Benefits pushed to breaking point

Social security cuts: Unions say loss of '20,000 jobs' will increase fraud and harm needy
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Public Policy Editor

Plans to slash the Department of Social Security's running costs by hundreds of millions of pounds over the next three years will increase the risk of fraud and hit genuine claimants, opposition MPs and trade unions claimed yesterday.

The scale of the change - an efficiency increase of at least a quarter in a budget of pounds 3.2bn - highlights the mounting impact of the dramatic cuts in Whitehall spending that Kenneth Clarke, the Chancellor, ordered in the Budget.

Peter Lilley, Secretary of State for Social Security, vigorously defended a programme which he admitted was "challenging", saying the alternative was "obviously to take the money away from benefits, which we don't want to do. We want to ensure that benefits are maintained to those in need".

Before the Budget, he told William Waldegrave, Chief Secretary to the Treasury, that the scale of cuts in running costs being sought "fills me with despair. The impact on operations will be devastating". Yesterday he argued that related only to the first-year cuts the Treasury had sought. The scale of change now demanded had been achieved in the private sector.

Barry Reamsbottom, general secretary of the Civil and Public Services Association, said managers were "stunned" at the scale of what was demanded. With staff accounting for half of running costs he predicted that "at worst" 20,000 of the 88,000 DSS jobs could go.

There were rumours of more self-assessment for benefit, he said, which could increase fraud, while attempts to simplify benefit payments could prove a false economy. The unions are to meet department officials on Monday week, when "tough questions" about the implications would be asked.

Chris Smith, Labour's social security spokesman, said the benefit system would be "pushed past breaking point" with "fewer people, longer delays, more mistakes and a worse service" when last year had already seen the highest error rate ever in income support. "The planned cuts also make a nonsense of Peter Lilley's much-vaunted fight against fraud." The impact on the DSS is just one of the earlier signs of a 12 per cent real terms cut over three years in civil service running costs that comes on top of existing savings.

So far that has produced an 8 per cent real cut in the coming year in NHS management - likely to account for several thousand posts; a cut of almost 3,000 prison officers, with more savings to come in the Home Office; a further 1.6 per cent reduction this year at Customs and Excise on top of a 4,000-job reduction programme by 1999, while the Inland Revenue has already started a programme which will shed up to 14,000 jobs and close 100 tax offices by 2002. Unions calculate that the Department of Transport and its agencies will have lost 20 per cent of its staff over five years before the new round of cuts.

Since 1992, more than 50,000 civil service jobs have gone, numbers falling even faster than projected 18 months ago in the civil service White Paper. Numbers this year will fall to "well below" 500,000, according to Michael Heseltine, Deputy Prime Minister.