LONDON: The government is considering saving money by privatising the delivery of the state pension, according to Whitehall documents seen by the Guardian.
In an effort to make up billions more in austerity savings, the Department for Work and Pensions (DWP) has initiated a review of how it issues 4.5m pension statements each year and the administration of £100bn in public money to millions of pensioners in the UK and around the world.
The review — which is entitled DWP Efficiency Review, runs to over 80 pages and is marked “restricted” — also considers how to make cost savings in the way the department handles three quarters of a million phone calls and the distribution of £98bn in benefits and tax credits.
Whitehall’s biggest department is facing an “unprecedented reform challenge”, says the document, which was distributed to senior civil servants in January. By 2016 the work and pensions secretary, Iain Duncan Smith, will have his operational budget slashed by 34 percent to £6.3bn from £9bn in 2009-10. Almost £2bn of those savings will need to be made in the next two financial years.
The documents say ministers and civil servants now need to “consider some more strategic shifts” such as looking at how the state pension and other benefits for over-65s are managed in order to meet demands by the chancellor, George Osborne, to drastically cut their overheads. “This includes a review of the pension service’s current delivery model and alternative delivery models,” the document says.
In a frank assessment the document says: “Opportunities to go further [with savings] are limited … [as] much of the ‘low hanging fruit’ has already gone.
“This is largely a result of the department pursuing all possible avenues for efficiencies. To deliver anything greater, the department needs to look more fundamentally at how it delivers its business, and consider some more strategic shifts.” Currently the government runs 10 pension centres around the country including in Dundee, Newcastle, Swansea and Blackpool. The service employs 7,000 staff who help administer £80bn in state pensions, £7.7bn in pension credits, £2.8bn in other pensioner benefits to people living in the UK and a further 1.2m to pensioners around the globe.
The review will also examine if the “Tell us Once” bereavement service – which helps people report deaths and the termination of social security payments – could be run more efficiently if it was outsourced. The chair of the Commons work and pensions committee, Labour’s Dame Anne Begg, said she would not want to see the service tendered out to private companies and pointed out that 93 percent of pensioners were satisfied or very satisfied with the current model.
“The pension service is one of the success stories of the DWP. There is a very high satisfaction rate and very few complaints about it. [So] if it’s a success story and it ain’t broke I’m not sure why they would want to upset that.
“If you’re saving money, it’s coming from somewhere. And if you end up with a poorer service as a result then it’s not good value for the taxpayer.” The pensions expert Ros Altmann said she was seriously concerned by the idea that firms such as Capita, Serco or G4S could be brought in to administer £100bn in public money to millions of pensioners.
Altmann said an outside company could feasibly save money in two main ways – by reducing the pay and conditions of staff or by reducing the quality of the service.
The Guardian
