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Benefits Simplification

I congratulate the hon. Member for Bradford, North (Mr. Rooney) on securing this debate and on chairing the Committee, and the members of the Committee, many of whom are here today, on their diligence and hard work in holding the Department and its Ministers to account, as is their proper role. Interestingly, at the beginning of the debate, the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) spoke about the purpose of the benefit system. There are many different analyses of that. A report by the social justice policy group chaired by my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) contained a particularly pithy definition:"““The benefits system plays a crucial role in tackling economic dependency on the state.””" However, it also highlighted the tensions:"““It is necessary to ensure that the most vulnerable people in society are protected against the ravages of poverty, while at the same time avoiding traps for those who could otherwise be earning a living.””" That is important, because most people agree that there is lots of evidence that the best route out of poverty is work. It is important to note, however, that some people are genuinely unable to work, and the benefits system must provide them with the level of support that allows them to live in dignity. There is general consensus, reflected in the Committee's report, that the UK's benefits system is hampered in achieving that by complexity. The Committee's Chairman highlighted the hugely increased complexity of documentation since his time as a welfare rights adviser. The Committee's report concluded that, while a welfare system trying to cater for millions of people with many different needs will never be simple, the UK's benefit system has an,"““unacceptable amount of dysfunctional complexity””." Therefore, there is a fair amount of work to do. One underlying theme of the Committee's report is that the simplification process needs to focus on people—both the experience of those who claim benefits and, as several Members mentioned, the experience of those who run the system, whether in a front-line Jobcentre Plus or in a headquarters, to which the hon. Lady referred. That is why we are considering approaches that have more involvement from charities, voluntary bodies and private companies that already have a great deal of expertise in the area—in particular, an understanding of the personal, emotional needs of people and of how to make the system ever more responsive. The Committee Chairman acknowledged that good intentions, which are prevalent in this area, often fail to deliver good outcomes. I am happy to acknowledge that the Government and the Prime Minister have a desire to combat poverty, although a number of indicators suggest that they have not been entirely successful. Five million people are on out-of-work benefits, and nearly 1.5 million have been on incapacity benefit for more than five years—up by nearly 250,000 since 2001. The number of young people out of work is rising—1.25 million young people between 16 and 24 are not in work or full-time education, which is almost 20 per cent. more than in 1997. The number of children in workless households is the highest in the EU. Obviously, those issues need to be tackled, and many would be improved were the benefits system less complex. Part of the complexity comes from having different parts of Government dealing with the system. One or two Members mentioned that tax credits are delivered by Her Majesty's Revenue and Customs, while many other benefits are delivered by the Department for Work and Pensions. In its recommendation 14, the Committee concluded that"““any attempt to simplify the benefits system must take tax credits into account.””" The Government's response referred to a number of joint working arrangements between the two Departments. If the DWP and HMRC are to work closely together, it is essential that data are protected. We all know the problems that there have been with HMRC, and it would be interesting if the Minister set out the arrangements that the DWP has in place. I tabled a number of questions due for answer last week about exactly what procedures the DWP had in place for protecting personal data. I am still waiting for answers to those. If all those procedures are in place and well understood, answering those questions ought to be relatively straightforward. The fact that they have not been answered suggests that there might be gaps. One of the other problems of complexity is error, which several Members have mentioned. I am perfectly happy to accept that some progress has been made, but it is still the case that in 2005-06 there was almost £1 billion of official error and £1 billion of customer error. In fact, error is now a much bigger problem than fraud, as I think the Chairman of the Select Committee acknowledged. That should clearly remain an important focus. Another problem with complexity is the impact on personal behaviour of means-testing. One or two Members mentioned that up to 40 per cent. of pensioners entitled to the pension credit do not claim it. Proposals in a statement earlier today to make some of the claiming processes more straightforward were welcome. Indeed, the hon. Member for Milton Keynes, South-West (Dr. Starkey), the Chairman of the Communities and Local Government Select Committee, referred specifically to council tax benefit take-up. A range of issues about data transfer between Departments are relevant to making that more straightforward. That problem clearly needs to be tackled. Another issue that has not been mentioned was the focus of a report by the right hon. Member for Birkenhead (Mr. Field). As is made clear in that excellent recent report, the tax credit system brutally discriminates against two-parent households because it does not correctly reflect the cost of the second adult in the family. The report specifically concluded that the Government should take the ““single immediate step”” of ensuring that any new money for the tax credit system"““should be used to lessen and then abolish the system's discrimination against two parent households.””" That would help towards targeting help"““towards the largest group of poor children””," which would make a big impact on the Government's child poverty targets. I am very pleased that at our recent party conference, my right hon. Friend the Leader of the Opposition committed us to removing the couples penalty and moving the working tax credit that couples receive to bring them into line with the rest of the benefits system. According to the Institute for Fiscal Studies, that would mean 1.8 million of the poorest couples with children gaining on average £32 a week.