DSS faces 25% cut in running costs

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Public Policy Editor

Draconian cuts in the running costs of the social security budget are to be announced today by ministers.

Ann Bowtell, the permanent secretary at the Department of Social Security, has told staff in an internal letter that the department's pounds 3bn administration budget has to be slashed by 25 per cent over the next three years. The package, which is likely to include more privatisation of the delivery of benefits is to be achieved by more contracting out of services and attempts to simplify the administration of benefits whose delivery currently employ about 88,000 staff.

A spokesman for the department said last night that the "change programme" did not at present include plans to abolish any benefits, contributions or child support payments, but that measures to simplify the system were being considered.

The DSS already operates through a range of "Next Steps" agencies that deal with benefits, contributions and the controversial Child Support Agency, but further extensions of the purchaser/provider split will be needed. That allows the department to define the service it wants but leaves others in the public and private sector to deliver. Civil service trade unions said tens of thousands of jobs would be at risk. A spokesman accused the Government of operating a "scorched earth policy" against the poor and vulnerable.

Union leaders say that the letter lays out clearly the Government's intention to bring in wholesale privatisation of the DSS's computer systems.

They believe also that the cuts outlined by Ms Bowtell will lead to widespread redundancies among the department's staff.

The department yesterday said that warnings of widespread job losses were based on "speculation".