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Following reforms to decision-making and the appeal process in social security benefits, introduced in 1999 by the Department for Work and Pensions, the number of appeals against decisions has fallen overall by around 15 per cent and waiting times for appeal hearings have been cut. Since the reforms, decision-making performance for some benefits, but not others, has shown improvement.

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The Department make tens of millions of decisions a year about eligibility for a variety of benefits. Results for 2000-01 and 2001-02 (published in 2003) indicate that, more than 90 per cent of payments checked were correct but there were errors in around a fifth of all decisions, for example where the decision-maker had not obtained all the necessary evidence or had not correctly determined the facts of the case. In around 230,000 cases a year around one per cent of decisions – customers disputes end in an independent tribunal and some 40 per cent of these cases are changed in favour of the customer.

The NAO has found examples of good local practice in decision-making and a number of improvement initiatives. The Department are meeting demanding timescales for clearing initial claims, but it takes on average 26 weeks to finalise an appeal, despite the Appeals Service and Social Security Commissioners having speeded up their parts of the process. The Department have introduced potentially effective arrangements for monitoring and reporting on decision making standards but the information reported so far has been inadequate in the level of detail and timeliness.

The NAO report examines in more detail two major benefits Disability Living Allowance and Jobseekers Allowance although findings and recommendations are relevant to the broader range of benefits. In Disability Living Allowance, claimed by some 2.4 million people, decision-making accuracy has fallen in the first two years since the changes; 8 per cent of decisions lead to an appeal and the proportion of appeals decided in favour of the customer (currently more than half of the 90,000 appeals each year) is increasing. The Department are piloting a range of improvements including tailoring claim forms, improved decision letters and changes to medical evidence requirements.

Jobseekers Allowance is claimed by around 900,000 people who are not working. Decision making accuracy improved in the first two years, and a high proportion of payments are accurate. Where decision-making errors occur, these are often caused by a lack of evidence and there are also problems with communicating the complex rules and reasons for decisions adequately to customers. The benefit is administered through a network of over 1,400 offices to provide flexible local service, but the high degree of local autonomy combined with a lack of minimum standards has led to variations in approach around the country. The newly reorganised Jobcentre Plus aims to provide a seamless national service, and is planning efficiency initiatives which we estimate could save 3 million a year through reorganising and improving decision-making alone.

The Department have taken important steps to improve the quality of decision-making and appeals, but they need to do more to get decisions right first time and put right errors without the need for customers to go to an appeal tribunal. Inadequate IT and complex benefit regulations remain obstacles to improvements in the medium term.

The NAO highlights a number of actions which the Department can take now. These include increasing the proportion of decisions which are pre-checked, focusing on where errors are most often found; and setting minimum standards for the process of looking again at decisions without the need for appeal (reconsiderations) including a maximum waiting time and a stipulation that decisions are re-examined by a different decision-maker.

There is scope for the Department to work towards saving an estimated total of 8 million per year on administering Jobcentre Plus benefits and Disability Living Allowance if it could get more decisions right or put them right without the need for costly appeals. Indirect savings from increasing the credibility of the social security system could also result, although these are more difficult to estimate.

"While more than 90 per cent of payments are accurate, more than a fifth of the Department of Work and Pensions thousands of decisions each day on benefits contain errors. Although the number represents less than one per cent of decisions, a quarter of a million people a year go to an appeal tribunal and 40 per cent of these cases are changed in favour of the customer. Customers are also having to wait too long for the outcome. The Department could not only reduce the number of cases where customers have to go through stressful appeals but also save money for the taxpayer, if they got more decisions right first time and put right errors effectively.

"The Department should make improving decision-making a priority in their ongoing programme of organisational change. By focusing more on good quality evidence and effective communication, and setting minimum service standards, they can help to ensure that customers across the country know what to expect from the system and have increased confidence in it."

Sir John Bourn


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