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Publication - Report

Social security agency in Scotland: outline business case

Published: 27 Apr 2017
Part of:
Communities and third sector
ISBN:
9781786529480

Collection of the analysis and evidence behind the Ministerial Statement on Scotland's social security agency, made on 27 April 2017.

187 page PDF

6.9MB

187 page PDF

6.9MB

Contents
Social security agency in Scotland: outline business case
Section D: Moving Towards the Preferred Option

187 page PDF

6.9MB

Section D: Moving Towards the Preferred Option

8. Selecting the best options

8. This section pulls together the results of the MCA in terms of the socio-economic case and the Financial case to consider the value for money of the different options. As discussed elsewhere, the complexity of the delivery framework for social security means that it is appropriate to consider hybrids or blends of the 6 options in order to maximise value.

8.1. The analysis proceeds as follows. Section 8.1 looks at the outcomes of the MCA analysis and section 8.2 takes into account the financial case in terms of the costs of the options. Phrases in italics relate specifically to one of the 27 criteria used within the MCA. The analysis is brought together in 8.3 in conjunction with the other 3 cases to produce overall conclusions on ways that value-for-money can be maximised.

8.2. This results in the creation of a number of hybrid options that are discussed and assessed in section 8.4.

8.1 Results of the MCA

8.3. The overall ranks of each option from the tables in section 4.8 are plotted against each of the 5 criteria sets to create a radar chart show in Figure 16. Figure 16 is interpreted such that points are preferred the further away from the centre they lie. Thus, in the diagram option 3 - LAs, is the best option in terms of implementability and risk.

Figure 16 - Results of the MCA

Figure 16 - Results of the MCA

8.4. Option 1 came out as the strongest on 3 out of 5 criteria - Equality and Poverty, Efficiency and Alignment and Economy and Environment. On Dignity and Respect it ranks third, with options 2 and 4 both ranking higher than option 1. On Implementability and Risk, option 3 ranks highest and option 1 the second highest.

Options 2 and 4 ranked lower than option 1 on all criteria apart from Dignity and Respect. Both ranked higher than options 5 and 6 on all five criteria.

8.5. Options 5 and 6 had the lowest scores against the criteria in the aggregate. Option 3 also performed relatively weakly against the criteria overall but ranked high against Implementability and Risk and Economy and Environment. All three of options 3, 5 and 6 were considered to be too weak to form the basis of the operating system for Social Security. However, on some specific criteria these options ranked as being stronger that options 1, 2 and 4. The specific delivery functions that led to these strong rankings are incorporated in the hybrid options.

8.6. The MCA suggested that option 1, 2 or 4 should be the basis of the social security system in Scotland. Option 1 was stronger than 2 and 4 on all criteria sets other than Dignity and Respect.

8.7. Because options 1 and 4 are identical in terms of all of their functions apart from the In-Kind function, it is precisely the inclusion of the In-Kind function that makes option 4 score worse than option 1 on four of the criteria. Hence, option 4 is not considered further in the context of the hybrid construction. In-kind provision may be considered in relation to individual benefits as part of social security policy but was found to be inferior as an operating principle for social security delivery as a whole.

8.8. Performances of options 1 and 2 against the criteria are discussed in turn.

8.1.1 Option 1

8.9. MCA showed that whilst being the strongest, option 1 could be improved in terms of its performance on Dignity and Respect and Implementability and Risk criteria by combining elements from other options.

8.10. There are several reasons why option 1 was weak on Dignity and Respect:

8.11. Because of the absence of face-to-face pre-claim advice and support function, in terms of Flexibility, Choice and Communication, option 1 ranked lower than options 2 and 4. Option 2 which incorporates local offices has the face-to-face support function. Option 4 ranks better for a different reason - the fact that the claimant gets the choice of receiving a benefit in kind as opposed to cash, which some people may prefer. It is acknowledged that option 4 would be weaker if the in-kind benefit was imposed.

8.12. Option 1 also ranked lower than options 3, 6 and 2 in terms of Simplicity and Support Alignment, because of the creation of a parallel advice service on devolved benefits and difficulties in aligning this support with that on reserved benefits. Options 3 and 6 would build on existing functions in Local Authorities and the NHS that already provide a range of advice of services for reserved, devolved and locally administered benefits. Options 1 and 2 would create a separate service for the devolved system and create difficulties for those who receive reserved benefits. Under option 2, co-location of office could address this in some local areas but this would not be possible under option 1.

8.13. On assessments, option 1 ranked worse than option 6 and 2 because of the absence of permanent local premises to conduct assessments for those who prefer not to have them at home. It was also considered that a mobile assessment workforce without a permanent workplace would lead to low job satisfaction and hence affect the quality of assessments.

8.14. On Public perception of claimants, options 4 and 6 ranked highly for different reasons. Under option 4, provision of benefits in-kind would show that social security is addressing specific needs of recipients and help address perceptions around benefit misuse and fraud. Under option 6, social security would be integrated into the wider public service provision, which would help shift attitudes towards seeing social security as an entitlement similar to how healthcare and education are currently perceived.

8.15. There are several reasons why option 1 ranked lower on Implementability and Risk:

8.16. Option 1 (as well as options 2 and 4) involve setting up a completely new organisation to take on all functions of social security benefits. Under option 3 the Scale of Change is smaller compared to the status quo because Local Authorities already deliver some social security functions such as discretionary payments, benefit maximisation and assessments for social care.

8.17. In terms of Timescales, option 1 ranks lower than option 3 for similar reasons as outlined above. Option 5 ranks highly under this criterion because there are existing providers in the marketplace that could take on certain functions (such as payment systems, assessments and advice and support services) of the social security system relatively easily, efficiently and quickly.

8.18. In terms of Risk, under option 1 (and 4) the consequences of administrative errors, IT system failures or processing backlogs in a central agency could be large affecting all claimants. Also, a mobile assessment workforce presents a greater risk of system failure than assessments done in fixed local premises. Option 3 ranks highest against this criterion which is driven, in part, by the lower risk around assessments and advice and support functions, and the fact that local authorities would deliver discretionary benefits separately from the central agency.

8.1.2 Option 2

8.19. Option 2 in both forms ranked lower than option 1 on four out of five criteria. It is weaker on Implementability and Risk because creating a large number of offices across Scotland is more complex and represents a larger Scale of Change and is likely to require longer Timescales. Decision making in local offices adds to complexity of Governance and Accountability and reduces Transparency, which leads to option 2 ranking lower on Efficiency and Alignment criteria set. Option 2 was also particularly weak on Economy and Environment because of the additional resource consumption that creation of local offices would entail. Unlike other options, option 2 is neither primarily digital nor utilising existing infrastructure.

8.20. On Equality and Poverty option 2 may not have sufficient resource to tailor services to a wide range of specific requirements that claimants may have in the same way that option 1 could. It may also be more costly for claimants to travel to local offices rather than call the free phone line or use online services.

8.21. Option 2, however, does provide more Flexibility and Choice and better Communication because of the face-to-face advice and support function in local offices. It also allows for assessments to be done in fixed locations and both assessments and decision-making to be done in the agency's local offices, improving the experience for claimants.

8.2 Taking costs into account

8.22. The assessment in the previous section is borne out by an examination of the steady state costs of the options. Table 7 from the financial case, reproduced below, shows that option 1 and 3 have the lowest costs. Option 5 and 6, which scored poorly on the MCA analysis, have the highest costs. Option 4 is a little more expensive than option 1 and 3.

Cost Estimate
Option 0 £155m Represents an SG estimate of the costs of the DWP calculated on an equivalent basis to the costings of the other options.
Range of Cost Estimates
Option 1 £145m to £180m
Option 2a £170m to £210m
Option 2b £165m to £205m
Option 3 £145m to £180m
Option 4 £150m to £190m
Option 5 £165m to £200m
Option 6 £225m to £275m

8.23. On costs alone option 2 is more expensive than option 1 but the difference is relatively small. Given that both forms of option 2 have a large local footprint of circa 90 offices (matching Job Centre Plus), there would seem to be potential to explore the impact on both costs and outcomes of a smaller number of local offices. Option 5 is more expensive than option 1 but slightly cheaper than option 2 whilst option 6 is the most expensive by a considerable margin. Option 6 would need to show considerable advantages over the other options in order for its cost disadvantage to be outweighed.

8.24. Of the remaining options although option 1 is the least expensive along with option 3, the differences in cost are not large and should be considered in the context of the full five case model.

8.3 Overall conclusions on VFM and drawing in the other cases

8.25. The multi-criteria analysis strongly suggests that option 1 or option 2 represent the best scoring options across the 5 criteria overall. Option 4 - the addition of in-kind distribution to option 1 - can be explored further as a potential bolt-on to any preferred option but does not make a strong case to be considered on its own. Option 6 has some advantages around medical or face-to-face assessments. This was of particular importance to many of the respondents to the social security consultation.

8.26. In terms of costs option 1 and option 3 are very similar but option 3 scores considerably lower on all of the criteria except Implementability and risk.

8.27. The strategic case has demonstrated the importance placed by Scottish Ministers on the dignity and respect criteria but also the importance of a smooth transition from the existing system. Option 1 scores somewhat weaker than option 2 on the first of these and weaker than option 3 on the second. This suggests that it will be worth exploring these aspects in the construction of hybrids.

8.28. The commercial case rates option 1 as the lowest (medium) risk along with option 3 with option 2 being rated as medium high. The commercial case confirms the ruling out of options 5 and 6 via the MCA or on costs grounds due to high commercial risks. Whilst the management case does not specifically rule out any option it does suggest the scale of the task and reinforces the strategic case around the importance of Implementability.

8.29. In conclusion, out of the 6 options it is clear that option 1 represents the best value. It is the joint lowest cost and scores overall best in both the socio-economic and commercial cases. However, aspects of the strategic case suggests some areas where option 1 does less well are important. Specifically, these are some aspects of Dignity and Respect around the availability of local support (from option 2), easier Implementability (in some respects) of option 3 and the importance of a high quality system of assessments that could draw on existing public sector professionals as in option 6.

8.30. The following section explores these issues and constructs 3 hybrids to explore them further.

8.4 Constructing hybrid options

8.31. Looking at the detailed MCA of rankings against individual criteria suggests that whilst most functions of social security are best delivered by the central agency as in option 1, some functions such as Pre-claims advice and support and assessments (highlighted in Figure 17 below) could be improved by bringing in elements from other options.

8.32. These two functions of delivery may sit better outside of the central agency and with other public sector organisations (such as under option 3 or 6 or a mix of both) or with local offices as in option 2. Another alternative is for the agency workers performing certain functions to be physically located in other public sector organisation premises, whilst still being employed by the agency. This would have the advantages of greater consistency and fairness and would provide a more coherent system overall.

8.33. If option 2 structure is chosen, it could be improved by giving more consideration to the number of offices. As discussed above, some functions may sit better in local offices but option 2 in the form that it was considered is weakened by the element of complexity and inefficiency associated with a large number of local offices. A reduced number of local offices would also reduce the cost. However, there may be trade-off in terms of the positive aspects of local offices with a reduced footprint.

8.34. In terms of Implemetability and risk, a balance can be struck between the advantages and other disadvantages of option 3 by combining those aspects of option 3 that are currently implemented with the structure of option 1 and 2. A simple solution here would be to allow the administration of the Scottish Welfare Fund (and Discretionary Housing Payments) to remain with local authorities. This means there is some reduction in risk as these systems are already in place.

Figure 17- Main Social Security System Functions

Figure 17- Main Social Security System Functions

8.35. Based on above the following three Hybrid options have been constructed for both the system and for assessments. The three hybrid options for the delivery system considered are:

  • Hybrid X - a central agency with enhanced phone and online support, which incorporates face-to-face pre-claims and support services locally in existing public sector locations (a variant of option 1);
  • Hybrid Y - a local agency model with one central and 8 local offices providing face-to face pre-claims and support and local caseload processing (a variant of option 2) and
  • Hybrid Z - a local agency model with one central and 32 local offices providing face-to face pre-claims and support and local caseload processing (a variant of option 2).

8.36. The three models of assessment are:

  • Model MA1 - Mobile agency staff conduct face-to-face assessments in people's homes and document-based assessments remotely;
  • Model MA2 - Agency staff conduct assessments in fixed office locations, which are existing health and social care settings (under Hybrid X) or agency's local offices (under Hybrids Y and Z) and
  • Model MA3 - Existing NHS professionals sign up to be part of an assessment pool and are paid hourly by the agency for both face-to-face and document-based assessments.

Contact

Email: Andy Park

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road
Edinburgh
EH1 3DG