Not work and pensions

The Department for Work and Pensions presides over the biggest budget by far, and unfortunately the fastest growing one, owing to rising unemployment. It is a huge clerical factory, employing 100,380 staff to give out a wide range of different benefits to a large number of people. There are another 12,000 staff identified as helping with these tasks but now accounted for elsewhere in the public sector.

My experience of managing industrial plants tells me two things. You need to manage quality well, and to keep morale of staff high. If you see the error rate rising too far you have problems. You need to improve your systems, upgrade your equipment, and idiot proof your processes. You need to involve and motivate your staff, and get them to buy into doing things right first time, taking a pride in a job well done. It needs to be worth their while. To be world class these days you aim for an error rate of 100 parts per million. I would be seriously worried about anything above 500 parts per million. If sickness and absence rises above 3 days per staff year in the offices you have a morale problem.

At DWP the apparent error rate has come down a lot, but is still a massive 6000 per million transactions. The absence rate is 9 days per staff year. In other words, the taxpayer pays for almost a million staff days when employees do not turn up. Some are genuinely sick and deserve their break. It is unlikely, however, that sickness rates across such a large workforce can be so high compared to private sector organisations without there being something wrong with the culture and incentives.

In 2008-9 the department spent around £100,000,000 on external consultances, and a total of £174,000,000 on external consultancies, temps and interims. This is far too high for comfort. The existing staff should know how to run the place better. The senior management and Ministers should try asking them and engaging with them, rather than calling in so many outsiders to reorganise. They might also get a bonus with more of the staff coming in for more of the working days, reducing costs further. If absence fell from 9 days to 4 days, that gives the taxpayer an additional 500,000 days of work each year, or a saving of around 2000 staff.

The department does not fail to spend on IT. That budget should be better used to idiot proof, streamline and improve systems. The current budget runs to £873,000,000. You could probably do it for less in this climate and get more out of the enhancements.

The best cut of all will be in getting out of work benefits down by getting more people back to work. Welfare reform is an urgent priority. We need to tackle this before it overwhelms us and the public accounts. The total budget of £156,648,000,000 includes £50,000,000,000 in benefits for people who are out of work. This is rising alarmingly. Clinton style reforms worked well in the States. What has been stopping reform here?

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25 Comments

  1. Mike Gill
    Posted July 25, 2009 at 7:19 am | Permalink

    Please don’t talk about introducing bonuses and incentives into the public sector:

    – These things instantly become rights of expectation.

    – They give those dispensing them an improper power of patronage.

    – They distort behaviour in quite contrary ways.

    Most people are not coin-operated. The factor that causes resentment and “demotivation” is the perception of others not pulling their weight or getting away with undue perks, all caused by poor management and overmanning.

    MG

  2. eeyore
    Posted July 25, 2009 at 7:37 am | Permalink

    I wonder, Mr Redwood, whether politicians ever reflect that every £10 they spend has cost the average bloke one hour of his life to earn. That hour, in which he might have done some good to himself, or his family, or simply watched the cricket at his ease and pleasure, has been stolen from him and can never be replaced. In effect he has been enslaved for that hour.

    A working life contains about 100,000 hours, of which nearly 50,000 are now passed in this state of slavery.

    So much for Lord Mansfield’s celebrated dictum about the miraculous powers of the soil of England to make a man free.

    Or perhaps politicians never do reflect on this, because the thought is too disturbing.

  3. Posted July 25, 2009 at 7:48 am | Permalink

    Sounds like a job for John Seddon

  4. A.Sedgwick
    Posted July 25, 2009 at 8:01 am | Permalink

    Until Mrs.T.’s tenure “can do” rarely raised its head in peacetime government. Basically socialism can’t do and we have witnessed this in the extreme over the past 12 years of tortuous government. You invariably write with great sense and purpose on financial and business matters, it will be a great pity if you are not given such a role in the cabinet. Regrettably DC seems more interested in political correctness and having his regular tangential moments which tend to frustrate us older voters.

  5. Posted July 25, 2009 at 8:28 am | Permalink

    I am going to be frank and, possibly though I hope not, hurtful.
    This article seems to me to be completely obvious and, yes, written by someone who actually understands management from the inside out. Why, then, are your ideas constantly rubbished in Tamsin Lightwater in the Spectator and why are you sidelined by the Conservatives? Is it because there is a wealth of people like you in the prospective government?
    The final figure is almost half of the total government expenditure when Labour came to power.
    If you reward people handsomely for being polygamous/serial monogamous/amoral (free housing) and for being idle (the dole), then -BINGO!- you get more and more of them!
    We need – urgently – more efficiency in the service and more weeding out of people who are swinging the lead. We also need to reward people who are playing by the rules.

  6. Posted July 25, 2009 at 8:55 am | Permalink

    Since the 1960s a steep decline in basic educational standards and achievement has led to a proportional decline in ability to do the simplest of tasks. We see this mirrored in poor speech and grammatical useage by senior politicians, teachers, police officers and less often but occasionally military personnel.
    Nowhere is this deterioration more keenly obvious than in the clerical arm of The Public Services. Jobsworths promoted way beyond their ability are rife, the “job for life, you can’t sack me” attitude leading to, eor example, a Social Services structure more concerned with personal advancement than quality of performance. It is unlikely to get better in my life time.

  7. backofanenvelope
    Posted July 25, 2009 at 8:55 am | Permalink

    Well, I feel a bit like the talking clock! You will not reduce public expenditure unless you STOP the state doing things. In the case of benefits – stop paying them!!!!! Massive reduction of expenditure and staffing levels.

  8. jean baker
    Posted July 25, 2009 at 9:02 am | Permalink

    John,

    It’s so refreshing to be reminded about the importance of a good employer’s attitude to it’s workforce and it’s relevance to success for all those involved.

    Box ticking target based employment creates stress, frustration, and moral; it detracts from the ‘job in hand’ and skills attached. The ‘sickness’ it causes is shown by your figures – Nulabor is a ‘rotten employer’.

    Whilst employment in the private sector continues to diminish, Nulabor employs increasing numbers – ‘unhealthy’ for workers and the economy.

  9. Brian Tomkinson
    Posted July 25, 2009 at 9:14 am | Permalink

    JR: “What has been stopping reform here?”

    Perhaps you should ask Frank Field MP. He was asked to think the unthinkable regarding welfare reform and then promptly sacked by Blair and Brown when he came up with good solutions.

  10. jim
    Posted July 25, 2009 at 9:20 am | Permalink

    I don’t have your management experience, but if you idiot proof the processes don’t you remove the human input this reducing the motivation of the staff?
    Personally I think we are in the final few months of the welfare state, a system which has produced 5 million people on one kind of benefit or another is not sustainable, nor is it desirable. Time will tell.

    Reply: “Idiot proofing” is my translation of poke yoke, the Japanese system used in most modern manufacturing. You cannot afford mistakes in complex supply chains, so you need to automate error out of the system. A sensible company ends up with smarter machines and fewer people on the line. The people you have left have more interesting jobs, because they are the bosses of more intelligent machines.

  11. alan jutson
    Posted July 25, 2009 at 9:25 am | Permalink

    Staggering figures indeed.

    From what I have seen in the last seven months (we have a family member out of work for the first time in their life) the whole sysytem is far, far too complicated.

    The claimants do not understand the system, those administering the system also seem totally confused, there seems no joined up thinking at all, with different elements of a claim having to go to different addresses, speaking to different departments who have different timescales.

    Most correspondence appears to be late, which involves the claimant in many follow up calls, very often to limited effect.

    New policies broadcast on the media are not yet in place or do not work, the promised mortgage interest relief having not been paid yet at all (now 7 months when it is suggested this is promised after 13 weeks).

    Tax credits from press reports are now so far adrift from reality that we are overpaying on a massive scale to tens of thousands of people, whilst those who have worked previously on a reasonable salary are not entitled to anything for 12 months because of their previous earnings.

    Unemployment benefit after six months is means tested so the frugal who have saved, get little, whilst those who have never worked and saved at all, seem to get the maximum.

    Our State Old Age Pension System is one of the lowest paid in the developed World, meaning that many very old pensioners have to run the gauntlet of bearing their sole to make additional claims. Many of the older generation do not, on the basis of being too proud to claim and thus miss out, even though many had worked and paid taxes all of their lives.

    Others who know the system, work it to its maximum effect.

    Time for a complete rethink of how and what this Country needs to encourage. In short “to think the unthinkable” remember that phrase and promise.

    Yes of course we need to support those who are unfortunate enough through genuine illness, injury or the like, and who cannot look after themselves, that is the essence of a civilised and careing society.

    For those who have never worked, or do not wish to work, the system should encourage them to do so, in a sensible manner.

    Surley simple logic should dictate that if you have never paid into the system, or have paid only occassionally, then you should only be able to get minimal amounts out until you have a sensible record of contribution.

    By sensible I mean regular payments, clearly a high earner will pay more and a low earner will pay less, but both would contribute regularly which is the point.

    Perhaps those who come to this Country for the first time should not be entitled to any benefits until five years contributions have been made. Same could be perhaps said for those who have just left education.

    No I do not have all of the answers, no doubt many will think the above is alarmist, no doubt many will be upset. But I genuinely beleive we have to change the system, its not working in the correct manner at the m,oment, its too confusing, its too complicated, its too expensive, and it does not encourage self help in many cases.

  12. Posted July 25, 2009 at 9:50 am | Permalink

    I think the benefits & tax system could be combined with a Negative Income Tax element. This (an old Liberal policy from back when they were still fairly liberal) would aboviously save duplication & would minimise the poverty trap since payments would be on a sliding scale according to income. Granted the big problem is getting there from here since there would be bound to be many marginal losersc as well as winners in such a simplified system – 1 way, which would have substantial change over costs, would be to allow people to choose whether get NIT or benefit but keeping benefit figures stationary & after a few years almost everybody would have moved to the former.

  13. Posted July 25, 2009 at 11:10 am | Permalink

    Hi John
    There are actually bloggers discussing the reasons welfare reform isn’t working here, mostly from the disabled community. I can provide you with links should you be interested.

    The fundamental problem is the assumption by people like Freud that most of those on disability benefits are perfectly fit for work. Whilst there is undoubtedly a significant minority who claim benefits fraudulently, the overall majority of people who claim are not fit for work. This disparity has meant that the system has never really considered or understood HOW to get disabled people into work.
    There are very few jobs to apply for currently, and less meeting the needs of disabled people or single mothers. The one most significant change which would make workforce style programmes effective would be to understand that the majority of those on benefits may WANT to work full time but are only fit to work part time. Tax credits and deductions from associated benefits such as housing or council tax are a monstrous barrier to entering work, but the easiest, cheapest and most straightforward way of enabling disabled people, carers or single mothers into the workplace would be to invest in technology that enables people to work from home and to promote the positive aspects of that to employers so they are keener to do so.
    Bendy Girl

  14. Acorn
    Posted July 25, 2009 at 11:12 am | Permalink

    A little suggestion JR. When you get the opportunity, make the DWP, renamed the Department for Welfare and Pensions; responsible for ALL forms of benefit payments. Particularly Tax Credits and Child Benefit, now paid by the HMRC but not funded by the HMRC budget. The same goes for Housing Benefit (DWP); Council Tax Benefit and Rent Rebates administered at local government level, one benefit tends to trigger another. All the way down to free car parking with a Blue Badge. These systems need a large dose of simplification.

    BTW. With a general lack of intelligent debate in the Commons, I have turned to the Lords lately. A very interesting Lords Constitution Committee debate is going on at the moment, worth reading the oral evidence. Particularly that coming from ex Cabinet and Permanent Secretaries.

    http://www.publications.parliament.uk/pa/ld/lduncorr.htm#const

  15. Rosemary
    Posted July 25, 2009 at 12:45 pm | Permalink

    Hi John,

    As a carer who belongs to several online carer boards and also an online campaign group,I have google alerts set up to bring results of any articles relating to Welfare Reform.Therein your article came through this morning.

    Many people are concerned about the measures being proposed by Labour and also about comments from Theresa May in which she has stated that your own party would take the proposals further and deeper.

    As far back as November even the SSAC expressed concern…

    “”Sir Richard Tilt called on Gordon Brown to postpone tough new measures
    Which will force the unemployed to look for jobs or see their handouts cut.
    He went on to warn that the plans, which are targeted at single parents,
    disabled people and the long-term unemployed, could leave families worse
    off. (Daily Mail 21 Nov 2008)””

    Would you agree that the economic situation is in an even worse state now so common sense tells us not to push these reforms through.?

    There are other issues too.I will only mention 2 for now, as I would really like to know your thoughts and also learn how your party would address them

    1. If private companie can provide a Workfare job, why isn’t this a real job available to all those who so clearly want employment now, which of course should be paid the minimum wage?

    2. If we want to persuade the long term employed that work is good for them – is imposing workfare (under threat of sanctions) really practical or worthwhile (in the longer term) – let alone humane?

    On a seperate note, I contacted a colleague of yours yesterday, Stephen O’Brien.I ‘met’ Stephen in a hosted chat that he did with the PRTC and raised some concerns with him regarding Carers Allowance and its future.I, and many others, believe CA should remain seperate from the main benefit system.

    What are your thoughts John?

  16. Robert Eve
    Posted July 25, 2009 at 12:53 pm | Permalink

    I thought sickness days were mandatory in the public sector.

  17. Brian E.
    Posted July 25, 2009 at 5:01 pm | Permalink

    Seems an enormous staff!
    If you assume that half the population are out of work or on pension, that is around 30 million, probably a high guesstimate as it doesn’t include children. Divide this by 100,000 and that’s an average of 300 persons per employee.
    Even allowing for the long civil service holidays and high sickness rate, that’s only about one and a half persons per day per employee.
    Maybe someone needs to talk to an insurance company to find out how many people they need to employ per pension paid.

  18. Posted July 25, 2009 at 6:52 pm | Permalink

    Being recently unemployed myself I am all too aware of some the DWP’s shortcomings. Some streamlining of processes could be implemented. For example, when switching from Contributions based Jobseekers Allowance to Income based why is it necessary to complete a new claim booklet again? As my circumstances had not changed would it not be more efficient to sign to the effect that my circumstances had not changed and then switch my claim over to income based? Apparently not. I had to complete another new claim booklet, have it checked by a member of staff at jobcentreplus and then they sent it off to be processed. So that’s unnecessary paperwork creating an additional task for at least two members of staff to complete and leaving me having to wait a further week for my payment.

    Also, pointless group sessions where staff tell claimants about all the fantastic jobs available in the area and try to see if people know how to apply for jobs is one of the government’s daft schemes ‘to help people in the downturn’. Admittedly, some people might need help in constructing a CV or writing cover letters to an employer but for the rest of us it is an unnecessary aggravation. There were 8 people who attended the session I went to and that required 3 members of staff for the hour which is remarkable. Judging from the mood of the other attendees nobody felt it was a beneficial use of time or money. Instead of these pointless schemes why does the government not offer some grants to businesses to take on new employees? This would be of far better benefit to the economy as a whole and the unemployed in particular.

    • alan jutson
      Posted July 26, 2009 at 7:33 am | Permalink

      Rob

      Yes your point about going from Contribution based to income based Jobseekers allowance can be verified by our family member who is also unfortunate enough to be out of work.

      System seems crazy, in addition the Department then writes to the Local Authority to tell them that Jobseekers allowance has ended for the claimant, so Local Authority then cut off the Council Tax benefit reduction, so a reclaim for that is neccessary as well.

      More form filling for both.

  19. Jon
    Posted July 25, 2009 at 6:58 pm | Permalink

    Thats justr shocking statistics on error rates. It is so clear over the years that the Public Sector now is so far behind the private sector it has no right to exist but I know it has to. It is not fit for purpose, it is from a different era and the world has moved on, it moves fast and quick to change and we have a public service that may as well be from the industrial revolution but I recon they were more efficient.

  20. Adrian Peirson
    Posted July 25, 2009 at 7:26 pm | Permalink

    Of course they want to cut the Armed Forces expenditure, they are after setting up an EU Army.
    We are an oppressed nation and people under foreign occupation, being destroyed from within.

  21. John Moss
    Posted July 25, 2009 at 7:32 pm | Permalink

    There are simply too many benefits.

    On the DWP website, you can find reference to over 50 separate schemes under which welfare assistance can be sought.

    Professional staff making a personal judgement against tightly defined criteria could set a personal assistance rate for each claimant.

    It is estimated that there are 10m pensioners and 7m out of work. if they each had to “re-apply” once every six months, that would mean 34m cases a year. With 100,000 staff, that is 340 cases per staff member. If half were employed on this, that would mean 680 per staff member. With 200 working days in the year, that is less than 4 cases per day.

    How hard is that?

  22. Adrian Peirson
    Posted July 25, 2009 at 7:37 pm | Permalink

    Maybe they are thinking that if they really mess things up we might say, why not do away with Westminster and just let Brussels run things.

    Nothing happens by accident, I have a better idea, lets, withdraw from the EU and run with a severely diminished state sector.
    Upholding Common Law, not sneakily imposing statutues ( contracts ) upon us.

    Part 1 of 5
    http://www.youtube.com/watch?v=V0IM7Hobd_k

    http://www.fmotl.com

    http://www.tpuc.org

    Part 1 of 11
    http://tinyurl.com/mpbjz6

  23. Posted July 26, 2009 at 6:47 pm | Permalink

    When I was on the dole myself, for most of the 1990s, the real problem was that nobody gave a monkey’s.
    You soon learned how to work the system – it didn’t take much intelligence to go to the soft bureaucrat and lie through your teeth. It was also nice to wave a paycheck in their faces (not literally) when I did get back to being a teacher again.
    We also had training done by people who were themselves on the dole. That was excellent. I learned how to work a computer, how to start up and ruin a small business, and how to go about getting a job.
    It was the attitude (see above) that was the killer. Perhaps – mad idea? – the Churches could do something positive at last in parallel with the sacred state? They are, after all, always talking about the poor and love and so on??

  24. B.Lawrence
    Posted July 27, 2009 at 9:27 am | Permalink

    How about motivating your staff by telling them they are paid,by taxpayers, to do a job and if they can’t hack it there are over 2 million on the dole some of whom would be glad to swap positions with them.

    Why are they paid a bonus they don’t generate any income for the state.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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