A secret leaked report suggests Work and Pensions Secretary Iain Duncan Smith is looking at ways to privatise running the government’s state pension scheme to save money.
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In a bid to stem the massive borrowing deficit, the Department of Work and Pensions (DWP) is considering outsourcing the state pension administration to an outside contracting firm.
The allegation is published in The Guardian newspaper, which claims to have seen the report marked ‘restricted’.
The DWP Efficiency Review, says the newspaper, is an 80-page document examines how the huge government department can better manage 750,000 telephone calls from the public each year and paying £98 billion in pensions and benefits.
The report explains that Duncan Smith will have a £6.5 billion budget to run pensions and benefits, by 2016 – down 34% on £9 billion available in 2010 – and £2 billion will need to be saved over the next two financial years.
Strategic thinking needed
The research then scrutinises how the department works and where savings might be made.
The DWP manages 10 customer service centres around the country, with 7,000 staff. The report authors suggest ministers need to make ‘strategic decisions’ to cut costs and should consider outsourcing services to private companies that could deliver the same services more cheaply.
The review includes reviewing how expat pensioners are paid their state pensions and benefits.
“Most of the easy options have already gone with previous rounds of cuts,” says the report.
“Opportunities for savings without looking at how services are managed and delivered are unlikely to come to much, so ministers and senior civil servants should look at alternative delivery models.”
The government confirmed every department is running an efficiency review, but no decisions had been made on specific measures, including outsourcing the state pension to external contractors.
Targets for savings
However, the reports examines how the DWP communicates with pension and benefit claimants and suggest sending out 4.5 million pension a statements a year could be one area where money could be saved.
Another candidate for outsourcing is the ‘Tell Us Once’ service to help the bereaved report the death of a loved one to government departments and agencies.
Dame Anne Begg, who chairs the work and pensions committee of MPs is one opponent who would not want to see the state pension run by private companies and argued that 93% of pensioners were satisfied or very satisfied with the current model.
“The pension service is one of the success stories of the DWP,” she said. “Satisfaction is high and we hear very few complaints about it. I’m not sure why anyone would want to upset that.
“If you’re saving money and end up with a poorer service then it’s not good value for the taxpayer.”
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