WELFARE REFORM: WHAT THIS MEANS TO FRONTLINE STAFF
Malcolm Gardner, Visionary Network – www.visionarynetwork.co.uk
There have been a number of announcements concerning changes to the welfare system. Pronouncements concerning housing and council tax benefit were revealed – in part – at the IRRV Conference at the end of September, while further changes to child benefit were made known at the Tory party conference at the beginning of October.
We know that the proposed reforms will affect benefit claimants but how will they impact on front line staff who administer the various schemes. There is little detail to the proposals and some inconsistent statements. At the IRRV conference, the Minister for Welfare Reform, Lord Freud, spoke on the subject of – please don’t faint – welfare reform. Actually, he did not; he spoke mostly on subject of benefit fraud, error and wastage. Really just benefit fraud, complete with the sort of war stories that we have heard before. Yes, Lord Freud there are some criminals in the system and they must be caught and flogged because they take large sums out of the system. But the largest number of “fraudsters” are like MPs, they got it wrong or they took advantage of the weak system but we just need to recover the money, spank their bottoms and send them home, not try to criminalise them to improve our performance figures.
The implications were that £9bn is lost through fraud, error and wastage. This figure is of course made-up as there are no confirmed figures on benefit fraud or error. Wastage is a new concept and not supported by any published figures. £9bn is a lot of money that is not placed into context. Coincidently it is a similar sum being banded in the press for the cost of welfare reform. It is also roughly the same amount of money that the Treasury is expecting DWP to make in straightforward savings. Although, the Secretary of State, Iain Duncan Smith when giving evidence to a House of Commons Select Committee, said he did not recognise the figure.
This £9bn figure is important because it frightens the horses, or least wise Daily Mail readers. Who could not be outraged by such a large loss to the public purse? However, placed in context, it represents only about 3-5% of the overall cost of welfare benefits. Any private sector CEO would say, “only 5%, result!” The Retail sector expects that the combined losses through fraud, staff theft, shoplifting, error and wastage to be closer to 30%. Banks and other industries would also expect losses in double figures. In truth, it could be the same for welfare benefits but we just do not know. The current figures for fraud and error have been used consistently for the last fifteen years or so. Since John Major was PM.
The problem for the Department is that it actually does quite well already in terms of administration. There is a sentence I never thought I would say. DWP administrative costs are some of the lowest in Europe. Unfortunately, the amount benefit is massive. Far too large to be ignored!
When Labour came to power, Tony Blair promised to reduce the cost of welfare and channel it into education. During Labour’s time in office the amount of welfare payments rose by about 40%. An increase that was similar to the rises in welfare payments during the Thatcher government. In reality, to curb the cost of welfare you would have to make serious cuts to the amounts being paid out. Some will be blowing the dust off the poor laws.
What Lord Freud, told conference is that benefits per household would be pegged to be just below the poverty line. It will not be easy as the proposed cuts to Child Benefit and the furore that followed were announced by Chancellor Osbourne – allegedly, without consultation with the DWP – showed The CB savings of £1bn is peanuts. The cost of administration of a means test CB is likely to cost more than the savings. Middle England was not impressed. Already the Government is back peddling. Reforms to benefits cannot be done on the fly. There will be continued conflicts between the Small-State Blue Tories and Big-Society Red Tories to make reforms a talking point for years.
So what does it all mean for frontline staff. Paul Howarth in his session for Visionary Network a few weeks ago and again at the IRRV conference has given us some scant information. Decisions, he said will be made quickly. Housing Benefit will most likely be part of the universal credit as is a single IT system. Council Tax Benefit will remain a rebate. The timeframe for reform was likely to be over a four-and-half year period. However, the Conservative Party Conference, has given a more realistic two-term — eight to ten years – phased implementation plan as an alternative.
The Small-State agenda kicks in first with further cuts to the Administration Grant and I suspect also Subsidy. A further 25% will need to be lost over the next few years and this will equate to 5-6% year-on-year reduction to the grant. Seven percent if you take the reductions already being applied. Given that there will be 25% cut to most Council budgets you can imagine that reductions to establishments and wages will be eye-watering. However, caseloads continue to grow, so I would expect to see early redundancies followed later on, when back-logs increase, with the use of more contractors. However, I also think that when the public start to experience or understand the changes to LHA then customer contact will increase exactly the same time as staffing is being reduced.
The localization agenda will also have an impact. We have already seen an increase in the DHP budget from £10m to £60m. While HB will continue to be squeezed, the DHP element will continue to rise. This will mean that the majority of benefit claimants will get the set universal credit element administered, possibly, by a central processing unit, while the difficult cases will still fall to LA.
In my view, frontline staff need not worry about long-term employment. The desired reduction in the cost of administration is not likely to be realised. Ten years of constant change is likely to increase the number of people working in the welfare benefit field than reduce it.
The private sector will suffer more. Software houses will be the main losers but not for some time. They should able to squeeze the pips for at least another ten-years. Outsourced processing will be popular and shown as a success story as LA jobs migrate from council employment to the private sector but ultimately will reduce when centralised processing and self-service kicks in.
You may not be doing the same job for the same employer, but there will be jobs and some adjustments to the skills base. More claims building – in which assessors may find themselves engaged by social registered landlords, customer services, social services and processing units while smaller units of professional welfare administration will be retained by LAs. Fraud officers will be working either for centralised government fraud teams or corporate fraud teams. There will be work.