.pdf
68 See National Statistics, Income-related Benefits Estimates of Take-up, Department for Work and Pensions, 2006; HMRC, Child Tax Credit and Working Tax Credit Take-up Rates, 2003/04, 2006; G Preston with M Robertson, Out of Reach: benefits for disabled children, CPAG, 2006 also explores non-take-up of disability benefits.
69 Department for Work and Pensions, Departmental Report 2006, 2006. The first target was not met.
70 Department for Work and Pensions, Quarterly Appeal Tribunal Statistics, March 2006, Table 3. Figures for the quarter to March 2006 and are for oral hearings.
71 National Audit Office, Helping Those in Financial Hardship: the running of the social fund, The Stationery Office, 2005
72 This itself is indicative of poor administration as Jobcentre Plus staff can use more appropriate ‘interim payments’ instead of crisis loans, which would also reduce the pressure on the fund.
73 K Legge, Y Hartfree, B Stafford, M Mayadi, J Beckhelling, L Nyhagen Predelli and S Middleton, The Social Fund: current role and future direction, Joseph Rowntree Foundation, 2006
74 Figures from Department for Work and Pensions, Fraud and Error in Income Support, Jobseeker’s Allowance and Pension Credit from April 2004 to March 2005, National Statistics, 2006
75 HMRC, Child and Working Tax Credits Error and Fraud Statistics 2003-04, 2006, available at
www.hmrc.gov.uk/stats
76 In evidence to the Public Accounts Committee, see Tackling the Complexity of Benefit Regulations, December 2005 available at http://www.cpag.org.uk/info/briefings_policy/CPAG_simplificiation_benefits.pdf
77 CPAG is a provider of this – including handbooks, second-tier telephone support and training.
78 See CPAG’s evidence to the Carter review of legal aid, Making Legal Rights a Reality, October 2005, at
http://www.cpag.org.uk/cro/Briefings/CPAG_Making_Legal_Rights_a_Reality.pdf

Comprehensive spending review 2007
What it needs to deliver on child poverty

Contents page
Introduction
The Government’s record
What should the spending review deliver?
Provide most for those children at greatest risk of poverty
Work towards better jobs, not just more jobs
Ensure the safety net protects families against poverty
Maximise the contribution of child benefit within family support
Introduce free at the point of delivery good-quality childcare
Make the reduction of child poverty central to the new child support policies
Make education truly free at the point of delivery
Provide benefit entitlement to all UK residents equally, irrespective of immigration status
Reduce the disproportionate burden of taxation on poorer families
Improve the quality of delivery and gear it to the needs of the poorest families
Notes

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