An agency for the Working Age

A huge and significant reform to the delivery of benefits is scheduled to start less than a year from now. But very little seems to have happened since the Prime Minister's March 16th announcement of a new agency to deliver benefits to all people of working age (see Working Brief 113).

If the Government's highest ambitions are to be achieved, some fast work is needed. Ministers have pledged that the new agency will have "a clear focus on work and a new culture". To be firmly focused on "helping people to become independent", it will be "freed from past bureaucracy and antiquated methods of operation".

But a log-jam in Whitehall seems to be slowing down the new agency's development. Now, after a 4 month hiatus, the Chancellor's announcement of funding for the new agency seems to be making things move.

At least 3 Government Departments have an interest in setting up the new agency - Treasury, DfEE and DSS - along with the 2 existing Executive Agencies. These are far too many interested parties generating inevitable structural inertia within Government.

The new agency will be a real-life delivery organisation. Unlike policy making, where Whitehall has discovered a new delight in the co-ordination of inumerable "cross-cutting" initiatives, paying the benefits of 10 million people per year is a vast logistical effort that simply must not go wrong.

So Ministers will have to promptly decide who is in charge and where the eventual line of Departmental responsibility will lie. For an agency that will have "a clear focus on work", that surely must be the DfEE.

Although a start date has been set, the funding and time-scale may well be scaled down. In its first year, the Treasury has allocated about 1bn to the Employment Opportunity Fund that the new agency is to be financed from. The funding rises to about 1.4bn in each of the following two years. But this fund is expected to also support the National Childcare Strategy, all the New Deal programmes (including an extended New Deal for Disabled people) and to fund any new initiatives. Most observers acknowledge that the new agency cannot be funded on this basis if it is to meet the Prime Ministers original promises that it will offer:

To achieve these ambitions will be expensive in the short term. So watch out for a subtle re-negotiation of the spending review between DfEE and Treasury in the coming months.

The Prime Minister also committed the new agency to "developing the partnership approach" to working with local authorities' Housing Benefit administration. Given the current melt-down in many Councils, this may be too soft an approach. At the very least, the new agency should be enforcing new standards - like uniform paperwork, common working practices and IT applications - and a new client-centred culture. But the crisis in Housing Benefit may be too systemic and a more drastic solution required. Admittedly, local government was handed a miserable benefit to administer and, with hindsight, it now seems extraordinary that Councils accepted it so enthusiastically in the mid 1980s. Successive Governments - particularly the latest one - have piled on additional complexities whilst Councils have responded to cost pressures by outsourcing much of its administration.

But, unless there are dramatic improvements, the new agency should be used to "re-nationalise" the chaotic and disparate benefit system. Although the cost of re-organisation - and buying out private sector contractors - could be enormous, Housing Benefit is the single weakest link in the Government's entire "making work pay" strategy.

Designing the new "working age" agency offers Government a chance to dramatically improve the quality of service offered to non-employed claimants, to boost their financial security and to offer real opportunities to enter work and achieve economic self sufficiency.