Press Release - Dealing with the Complexity of the Benefits
System
18 November 2005
Sir John Bourn, head of the National Audit Office, reported
today on the complexity of the benefits system, which he considers
is one of the most important issues affecting the performance of
the Department for Work and Pensions. According to the report to
Parliament, tackling the problems associated with a complex system
requires a systematic and strategic approach focusing on the system
as a whole.
The Department has already taken a range of actions which
illustrate key principles for a way forward: specifically designing
new benefits to reduce complexity, systematically removing
anomalies, simplifying processes including customer input, sharing
information, using technology to protect customers from complexity,
and making the most of external scrutiny mechanisms. Sir John
called on the Department to develop a strategy to tackle the
problem both in the short and long term. This would build on the
Department’s commitment made earlier this year to develop ways of
simplifying benefits.
The Department for Work and Pensions is a complex organisation
with millions of customers and a wide range of responsibilities and
relationships. It administers around 40 benefits, allowances and
grants to a wide and diverse population. Benefit legislation and
supporting regulations are inherently detailed to allow the
Department to pursue the objective of equity and fairness between
individuals in the same or differing situations, while providing
incentives, meeting specific needs and incorporating safeguards
against abuse. Complexity also allows the Department to secure its
objectives cost-effectively and fine-tune regulations to allow for
more specific targeting of groups or individuals.
Complexity is not a new issue and the current benefits system is
an accumulation of years of legislative change. The Department of
today has to live with decisions made in the past. Complexity
arises in various ways. The incremental small-scale changes can add
to the complexity, as can the way benefits link up with each other
and with other forms of assistance. Benefits are administered at a
local level by the Department’s agencies and local authorities; and
complex delivery arrangements can also arise as a consequence of
the design of the benefits themselves.
The effects of complexity can be seen in many ways. For example,
it can be associated with errors in benefit payments, due to staff
and customer mistakes. It can also reduce the ability of staff to
explain benefit regulations to customers and makes it hard for some
customers to understand what is required of them. For the last 15
years, Sir John has given a qualified audit opinion on the accounts
of the Department for Work and Pensions and, previously, the
Department of Social Security. This qualification is in part due to
the extent of errors in the payment of benefits.
Successive governments have advocated simplification. In
February 2005, the Department published its Five Year Strategy in
which it stated that it would be "..exploring and developing ways
to simplify benefits while continuing to protect social security
expenditure." The strategy also recognised that this will not
necessarily save money. This is because savings arising from
administrative simplifications may be substantially exceeded by
increased programme costs. Overall, the Department has made
progress in tackling the complexity of the system and in designing
ways of managing it to protect staff and customers, but it
recognises that there is more to be done.
An appropriate degree of complexity exists where there is a
balance between the system being detailed enough to meet the needs
of a wide range of different individuals in various circumstances,
yet straightforward enough to run efficiently. According to the
NAO, the Department for Work and Pensions has not yet achieved this
balance. This is indicated by:
Dealing with the problems associated with complexity is a long
term project which will require a systematic and strategic approach
focusing on the system as a whole. The report provides an overview
of the system, explains how complexity arises, summarises some of
the main consequences, and looks at what the Department is doing to
manage the complexity. The report encourages the Department to
build on and extend its current work to tackle the problem in the
short and long term taking account of the following key
principles:
Sir John Bourn said today:
"The complexity of the benefits system is one of the
most important issues affecting the performance of the Department
for Work and Pensions. There is a balance to be struck between a
system which is detailed enough to respond to needs and yet
straightforward enough to be run efficiently, communicating clearly
with customers and minimising error. This balance has not yet been
reached. It is not for me to direct specific changes but I
recommend that the Department builds on current work to tackle the
problem both in the short and long term."
Notes for
Editors
- The National Audit Office drew on its accumulated experience as
auditor of the benefits and worked with partners RAND Europe to
examine aspects of complexity, focusing on benefits for which the
Department for Work and Pensions is responsible. Our examination
does not question the right of Government to design the system to
meet its desired objectives.
- Press notices and reports are available from the date of
publication on the NAO website at www.nao.org.uk. Hard copies can
be obtained from The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 60/05
All enquiries to Barry Lester,
NAO Press Office:
Tel: 020 7798 7937 Mobile: 07748 181 692