20.  Department of Social Security (DSS)

The Government is reforming the Welfare State to fit the needs of the modern world. It is plain that the present system is not working. The cost of the social security bill has risen faster than education and health over the last 20 years but is failing to meet urgent need. The Government's aim is to ensure that welfare costs are affordable and to ensure resources go to promote work where people can and provide security for those who can't. The Government's long-term reform programme will be the result of careful preparation and public consultation. But already substantial progress has been made: the biggest investment in employment for a generation, with the New Deal to help the young unemployed based on clear rights and responsibilities with no option of doing nothing on full benefit and New Deals for the long term unemployed, lone parents, and disabled people; measures to help make work pay, including the Working Families Tax Credit and reform of national insurance, underpinned by a national minimum wage; increased support for families with children, through higher Child Benefit, based on the principle that additional support should be provided not on the basis of family structure but on the basis of family need; and proposals for reforming child support so more help goes to children; and the first ever comprehensive counter-fraud strategy announced this week, focused on preventing fraud through working in partnership across government and with the private sector. This will be followed by: a package of support and services for pensioners; and later in the year, by proposals to reform sickness and disability benefits to promote work and independence; and a Green Paper on the long term framework for pensions. The Government set itself in the Green Paper on Welfare reform a series of measures to guide its reforms over the next decade and beyond: a reduction in the proportion of working age people living in workless households; at the end of the reform process, a guarantee of a decent income in retirement for all; a reduction in discrimination against disabled people and an increase in the number of disabled people at work; a rise in the proportion of parents meeting their financial obligations to their children after separation; and a reduction in the amount of money lost in fraudulent payments.

A new approach to Welfare

20.1  The Government is reforming the welfare state by promoting work for people who can work and security for those who cannot. Reform is a continuing process. It will not be achieved in one budget or from one expenditure review but be the result of a continuing programme of change.

20.2  The Government set out the principles that would underpin reform in the Green Paper New ambitions for our country: A New Contract for Welfare published in March:

• the new welfare state should help and encourage people of working age to work where they are capable of doing so;
• the public and private sectors should work in partnership to ensure that, wherever possible, people are insured against foreseeable risks and make provision for retirement;
• the new welfare state should provide public services of high quality to the whole community, as well as cash benefits;
• those who are disabled should get the support they need to lead a fulfilling life with dignity;
• the system should support families and children as well as tackling the scourge of child poverty;
• there should be specific action to attack social exclusion and help those in poverty;
• the system should encourage openness and honesty and the gateways to benefit should be clear and enforceable; and
• the system of delivering modern welfare should be flexible, efficient and easy for people to use.

20.3  These principles have already been put into practice in the last two Budgets, the proposals to reform the child support system, the strategy to tackle fraud and in the further measures announced in the CSR. On the basis of these principles and overseen by the Prime Minister's Welfare Reform Group, there will be further announcements to modernise disability benefits and the pensions system.

Spending plans

20.4  The new spending plans incorporate latest estimates of future caseloads, the changes announced in the last two Budgets, including measures to raise child benefit, and CSR announcements.

20.5  Expenditure on benefits will count within the definition of Annually Managed Expenditure, while DSS administration will be subject to a Departmental Expenditure Limit. The Government will not take policy measures which are likely to increase expenditure on benefits without taking steps to ensure that the effects of these decisions can be accommodated prudently within the Government's fiscal rules and can be financed by a fair and efficient tax system.

Table 20.1: Key figures

£million	1998-99	1999-00	2000-01	2001-02
Benefit Expenditure1	92,267	97,119	99,529	105,274
DSSAdministration2 3	2,8804	3,330	3,410	3,490
Total	95,147	100,449	102,939	108,764
1 Annually Managed Expenditure.
2 Departmental Expenditure Limit.
3 Includes £160 million of non-DSSadministration grants.
4 Net of £350 million receipts.

Investing in welfare reform

20.6  The Government has embarked on a long term programme of change based on its principles.

20.7  The Importance of Work. For those who can, work represents the best way out of poverty. Therefore promoting work, not just for those conventionally classified as unemployed but those previously written off by the benefits system, is central to the reform programme. The New Deal for the young unemployed, based on clear rights and responsibilities, and the New Deal for lone parents are already underway as national programmes. Lone parents who have moved back into work are, on average, £39 a week better off. The New Deal for the long-term unemployed began last month and the New Deal for people who are disabled or have a long term illness starts later this year.

20.8  As well as encouraging work, radical reform of the tax and benefit system will ensure that work pays more than benefits. The new Working Families Tax Credit will guarantee a minimum income of £180 a week for all families with children where someone works full-time and ensure that no family with children earning less than £220 will pay any income tax. In addition, there will be new help with childcare costs as part of the WFTC, to ensure that parents are better able to balance work and family responsibilities.

20.9  The Government plans to extend the concept of the WFTC to provide an incentive to specifically help disabled people get back into work through a new Disabled Persons' Tax Credit which will be more generous than Disability Working Allowance.

20.10  Partnerships. The Government wants to encourage people to save and to make provision for their long term needs in order to increase their security in retirement. This can best be achieved through a combination of public and private provision.

20.11  The Government will publish a Green Paper setting out its pensions strategy later this year. This will set out a framework of provision for tomorrow's pensioners. The Royal Commission on Long-Term Care will also be reporting later this year.

20.12  More Help for Today's Pensioners. The Government has set aside resources for a package of support for pensioners, including action to meet the Government's manifesto commitments on take-up of benefits by poorer pensioners. Full details will be announced by the Secretary of State for Social Security shortly.

20.13  Welfare Services. As chapter 3 sets out, services - especially education, health and housing - are as important as cash benefits in promoting independence and security, tackling poverty and widening opportunity. The Government is working to tackle some of the defects in housing benefit. It has already begun to tackle the problem of fraud through its new counter-fraud strategy announced this week. It is also looking, in consultation with local authorities, at how housing benefit administration can be simplified and improved. As well as improving public services for all, the CSR contains a number of measures specifically designed to tackle poverty at source through improved services such as the New Deal for Communities, which will offer new employment opportunities and better housing and transport to those living in some of Britain's most deprived areas.

20.14  Support for Disabled People. The Government is committed to reforming benefits for disabled people. The first priority is incapacity benefit which is failing in its objectives. It is meant to be an insurance benefit for people incapable of working. But it has been used by government as a costly escape route to keep the unemployment numbers down. For those who are capable of work insufficient priority is given to rehabilitation and jobsearch to speed their return to work.

20.15  The Government promised in the Green Paper on Welfare Reform that it would fundamentally reform Incapacity Benefit for new claimants. It aims to spend less on Incapacity Benefit and to provide more help to the severely disabled and to disabled people generally to return to work. The Government is working to devise a new test, which assesses people's employability, replacing the "All Work Test" which writes people off. The aim is to develop an integrated and sensible package of support for disabled people.

20.16  The Government also promised in the Green Paper to maintain Disability Living Allowance and Attendance Allowance as universal national benefits. The Green Paper raised concerns that the gateways to these benefits were not working as they should. The joint investigation by the DLA Advisory Board and the Department of Social Security suggested that in two thirds of cases there was not enough evidence to support the benefit claim. They also found that one third of awards made for life (two thirds of the total) were made to people whose condition was expected to improve. On the other hand, early evidence from a forthcoming disability survey suggests present take-up of DLA may be as low as 40 to 60 per cent. As the Green Paper promised, the Government has set up a forum with organisations of and for disabled people to discuss how the benefits can be reformed to fix these problems.

20.17  It is committed to effective civil rights for disabled people. Later this month a White Paper will be published setting out the remit of the new Disability Rights Commission. Work is also taking place across Government to develop a coherent strategy of support for disabled people who are capable of work, partly capable and on the borderline.

20.18  Support for Families and Children. Measures were announced in the Budget to help parents into work and increase support for children, consistent with the principle that additional support should be provided not on the basis of family structure but on the basis of family need. Child benefit will be raised from next April by £2.50 a week for the eldest child. Last week proposals were announced to improve child maintenance through reform of the Child Support Agency. The proposals will simplify the formula, improve compliance, allow parents on Income Support caring for children to keep the first £10 per week of maintenance, and reduce the delays in receiving maintenance.

20.19  Attacking Social Exclusion. The Government has developed a series of new and innovative approaches to the problems of social exclusion. The Social Exclusion Unit was established at the end of 1997 and has produced three reports on school exclusion and truancy, rough sleeping and deprived neighbourhoods. Its proposals have been put straight into effect, focusing in particular on better ways of preventing social exclusion. Their work has also shaped the new Sure Start and New Deal for Communities programmes, which are imaginative approaches to tackling deep seated problems of social exclusion in poor areas.

20.20  Rooting Out Fraud. The Government announced this week a counter-fraud strategy to reduce the £2 to £7 billion a year fraud in the system. Previous efforts have been almost exclusively directed at detecting fraud with little effort put into preventing the fraud happening in the first place. While there will always be a place for detection, the Government plans to concentrate more on prevention, with simpler rules and procedures playing a major part, working in partnership across government and with the private sector.

20.21  Active Modern Service. Service to the public should be the priority in benefit delivery, with the aim being to deliver the right help and support quickly and efficiently. Measures are proposed to improve customer service, including the provision of a more integrated service to those of working age with pilots planned for the Benefits Agency and Employment Service to work together. The emphasis will be on identifying training, work placement and childcare needs rather than the routine distribution of benefits. In return, claimants will be expected to co-operate and to take up opportunities made available to them.