Benefits staff strike over privatisation

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Public Policy Editor

Staff at dozens of benefits offices across the country walked out yesterday as Peter Lilley confirmed that privatising the delivery of child benefit will be just the first step in handing over parts of the benefit delivery system to the private sector.

The change will initially affect the 1,850 staff at the Washington centre in Tyne and Wear, but private sector consortia are also being invited to bid to work in three of the Benefit Agency's 13 regions for a year - before being given the chance to run at least parts of the business themselves.

Further dramatic streamlining of the benefits process to achieve a 25 per cent efficiency increase with 20 per cent fewer staff means "greater involve- ment of the private sector", the Secretary of State for Social Security indicated.

Opposition and the unions reacted with fury to Mr Lilley's announcement. Chris Smith, his Labour opposite number, said he feared the aim was to abolish a scheme which played a key part in the poorest families' finances. Mike King, national officer of the Public Services, Tax and Commerce Union, said staff at the centre were "livid", and industrial action could not be ruled out.

The unions speculated that computer giants EDS and Sema, lottery operator Camelot, and the ICL consortium which is developing the benefit payment card, could be bidders. Mr Lilley insisted that the moves would make benefit delivery more efficient, contributing to the pounds 900m he is seeking to release from his depart-ment's pounds 3bn administration budget.

Liz Lynne, the Liberal Democrats' spokeswoman, protested that child benefit was already efficiently delivered. "If it ain't broke, don't fix it," she said.