Chapter 18

Department of Social Security

This Government is improving the delivery of social security services to the public with a ring-fenced investment of £404 million, £786 million and £680 million over the next three years to:

create the infrastructure to deliver a new service to those of working age so that staff can focus more on helping claimants find work, not simply processing benefits;
overhaul the service provided to pensioners so that pensioners no longer need to visit benefit offices but can make their claims over the telephone, making it easier for them to claim the Minimum Income Guarantee; and
protect the system against fraud and error.

This money will be ring-fenced in a Welfare Modernisation Fund to ensure it is genuinely spent on IT projects and other modernisation, not more bureaucracy.

Outside the Welfare Modernisation Fund, there will be no growth in real terms in the cost of social security administration over the next three years.

18.1 The Government spends over £100 billion on social security every year. Yet the technology and systems that are used to deliver these services are antiquated and unreliable, unable to deliver modern services and vulnerable to fraud and error. Too often they hinder the Government in delivering its commitment to 'work for those who can and security for those who cannot'. The Spending Review responds to this legacy of under-investment with new investment in IT to modernise the way social security services are delivered.

18.2 Welfare expenditure has been brought under control. Social security spending and tax credits will grow on average by only 1.2 per cent a year in real terms over the period 1997-98 to 2001-02 compared to 4 per cent a year over the period 1992-93 to 1996-97. Within this level of expenditure, the Government has been able to put in place measures lifting 1.2 million children out of poverty.

18.3 Key achievements include:

the introduction of the Working Families' Tax Credit and Disabled Person's Tax Credit boosting the incomes of over 1 million families;
record increases in Child Benefit;
national roll-out of the New Deal for lone parents which has helped over 50,000 lone parents into work and 15,000 into education or training; and
spending an extra £2.8 billion a year on pensioners by next year through initiatives such as the Minimum Income Guarantee, Winter Fuel Payment of £150 and free television licences for over 75s.

Modernising Social Security systems

Box 18.1: Key PSA targets - Department of Social Security

Introduce the reformed child support scheme for new cases by April 2002 so that, by April 2003 for such cases:
- the accuracy rate for assessments and reviews is not less than 90 per cent;
- payment arrangements will have been established on average within six weeks; and
- the level of compliance will be at least 75 per cent.
Reform second tier pension provision, working with pension providers and employers, so that by 2004:
- stakeholder pensions have given more people access to good value funded second pensions;
- 2 million carers and 2 million disabled people with broken work records have, for the first time, started to build up a state second pension; and
- 14 million low and moderate earners have started to build up a better state second pension than would be possible under SERPS.
Reduce by 50 per cent losses from fraud and errors in Income Support and Jobseeker's Allowance by March 2006, with a 25 per cent reduction by March 2004.

Opportunity and support for working age people

18.4 For those of working age the investment in modern social security systems means:

new systems to collect information from claimants electronically - reducing the number of paper forms they need to complete, and facilitating the roll-out of ONE and the new working age agency, which brings together the Employment Service and those parts of the Benefits Agency dealing with people of working age;
providing Benefits Agency and Child Support Agency offices with a modern office infrastructure of personal computers to replace outdated terminals - enabling staff to manage cases properly, send individualised letters, arrange work-focused interviews and, in due course, have all the information at their fingertips to provide a better service to claimants;
linking up the various DSS systems and the new electronic claiming system - freeing up staff from clerical benefit processing to advising claimants on getting back to work and reducing fraud and error;
making 85 per cent of payments directly into bank accounts by 2005, while ensuring that people can still draw their cash at the post office if they prefer;
preparing DSS systems for the new Integrated Child Credit; and
delivering a new computer system to support the new, fairer system for child support - so staff can spend less time working out how much fathers should pay and concentrate on chasing them so they pay what they owe.

18.5 This will pave the way for a more efficient social security system, reducing the cost of administration and fraud.

A better service for pensioners

18.6 Current DSS services to pensioners need to be modernised. The Spending Review includes £200 million investment over three years to deliver a new centralised, largely telephone-based, service to pensioners. This will mean pensioners can sort out their claims over the telephone without needing to visit the Benefits Agency office, encouraging the take-up of the Minimum Income Guarantee amongst the poorest pensioners.

18.7 This service will:

reduce the average cost of processing retirement pension claims and maintaining the caseload by 20 per cent by 2004;
reduce the average cost of processing Minimum Income Guarantee (MIG) claims and maintaining the caseload by 15 per cent by 2004;
ensure that 90 per cent of MIG claims are processed within 13 days once evidence requirements are met; and
reduce by 20 per cent the amount of MIG that is incorrectly paid.

Reducing fraud and error

18.8 Fraud and error in the social security system is partly due to the legacy of under-investment in the system over past decades. This Government is determined to tackle the problem. Modernisation of the DSS computer systems will contribute by facilitating the collection of information from claimants and linking up the various computer systems. In addition, the Spending Review provides new investment for better checking of claims before they are put into payment and for improved administration of housing benefit. In order to measure progress in tackling fraud and error, the Spending Review sets a new target of reducing losses from fraud and error in Income Support and Jobseeker's Allowance by 25 per cent by March 2004, and by 50 per cent by March 2006.

18.9 In total, the extra funding provided through the 2000 Spending Review will reduce losses through fraud and error by over £1 billion per year by 2005-06.

Spending plans

18.10 DSS benefit spending is in Annually Managed Expenditure (AME), not in Departmental Expenditure Limits (DEL).

18.11 Money for modernising the delivery of the social security system will be held within a ring-fenced Welfare Modernisation Fund within the DSS DEL. Outside the ring-fenced Welfare Modernisation Fund, there will be no growth in real terms in the cost of social security administration.

Table 18.1: Key figures

£ million
	2000-01	2001-02	2002-03	2003-04
Department of Social Security	3225	3450	3466	3495
Welfare Modernisation Fund	-	404	786	680
Total DSS*	3225	3854	4252	4175
of which: Resource Budget	3193	3751	4144	4141
Capital Budget	32	103	108	34