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Andreas Whittam Smith

Andreas Whittam Smith: Eliminating waste can be as simple as answering phones

HM Revenue and Customs spends £200m a year on call centres. You call with an enquiry. You hear the phone ringing. And ringing. Often that is all you hear

It is one thing to have a good idea and quite another to put it into practice. It is one thing for Iain Duncan Smith to conceive of a Universal Credit that will replace the current muddled system of social welfare that comprises six different benefits. His plans received broad parliamentary approval last week. But it is quite another thing for the Department for Work and Pensions to deliver such a change.

The DWP has a terrible record. Just two weeks ago, the Public Accounts Committee, the senior parliamentary watchdog, had this to say: "The cost of errors in the benefits system is considerable... We found that efforts to tackle error have had little success: despite the Department introducing a strategy to reduce errors in 2007, levels of error have remained constant since then."

Think about this. The Department recognises serious shortcomings. It devises a plan of action and puts it into practice. And nothing happens. Improvement zero. It is in the face of such ineptitude that Mr Duncan Smith must strive to deliver the Universal Credit.

An inability to translate ideas into action is endemic within Whitehall. HM Revenue and Customs spends over £200 million a year on call centres. These receive more than 100 million calls a year. Alas many are not answered. You call with an enquiry. You hear the phone ringing and ringing. And ringing. But very often, that is all you hear. Only some 57 per cent of call attempts in 2008-09 were actually answered compared with 71 per cent in 2007-08, and an industry benchmark of more than 90 per cent. Measures were taken. Now three quarters of all calls are picked up. And this is supposed to be a triumph.

To escape from this trap, I urge Mr Duncan Smith to draw inspiration from the great Henry Ford. For as well as creating the Model T automobile, the very first popular car, he also devised a new system to bring it to market. This was an assembly line that produced cheap goods while paying workers high wages. Because it was such a remarkable development at the time, it also has a name, Fordism. Mr Duncan Smith has to do the same thing. His Universal Credit is his Model T Ford. What he hasn't yet conceived is his own version of Fordism, a reliable way of delivering the new benefit.

Yet examples of what is needed exist, albeit only at the edges of the public sector and this is where the Secretary of State ought to direct his attention. It is a management technique known as systems thinking. It is less about dividing up a complex process into small pieces and assigning the different parts to different groups of workers, than about considering the system as a whole. Systems thinking focuses on eliminating "waste". Waste has a special meaning in this context. In the case of providing housing benefits, for instance, what is known as value demand comprise two types of request: "Can I make a claim?" and "My circumstances have changed". Failure demand, or waste, is illustrated by the following communications from applicants: "I don't know how to fill in the form". "I don't understand your letter". "When will I get my money?" and "I don't agree with the decision." Waste in this sense can comprise 40 per cent and more of the work of welfare and tax offices.

To find a good example of systems thinking you can travel from Whitehall 100 miles in a westerly direction to Stroud district council. Anne McKenzie runs "Revenues and Benefits" at the council. She set her team a new purpose: to pay the right amount of housing benefit to the right person at the right time. Then they set out to calculate how much of what they did contributed directly to achieving this purpose and how much didn't (waste). They analysed all calls, visits and emails over a period of time. To everyone's surprise, 90 per cent of all customer demands were not contributing to the purpose and were, therefore, "waste". In a report, Ms McKenzie said: "Much of this waste was due to customers chasing their claims, telling us they did not understand the letters we'd sent them and – by far the most frequent – incomplete claim forms. None of this was the customer's fault. We knew it was our responsibility to change the system."

Stroud's old system, which Ms McKenzie has now replaced, was typical of much of the public sector as far as paying benefits is concerned. It consisted of a front office and a back office. The staff in the front office had no special expertise in housing benefits, but it was to them that claimants first applied, either in person or by telephone. These requests, now documented, were then scanned and transferred electronically to the back office where the assessors were to be found. As can be seen, however, these assessors had very little face-to-face contact with customers.

The rest of Ms McKenzie's report perfectly captures the sort of result that Mr Duncan Smith should be seeking. "In the new system, there is no front/back office split. A benefits assessor now sees customers when they first come in. Customers develop a personal relationship with the assessors. In the old system, claims often took 40 to 42 days to process. In the new system, most claims are completed within a week, even with the additional workload caused by the economic downturn. Twenty per cent of claims are now completed within two days."

The team often receives letters of thanks and even flowers. Complaints are rare. Waste is also rare; phone calls from customers chasing the progress of claims have almost disappeared because people know that an assessor is personally handling their claim, thus improving confidence in the process. Staff now see their role as "helping people to claim benefits."

This is profoundly different from their previous role, which was "to assess benefits". Sickness in the team has reduced by 44 per cent. Staff enjoy the personal contact with customers and feel a real sense of accomplishment when resolving benefit claims quickly and efficiently. If the new Universal Credit could be delivered along these lines, Mr Duncan Smith would have done the full job. Otherwise I fear he will look back in years to come and ruefully tell himself – "yes, the Universal Credit was a good idea, if only we could have delivered it".