Is the DWP even fit for purpose?

The DWP's goals are controversial in themselves but perhaps more worrying is that the department doesn't seem able to function - report after report lays bare the most fundamental failings.

Deborah Padfield
14 November 2014

Iain Duncan-Smith at a work programme. Flickr/Regional Cabinet. Some rights reserved.

Iain Duncan Smith (IDS), Secretary of State for Work & Pensions (DWP) is a brave man, tackling reform of our dysfunctional benefits/tax credit system. It's a task that howls to be addressed. 'Shambolic' well describes the imagination-boggling benefits web entangling desperate people.

IDS is a man on a mission. He's also a committed deceiver taken to task by a swathe of official bodies. In late October he sent out a press release trumpeting Universal Credit's (UC's) success in 'transforming the welfare state'. It was followed by another about an emerging 'digital revolution' in JobCentres Plus.

Behind the releases lie two excoriating reports by the Work and Pensions Select Committee (the Committee) on DWP's performance - a DWP that's both at the mercy of IDS' driving ambition and, arguably, overly accepting of it.

Other reports say the same. On 3 November, Margaret Hodge of the Public Affairs Committee (PAC) spoke on Radio 4's Analysis of DWP's 'abysmal' management of IT contracts; the PAC was no less forceful in its reports on Universal Credit in November 2013 and on the Work Programme this October. Last month also, the National Audit Office (NAO) highlighted repeated failures of management that allowed DWP's welfare reforms to roll out far too fast, lacking clear definitions of scope or risk control and citing poor control of contracts and poor 'value for money'. Margaret Hodge agreed.

Employment & Support Allowance (ESA) has existed since 2008. The Committee reported in July 2014 on problems repeatedly identified in four independent reviews, three by Professor Harrington and one by Dr Litchfield. The Committee recommends 'that the Government undertakes a fundamental redesign of the structure of ESA outcomes'.

Implicitly, the report questions ESA's initial premise. ESA replaced Incapacity Benefit (IB), castigated for failing to encourage disabled people back to work. DWP seriously over-estimated the problem. It expected that only 20% of new claimants would enter the Support Group for those wholly unfit for work. 'The Secretary of State has referred to claimants "languishing" on IB.' Instead, '89% of IB claimants who were reassessed were entitled to ESA, with the vast majority being placed in the Support Group' [para 14].

The Committee doubts DWP's ability to manage ESA's Work Capability Assessment (WCA) contract [para 89]. Its concerns include an 'unacceptable' backlog of 700,000 assessments, DWP's inaccurate forecasting, its numerous changes to the WCA contract and its failure to ensure adequate assessment standards [86 et seq].

Is DWP capable of running ESA? Claimants in the Work-Related Activity Group (WRAG, for those judged potentially fit for work) face considerable demands, backed by sanctions. Often, their health becomes worse under the strain of repeated Work Capability Assessments (contracted out to Atos Healthcare) and JobCentre Plus' mistaken capability decisions. Professor Harrington 'believed that the frequency of reassessments was "illogical" and that the system did not take sufficient account of individual conditions'[30]. To assess people with degenerative conditions as potentially fit for work he thought equally illogical. ESA's 'inefficiencies and the detriment inappropriate decisions cause to claimants can only be resolved in a fundamental redesign of the ESA claims process over the next few years' [17].

Illogicality, or a failure to think through how to achieve ESA's aims, is characteristic. Helping disabled people back to work has to take account of workplace realities. Yet '83% of claimants deemed fit for work would need "on average, two or three" adjustments; 50% would need flexible working hours; and 24% would need a support worker.' DWP witnesses 'were not able to provide any clarity' on how they should respond to such needs [para 130].

Indeed, DWP has removed the tool originally provided to assess claimants' barriers to work. This was the 'work-focused health related assessment', suspended in 2010 for two years followed by another two [131-133]. More basic still, the WCA results, focused on fitness to do any work, are not passed on by Atos assessors to JobCentre Plus or Work Programme advisers [135].

Atos has withdrawn early from its contract - to no one's regret.  Just over ten percent of fit-for-work decisions taken on its evidence were successfully appealed in 2012/13; in 2013/14 appeals cost £69.9m [90]. One result of the early withdrawal is that the minister responsible has no time to redesign the contract 'completely from scratch' [78] as he had wished. Contrary to government's usual pro-competition practice, there is again a single contractor for the WCA.

This contractor has now been named, to take over when Atos withdraws in March: Maximus, a US company working also in Australia, Canada and Saudi Arabia. For whatever reason, the DWP press release mentions all these countries save Saudi. When the Committee reported in April, DWP intended to run old and new contracts in parallel for six months from October 2014 to ease the handover. In the event, Atos has a new £10m per year contract to continue providing the IT support. Its WCA employees will largely be TUPE'd across to Maximus.

Maximus runs two of DWP's Work Programmes, one of which has been amongst the highest achievers in terms of 'outcomes' for job-seekers. Those outcomes themselves deserve scrutiny.

So will the Maximus contract. Atos' contract contained financial penalties. The Committee reports that in 2012, the National Audit Office criticised DWP for failing to hold Atos to account: only 10% of the service credits [penalties] triggered had been applied [59]. It is not surprising that the Committee doubts DWP's management ability. 'DWP needs to demonstrate that it has sufficient expertise and capacity to manage a contract of this size and complexity, to ensure value for public money and that claimants receive an acceptable level of service. This does not appear to have been the case with the Atos contract. If this capacity does not currently exist, we recommend that it be developed as a matter of urgency, bringing in expertise from other parts of Government if necessary' [89].

ESA is complex, but not uniquely so. Claimants of Job Seekers Allowance (JSA), Income Support (single parents and carers) and ESA alike face a range of barriers to work. The Committee noted in another report (Jan 2014), on the Role of JobCentre Plus, that JSA 'work-focused interviews', more detailed than Fortnightly Jobsearch Reviews ('signing on'), had decreased in length and frequency, suggesting a shift from support to mere compliance [37-38]. ESA claimants are worse off: they apparently '“do not really have any engagement with a personal adviser”, prior to referral to the Work Programme or Work Choice' [73]. While job-seekers' access to specialist Disability Employment Advisers is inadequate (an average workload of 140:1), ESA claimants' is far worse (600:1). There is an obvious concern: 'asking JCP to do more with “an ever-shrinking resource” was a “fundamental issue”' [151].

In March an internal DWP review carried out with the Treasury and Cabinet Office similarly reported DWP to be 'struggling to meet "extremely challenging" demands for over £1bn of efficiency savings over the next two years'. 'Too crude an approach to future cuts would affect the quality and capacity of the DWP's "public-facing" services to vulnerable pensioners, jobseekers and benefit claimants.'

The Committee questions DWP's current ability to manage ESA; the Department faces further cuts; can it handle Universal Credit? UC will incorporate six working-age means-tested benefits currently run by itself, Local Authorities and HMRC. The same system will handle a new flow of 'real-time' earnings information from employers, DWP chasing up the same data from claimants whose employers do not provide it. DWP will also administer benefits remaining outside UC including State Retirement Pension and Pension Credit for older people, contribution-based JSA and ESA, Carers Allowance and, until it is finally phased out, the remnants of Incapacity Benefit. The conditions of entitlement will be more rigorous, for a wider range of claimants.

How is DWP doing so far? The Committee's report is a tale of mismanagement, a catalogue of uncertainties about IT and implications for claimants. Because of the scale of the former, the Committee postponed detailed consideration of the latter [para 10] though in this, as in the Jobcentre report, we repeatedly hear of the lack of evidence behind DWP's aims.

The UC computer system will be massive. Its development is not going smoothly. The Committee reports that on the very day of an evidence session on the issue in December 2013, DWP announced a write-off of £40.1 million out of total UC IT assets valued at £196.1 million. A further £91 million of the remaining assets were to be 'written down' in five years (by March 2018) rather than the usual 15 years [36].

UC is now being rolled out on 'twin-track' computer systems. The original (2011) is being phased out, running in parallel with the 'end-state solution' now in development [40 et seq]. In April 2014, DWP did not know how the 'end-state solution' would work or who would develop and build it. Ominously, the DWP Permanent Secretary said the IT development staff 'would have to be "in-house and we have to make sure that we can afford them within the constraints that we are used to"' [48].

The Committee's strained courtesy finally gives way: 'Although we agree with an incremental approach, there is a difference between sensible caution and a snail's pace. It will only be possible to prove that the end-state solution will work for the millions of households which will eventually claim UC when the IT can be tested at scale' [conclusion 7].

The UC delay means losses and savings [26 et seq]. UC is expected to produce lower fraud and error and higher employment take-up, though both are surrounded by 'uncertainties'; delaying these savings adds to the swollen 'transitional costs'. Conversely, it will make savings of £0.2bn in 2014-15 and £ in 2015/16 'as households that would have been eligible to slightly more generous entitlements under the new benefit no longer move across'. In addition, DWP expects further savings from plans to freeze inflation-related benefit increases for two years from 2015 and from cuts to some UC payments (income disregards and disability additions).

This cost to claimants parallels a cost to struggling Local Authorities. Their hand-over of Housing Benefit to DWP is long overdue, with continuing staffing implications. Responding to the Committee in June 2014, government said that 'DWP has already notified Local Authorities of their 2014-15 Housing Benefit Allocation.' One would hope so. The next Allocation would be made known 'in sufficient time before the start of the 2015/16 financial year.' 'Sufficient' notice?

The ideology of benefit reform troubles many. These Committee reports explore something differently troubling: the widening cracks in DWP's ability to deliver.

Government and DWP speak the language of responsibility. The Committee reports reveal some of DWP's failure to manage its responsibilities and attempts to protect those failures from scrutiny. The ESA report is dotted with calls for greater 'transparency', listing the occasions when essential information was withheld until the day of, or sometimes after, crucial meetings with DWP. The last section reads: 'It is not acceptable for Ministers to provide information about changes to major policy implementation to this Committee, and indeed to Parliament and the public more broadly, only when forced to do so by the imminent prospect of being held to account in a public oral evidence session. We recommend that... DWP sets out how it will improve the frankness, accuracy and timeliness of the information it provides to us, to ensure that it meets the required levels of transparency between the Government and select committees, and that we are not hampered in trying to carry out our formal scrutiny role effectively.'

Two broad messages emerge. Firstly, the failure of the DWP to fulfil its responsibility for efficient and effective management of welfare benefits. That failure contrasts sourly with its emphasis on claimant 'responsibility' and stringent punishment of any shortcoming.

Secondly, the culture of cover-up. DWP and its Secretary of State are not delivering what they claim. The select committee does a gallant job of holding DWP to account, but in the face of committed dishonesty, there is little it can do. Last November Margaret Hodge identified the problem. 'Pressure to deliver a programme of this magnitude within such an ambitious timescale created a fortress culture where only good news was reported and problems were denied.'

Parliamentary Committees and government departments are active in naming the problem and its effects. In measured language revealing real concern, the Social Security Advisory Committee charts the cumulative effects of welfare reform. It is up to the electorate to support these bodies with our watchfulness, words and actions. The biggest cost of political deceit is cynicism. It is easy to slip into assuming—with good cause—that major IT projects will fail and government promises be broken. In the case of welfare benefits, it is those with least protection who will suffer.

Iain Duncan Smith and the DWP will survive. What about the claimants? For suffering to flourish, it is only necessary for citizens to do nothing.

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