Grand Committee
(12 years, 12 months ago)
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Arrangement of Business
(12 years, 12 months ago)
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The Deputy Chairman of Committees (The Countess of Mar)
My Lords, if there is a Division in the Chamber this afternoon while we are sitting, which seems likely, the Committee will adjourn as soon as the Division Bells are rung, and resume after 10 minutes.
Welfare Reform Bill
(12 years, 12 months ago)
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Lord Wigley
My Lords, I was truncated once again shortly before we finished on Monday. I wanted to add just a few words to the powerful speeches that were made on this amendment—none more powerful than that of the noble Lord, Lord Kirkwood, who apologises for being unable to be here because he is chairing another committee. The points that he made on entitlement to benefit were central. If one is going to get into a situation where capping prevents people getting what Parliament has passed as being their entitlement, there is something that is fundamentally wrong. I suspect that the Minister will have heard the points that have been made. A colleague whom I shall not name suggested that I give the Government hell; I am not going to do that because I am sure that the Government are in listening mode and will take on board the points that have been made. They are central to arguments about social security and I hope that the Minister will respond in those terms.
Baroness Hollis of Heigham
My Lords, we are talking still about benefit caps. We left the debate on Monday, I think, accepting that families hit the cap, as the noble Lord, Lord Best, explained so straightforwardly for us, through the interplay of both high rents and large families, a problem particularly in London and the south-east, with 70 per cent of those affected in social housing. Amendments tabled during our previous day’s debate sought, first, a more appropriate comparator by excluding child benefit in particular from benefit cap calculations—this was an argument by my noble friend Lady Lister—so that we could compare like with like and not apples with oranges. A second group of amendments suggested, wisely, a transitional period of grace before the cap was imposed. This is a theme to which I think we will all want to return, because we need a period of grace for quite a lot of the measures being introduced in order for them to settle down before the whole weight of penalties comes into play. We ran a similar amendment on housing benefit earlier. A third group of amendments sought to exclude subgroups from the caps—for example, those in supported housing, carers and kinship carers.
I want to focus on two aspects of all the debates that we have had so far, plus on the issue of carers, which was raised so effectively by the noble Baroness, Lady Hollins, and issues of housing benefit raised by the noble Lord, Lord Best. I support the thrust of all the amendments. There was one golden rule of public finance that I learnt from my time in the department: amendments abating or removing cuts always cost more than the cuts originally saved, even if the situation is not restored to the pre-existing status quo. That may be the case here again.
I wish to raise some wider questions on Amendment 99A tabled by the noble Baroness, Lady Hollins. She argued powerfully that just as PIP will remain outside of UC and the cap, so, equally, should carer’s benefit not be included in the cap, because they mirror each other, as they do in real life. The financial pressures, the fatigue and exhaustion, the using-up of savings and the social isolation apply just as much to many carers as they do to so many disabled people. We know that the Minister is sympathetic to carers, as is the whole House. So far, however, we do not yet know how many carers face a reduced earnings disregard. We do not know how many carers will lose carers allowance, because of the possible uneven mapping of the existing DLA passported benefit to the new PIP. We also do not know whether CA will come within the cap.
Given that the Bill is going through Committee stage here I feel that we are entitled to require the Minister to give us this information before we start Report stage and that we should not have to wait until we get to the clauses specifically about carers. If a single carer—it could be no carers, or it could be 100,000 carers—loses their entitlement to a passported benefit they will come into the framework of in-work conditionality which we have to deal with before we get to the carers clauses, at which point the Minister tells us he will be able to give us the information we want. We cannot do it that way round. It is not fair to the carers and it is not fair to Committee Members, who have been trying to do our best to get from the Minister—I am sure that he wants to be helpful on this—this information on the situation in which carers will find themselves. We must know everything about this situation before Report; otherwise some of us will be demanding that we go back into Committee, in the middle of Report stage, in order to take on board information that should have been available to inform earlier debates. It is not a proposal I would wish to argue. It is annoying for everybody concerned, but I feel quite strongly that it is not reasonable to ask us to proceed in this way.
The second area is housing benefit. Again, I strongly support the amendments moved so powerfully by the noble Lord, Lord Best. However, perhaps I may widen the point to remind the Minister of where we are so far and what we so far know, and then to ask him what advice he would give to a housing association such as mine—I declare an interest as chair of Broadland Housing Association. First, there is under-occupying. So far we have learnt that many of our poorest tenants would be required to move to smaller accommodation—except that we do not have it; it does not exist and it will not be built in the next few years. So the tenants will stay put and be fined on average about £20 a week. They have no savings, so they will run up arrears. However, we will be asked to avoid evicting them on grounds of decency as well as cost savings. Although such tenants would not be intentionally homeless through arrears generated by benefit cuts—as the Minister has helpfully agreed on the record—we would in any event have to rehouse them, probably in the house next door, if we evicted them. We will get substantial arrears from—although not pensioners—perhaps one-fifth of our tenants. I do not know.
We will perhaps also be faced, as we found from the discussion last week, with some tenants who are up against the housing benefit or UC cap. They too will face arrears, and again we will be expected as social landlords to avoid evicting them for what is not their fault. Again, arrears for us will mount.
We may also face cuts in housing benefit for those with supported housing in its various forms, although obviously this is a much smaller group. Again their arrears may mount, and again those will pass to the housing association.
Finally—an issue which we have not yet debated—we will certainly face substantial arrears in the move to direct payments to tenants rather than to the landlord.
Each of these four changes in housing benefit from DWP will plunge social housing landlords into mounting arrears. What is my housing association to do? We cannot raise rents to compensate for those arrears because we are at our fixed-target rent and DCLG does not allow us to go above it. We cannot get extra revenues from HCA or DCLG—indeed, they have cut our capital revenues by some 60 per cent. Housing associations could well find their accounts qualified, at which point the banks may threaten to reprice their capital loans because of infringement of a covenant, at which point our building programme falls.
I suppose that we could cut staff but the Tenant Services Authority within the HCA requires us to improve services. A 95 per cent satisfaction rate on any of the criteria it produces is required, which means that there must be staff on the ground, and quite rightly so. The driving-up of standards equals staff, which means that you cannot cut in that field either.
Put those four cuts together and they could send many housing associations into the red. Any one or two of these proposed benefit changes would be difficult to manage, but to face all four would be unbelievably difficult. I warn the Minister that he could be jeopardising the financial stability of a swathe of housing associations across the country. How then will the Prime Minister’s newly voiced concern for affordable housing be met? Given that 95 per cent of all housing stock that will exist in 10 years’ time has already been built, we cannot adjust the stock to meet what I believe is very wrong-headed, and in some places downright indecent, changes to HB. Some of us feel very strongly about this and it would seriously jeopardise our support for UC. DWP’s cuts in housing benefit will be offloaded to housing associations as arrears.
Goodness knows that local authorities are strapped for cash with 30 per cent cuts, but at least they have other financial resources. Housing associations do not. I repeat to the Minister that his savings will be our debt. DWP and DCLG have to get their act together. As I suggested at Second Reading, not entirely jocularly, if we could persuade DCLG to give up its batty scheme of localising council tax benefit with all the savings that accompany it and trade it for protecting the housing benefit, which would finance the homes we need and keep people in the homes that they want, UC would be welcomed widely across the country. I warn the Minister to take this issue very seriously. It will be very difficult for those in the field of social housing to cope when his cuts become our arrears with no capacity to meet them.
Baroness Meacher
I support Amendment 99A, which would exempt from the benefit cap, as others have mentioned, claimants with entitlement to carer’s allowance or additional allowances within universal credit for claimants with regular and substantial caring responsibilities. I am sure that this amendment was moved extremely ably by my noble friend Lady Hollins.
Perhaps I may make a couple of comments about the cap more generally. As Cross-Benchers, we do not normally refer to any political activities that we might have undertaken even in the distant past. Over a quarter of a century, however, I have spent rather a lot of time knocking on doors. One incredibly powerful recollection that I have is that the perception of the so-called scrounger was always the biggest single issue on the doorstep, even bigger than immigration. We cannot get away from the fact that low-income earners bitterly resent neighbours who they regard as being on benefits and, apparently, seeming to do rather better than they themselves. It is important that low-income earners feel that they are benefiting from going to work, which was the objective of the tax credit system. I strongly support the principle of that, albeit that there were a few problems with complexity.
As for the political motivation behind the benefits cap, I understand that people must have that incentive to work and that those in work should not resent those who are out of work. I have concerns, however, which I believe others have expressed, about the cap as a mechanism for achieving that sense of fairness. My understanding is that the design of the universal benefit should achieve this objective if only, as others have said, the council tax benefit were incorporated within it—at least except for a small number of very large families and some people living in very high cost areas.
I suggest to the Minister that the Government give some thought to finding a formulation in the legislation to achieve their fairness objective as between claimants and low-paid earners without resort to the notion of the cap. I know that the Secretary of State is extremely committed to this cap because it is a beautifully simple little message about being tough on claimants, if one is really honest about it. However, the Secretary of State should think carefully about whether this is acceptable within the traditions of democracy in this country. The aim, of course, would be to avoid relinquishing parliamentary scrutiny of the Executive. That is important because the levels and structure of benefits should not be open to change by the Executive without reference to Parliament. I understand that that is possible with the Bill as drafted. I know that the Minister will correct me if I am wrong but that is my understanding.
As regards this amendment, if the Government are determined to have the benefit—and I still hope that they are not—one group of claimants who clearly should be exempt are carers. About 200,000 children in the UK are being raised by grandparents, older siblings or other family members and friends. These carers step in to bring up a child or children as a result of very difficult family circumstances which often involve drug or alcohol misuse, abuse or neglect, death or serious illness, domestic violence or imprisonment. These carers are saving the taxpayer very large sums. These households are often large, simply because they have children of their own and then bring in others, perhaps five or more; so they will be disproportionately affected by the cap. I am sure that others have already mentioned this issue but I hope that the Minister will address it directly.
The idea of imposing a cap or some form of benefit control on large families is presumably to discourage parents from having more children than they can readily cope with, but that argument does not apply at all to carers who take on other people’s children. I do not know what the Minister feels about that point. Is that actually the main incentive behind the cap in relation to these households? Have I misunderstood? I would welcome his clarification. I know that he will want to support carers and hope that he is in a position to hold out some hope of concession on this issue. I hope that, at the very least, he will take this matter away for consideration.
Baroness Lister of Burtersett
I know that I have already spoken once but I want to ask a question now rather than jump up while the Minister is speaking, because I do not think that we have covered it so far. It is about free school meals. I believe it has been made clear that free school meals as an in-kind benefit will not be taken into account as a benefit received for the cap. However, the Government are currently consulting through the Social Security Advisory Committee about how such passported benefits should be treated with the universal credit. Has the Social Security Advisory Committee been advised about what would happen if it were to recommend that free school meals should become part of universal credit cash payment? Would that bit be treated as separate so that it is not taken as part of the cap, as it would be if it were still paid in kind, or would it be treated as income for the cap? That could be quite an issue in determining whether noble Lords want to support payment in kind or in cash. If the Minister will cover that in his response, I shall be very grateful.
Lord Northbourne
My Lords, I shall not speak at any length because I was not able to be here for the previous day in Committee, but I am very concerned about the effect of the Government’s proposals on carers.
On paying rent to tenants rather than landlords, does the Minister know what the estimated fraud is at present? A few years ago I set down a Question in the House and it emerged that payment to landlords was causing fraud of about £2 billion a year, mainly because they put in applications for addresses that did not exist. If that is the case it slightly affects the statistics, and it must mean that paying to tenants would probably be more efficient.
Lord McKenzie of Luton
My Lords, before we adjourned on Monday we had very significant contributions from noble Lords, as we have had today. We heard a powerful case from my noble friend Lady Lister against the principle of the cap, and, indeed, a brave speech by the noble Lord, Lord Kirkwood, about why in his view these clauses are irredeemable, a point which was reinforced by the noble Lord, Lord Wigley, a moment ago. Nevertheless, I believe that we must try to amend Clauses 93 and 94, because to leave them unconstrained would leave some of the most vulnerable in our country subject to major injustice.
This second group of amendments seeks to introduce exemptions from the cap, either for particular groups or for specific benefits. Amendment 99ZB, moved by the right reverend Prelate the Bishop of Ripon and Leeds, and Amendment 99AD, to which we have added our names, exclude, in the first case, child benefit, and, in the second case, all elements paid with respect to children, from the calculation of total income from benefits for the purposes of the cap. As we have seen, at present the proposals have a disproportionate impact on children who can, of course, do nothing themselves to change their behaviour to escape from the impact of the cap. Moreover, as discussed, the cap is not only unfair but inconsistent in its treatment of these benefits which are included as income for those out of work but not in calculating the level of the cap. We support these amendments, and if the Minister is not able to do so, we would ask him exactly why these benefits are to be included in the calculation of the in-work but not the out-of-work income.
Amendments 99A and 99AAA, spoken to respectively by the noble Baronesses, Lady Hollins and Lady Tyler, create exemptions for, first, carers, and, secondly, family and friends as carers. They have had support from the noble Baroness, Lady Meacher, and the noble Lord, Lord Northbourne. Like them, we are keen to understand the Government’s thinking on this. The Government’s impact assessment says that the impact on those affected will be that they need to choose between taking up work—of course, the cap does not apply to those entitled to working tax credit—reducing their non-rent expenditure or moving to cheaper accommodation or area. Can the Minister tell us which of those options he expects families who are caring to take up? I believe that he should especially answer the point raised by the noble Baroness, Lady Hollins, about why he considers that carers do not fit the description of working hard and playing their full part in society.
Amendments 99AB and 99D, spoken to by the noble Lord, Lord Best, and to which we have added our names, provide an exemption from the cap for those in supported, sheltered or temporary accommodation. We know that those families may be particularly vulnerable and face real problems if forced to move due to a reduction in their housing benefit. As the noble Lord, Lord Best, said, families in temporary accommodation have not chosen to live in high-rent housing; they have been placed there due to there being no other options available. It seems particularly unfair to penalise them for a situation over which they have had little control. As Shelter, Crisis, Homeless Link and the National Housing Federation have stated, the caps for households in temporary accommodation create the prospect of a spiral of homelessness where households lose their income due to the overall benefit cap, but are unable to access accommodation under the main homelessness duty because they are still subject to benefit restrictions.
Amendment 99AA and 99C create exemptions for those who have recently started claiming benefits because of job losses. At present, the benefit cap will penalise those who have just lost jobs for decisions about their rent level or family size taken while employed. If it achieves its intended effect of forcing families to move to cheaper accommodation, the benefit cap is likely to increase hugely the disruption caused by job loss for such families and reduce the chances of them finding employment rather than giving them the level of security that the benefit system was designed to provide for people who have lost their job.
My noble friend Lady Drake spoke with some force, as did the noble Lord, Lord Best, about the traumatic situation facing people when they lose their jobs and at that very point confront what might be the further traumatic consequences of the benefit cap. As my noble friend declared, a modern welfare system is intended not only to incentivise people to work and to address benefit dependency but to support hard-working families with a clear work ethic in managing a flexible labour market. Perhaps the Minister will say whether he agrees.
We are told that much of the thrust or motivation behind the Bill is to encourage people into work, to keep them there and to ensure that work is rewarded. The group of claimants who would be covered by the amendment tabled by my noble friend Lady Donaghy are exactly the people who do not need any such incentivisation. They have indeed been working, possibly for decades and perhaps in hazardous situations since all have been injured at work. It is part of our contract with employees, which goes back to some of the earliest social legislation of workmen’s compensation Acts, that those hurt in the course of their work should be compensated, ideally by the employer or, failing that, by the state. This benefit is paid to all who qualify regardless of whether they are in work. It therefore cannot ever act as a disincentive to earning as the recipient continues to receive this money regardless of whether they have other earnings. It is compensation for perhaps being less able to work, for finding work more tiring or for not being able to return to one’s original occupation, but it does not diminish the financial advantages of working as it is paid out alongside any earnings. The point made by my noble friend Lady Donaghy was that to save perhaps £1 million we hurt those who have already been hurt at work. Is that fairness? I do not think so.
There remain some fundamental questions to be answered. I hope that the interlude since Monday will have given the Minister the opportunity to marshal his thoughts on some of those. We heard on Monday a reiteration of the Government’s position that households getting out-of-work benefits should not,
“receive a greater income from benefits than the average weekly net wage for working households”.
Can the Minister say whether this policy overrides any cost implications? Should the reductions in benefit expenditure from the cap be less than costs engendered, be it through homelessness, reductions in the number of people being able to care, the extra expense of supporting disrupted vulnerable families or the costs of bureaucracy in administering the system, would the policy still be for the cap to prevail? The Minister stated on Monday:
“The benefit cap provides a clear, simple message that there has to be a maximum level of financial support that claimants can expect the state to provide”.—[Official Report, 21/11/11; col. GC 345.]
Yet, we heard the welcome news that childcare costs were to be excluded. So what is the principle—if any part of this policy could be described as principle—which determines those items of support that can potentially be received in excess of the cap and those which cannot? What is the policy?
Perhaps the starkest example of an unfair element in the proposal is, as outlined by the right reverend Prelate the Bishop of Ripon and Leeds, the treatment of child benefit. This is a non-means-tested benefit paid to all families whether in or out of work and has very high take-up rates. It is included in the total of benefits but not included in the comparative income level. My noble friend Lady Lister called this patently unjust, as it is. Where there is a demonstrable, illogical injustice of this nature which collides with the rhetoric and intent of the cap, on what basis is the argument for justice jettisoned in favour of the cap? Perhaps the Minister will explain that to us.
The Minister is an enthusiast for the universal credit. This is the approach which merges in and out of work support, will be easily understood, will mean that it always pays to be in work rather than out of work and will change the paradigm of people’s attitudes to work. I think that the noble Baroness, Lady Meacher, touched on that point. If all this is right, what remaining role is there for the benefit cap? Before we reach universal credit, the cap is apparently to be administered by local authorities’ deductions from housing benefit. Can the Minister tell us what happens if the housing benefit component is insufficient to cover that, possibly because of support for mortgage interest being included in the calculation rather than a rental housing benefit amount? Will universal credit mean a greater range of support is apparently at risk when it is introduced? Can the Minister tell us about the practicalities of all this when the housing benefit and council tax benefit service has been outsourced by so many councils? My noble friend Lady Hollis raised some very practical issues about the impact of this on housing associations. What will it actually mean?
These are not theoretical questions but questions that will be faced, and faced in the near term. I do not believe that we have yet had the answer to the question posed by several noble Lords on Monday, that if most of the people to be affected by the cap are those for whom there is no full work conditionality, what is the change in behaviour that this policy is designed to achieve? We need to hear from the Minister on these points and on the whole range of other questions that were raised earlier.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, these amendments seek to provide exemptions on the face of the Bill from the application of the benefit cap for a wide range of different groups. I would like to start by repeating what I said on Monday. We have always been clear that we will look at ways of easing the transition for families and providing assistance in hard cases. We are very aware of concerns about the impact of the cap in specific scenarios. We have always said that we will take account of the sort of issues raised in this debate when preparing the regulations next year. The clause has been drafted to give us powers to set a cap that achieves its purpose in the fairest way possible.
Let me take this early opportunity to assure the noble Baroness, Lady Lister, that I have considered the requirements of the Human Rights Act and the European Convention on Human Rights in respect of this policy. I am content that the way in which we will implement these clauses will meet those requirements.
Let me also clarify early on the point about behavioural change and the logic of applying the cap to people with reduced conditionality—a question raised by the noble Lord, Lord McKenzie. Our policy aim is to achieve a range of positive effects through changing attitudes and expectations. Clearly, we intend in particular to improve work incentives and reinforce the expectation that people of working age should work. However, it is perfectly reasonable to encourage and help people towards employment even if they are not currently expected to work.
I said on Monday that our original estimate was that only about 10 per cent of the households that might be capped would be subject to full conditionality, through the JSA regime. However, it is wrong to say that the remainder will have no work-related requirements. A significant proportion will be people subject to work-focused interviews or work preparation and who will be building towards work. I said on Monday that I would provide the Committee with a breakdown of the caseload of households which might be capped. I also said that we are in the process of updating our figures. These indicate that a higher proportion, about a third, will be subject to full conditionality. I will provide the full set of figures as soon as they become available.
The key point is that if we are to tackle the negative effects of the current system then it makes no sense to exempt people from the cap simply because they are not currently subject to full work-related conditionality. That would not change attitudes and would be very likely to further entrench the problems of worklessness and dependency that we are trying to address. We have therefore been very careful in providing exemptions and deliberately kept the list short.
We have always said that we will exempt households that are entitled to working tax credit and that there will be an exemption for working households on universal credit. I have already explained that I am not yet in a position to provide details of this, but I can assure the noble Baroness, Lady Lister, that we are very conscious of the issue of cliff edges and the need to consider the impact of thresholds on households whose earnings fall.
We have always said that we will exempt war widows and widowers and that we will exempt households with someone in receipt of DLA or constant attendance allowance completely from the effects of the cap. I can confirm that this exemption will also extend to those in receipt of attendance allowance and PIP when it is introduced.
I am aware of representations already made that recipients of industrial injuries disablement benefit should be exempt from the cap in the same way as recipients of DLA. However, I do not think that these groups are in exactly the same position. DLA is paid to people to help with the extra costs arising from their disability. Other than through constant attendance allowance, industrial injuries disablement benefits do not reflect whether the recipient’s disability or illness necessarily brings extra financial costs.
We will be exempting people who are in receipt of constant attendance allowance because it serves the same purpose as DLA, but that does not apply to other industrial injuries payments.
I welcome the remarks of the noble Baroness, Lady Hollins, on the important issue of carers. The DLA exemption will mean that the cap does not affect a carer in a case where, as she said, the person being cared for is a partner or dependent child. Households where a member receives carer’s allowance but no members receive DLA or PIP will however not be exempt. In cases where the recipient of DLA is not deemed to be in the same household as the recipient of carer’s allowance both will be looked at separately and for benefit cap purposes their individual entitlements will be assessed independently. We have also said that we will look at ways to ease the transition for families and provide assistance in hard cases.
On the passport, as I said, I will seek to set out our intention for the passporting arrangements for PIP to carer’s allowance before the start of Report stage. I hope that that is adequate assurance for the noble Baroness, Lady Hollis.
Baroness Hollis of Heigham
No, my Lords. The Minister made that clear at the last sitting, but unless we know the actual numbers, as opposed to the structure, we will not know how many carers currently enjoying carer’s allowance, if I may use that word, will lose it and, as a result, become subject to full in-work conditionality—a clause in the Bill that we have to deal with before we get to carer’s benefits.
Lord Freud
By the time that I am able to set out these arrangements Committee Members will have a tight band in which to make a judgment. Although it will not be precise I hope that there will be a reasonable degree of precision to enable Members to reach key judgments.
As I confirmed on Monday, support for childcare—
Baroness Lister of Burtersett
The Minister seems to be moving off PIP. When we discussed PIP earlier I asked a question and the Minister said that it would be appropriate to discuss it as part of the benefit cap. I do not think that he has addressed the question. How many people does he estimate will be affected by the cap as a result of the PIP waiting period going up from three months to six months, and will he consider backdating entitlement for those who then become eligible for PIP?
Lord Freud
Yes, my Lords; that is an excellent question in this sense. I have made clear that we are looking at transitional arrangements, and I will look at precisely this issue of the timing with PIP in the light of those transitional arrangements as people move through. Clearly I have already committed to looking at the three months and the six months, so I have something of a three-handed chess operation to get through, but I hope to come back with the pieces in the right place—or, rather, although the pieces might be in position, they might not be in the right place as far as the noble Baroness is concerned. It will at least be a clear understanding of the position. I absolutely bear in mind the point that she has made.
The noble Baroness’s other question was on school meals. I am happy to commit that, however we restructure the provision of the passported benefit of school meals, it will remain outside the cap in the same way as childcare.
With regard to the kinship care amendment, we have already discussed and recognised in Committee the valuable role that kinship carers fulfil. I made a personal commitment, supported by the Secretary of State, to look at a range of issues affecting this group. I have already had a number of meetings with organisations that support kinship carers to help me better understand their priorities. These carers are able to receive support for the children in their care through the benefit system as, unlike approved foster carers, they have access to child benefit and child tax credit on the same basis as parents. Any payments they receive from the local authority will be disregarded. This parity of treatment with parents will be continued with the introduction of universal credit.
Baroness Hollis of Heigham
That is very helpful and clear, but the point being made by the noble Baroness, Lady Hollins, and others was that kinship carers very often take on children additional to those already in their family. Therefore, we are much more likely to see fairly large households with possibly five or six children and, as a result, those families could immediately be up against the benefit cap. How would the noble Lord suggest that is going to be addressed?
Lord Freud
My Lords, I accept the importance of this issue. There are a lot of angles to it, but I fully accept its importance and the argument that discouraging kinship carers could actually have a perverse effect, certainly in terms of cost.
The noble Baroness, Lady Sherlock, raised the issue of children at risk. We as a Government take our responsibilities to vulnerable children and vulnerable parents very seriously. It is clear that such families are likely to have multiple problems that may not be solved by benefit payments alone. The noble Baroness is concerned that the benefit cap will force such households to be constantly on the move, which will make it harder for local authorities and support services to keep track of them. We recognise that a more co-ordinated cross-government response is needed, and so last December the Prime Minister announced a new national campaign to try to turn around the lives of the most troubled families in England—there are around 120,000 of them—by the end of this Parliament. Local areas are being encouraged to develop a new approach to supporting these families. It involves redesigning services so that each of the most troubled families is supported by a single key worker who helps them turn their lives around and engage successfully with education and employment. I can assure noble Lords that my officials will work closely with other departments to support the Prime Minister’s plan for these vulnerable families and ensure that those who may be subject to the cap will be given all the help and information available.
Baroness Sherlock
My Lords, I thank the Minister for that important information about the 120,000 or so problem families—I think that is the term being used. The three categories in Amendment 99B, which was tabled in my name and that of the noble Earl, Lord Listowel, were children who were subject to a child protection plan, a child in need assessment or a common assessment framework team. Does he believe that those three categories are covered by the 120,000 problem families definition? I confess that this is not my specialist area, but the reason I ask is that I understand that those families, at whom that policy is targeted, are people who are presumed to be taking significant funds from a large range of public agencies. It is quite possible for a child to have a potential vulnerability that a social service department is looking at without the family necessarily being in that position. The questions I was raising were about vulnerable children, not necessarily the children the Minister is describing, but I may have misunderstood. Perhaps he can help me.
Lord Freud
My Lords, I am not quite sure, off the top of my head, how the mapping of these vulnerable families is worked. The sign just made to me by the noble Baroness, which normally is a sign for “Can I have the bill please?”, we can convert to mean, “Can I have a letter?” and I will be pleased to do that.
Baroness Sherlock
I would settle for a few million but a letter will do nicely.
Lord Freud
On the child benefit cap, Amendment 99ZB would require us to exclude child benefit when calculating a household’s total entitlement to welfare benefits for the purposes of applying the benefit cap. Amendment 99AD would go further and require that we exclude all-child related benefits. Both would result in household’s being able to receive benefits at a level above that which we have announced for the benefit cap. We believe that ultimately there has to be a limit to the overall amount of financial support that households in receipt of out-of-work benefits can expect to receive in welfare payments. Like other welfare benefits, benefits for children provided by the state are funded by taxpayers and should be taken into account along with other state benefits when applying the cap.
Baroness Lister of Burtersett
My Lords, perhaps the Minister will say more about that. I do not know about other noble Lords but I am afraid that I do not find that enough. I understand the broader argument about the limits and, as the Minister knows, I disagree. There has been talk about a level playing field. Will he explain to the Committee how the Government justify the fact that child benefit is being taken into account on one side of the equation and not on the other when we know that all those families on median earnings are getting child benefit? That is what I do not understand. In the previous session, I think it was my noble friend Lady Hollis who referred to comparing apples and pears. We are not comparing like with like.
Lord Freud
My Lords, I acknowledge that we are not comparing like with like. We are looking at a sensible level at which to put the maximum benefit payment. The level that we are looking at is the equivalent of a household earning £35,000. I think that one can overelaborate the logic, which I will not attempt to do here.
Amendment 99AA, in the name of the noble Lord, Lord Best, would introduce a grace period. I accept that there will be occasions when changes occur that are beyond a household’s control. We have said that we are looking at what transitional arrangements might be appropriate. The arguments that I was laying around the PIP are equally applicable here.
Lord Boswell of Aynho
Perhaps my noble friend will assist me. I have been worried a couple of times in this debate, both the other day and today. I would be grateful if he could clarify what seems to me to be a certain ambiguity in the use of the word “transition”—of course, not necessarily from his lips. This can mean one of two things: it can mean either a running-in arrangement to make it softer and more acceptable, and better understood before the policy is introduced, as it were, in macro; or it can mean the micro issue about how one deals with the individual case which is to be handled in a humane way. Does he agree that those are both important but distinctive characteristics? As we develop this argument perhaps into the next stage of the Bill, can we make sure that we keep them both in mind and address them separately?
Lord Freud
Yes, my Lords. Empson wrote a book called Seven Types of Ambiguity and my noble friend has cited two of them. I can clear up this particular dual ambiguity: the word “transition” here applies both to the running-in of the system and to the timing of how it will affect particular people when the system is fully run in.
Baroness Hollis of Heigham
Some of the Minister’s common phrases are “soon” and “very soon” and we are beginning to decode them. Another one is about the possibility of discretionary housing allowance being extended to plug all possible gaps in the system, and we have had some discussion on that. It would be very helpful if he could circulate a paper to us on all the areas where he has assured us that there are going to be transitional arrangements so that we can see what they will look like.
Lord Freud
My Lords, I do not think that I am in a position to do that. I think that I will have to leave it to Hansard to pick up where I have applied the phrase “transitional arrangement”.
Baroness Hollis of Heigham
Forgive me, the question was not how many times the noble Lord has used the phrase but what it means in practice. Is there a three-year run-in? What are we talking about here?
Lord Freud
All I am able to say at this moment is that there will be transitional arrangements and help for hard cases.
Lord McKenzie of Luton
The noble Lord again raises the issue of help in hard cases. Can he give us some indication of what he counts as hard cases, and of which, within the potential group of people who will be hit by the cap, he would say were soft cases?
Lord Freud
My Lords, I am being enticed by the velvet tones of the noble Lord. I am afraid that as we build the regulations to tackle the issue of hard cases, I can only say that we are looking at transitional arrangements. I am sorry but I cannot go any further at this stage.
Lord McKenzie of Luton
I think that we understand that. However, does the Minister recognise the dilemma with which the Committee is faced? We have a broad framework which the Minister says gives the opportunity of reducing the cap, but we have none of the detail which is absolutely crucial to understanding how it will work and who it will impact. Without providing that he is facing the Committee with an impossible dilemma. Perhaps the noble Lord, Lord Kirkwood, is right and these clauses are irredeemable.
Baroness Hollis of Heigham
My Lords, it also means that the noble Lord will face a lot of amendments on Report, which he would not need to face, calling for breathing spaces or a transitional period of one year for people who suddenly lose their jobs or are suddenly exposed, at 27 or 28, to living in a single room, and so on. If he were able to give some clarity about what he proposes, he could wipe out possibly a dozen amendments.
Lord Freud
My Lords, I have been set a challenge and a reward. It would be lovely to collect on that, but I cannot make any further assurances.
I shall continue to speak to the amendment in the name of the noble Lord, Lord Best. Apart from the transitional arrangements that I have talked about, the underlying position is to ensure that people understand that they have to take responsibility for the decisions that they make in their lives in the light of what they can afford, and they cannot always look forward to the state stepping in to make good any financial shortfall.
I shall continue on to the more technical areas raised by the noble Lord, Lord Best, on temporary accommodation and supported and sheltered housing. The amendments provide an exemption for households to which local authorities owe a duty because they are homeless, or threatened with homelessness, and for those living in supported or sheltered accommodation. As I said on Monday, discretionary housing payments will not be included as part of the cap, but in wider terms it is too early to say how we shall treat those cases for housing cost purposes in 2013 and beyond. We are exploring options for the treatment of housing benefit for people living in temporary accommodation within universal credit and the overall benefit cap.
Noble Lords may be aware that we recently consulted on high-level proposals to change the method by which help with rent is calculated for those who live in certain supported housing in the social and voluntary sector. As the noble Baroness, Lady Hollis, indicated, there is a series of issues here. We are working very closely with local authorities, housing associations and other government departments, including the devolved Administrations, on these very issues. Our considerations will, obviously, include possible interactions with the benefit cap.
Finally, Amendment 99C, in the name of the right reverend Prelate the Bishop of Ripon and Leeds, would place a requirement on the face of the Bill for exemptions for a range of groups. These include groups that we will provide exemptions for through regulations, and others that we have already discussed during the course of our debates today. The amendment also includes an exemption for lone parents with a child under five. I have made it clear that the cap is intended to act as an incentive to work. I acknowledge that we currently do not require lone parents with children under seven to work, although we are seeking to reduce this to five, but that does not mean that we do not want to encourage them to find employment Indeed that is the very reason why we provide extra support through work-focused interviews.
Each of these amendments would undermine the fundamental principles underpinning the cap—that ultimately there has to be a limit to the amount of benefit that a household can receive and that work should always pay. I have listened carefully to the measured and detailed arguments put forward today and will take them into account when deciding on the final design of the cap. In the mean time, I urge the noble Lords and the right reverend Prelate not to press their amendments.
Lord McKenzie of Luton
If I may say so, several questions remain unanswered by the Minister. First, if it were established that the cost and consequences of the cap outweighed the benefits savings, would he still support and seek to introduce the cap?
Lord Freud
My Lords, we have done an estimate of the cost and benefits savings of the cap and we have looked clearly at the wider ramifications. The question is theoretical in practice. Clearly the message that we are trying to get over is a behavioural one much more than a cost-based one.
Lord McKenzie of Luton
If that is the case, and the Minister has made that point on several occasions, what does the benefit cap provide that is not catered for within the new world of universal credit? I thought that universal credit was all about merging in and out of work benefits, simplicity, making sure that work always pays and changing people's attitudes to work. That is all that the universal credit is about. How does the cap sit with that and what does it produce in terms of policy outcomes in addition to what the universal credit produces?
Lord Freud
My Lords, the main difference is the simple message behind the cap: in the end, there is a limit to how much the state is prepared to support someone. That is a clear and simple message that can be readily understood in a way that, however simple universal credit is, that message would not be.
Lord McKenzie of Luton
One accepts that it is a simple message, but I am trying to understand the policy outcomes that the Government expect to achieve from that, which are different and in addition to the policy outcomes that they expect from universal credit.
Lord Freud
My Lords, what we are looking at now is a three-tier persuasion towards behavioural change. We have a conditionality regime; we have a universal credit that removes the concern of many welfare recipients that if they go to work they will be worse off; and we have a specific limit on how much benefit people can actually earn. That acts as a very precise work incentive, which is a long-term work incentive.
Lord Oakeshott of Seagrove Bay
Perhaps I could help the Minister. Surely the answer is that when the universal credit comes in fully it will deal with exactly the point that the noble Lord, Lord McKenzie, is making. That is why it is such a good idea, but it will take a long time and cost a lot of money so this is an interim arrangement. Is that not the position?
Lord Freud
I welcome my noble friend’s support because he has expressed the argument much better than I possibly could.
Lord McKenzie of Luton
Is the Minister telling us that this is just an interim, transitional arrangement? I thought it was a permanent proposition.
Lord Freud
I return to the principle. As I understand it, this is a principle with which the Opposition agree: that there should be a limit on the amount of benefit a household can obtain. We have set that limit at the equivalent of £35,000 of earnings before tax and national insurance.
Baroness Lister of Burtersett
I do not know whether the noble Lord, Lord Kirkwood—of wherever he is of—would comment, if he were here, but he spelt out a very powerful argument of principle about entitlement. I have not heard the noble Lord address that argument and, in his absence, I would be very grateful if he could do so.
Baroness Hollis of Heigham
Basically, the noble Lord is constructing universal credit based on meeting several different objectives and many of us support this very strongly. However, he then artificially reduces the amount that some people will get under the very structure he has set out to meet the objectives he has outlined. It is that inconsistency of a deliberate cut to an entitlement, constructed by himself through universal credit, that we find unacceptable—so far it has not been explained to us—particularly when some of the consequences may cost us more.
Lord Freud
My Lords, the best piece of information I can provide the Committee on that question is that it is the noble Lord, Lord Kirkwood of Kirkhope. I think I am reduced to going back to the basic principle that there should be a limit and we have set that limit at the equivalent of £35,000. We are going round in circles slightly.
Lord Best
I thank the Minister for helpful and hopeful words about the transitional arrangements—the 26-week period of grace that was the subject of my amendment. On my other amendments relating to excluding sheltered and supported housing and temporary accommodation, I think the Minister was saying that that was still a work in progress, so my hopes are not dashed on that.
The overarching point that I have repeated a little here is that it is fair enough to have a limit, if the Government, for political or wider reasons, believe it to be necessary, but the limit affects people in very random ways. If you live in a nice three-bedroomed council house in Wales—as I described it earlier—costing £85 a week, you will have £415 left to spend on other things. If you live in a crummy flat in the East End of London at a rent of £325 a week, you will have an awful lot less to spend out of your £500 on all the other things you need. The cap hits people in a rather random way, which is why I have been arguing that we should take housing out of the equation and look at the other factors where the fairness principle might have greater applicability.
The underlying question I would leave with the Minister is: how are we going to manage the movement of people from a high-rent area of the country—they may be in privately rented property or have a number of children—to the cheaper areas of the country? We are looking at something like 200,000 people and 50,000 households. The Minister has suggested that some people will deploy savings, but savings will run out quite quickly if they are being dipped into at an average rate of £93, and for some people up to £150, per week. Such people do not have large amounts of savings and their savings will run out quite quickly. We know it is rather improbable that landlords will drop rents dramatically to cover these and other benefit caps.
In most cases we do not expect people to be going out to work—90 per cent of them are not required to go out to work—so although some might be coerced or incentivised to go out to work, the great majority of the 50,000 will still be in homes where they will not be able to stay because the gap between what they will receive to pay their rent and the rent itself is too wide. They will have to leave. Are we making contingency plans for this movement of a couple of hundred thousand people from the more expensive parts of the south-east and south-west to the inexpensive parts of the country? The move will be expensive.
I pick up on the point made by the noble Lord, Lord McKenzie, about the cost of this cap. If people stay put and wait until they are evicted, an eviction will cost the housing association or social landlord something like £9,000. It is not just the legal costs but the fact that when the people move out you have to redecorate the house and you have a period of vacancy. All those things add up. We reckon that an eviction costs about £9,000, but if people go voluntarily and we can move in at the right time and do things in a more sensible way, the cost is about £2,500. However, on average you are looking at the landlord paying several thousand pounds when people move out.
There is also the question of providing education. When people arrive in new areas, their children will need to attend new schools. Social services departments will have to be notified if children are under the care of social workers. All these things will cost an awful lot of money, let alone just the simple transportation of people’s belongings, the cost of their rail fares and the costs involved in searching for a new home. All this is incredibly expensive. If we are to move 200,000 people because we feel, for whatever reason, that it is not fair for them to continue to occupy homes in expensive areas, are we putting in place the contingency plans that the local authorities in particular will need to get their heads around?
Lord Freud
My Lords, I thank the noble Lord, Lord Best, for that area of inquiry. We are looking to get early support for families in a number of ways well before the cap comes in. We are looking at a process whereby families on benefit face the same choices that low-income working families face. We are looking to achieve significant behavioural change through this measure. I assure the noble Lord that we are working hard with local authorities and other departments as well as with the devolved Administrations on the implementation of this measure.
Lord Wigley
I find it fairly disturbing that the Minister accepts that 200,000 people will be moving to places where low rents are charged—the noble Lord, Lord Best, referred to that—such as Wales. Is this a land clearance from central London to rural Wales?
Lord Freud
I wish to make it clear that I absolutely do not accept that figure. I have said that we are introducing a lot of measures in advance to make sure that that figure does not arise.
The Lord Bishop of Ripon and Leeds
My Lords, will the Minister develop a little further the argument as regards Amendment 99C, which concerns the lone parent with a child under the age of five? It seems to me that there needs to be more discussion about the whole question of whether people in those circumstances —this would apply to kinship carers as well—are being encouraged to seek work or to move back into work. It is often argued that they should not be working and that the important thing is that they look after their child under the age of five, or, if they are kinship carers, that they give up work in order to take on that responsibility, which may have suddenly arisen. It seems to me that we ought, therefore, to take much more seriously the possibility that they ought to be exempted because we do not, as a society or a Government, want them to be working.
Lord Freud
My Lords, I hope I made clear my sympathy on the kinship carer point. I am looking at it in the round. On the lone parent point, I am afraid I am reduced to the underlying principle that there is a level of pay for people, which we have set at the equivalent of earnings of £35,000. Do not forget that, by definition, half the households in the country receive less than that amount because it is the median amount, and that is why we have fixed on that figure.
Lord Northbourne
I wonder whether the Minister can give some sort of comfort to those of us who feel, as the right reverend Prelate does, that raising children under five is a business very often for the mother or the father and that they are providing a much more important service to society and to the world, as well as to their child and themselves, if they concentrate on doing that instead of trying to do two things at once in order to keep up with the regulations in this proposed Bill?
Lord Freud
My Lords, I think I am reduced to making the mainstream point that the amount that such families can look to is the equivalent of what up to half the households in the country earn, which is £35,000.
Lord McKenzie of Luton
My Lords, the noble Lord, Lord Best, spelled out the challenges that some 200,000 people could face. The Minister may dispute the precise numbers, but he said that we are looking at a lot of measures to make sure that it is not 200,000 people. Can the Minister explain what types of measures are involved? What sort of measures are going to alleviate the challenges that the noble Lord, Lord Best, spelled out?
Lord Freud
Clearly one of the most important areas of support that we can supply is helping people find work. One of the areas of support here is clearly Jobcentre Plus, and we are exploring that area pretty actively.
Lord McKenzie of Luton
Are we seriously saying that, whether it is 90 per cent or two-thirds of the people affected by this who, under all the other rules and constructs that the Government have brought forward, are not required to get in to work, they are going to use this as a lever to force them in to work? Is that what they are saying?
Lord Freud
That is one of the areas of support. If we have about one-third of families who are subject to full conditionality and others subject to partial conditionality, by which we mean moving towards work over a period, a very substantial proportion of the group can be helped into the workplace.
Baroness Lister of Burtersett
Is the Minister really saying that it would be supporting, say, a lone mother who has a baby to, in effect, require her to take a job as the only way she can avoid the benefit cap or to move to an area where she does not know people and has not got the support network she needs for her baby? I cannot believe that that is what the Minister is saying.
Lord Freud
There is a combination there. Those are the choices that half of the low income working families need to take, although they are not even low income families—this is pretty high income. I am not specifying any more, but we will look at hard cases. I do not want to be “loaves and fishes” about hard cases either, which I know the noble Baroness would want to accuse me of, but those are the two areas relevant to that case study.
Lord Wigley
We seem to be getting into a bigger hole on this. If the idea is that 200,000 people, or whatever the lower figure is—I accept that the Minister has a figure and we would be very glad to know what it is—will move to areas of low rent in order to get work there, does the Minister not realise that the reason the rents are low there is that people do not have work?
Lord Freud
My Lords, we are going round in circles. Noble Lords seem not to like this, although my understanding is that, as a principle, the Opposition approve of the benefit cap. There is a general level of support for it. I want to lay out the ground that working people with earnings of less than £35,000 already face these kinds of choices with regard to housing. Noble Lords seem to be arguing that people who are not working should be in a better position than those in work by protecting them from having to make this kind of choice. Bluntly, it was that kind of approach that has created or has been partially the cause of the high level of dependency that we have in this country.
I have, bluntly, said all that I can in this area. We can go round and round, but I am not in a position to offer very much more in the way of elaboration.
Baroness Hollis of Heigham
I just want to pick up on my noble friend Lady Lister's point. We know that most lone parents come out of a relationship: very often out of a marriage. These are not people who are regarded by others on the estate as shirkers who need to be driven—that sort of mentality. We could have a situation where, before they separated, the total household earned income was perhaps over £30,000 and there was some housing benefit because it was a three-bedroom property in an inner city area at a fairly high cost. He then leaves and she is left with three small children under the age of five in their existing home, which is rented. As a result, they are facing the benefit cap. How on earth do we think that any of these proposals under universal credit or the benefit cap could or should alter that behaviour, the judgments that they have to make and the possibilities open to them? All it can do is turf them out and send them up to Middlesbrough, as far as I can see.
Lord McKenzie of Luton
My Lords, I suspect that we have taken this as far as we can today, but I am sure that we will return to it on Report—perhaps we should already be thinking of booking an extra couple of days for that. I have a technical question for the Minister. As I understand it, before we get to universal credit, the variety of benefits that people have will be looked at. That will go into the calculation on one side. We will compare that with the earnings comparator and the difference will be withdrawn by way of reduction of housing benefit. Is that right? So that will be administered by local authorities.
What if people are in receipt of mortgage interest support or the housing benefit element is not necessarily sufficient to cover the shortfall? What happens with all the local authorities that have outsourced their housing benefit and council tax arrangements? There are a lot of them. Have they been engaged? Presumably, there are extracontractual costs because they will be required to do things in excess of current entitlements.
On universal credit, is it likely that the withdrawal will be in respect of only the housing component of the credit or will the broader range of support that is in universal credit be subject to the clawback?
Lord Freud
No; we have made it clear that it would apply to housing benefit and not to other benefits. The cap will not have full coverage until universal credit comes in.
Baroness Drake
I did not get the chance to mention this when other issues were being discussed. The Minister gave a blunt message on what had caused benefit dependency. But the Bill is also setting the welfare system for people who have no record of benefit dependency. They are hard-working people who from time to time experience difficulty. We know that the Government are considering greater flexibility in the labour market. The newspapers have rumours about making group redundancies easier. Large-scale redundancies are much easier because it cuts the amount of consultation and makes it easier to dismiss people. I should like to push the Minister on the point that, notwithstanding the Government’s position on a cap, the transition to that cap needs to be considered so that the principle of the cap is not broken when hard-working people who do not have a record of benefit dependency are trying to engage in the labour market.
Lord Freud
I fully accept that point, as I have already indicated. I shall bear that point very much in mind as we go through the next stages.
Baroness Donaghy
My Lords, I deliberately did not intervene on the industrial injuries benefit interval because I did not want to interrupt the flow of the debate. The Minister will not be surprised that I was disappointed by his response to my amendment. This is about signals. I was very moved by the contribution by the noble Baroness, Lady Meacher, on the distinction that people make between hard-working people and so-called scroungers. My amendment concerns working people—of course, not all are still working—who were injured in the course of their working lives. I do not think it is adequate just to say that it is different from disability living allowance.
To pick up a point made by my noble friend, Lady Drake, if the Government are trying to get over messages, they must be seen to support those who have spent their lives working, and even those who have been injured in the course of that work. I ask him whether he would be prepared to reconsider. I am not talking about the amounts of money, as we all know that in this area they are very small, but there is an important point of principle here and this is an opportunity for the Government to reinforce their message.
Lord Freud
My Lords, I will not make any promises on this but I will have another look at it. That is the weakest of possible promises. In fact, I am trying to say that it is not a promise at all. The signal I am giving is that I will have another look at it, but that is no guarantee of anything happening.
The Lord Bishop of Ripon and Leeds
My Lords, I am very grateful to all those who have taken part in this long and detailed debate on this group of amendments. I am grateful to the Minister for the way in which he has engaged with the discussions. I take a certain amount of hope from some of the things that he has said about taking account of the arguments, which we have shared, and about some specifics, such as references to attendance allowance, to childcare costs, repeatedly, and to free school meals, that there will be exemptions which we can see in those areas. I am also encouraged by the beginnings of a discussion on the issue of carers, in particular kinship carers. I very much hope that that can be taken further in our debates. I am rather less encouraged by the comments on housing benefit, but I hope that there can be ways in which, at least in terms of transitional arrangements, we can move forward on those as well.
The area in which I am least encouraged relates to the amendment on child benefit. We still have not got a real answer to the question of why child benefit counts on one side of the scales and not on the other, a point that the noble Baroness, Lady Lister, has made several times in this debate. We can only use the figure £35,000 on the basis that we are not comparing like with like, otherwise it does not make sense as a figure to be used. That seems to me to be regrettable and I hope that the Minister will be prepared to have another look at this and to discuss just what the place of child benefit—perhaps the key benefit—is within the whole of our society, over many years, in terms of the cap. Having said that, I beg leave to withdraw the amendment.
Lord Freud
“( ) A statutory instrument containing the first regulations under section 93 may not be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.”
Lord Freud
“(a) to determine that payment related to the provision of support of children and for childcare costs should be paid to the main carer of those children,(b) to determine that payment related to the provision of support for housing costs should be paid to a person liable for payment of those housing costs, so far as those costs are not paid directly to the landlord, or(c) to determine that, where applicable, payments of universal credit shall be split between claimants in order to ensure payment is made in accordance with paragraphs (a) and (b).”
Baroness Hayter of Kentish Town
My Lords, I think that the Minister was hoping for a Division during the previous discussion like I have never seen a Minister hope for a Division, but he was not saved by the Bell.
We have two amendments in this group. Amendment 102ZA would allow for the person mainly responsible for meeting particular costs to receive that part of universal credit intended to meet such expenses. It would enable the main carer, who is primarily dealing with the costs of children and childcare, to receive the elements of support related to this, and the person responsible for meeting housing costs to receive the part of universal credit that relates to housing costs. Amendment 102B would allow for the elements of universal credit to be calculated in such a way that facilitated this aim, tapering away each element individually to enable a fair proportion of each component of universal credit to be paid to the relevant member of the household. The amendment is therefore the corollary of the earlier amendment, in that if the payment can be split between two recipients, it should also be withdrawn, whether for reason of the taper or of any benefit cap, in the same proportion, rather than be taken either from the childcare element or the housing element.
Amendment 102ZA seeks to mitigate the risks associated with paying all universal credit to one person, in particular the risks for women if the current proposal goes ahead unamended. Concerns have been raised by a wide range of organisations, including the Women’s Budget Group, Oxfam, Platform 51, the Child Poverty Action Group, Women’s Aid, Daycare Trust and the Children’s Society.
Baroness Howe of Idlicote
My Lords, my Amendment 102A is in this group and I think that the noble Baroness, Lady Hayter, has used most of the arguments that I was going to use. I will merely stress the importance of why the payment would be much better paid to the main carer who, in most of these instances, is the mother. The noble Baroness, Lady Hayter, said that the payment is usually her only source of income. Equally, we know from experience that it will be spent on food and resources such as that which will keep the household together. When there is violence in a family, the payment would also allow a mother to have enough personal income, albeit family income, to seek help from a refuge and so on. I hope that the Minister will think hard about making the payment available, regardless of the circumstances, to just one person. As we have heard, in cases where the payment goes to one person, something like 80 per cent of applications are made by the male in the household.
On the inequalities that exist in some households and the importance of encouraging women who will, under these circumstances, be fighting for their children as well as for themselves and for the opportunity to lead a decent life, I hope that the Government will think carefully about this and will not continue with the approach of just one member of the household being able to apply for the payment.
Baroness Lister of Burtersett
My Lords, I support the two overlapping amendments, Amendments 102ZA and 102A, as well as Amendment 102B, to which I will not speak specifically. Clause 97 is the Groundhog Day clause. Back in the 1980s I helped to lead a charge against the then Conservative Government’s attempt to pay the family credit through the wage packet. I then helped to persuade the previous Government of the error of their ways when they proposed to pay working families’ tax credit through the wage packet. I was able to do this using JRF-funded research that I had just carried out with Jacky Goode and Clare Callender into the distribution of income within families in receipt of benefits. It demonstrated the importance of paying benefits for children to the mother, who was in all those families the parent with the main responsibility for the day-to-day care of the children. Indeed, once out-of-work families had migrated to child tax credit, we would have achieved that for out-of-work families as well as those in work.
It was with a heavy heart that I realised we were back to square one and having to persuade the Government of the day why it is so important to pay money for children direct to the parent who has the main responsibility for the day-to-day care of the children and for day-to-day budgeting. But this time the stakes are that much higher because so much is being wrapped up in the universal credit, particularly because, as Amendment 102ZA refers to, payment for housing costs are also at issue. We need to bear in mind here our earlier debate about the hazards of payment of rent as part of the universal credit.
Lord Freud
My Lords, Clause 97 provides that in the case of a benefit awarded jointly, such as universal credit, it can be paid to whichever person in a household they themselves nominate, or for all or part of it to be paid to either person regardless of their nomination.
Amendment 102A seeks to ensure that the child and childcare elements of universal credit are paid to the responsible carer within a household. Amendment 102ZA also seeks to ensure that the child and childcare elements of universal credit are paid to the responsible carer and that the housing element is paid to the partner responsible for housing costs.
Under universal credit, couples living in the same household will make a joint claim for the benefit payment. It is not correct to think of, as has been said, a man claiming for the household. In couples, both will be claimants, which is an important change under universal credit. We have outlined our intention to make universal credit a single payment to a household. This decision will ensure that the household can see clearly the effect of their decisions about work on total household income and ensure that claimants can take responsibility for budgeting. Households budget and organise their finances in different ways, so we want to enable couples to decide between them where their payment should go. It is not for the Government to dictate how a family arranges its finances.
We recognise, however, that there may be cases which require alternative arrangements and the Government intend to retain powers to split payments to couples as a safeguard. We are still considering the circumstances in which we would split payments and further details will be included in regulations. Examples of when the power is used could include where there is proven abuse of the money by one partner or where children are deemed to be at risk.
On the point made by the noble Baronesses, Lady Hayter and Lady Howe, on domestic violence, where there is abuse or children at risk we will have the power to split payments and we are talking to stakeholders about how this should work in practice. Let me try to be clear: when it becomes apparent that one partner is not managing money properly, we have the ability to switch the money entirely to the other partner, which is the appropriate safeguard.
The Government will also have the power to pay the housing element of universal credit direct to the landlord in exceptional cases. We are currently considering with stakeholders the specific circumstances in which this power could be exercised and again will set out further detail in regulations.
Lord Freud
However, in circumstances where a universal credit award is split, neither party will receive specific elements such as housing or childcare. They will each receive a proportion of the total award and decide for themselves how best to use the money. This adheres to one of the key principles of universal credit, which is that claimants must be responsible for their own budgeting.
In answer to the specific question from the noble Baroness, Lady Lister, contributory benefits will continue to be individualised entitlements, but we are looking at options for payment of benefit in cases where a household has entitlement to both contributory benefits and universal credit. It may be simpler to make a single payment of universal credit in that situation, but that is just one possible option and we have the power to cover different approaches.
We are, however, committed to ensuring that people can access support to manage their payment and help them budget effectively. This is likely to include access to nationally available advice and guidance, locally delivered targeted support and improved access to budgeting products.
Budgeting products, I know, mystify the noble Baroness. It is easy to think about universal credit and such areas in slightly Victorian terms. When we look at what universal credit is and the support mechanisms that are under it and wrap it up, we see that there are a huge number of options. I am actively looking at those and interested in encouraging access to what are popularly known as jam jar accounts. Those accounts allow partners to allocate part of their payment for specific purposes, particularly the ones that need to go to utility bills and rent. Such accounts incorporate direct debits and such things. There is a lot of work to be done in this area and I hope to be able to share that with noble Lords as we develop it.
We are talking to a lot of people about this. As well as to the banks and the financial services industry, we are talking to local authorities, housing associations and the voluntary sector about how to deliver this. I may have some more information about how this will start to work. I hope that it will break us out of what could be a 20-year debate into the opportunities offered by modern technology. I hope that I will be able to keep noble Lords updated.
Baroness Lister of Burtersett
Will the Minister be able to update us before we get to this on Report? I am sure that we will want to return to this on Report.
Lord Freud
I would like to. I have people working on this and we are beginning to think quite differently about how these issues can be addressed—what is universal credit, what is a banking product and where is the join. We must not forget that, at a simple level, a universal credit is a payment stream with budgeting advances. It does not take a lot of imagination to see how it could join up with a more formal banking product and we have to work out where the line is drawn.
Turning to Amendment 102B, I appreciate that the intention behind it is to demonstrate that the taper can be applied to individual elements within the overall universal credit award so that payment of—
Lord Freud
My Lords, I was just tidying up on Amendment 102B. We are not looking to put the taper on individual elements, and I have described why we do not want to go down that route because it is quite different from what universal credit is. With these explanations, I urge the noble Lord to withdraw the amendment.
Baroness Sherlock
Before my noble friend responds, will the Minister explain one thing to the Committee? He has explained why he wants to make clear to a claimant household exactly what income is coming to it as a result of universal credit and the different components to help them understand that. Why does he then have a problem with separating payments as opposed to assessments?
Baroness Lister of Burtersett
To save the Minister jumping up and down, I asked him a specific question about monitoring the impact on the distribution of income within households which I would be grateful if he would answer. I do not think he answered it, although the reply has been so fragmented because of the Divisions that we may have missed it.
Lord Freud
On the first question, I think we should look at this rather differently. It is one payment to the household. On whether we can look at how the household can do different things with that payment, I am very happy to look at all the budgeting supporting mechanisms. I am actively looking at them, and I hope I will get some more information on that.
To be honest, I have not got on the top of my head the detail on the monitoring. We will be looking at it very closely when that comes in and will be devising a structure to do that. As noble Lords know, we are planning to have a very substantial research exercise around universal credit, mainly because it is an almost unique research laboratory opportunity in that we can capture in one place all the different behaviours. I am looking very closely at how we can get world-class research behind many aspects of the universal credit.
Baroness Sherlock
This is the last time I shall intervene, I promise—and that is a strong promise rather than a weak one, I can assure the Minister. I understood him to be saying that the state does not want to intervene more than it has to in the financial affairs of families, and I can see that and agree with it, but if putting different amounts of money into different subsets of a bank account is going to encourage people to budget, somebody is still going to have to go through the process of working out which elements of the total award relate to different elements—children, rent et cetera—and deal with the complicated bit of that, which is understanding how tapers apply. When the Minister thinks about this again, will he consider whether the assessment can be for a household but when you get the answer, you simply split the amount and give it in two different directions? Is that not much easier than the Minister getting embroiled with the FSA or the FCA and complicated financial services market products?
Lord Freud
I am thinking about this area. I do not think I am thinking in quite the same way as the noble Baroness, but I am looking at it and hope I will be able to have a vigorous conversation with her on where that comes in at a later stage.
Baroness Hayter of Kentish Town
I thank the Minister for his responses, although I may not like their content. I also thank the noble Baronesses, Lady Howe, Lady Lister and Lady Sherlock, for their support on these issues, which are very real. My guess is that there will come a time when the Government will have to revisit this when they see the results.
The words of the noble Baroness, Lady Howe, ought to be resonating around. She spoke about vulnerable women and inequalities within households. She said:
“These are women fighting for their children”.
We are talking about people without great access to income needing to feed their children. Very often, it will be a mother living with a man who is not the father of those children. This is great—I am a stepmum and well used to these relationships. But we have to understand that we are very often talking about not the idealised couple but the couple struggling to get their relationship together. Not to enable the woman as a right to have access to that, I find a little strange.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, I imagine that this will be extremely brief. This is a genuinely probing amendment on a point of detail. Clause 98 covers payments on account and under the Bill there are three different legs under which those payments can be made. The first mirrors the existing provision of SSAA 1992. The second provides for payment to be made where a claimant is in need. Examples of how it might be applied apparently include where benefit has been claimed but the first pay day has not yet been reached. Regulations will provide the detail of the test of need. New Section 5(1)(r)(iii) enables the Secretary of State to make a payment on account where, again, subject to criteria set out in regulations, it can reasonably be expected to be recovered. I think such payments will replace the existing social fund budgeting loans. However, part of what this clause does is to repeal Section 22 of the Welfare Reform Act 2009, a provision which is not yet commenced.
The thrust of the question really springs from a sentence in the Explanatory Notes which says in respect of that provision that, had it been commenced,
“it would have extended the range of situations in which a payment on account could be made beyond the existing section 5(1)(r) … It would have extended making payments on account to situations similar to those that will be covered by new section 5(1)(r)(ii)”.
My question is: is there anything that Section 22 of the Welfare Reform Act 2009 would have permitted in terms of payments on account which are not now facilitated by those three legs in Clause 98? I beg to move.
Lord Freud
In the interests of time, I can give an assurance that there is nothing extra to worry about.
Lord McKenzie of Luton
Nothing extra to worry about is good enough to worry about with this Bill. I am grateful for that. Perhaps it can be dealt with in correspondence. It was a genuine inquiry about whether that swapping of the provisions precluded something which would have been allowed. I accept the noble Lord’s assurance on that. I beg leave to withdraw the amendment.
Lord Ramsbotham
“Benefits payments to prisoners
(1) Regulations shall provide that a person undergoing imprisonment or detention in legal custody who, at the time that imprisonment or custody commences, is in receipt of any of the qualifying benefits, shall be assessed, during his time in imprisonment or custody, for eligibility for those benefits at the time of his release from imprisonment or custody.
(2) For the purposes of this section, the qualifying benefits are—
(a) universal credit;(b) jobseeker’s allowance;(c) employment and support allowance;(d) income support;(e) personal independence payment, to the extent provided for in regulations made under section 84; and(f) any other benefits provided for in regulations made under this section.(3) Regulations made under this section shall provide that the assessment required under subsection (1) shall commence as soon as a person is received into imprisonment or custody.
(4) Regulations shall in particular provide that a person appointed by the Secretary of State shall record, at the time a person is received into imprisonment or custody, details of any qualifying benefits which are in payment at that time, together with any personal information needed to establish the person’s identity, including but not limited to their national insurance number.
(5) An assessment of eligibility under subsection (1) shall be completed in such time as to ensure that the person assessed receives payment of any benefits for which he is assessed as being eligible no later than one week after his release from imprisonment or custody.
(6) Regulations under this section shall be made by the Secretary of State and shall be subject to the affirmative resolution procedure.”
Lord Ramsbotham
My Lords, this amendment has its genesis as long ago as 1996. As Her Majesty’s Chief Inspector of Prisons, I found that, at the end of their sentence, prisoners were released with a discharge grant of £46 or, if they had no address to go to, £92. The numbers claiming £92 went down when home detention curfew or tagging was introduced because, in order to qualify, they had to give an address. They were then required to go to their local jobcentre and sign on for whatever benefits they were entitled to, so having to live on their discharge grant until those came through, which could take up to three weeks and sometimes longer. I ask Members of the Grand Committee how they would cope if they were a single parent with dependent children having to live on £46 for three weeks, probably having lost their accommodation thanks to the rule brought in by Mr Peter Lilley in 1995 whereby council accommodation would be forfeited after 13 weeks of absence and their possessions removed. That is not to excuse those who break the law, but it offers an explanation for the appalling high reoffending rate among recently released offenders.
When I was Chief Inspector of Prisons, and on several occasions since then, including in your Lordships’ House, I have asked why benefit claims could not be processed while someone is in prison so that on release they do not receive a grant but the first of future regular payments. As very many prisoners are receiving some form of benefit before they go into prison, it should not be beyond the wit of man to suspend those payments during the period of imprisonment and resume them on release. However, every sort of reason has been put forward about why that is impossible, which I put down to lack of will power: the prisons from which they are released may not be in the same geographical area where they live and, therefore, not in the area where their nearest jobcentre is; there are no Jobcentre Plus employees in prisons who could process the claims; or the prison into which they were received and which suspended their payment may not be the same one from which they are released. I think all this is baloney and that the Government, by not grasping the nettle, are contributing to the reoffending rate.
My amendment is designed to put an end to that nonsense by regulating that individual benefit claims are processed during a person’s imprisonment so that the discharge grant becomes a thing of the past, except for those who do not qualify for benefit. There are other spin-offs to this process that can only help the conduct of imprisonment, because an individual’s national insurance number is a unique identification weapon armed with which there is no reason why one cannot pass information regarding individual claims around the system. Unique national insurance numbers, without which benefit claims cannot be made, will also help to prevent identity fraud, because pretending to be someone else will deny provision.
My amendment specifically mentions those who were in receipt of benefits at the time of their reception into custody, but I shall amend it at a later stage to include the assessment of all people inside and the initial assessment of those whose entitlement is discovered only when they are in custody. What I am proposing is in fact in line with something that has already been set in train regarding the work programme. The Deputy Prime Minister announced on 16 August that the Government intended to mandate prison leavers to the programme immediately on release from prison, with national implementation for jobseeker’s allowance claimants from March 2012, and to work with the Ministry of Justice on a pilot integration of reoffending outcomes into work programmes.
To enable that to happen, Jobcentre Plus advisers will process jobseeker’s allowance claims in prison—although for some extraordinary reason it is said that discussions with claimants will be voluntary and not mandatory. They will then make a record of all prison leavers that will be retained for 13 weeks from the date on which they leave custody. If a claim for jobseeker’s allowance is made during that time, the prison leaver will be referred to the work programme at the point of claim. To a layman, this all seems convoluted and bureaucratic. If the Department for Work and Pensions really is fully committed to supporting the rehabilitation of offenders, why can officials not sit down with those from the Ministry of Justice and work out a system that applies to every single prison leaver, not just those who are in the market for the work programme or jobseeker’s allowance?
The reason for proposed subsection (3) in my amendment is that, all too often, resettlement essentials in prison are left until the very end of a sentence, in which case it may be too late to process benefit claims. However, if processing is started immediately so that a prisoner’s status on release is well known in advance, that will be avoided. This applies to the work programme as much as to the universal benefit. Of course there will be problems with those serving short sentences but, as I have suggested, suspension and resumption rather than initiation may well be the required process.
Bearing in mind the unnecessary reoffending and misery that present procedures have caused for too long, I have corresponded with both the Ministry of Justice and the Minister over this amendment, being amazed that successive Governments should not have done something to rectify this over the years—particularly this Government, in view of what they currently have in hand at both the MoJ and the DWP. I am very grateful to the Minister for his response to my letters but, with respect, I suggest that in drafting his answer his officials may not have made the connections that I have tried to describe. I therefore ask him to reconsider his written refusal to support my amendment, dated 26 October, and meet me to discuss further action before Report. I beg to move.
Baroness Meacher
My Lords, I have not prepared any comments on this amendment, but it seems to me to be of enormous importance. I cannot imagine that the Minister would not wish to support it.
One very obvious proposal would be for every prison to work out the release rate of their prisoners and to determine how many hours per week of a Jobcentre Plus person they need in the prison to process all these prisoners in order that they are paid their full benefit entitlement before, I suggest, they go out of the door or within the first week.
It is a fact that a very large number of prisoners reoffend within that very early period following release, which seems almost inevitable. What else are these people supposed to do? I therefore hope that the Minister will indeed meet my noble friend Lord Ramsbotham to consider how to do it. It has surely to be done; it is a matter of how best to do it—whether to have people in the prison doing this work to overcome the problems of people moving from one area to another and even while they are in prison. I can see that that is a problem for individual jobcentres, but, one way or another, I hope that this can be resolved.
Baroness Howe of Idlicote
My Lords, briefly, I also support what my noble friend Lord Ramsbotham said. It clearly makes sense and is essential for the rehabilitation of offenders to be begun and appropriately carried through. Above all, the idea of applying it to all people, not necessarily just those who would have qualified in the first instance, must be a sensible way forward. I would have thought that the business of suspension and resumption would apply to very short sentences. I, too, very much hope that the Minister will rethink and at least have these conversations for the long-term benefit of what we are all trying to achieve—less offending in the first place.
Baroness Hollis of Heigham
My Lords, the noble Lord, Lord Ramsbotham, has made a very powerful case, particularly for those serving short sentences. One can be reasonably confident that the benefit entitlement with which they enter prison will remain the same when they leave it. Could the Minister help me by fleshing out his thoughts a little further on a situation in which you cannot know in the same way, under universal credit, whether someone leaving prison is going into the household of a former partner with children or whether that household has broken up while he has been in prison? What question marks will there be? It was much easier to arrange when we were dealing with a single benefit, such as jobseeker’s allowance, which was not particularly related to the network of other benefits that a household might receive. It would clearly work for those serving short sentences or for somebody who was single throughout their sentence and expected to come out single. Could the Minister help us on how he would handle a situation in which a person was going back into a household with children, where there might be rent to be paid from his universal credit entitlement? He might go back expecting that payment to be made to him. Perhaps the Minister could help us on that.
Lord Ramsbotham
Thank you very much. I am glad that the noble Baroness raised that point. It reinforces something that many of us have been saying for a long time: the prison system of this country is not organised to help itself. The trouble is that prisoners are scattered all over the country by an incoherent national population management structure, as opposed to—as recommended by the noble and learned Lord, Lord Woolf, after the Strangeways riots in 1990—prisons being grouped into what he called community clusters or regional clusters so that nobody ever left their region. Therefore, all the resources of the region could be applied to the rehabilitation of their own offenders. It will be very difficult for the Ministry of Justice to resolve the questions that noble Lords have asked under the present distributed system. If prisons were regionalised and the prison authorities properly hooked into all the authorities in the region, it would be much easier to liaise with the regional authorities responsible for finding out that sort of detail. That should of course be part of the whole rehabilitation process anyway. The questions that the noble Baroness, Lady Hollis, posed are absolutely ones that should be referred to the Ministry of Justice. We should ask, “How will you ensure that these are answered, because they must be?”.
Lord Brooke of Sutton Mandeville
My Lords, my role in this Grand Committee has been very much in the light of that line from Milton:
“They also serve who only stand and wait”.
The occasions on which I have spoken have been unexpected to the Committee and have surprised even me. I am indebted to my old friend, the noble Lord, Lord Ramsbotham, for having moved his amendment. He will not remember, but in my last month as a Member of Parliament, I had just such a case. It was the first time that I had ever had one. A man had been in prison for drug-related offences and had just come out. At my surgery, he described to me the nature of the problem with which he was then confronted. I cannot remember whether we spoke on the telephone or face-to-face, but I recall saying to the noble Lord—of course I knew his background—that we had known each other a long time and even played cricket together, sometimes on the same side and sometimes against each other. I laid out the case and the noble Lord, Lord Ramsbotham, said in despair, “You are describing what happens so often, so often, so often”. I am only sorry that by virtue of leaving the House of Commons at that moment, I never heard how the story ended. I speak now because it is quite clear not only from today but from my earlier experience that there is a real problem that we must deal with.
The Earl of Listowel
My Lords, I will speak briefly to support my noble friend and also to ask whether, if there is some difficulty with achieving this as a one-off from the start, one might start by focusing on women in custody. They are more likely than men to have dependants. I see also the problem raised by the noble Baroness, Lady Hollis. Unfortunately, one of the drawbacks of incarcerating so many women in this country is that once they are taken into custody, the family breaks down. If the Minister can go only part of the way in this context, I hope that he might think in particular about the issue of women in custody.
Baroness Hayter of Kentish Town
My Lords, as I have often said, my education on these issues has grown thanks to the Minister, but I am afraid that today he was trumped by the noble Lord, Lord Ramsbotham, from whom I learned that one may use the word “baloney” in your Lordships’ Committee. Given his reputation, I am slightly hesitant about speaking on this, but I will add a few comments. I must say that the last time that the noble Lord, Lord Brooke, told us his story about Degsy in Liverpool, we got significant movement from the Minister, so I hope that his charm will work equally well today.
The amendment seeks to ensure that people who are coming out of custody get swift access to the benefits to which they are entitled. The Prison Reform Trust report, Time is Money, stated that eight out of 10 former prisoners claim benefits. Obviously, delays in accessing them can lead to enormous financial hardship and stress. It can also increase the risk of reoffending. We also know—although I am sure not as well as the noble Lord, Lord Ramsbotham—how many people in prison have multiple needs.
The transitions of entering or leaving prison, or becoming homeless, often lead to both personal and financial crisis. We think of coming out of prison as very positive, but it can be traumatic for people with multiple needs. With no financial contingencies, these people usually rely on a benefit system that they experience as complicated, slow and unhelpful. In extremis, some return to crime, as that was their proven source of income. The report found many problems experienced by people who were just out of prison, such as: delays of up to four weeks before the first payments, with little or no explanation; problems with claims that had been started before they had gone to prison, and which had to be resolved before any new claims could be made; problems of claims being delayed because they had no fixed address; disputes over prison admission and release dates, where timings can be crucial; and problems caused by not closing down a claim on entry to prison, resulting in a fraud investigation and the suspension of the new claim. Many of the people we are talking about have multiple needs. About one-third of people in prison do not have a bank account, which makes the payment of a deposit for housing or to cover early expenses even harder to organise on release.
As the noble Lord said, help beforehand with immediate access to benefits is key if the person is not to feel the need to return to using other people's money simply to survive. It emphasises the point that has been made about the need for help and advice while in prison. This will be particularly the case over the next few years, when the whole benefit system will have changed; the one that they knew on going into prison will be quite different from the UC world when they come out. We also know that in one survey that about half the prisoners had debts that awaited clearance on release, and one in three owed money for housing. That gets them started on a real problem of owing money on existing housing. It also touches on an earlier amendment about splitting a joint universal credit if they return to a partner with children and then want to take over responsibility for the housing amount. There could be some difficult readjustment or re-entry. When publishing a book about returning from the war in 1945—I remind noble Lords on that side of the table that we had a really good election result that year—it was interesting that it was difficult for stable, loving marriages when a man came home from the war and wanted to take over financial responsibility. So these things affect whole swathes of people. It is a stressful time, and getting benefits lined up early is really important.
The Centre for Social Justice, which is often mentioned in this Committee, has also highlighted the problems faced by people leaving custody. Its report, Locked Up Potential, recognised that delays in processing benefits meant that many people who are discharged have no source of income when it is most urgently needed. I am sure that the Minister is very familiar with its recommendations, which are that:
“To bridge the finance gap, with the objective of reducing the resulting crime which it can fuel, we recommend that all prison employment and benefits advisors be required by the Department of Work and Pensions … and the MOJ to initiate core benefit applications at least three weeks prior to a prisoner’s nominated release date”.
It would be helpful if the Minister could let us know what discussions the DWP has had with the MoJ about responding to the recommendations in that report and ensuring that those leaving prison are not left with gaps and delays in getting the financial support that may be essential to them in starting a new life outside custody.
We know that the coalition Government have decided not to continue with the progress to work scheme, which provided support to ex-offenders. That support will be provided through the work programme, although as we have heard there will be some difficulties there. It would be useful to know what decisions have been made about access to work programmes for ex-offenders and whether they will be fast-tracked to receive this support. If not, what alternative arrangements are being put in place to ensure that they receive the tailored employment support that they might need? While I hope that the Minister will respond to discussions for talk, I also hope that it will not just be talking the talk but walking the walk and that we will get some progress.
Lord Freud
My Lords, I have listened with interest to the noble Lord’s remarks and acknowledge his expertise on penal policy. I can also say that I am utterly delighted to meet the noble Lord. I can say now that I do not accept his amendments and I hope that what I describe of what we are actually doing will leave him joyful, both after what I describe here and after our meeting, which will happen as soon as we can. I believe that the route that we are going down will prove more beneficial in the long run than what he has suggested in this amendment, which is more expensive and resource-intensive, in terms of in-prison assessments.
Baroness Hollis of Heigham
Regarding the payment on account, I do not know whether it is exactly the way to go forward, but I think it is the only way you can make this work. However, on the assumption that most people coming out of prison may well be under the age of 35, will the Minister confirm that he expects the payment to include at least the HB single room rent, as well as the jobseeker’s allowance? At £67, the jobseeker’s allowance will not go very far in paying rent. Therefore, the payment on account benefit of UC would include a putative amount for both elements—both what we know is called JSA and what we currently call housing allowance.
Lord Freud
My Lords, there are two things here: budgeting advances and a process of how we move people on to the system that we are looking at. I cannot set that out in detail, but we will be doing so in regulations as we elaborate that system.
Lord Ramsbotham
My Lords, I thank the Minister for that reply and I also thank those who have contributed to the debate. I have to admit that I am encouraged. However, there is a “but”, and my “buts” are always about the maintenance of momentum. The noble Lord mentioned those on the work programme, but what about those who are not and what about those who are falling between the cracks? When we meet, I should like to explore the question of all the people whom one finds in prison, such as the one that the noble Lord, Lord Brooke, quoted, who fall through the cracks and do not get picked up.
I take issue with the business of leaving things until late. The Prison Service is notoriously bad at leaving things until they are late, and it is the same with housing and debt management. The sooner you can start work on it, the better. It will not be expensive because it can be done by the people in prison, provided that they are brought into the process. It should not be left.
I am very grateful for the Minister’s offer of a meeting. I look forward to it because there is obviously more to discuss, and indeed I shall have one or two examples of that in my Amendment 107, which we shall come to later. That amendment is connected with what happens to people when they come out of prison. In the mean time, in the spirit of the Minister’s reply, and with my thanks for its comprehensive nature, I beg leave to withdraw the amendment.
Baroness Meacher
I think I slightly missed my cue. I apologise. I rise on behalf of the noble Baroness, Lady Grey-Thompson, who gives her apologies to the Committee. My noble friend is unable to be with us due to a commitment in Birmingham today and she asked me to speak. I rise to give notice of our intention to oppose the question that Clause 99 stand part of the Bill. I must express my gratitude to Sue Royston of the CAB service for her help with this contribution.
The purpose of this amendment is to remove Clause 99, which requires claimants to apply for a revision before they can appeal. This clause would mean a mandatory extra step in the system, which complicates the process for claimants. The extra step has a strict legal time limit within which the application must be made. This inevitably means that some vulnerable people will lose their right to appeal, having failed to submit their application in good time. It will create extra work and extra expense. The reconsideration process is already in place anyway when someone appeals; the DWP just needs to use it more effectively.
What does the proposal mean for the process of challenging a decision? At present someone who receives a decision they disagree with has a month to challenge it. They can either ask the decision-maker to reconsider the decision or they can put in for an appeal. If they appeal, the DWP still has a duty to reconsider the decision. If, after reconsideration, the decision is unchanged, the appeal is passed on to the Tribunals Service automatically. This means that at the start of the process claimants have only one legal time limit to meet if they appeal. If the new proposal set out in Clause 99 is passed, someone who receives a decision they disagree with will have a month from the date of the decision to ask for a reconsideration. Then, when the claimant receives the result of that, they will have only a month from the date of the new decision to submit their appeal. Both of these deadlines will be strict legal time limits and a late reconsideration or appeal will be accepted only if good cause is proven. We all know that good cause is a very tough hurdle and very much a matter of discretion. One can never be sure that the decision is fair.
Perhaps the Minister can explain why the Government regard this change as necessary. In the equality impact assessment published in October, one reason given by the DWP for this proposal is:
“We wish to ensure that as far as is reasonably possible, disputes between claimants and the relevant decision making body regarding social security, child support and certain other decisions are resolved through internal processes”.
It makes no sense to suggest that this proposal is to ensure that decisions are resolved through internal processes. The process for doing this is already in place. If a claimant wants to challenge a DLA decision and appeals, time is given to collect evidence and a proper reconsideration of the evidence is made. Where a good cause is presented, the decision is frequently overturned. The taxpayer is saved the cost of an appeal and the claimant the stress of that appeal.
However, in ESA cases, until recently it was very common to send in an appeal one day and get back the reconsideration by return of post refusing to change the decision—the appeal had been forwarded to the Tribunals Service before any evidence could be collected. The reconsideration process has recently improved. However, the improvements are patchy. One CAB in the south-west reported that it had started to see an improvement in the reconsideration process, but ever since the reassessment process started in earnest, it appears that the decision-makers have been overwhelmed and in not a single case where the CAB has helped claimants appeal has the decision been overturned on reconsideration, and yet at tribunal the CAB service has a success rate of 90 per cent. Clearly something is going rather badly wrong.
Lord McKenzie of Luton
My Lords, the noble Baroness, Lady Meacher, has made a powerful argument about why the current provisions cannot be properly implemented and why they are not sufficient. In welcoming the Minister to his first slot at the Dispatch Box today, I ask him whether it is possible, perhaps not today, although today if he can, for him to set out for us each of the benefits that would be affected by these proposed changes, what the current arrangements for those benefits are in respect of appeal provisions, what happens to payment or otherwise in the interim and the extent to which that would change under these new provisions? That would be important in helping us to understand what might happen in practice.
I may have missed the point when the noble Baroness was speaking on this issue, but is there a time limit for the DWP to respond to a reconsideration request? There are time limits which flow from it, but under these new arrangements, what causes the DWP to have to respond quickly or within a fixed timetable, particularly if for some of the benefits the dispute is about whether a benefit should be in payment at all? It might be an argument about the capital rules for universal credit or about the category that somebody is in. If it is ESA, I think the claimant gets the assessment rate until the matter has been settled. If the noble Lord is able to clarify that, it would particularly help us understand the import of these proposed changes.
Lord De Mauley
My Lords, the noble Baroness, Lady Meacher, has eloquently explained her concerns and those of her noble friend Lady Grey-Thompson, who cannot be with us today, about Clause 99. Let me try to address them.
I assure your Lordships that the time limits for claimants wishing to request a revision, or make an appeal, in relation to most social security benefits are not changing. What is changing is that claimants will need to ask for the decision to be looked at again before they can appeal. I hope that noble Lords will agree that it is in everyone’s interests for disputed decisions to be resolved at the pre-appeal stage wherever possible. Previous figures have indicated that approximately 65 per cent of cases overturned historically were a result of additional evidence being provided that was not available to the decision-maker.
While the claimant will be required to apply for reconsideration within one month of being notified of a decision, the process for making the request is informal. It does not require the claimant to supply a substantial submission and can be done by telephone, face to face or in writing, so claimants should not be subject to additional expense.
The purpose of Clause 99 is to allow DWP to focus on revision rather than responding to appeals, enabling more disputes to be resolved at an earlier stage. Claimants will still be able to ask for a written explanation of the decision and, where they do, the one-month time limit for applying for reconsideration will be extended. In the event that a claimant fails to request a reconsideration on time, the deadline can be extended where there are special circumstances—for example, a hospital admission —which make it impracticable for the claimant to meet the deadline. I assure the noble Baroness that when a request for reconsideration is made beyond the one-month deadline, no formal submission of reasons will be required. They can be supplied by telephone, allowing a decision-maker to consider whether they meet the criteria for an extension of the deadline.
This clause does not change which decisions carry appeal rights; it will simply require claimants to go through the internal reconsideration process first. The purpose of this is to ensure that the decision-making and appeal process is both fair and proportionate.
Although reconsideration is already practised in DWP, there is no legislative requirement for it to be carried out when an appeal is made. Clause 99 will introduce this requirement. Currently, decisions are routinely reconsidered on appeal, so the reconsideration process takes place after the claimant has already decided to appeal to the tribunal.
Under the new arrangements, DWP will use direct contact with the claimant to gather additional evidence relevant to the decision and will provide an explanation of the outcome of the reconsideration. The process will allow a claimant’s decision to appeal to be informed by whether reconsideration had provided them with a clear justification for the original decision, and a clear explanation of it.
Some parts of DWP have already introduced a more robust and independent reconsideration process. However, claimants may often have already made a formal appeal before this process begins. As the noble Baroness has rightly pointed out, under Clause 99, where a decision is overturned upon reconsideration, this will save the taxpayer the cost of an appeal and the claimant the stress of appealing.
The noble Baroness makes the point that, under the current process, no one can get to a tribunal without confirming their intent to carry on. However, if a claimant does not respond to the TAS1, the appeal does not simply stop. The tribunal will still be required to make a decision to strike out the appeal.
Currently, the claimant has 14 days to respond to a TAS1, which is sent along with the DWP response to the appeal and often the reconsideration outcome. Unless the claimant appeals early, which is the issue that we are trying to resolve, this gives the claimant only a short time to consider this information and make an informed decision on whether to proceed with their appeal or to withdraw.
Clause 99 will allow the claimant to make an informed decision about whether to appeal, having passed through a less formal process. There is currently no time limit for the DWP to complete the reconsideration process, nor is one proposed, but it is important to the DWP that each stage of the decision-making and appeals process is carried out within acceptable timescales and does not result in unreasonable delays for claimants. The department is considering carefully how best to monitor and evaluate this in future.
The noble Baroness expressed a concern that claimants will not qualify for payment of ESA pending reconsideration. No appellants should be left without support, since other benefits such as JSA may be available. No decisions have yet been made to change ESA. The main focus of the DWP is to make the correct decision, based on all the available evidence, at the earliest point. Clause 99 will also help claimants distinguish between revision and appeal. The process will be clearly explained via decision letters, leaflets and through direct contact with claimants.
The noble Baroness referred to costs. There will, of course, be costs, particularly relating to IT changes, to implement this clause. The DWP expects to meet these within its spending review settlement. Furthermore, savings are expected to be made in both the DWP and the Ministry of Justice via a reduction in appeals.
I do not think that I have responded in detail—
Baroness Meacher
It seems to me that this is a tricky subject area. I am struggling as regards what benefit there might be in introducing Clause 99. It seems to me that one is shifting the responsibility from the DWP to get on and undertake one of these reconsiderations to the claimant requesting that this happens. I am sure that the Minister will accept that these claimants have a pretty difficult life to manage anyway. To add on another process that they have to go through is going to cause all sorts of problems. Why cannot the DWP improve its processes as regards the reconsiderations so that they can happen automatically if a claimant is concerned about a decision? The DWP should get on and undertake a reconsideration, asking for any further evidence or whatever it wants. If it comes out with the same decision, it then informs the claimant and asks him or her whether they wish to pursue their appeal. I am not clear about that process. Can the Minister help me with that?
Lord De Mauley
My Lords, we are not trying to introduce a new stage—reconsideration and appeal have existed before; we are trying to get a better process of reconsideration before we get to appeal so that we can avoid a large number of appeals that occur. We are introducing an element of flexibility and informality so that claimants are not held quite so rigidly to deadlines, information and the form in which it comes. We plan to make the process more streamlined for them as well as for the department. We require Clause 99 to effect that.
Lord McKenzie of Luton
I understand the thrust of the point the noble Lord has just made but I am also trying to understand the position of claimants who ultimately rely on a successful appeal to end up in the right category. If I understood what the Minister said, the reconsideration needs to take place before they can get to an appeal, and there is no timeframe within which the DWP has to go through that reconsideration process before that appeal starts. Other things being equal, that would mean that it could take longer for those who rely on a successful outcome of an appeals process to end up in the right category. The extent to which that matters depends on what people are being paid in the interim. If, under ESA, they are paid the assessment period rate—the JSA rate—until the appeal has run its course, at least they may have some resources. However, if the issue is whether or not the benefit is payable at all, as there may be a dispute about capital, as I said earlier, they would receive nothing for that period. That is part of the worry. However, we understand the point about streamlining and the improvement that the noble Lord is seeking to make.
Lord De Mauley
I am grateful to noble Lords for allowing me the opportunity to clarify that. It is important to the department that each stage of the decision-making and appeals process is carried out within an acceptable timescale and does not result in unreasonable delays for claimants. Alongside implementation of this power, we intend to make further improvements to the reconsideration process, which will include suitable arrangements for monitoring and, where appropriate, improving the speed of the process.
Taking the second point made by the noble Lord, Lord McKenzie, which is allied to that to a great extent because it is a matter of how a claimant affords to live in the mean time, whatever the outcome of the appeal, the tribunal’s decision takes effect from the date of the original decision. So if the tribunal rules in the claimant’s favour and, for example, makes an award of benefit where the original decision was that the claimant did not qualify, all the arrears of benefit will be paid in full from the date that the claim took effect. I do not think that that particularly addresses the noble Lord’s concern.
The noble Lord and the noble Baroness expressed the concern that claimants will not qualify for the payment of ESA pending reconsideration. I have said before and I will say again—I hope that this will address the point made by the noble Lord—no appellants should be left without support since other benefits such as JSA should be available in those cases. He also asked a broader question about benefits more generally and generously offered me the opportunity to write to him or meet him. I would be grateful if we could expand on that in such a forum.
Lord McKenzie of Luton
I am grateful to the noble Lord for that and very happy to deal with that matter through correspondence. However, what does he believe to be a reasonable timeframe within which the reconsideration should routinely take place? What is the target and the plan for the department?
Lord De Mauley
I do not have an answer for the noble Lord. He is right to raise this issue. Perhaps I may include that in the correspondence.
Baroness Hollis of Heigham
The Minister is being very helpful on this but I want to go back to the point made by my noble friend. This stemmed originally from what the noble Lord, Lord Freud, corrected, which was a misapprehension in the press some time back that people would lose ESA et cetera while they appealed. This was presented as an issue of moral hazard: why would anyone ever not appeal if they knew that through the process of appeal they would get a benefit even if subsequently this was not confirmed?
The other side of that moral hazard issue is: how many people, and under what circumstances and what benefits, could lose their income even though ultimately it might be reinstated by an appeals tribunal and backdated? During the process, which could very well take six weeks, what do they live on? The noble Lord may be able to respond now but, if not, perhaps he can write to us about in what circumstances, with what benefits and with what clients there could be a situation in which someone could lose their benefit, even though they were appealing and might subsequently be reinstated? During that process they could be living basically on the kindness of strangers.
Lord De Mauley
I understand what the noble Baroness wants and I am grateful to her for allowing me to write.
Baroness Drake
If there is an intention to put much more emphasis into making the reconsideration stage effective and efficient, is the department intending to commission an independent audit of that and to publish the findings so that people can have confidence in the effectiveness of the changes at the reconsideration stage?
Lord De Mauley
It will not be an independent process but it will be monitored closely in the department.
Baroness Meacher
I thank the Minister for that full response and the detailed explanations about a number of these tricky issues. I have no doubt that my noble friend who is unable to be with us today will read Hansard carefully and may want to come back to it later.
“(8) For the purposes of this section, “entitlement” means the amount that would have been awarded to the claimant had the claim been correctly represented and all relevant material facts disclosed for the period to which the overpayment applies.”
Baroness Lister of Burtersett
In moving Amendment 103ZZZA I shall speak also in support of Amendment 103ZA tabled in the name of the noble Baroness, Lady Hollins, to which I have added my name. In fact, Amendment 103ZZZA has been designed with the help of the Child Poverty Action Group to complement and support Amendment 103ZA, and it is just an accident of drafting that it is being taken first. I shall therefore start by speaking to Amendment 103ZA, which also has the support of Carers 2000 and a large number of charities and churches. The purpose of the two amendments is to apply to universal credit the rules on recoverability of overpayments that reflect those currently applied to most benefits in regard to official errors that a claimant could not have known about and to provide for the offset of underlying entitlement from overpayments, a concept that I shall explain in a moment.
The current rules on the recoverability of overpayments that apply to most benefits provide for recovery where overpayments have arisen because of,
“misrepresentation or failure to disclose a material fact by a claimant or by any other person”.
This is a fair and just test which has been in place for many years and has been tried and tested in case law. Its purpose is to allow the recovery of an overpayment which arises as the result of a claimant’s actions or failures, whether innocent or fraudulent, but protects the claimant in a case where the overpayment arises because of official error by the benefit authorities. In other words, it sanctions recovery in the case of negligence by the claimant but offers protection in the case of negligence by the state. I believe that this is a fair and just balance which reflects the responsibilities of claimants to correctly notify their circumstances when claiming benefit and the benefit authorities to calculate correctly and pay awards based on the information available to them.
Clause 102 proposes to allow recovery in all cases regardless of culpability. I believe that this alters the balance of responsibilities and justice unfairly in favour of the state. It would mean, for example, that a claimant could be presented with a large bill for repayment amounting to thousands of pounds many years after an overpayment occurred, even though the overpayment was due entirely to the negligence of the benefit authorities. In return for providing accurate and up-to-date information, I believe that a claimant is entitled to the accurate calculation of payment of entitlement by the benefit authorities and that the state should bear any losses caused by its own negligence.
In the other place the Minister of State accepted that there are some real issues around whether vulnerable individuals can or cannot be aware of the error that takes place when overpayments are made without them realising it, and they only discover afterwards that they have incurred a substantial debt. We have to be careful and sensitive in that situation. He went on to say:
“The real question about the clause, however, is whether it is sensible to establish safeguards in primary legislation that apply absolutes to a situation and which effectively say, ‘You can never do anything’”.—[Official Report, Commons, Welfare Reform Bill Public Bill Committee, 19/5/11; col. 1018.]
That recognition of the sensitivity of this is welcome, but my answer to the Minister’s question in this instance is “yes”. The Government’s view however, is, of course, “no”. Although the Government appear to have recognised the justice of the case, they have done so only by indicating that they will provide for non-recovery in cases of official error in a code of practice on recovery. Can the Minister say whether that code of practice will be published, whether it will be made public, and exactly what it will cover?
I do not believe that a code of practice is sufficient, and I would argue that it is essential that provision is statutory so that an aggrieved claimant has the right of appeal against recoverability to an independent tribunal. The claimant should have a clear right rather than be vulnerable to discretionary decision-making. The Government have expressed their confidence that the introduction of universal credit will significantly reduce the scope for official error. If that is the case, the administrative burden of retaining protections for claimants unjustly prejudiced by official-error overpayments should be greatly reduced.
The system of automatic recoverability, perhaps supplemented by a non-statutory code of practice as proposed in Clause 102, mirrors the system which applied to tax credits. This system has blighted the administration of tax credits, caused widespread injustice and hardship and has been widely condemned in the media and in reports by the Parliamentary Ombudsman and the Select Committees in the other place. It has also resulted in thousands of complaints to MPs, the Revenue adjudicator and the ombudsman.
Amendment 103ZZZA provides for the offset of underlying entitlement when calculating overpayments. Underlying entitlement means the entitlement that would have been paid to the claimant had the claim been made correctly at the time. For example, an overpayment might arise if a claimant had separated from their partner and the claim continued to be paid as a couple claimed for several weeks after the date of separation. The claimant had not declared the change of circumstances immediately and had told their personal adviser that they were not aware that they needed to because they had hoped that the separation was temporary. I think that sometimes, in those circumstances, you do not really want to face up to what is happening. If the claim is cancelled from the date of the separation then the claimant must make a new claim. However, had they immediately declared the change then their claim would have been reassessed as a single claim, so it would have given rise to entitlement as a single claimant which could be offset against the overpayment as underlying entitlement. I am sorry that that is slightly complicated.
This mirrors the provision in the housing and council tax benefit regulations which ensures that only the true amount of excess entitlement is recovered. This provision is particularly needed in relation to universal credit because there is a requirement for the benefit to be claimed by either a single claimant or by both members of a couple, which, as is the case with tax credits, results in many notional overpayments when there is a change of status from single to joint claims and vice versa. The Revenue has belatedly recognised the need for the offset of underlying entitlement in such cases and introduced non-statutory provision for this from January 2010. This Bill gives the opportunity of providing for offsetting on a statutory basis, ensuring that it is applied fairly, openly and consistently.
It may be that it is intended to do this in regulations. I must apologise because I have seen the draft regulations only today. I have had a quick look at them and it seems that they are perhaps intended to do that. I am glad that the Minister is nodding but it would be even better if he put it formally on the record so that we know that that is the case. I am very happy that for once the Minister is nodding rather than shaking his head when I am speaking. There is another question that I hope the Minister will be nodding at as well. Can he assure the Committee that there will be a right of appeal to an independent tribunal in the case of a dispute as to whether an overpayment was caused by official error and should or should not be recovered; or—I do not see any nodding going on there—if there is no such right of appeal, how will a claimant be able to challenge a decision to recover an overpayment?
In conclusion, this might appear to be a rather techy amendment. However, the strong lobbying by a wide number of churches and charities signals its significance. The reason they are so concerned is in part because they believe it to be simply unfair that a claimant might have to pay for a mistake made by the state. They are also concerned because they know from their own work what this would mean in terms of hardship and possibly increased debt to moneylenders and loan sharks as claimants’ benefit was reduced below the statutory minimum. Heaven help them if they are also subject to capping. I hope the Minister will look favourably on a small but important amendment, which serves to protect the underlying rights of claimants. I beg to move.
Lord Kirkwood of Kirkhope
My Lords, I support the case that the noble Baroness has made. I am particularly interested in the answer to the question about an independent appeal right in these circumstances. That would be very useful indeed and I hope that the Minister can confirm that that will be true.
I have four amendments in this group. They can be dealt with with reasonable dispatch but they deal with a very important issue that surrounds the whole question of amounts recoverable by deductions from earnings. During the Bill’s Commons stages the Government amended Clause 102 to add a new Section 71ZD(3)(e), which addresses the,
“level of earnings below which earnings must not be reduced”.
That is very welcome, as far as it goes, but I wonder whether the Minister could say a bit about whether any thought has been given to how that will be delivered and how that protection will be rolled out. That is important.
Baroness Hollins
My Lords, I rise to speak to Amendment 103ZA, which is in my name. I am grateful to the noble Baroness, Lady Lister, for speaking about it earlier and also to the noble Baroness, Lady Healy, and my noble friend Lady Meacher for their support. This Bill gives considerable discretion to jobcentre officials over many decisions and this amendment is about an area of their discretion that has been limited since the Supplementary Benefits Act 1976. Members of the other place have now proposed that this limit to their discretion should be removed. The provision of the 1976 Act was repeated in Clause 71 of the Social Security Administration Act 1992, in which the Secretary of State has to prove that a claimant must have either misrepresented or failed to disclose a material fact in order to recover an overpayment, thus protecting claimants from the recovery of payments arising entirely out of official error. Previously there was no provision for the recovery of administrative costs either, which the current Bill could also change.
Think about a claimant who has a letter from officials telling him that he is entitled to universal credit, which is paid to the landlord in rent. However, six months later, officials tell him that they have made a mistake and ask him to repay several thousand pounds—money that has already gone to the landlord, either direct from the local authority or from the claimant. The issue that then has to be discussed with the claimant is whether he or she could have known it was an error. If it can be proved that the claimant could not reasonably have known that it was, then the state has to bear the cost of the state’s mistakes. It is difficult to understand why such a reasonable and just law should be repealed.
This amendment is proposed by Caritas Social Action Network and the Zacchaeus 2000 Trust and I am grateful to them for their detailed briefings. It is also supported by more than 20 NGOs, including organisations from five different Christian denominations, the Royal College of Psychiatrists, AdviceUK, Community Links, Derbyshire Unemployed Workers’ Centres, Mind, Money Advice Trust, the National Housing Federation, Save the Children, Shelter and the United Kingdom Public Health Association. All of them, in one way or another, are working for the poorest citizens of the United Kingdom.
They are all concerned that overpayments of universal credit and council tax that claimants could not reasonably be expected to notice would be left to build up over time into significant cumulative debts that the state could then recover through court action or reductions in benefits. Such debt recovery would jeopardise basic living costs, housing security, payment of utilities bills and nutrition, and risk damaging mental health.
An additional concern relates to the announcement by the Minister for Employment in another place that the standard allowance of the universal credit will be £67.50 a week for a single adult. The Joseph Rowntree minimum income food standard is £46.31 a week for a healthy diet. The sum of £67.50 will not cover the weekly cost of all essential items for an adult, let alone the additional repayment of overpayments, debts or arrears.
The burden could be further increased, for example, through the state additionally recovering the costs that it incurs when making recoveries through the courts, or through employers recovering administrative costs that they incur when instructed to reduce a claimant’s wages in order to offset a benefit overpayment. In both of these circumstances, people may end up with debts larger than the sum they were originally overpaid by—a seemingly illogical and unjust situation.
Another concern is that it seems possible that the DWP would be able to recover the overpayment from landlords, or from anyone who happens to be living with a claimant who is a beneficiary of the benefit concerned. The recovery of large blameless overpayments will have a devastating effect, not just on the claimant but on all other members of the household, which might include children, a pregnant woman or a disabled person who has particular additional nutritional and health needs.
It is inevitable that a new IT system for the delivery of welfare will create errors that are the fault of the employer entering information, officials at HMRC or the jobcentre. This is most likely when pilots are being run to test the system. The poorest citizens and their families should not have to pay the debts arising from any faulty consequences of the Government’s reforms.
As well as these immediate and potentially devastating impacts, such significant financial burdens all too often result in mental health difficulties or exacerbate existing ones—a link consistently highlighted by prominent institutions such as the Government Office for Science or charities such as the Royal College of Psychiatrists and Mind. Numerous reports have drawn attention to the direct correlation between large debts and family breakdown, illustrating the further dangers of subjecting those dependent on benefits to unexpected reclaims. Clearly such consequences would be utterly at odds with the Government’s intentions with this Bill.
Assurances have been given in the other place that officials will exercise common sense and considered decision-making, so as not to cause undue hardship. But the removal of the existing safeguard in primary legislation will mean that each case is ultimately based on the discretion of different officials, and would leave absolutely no guarantee that decisions will err on the side of protecting vulnerable people. This could lead to expensive litigation, if advice and legal aid could be found, which could have been avoided had the prohibition remained in place. However, it is more likely that the vulnerable claimant will pay, because of the lack of advice and legal aid, all of which has been cut. Then the claimants will suffer the stress of unmanageable debt and an increased risk of mental health problems and family breakdown.
It should be emphasised that the proposed amendment would not affect recoverability when overpayments result from the misrepresentation or withholding of relevant facts by a claimant, thus providing no respite for those seeking to defraud the system. Rather, it seeks to maintain three decades of protection—rightly afforded, in my view, to benefit claimants—from human error or technical fault by departments, landlords or local authorities, and any future errors as the result of the new IT system.
I urge the Minister to give this amendment serious consideration, to reinforce an existing provision that protects those whose health and welfare will be further compromised without it.
Baroness Healy of Primrose Hill
My Lords, I will also speak to Amendment 103ZA. I will be brief. It may appear overly generous on the part of a cash-strapped Government already making severe cuts in benefits and public services not to demand repayments. However, in the interests of natural and administrative justice it cannot be right to request repayment when every penny is already allocated to get a family through the week—and now to be the month. Benefits are about to be cut and will no longer keep pace with inflation. Housing, energy, food and travel costs are all rising at frightening speed. With the best will in the world, I cannot comprehend how a family which is already struggling can be asked to pay back more than its members are currently being paid either in wages or benefits or both. Many charities and churches have raised the alarm over this element of the Bill. I strongly urge the Government to reconsider such a course. It may seem small in the overall picture of state spending but would be enormous for a family on an already modest income.
Lord McKenzie of Luton
My Lords, my noble friend Lady Hayter is going to do Front-Bench duty on this group of amendments. I want to speak briefly to Clause 105, where a probing amendment has been put down, to make sure that we have understood what is happening in respect of the statute of limitations.
My understanding is that, at the moment, to take action to recover sums which are outstanding, you cannot go back more than six years: they are statute-barred at six years. The issue is what an action is for these purposes. The clause clarifies that, other than proceedings in a court of law, recoveries of sums due are not actions. The consequence, as I understand it, is that they are not statute-barred, so unless you need to take action through court proceedings, as a result of this clause there is no statute of limitations applying to debts arising under the Social Security Act or the provisions that are set down in the clause. That seems to be a departure from the existing position.
Moreover, the clause says that the amendment is regarded as having always formed part of the 1980 Act, so that it is retrospective, and does not just operate from the date this clause comes into existence, except in respect of proceedings. I have a question as to what, for these purposes, the proceedings are which would still remain outside the retrospection of this clause. But more importantly, what assessment has been made of the additional amounts that might be brought in scope for recovery as a result of these changes to the law?
Baroness Hayter of Kentish Town
My Lords, as has been set out my noble friends and other noble Baronesses, the amendments relate to how and in what circumstances the state will seek to recover overpayment of universal credit from claimants. As many here, although not me, will remember, the issue of overpayments caused a considerable headache for the previous Government when tax credits were introduced, so it is vital that the present Government get this part of the Bill right. I am sure that anyone with those memories will support this.
In this Bill we have the added complication that, in addition to overpayments being recoverable from the claimant, they will also be recoverable, as the noble Baroness, Lady Hollins, has mentioned, from landlords in certain situations. I am not talking about dodgy landlords but those who are blissfully unaware that the rent they were receiving was not from their tenant but was due to some sort of overpayment, whether by accident or design on the part of the tenant claimant or by error on the part of the DWP. We know that at present there are some cases of overpaid housing benefit that can be recovered from a landlord. Could the Minister tell the Committee whether this clause widens the set of circumstances in which benefits can be recovered? Also, what type of benefit could be recovered from landlords, rather than from claimants? What consultation has taken place on this proposal with the NLA or any other representative of landlords?
I have certainly heard anecdotal remarks from both actual and potential landlords. By the way, I am not someone who thinks that lots of anecdotes add up to evidence. However, I have heard that the idea that landlords might be asked to make good some overpayment made to a tenant when they have no way of recouping it from the tenant is a further disincentive to entering or remaining in this market. I remind the Minister that this comes just at a time when access to private rented accommodation, especially the one-bedroom type quite favoured by small landlords, is so needed due to the housing shortage; to take in the swathe of refugees from the social housing sector as his policy on underoccupation kicks in; and as families may be forced to leave high-rent London for far distant places, as we heard earlier today. We need to encourage landlords to make properties available, not threaten them that they may be left paying for overpayment of a tenant’s claims.
Amendment 103ZZA seeks to ensure that the recovery of any overpayment leaves the claimant with the correct entitlement based on their circumstances, as my noble friend Lady Lister spelt out. Again, this draws on the experience of tax credits, where in some cases claimants were asked to pay back overpayments on the one hand while applying for additional entitlement because of a change in circumstances on the other. The amendment would make sure that the end result is that the claimant receives the payment to which he or she is entitled.
Amendments 103ZZB, 103ZZC, 103ZZD and 103ZZE seek to replace references to earnings with those to income, and then to ensure that the recovery of overpaid benefits cannot leave a claimant without sufficient income on which to live. As has been said, within the current system protections of this type are in place, setting limits on the amount by which the DWP, local authority or HMRC can reduce benefit payments to recover an overpayment. Could the Minister let us know what limits the department intends to place on the recovery of universal credit, and whether they will meet the aim of ensuring that claimants retain a minimum amount on which to live?
Amendment 103ZA ensures that benefits overpaid as a result of official error cannot be recovered when the claimant could not reasonably be expected to know that he or she was being overpaid. In explaining new Section 115C in Clause 113, the DWP says that negligence constitutes not exercising the care which the circumstances demand; that is, being careless. It gives the example of not checking statements made in a claim. However, this amendment is quite different. It is not about lack of care; it is about lack of knowledge. The claimant cannot be expected to know that the amount they were receiving was in fact an overpayment.
Each of us, perhaps even some very rich people in this Room, would know whether £1 million came into our bank accounts as opposed to the £1,000 that we were expecting. However, I have to confess that when the DWP pays my pension I have no idea whether the amount is correct. It is difficult to determine that, partly because I do not get a monthly statement—the equivalent of a pay slip—from the DWP and partly because it is four-weekly and every now and again there is a month when I receive two payments. If that happened to fall in January and then perhaps in October and I got a double payment, I am afraid that I would have absolutely no idea whether that was the correct timing for my extra bonus month—it is always very nice—or whether it was an error, and I have precious little way of checking. This amendment is about ensuring that any overpayment which the claimant could not be expected to know was wrong should not be clawed back. I promise noble Lords that it is not intended to protect my own position; it is tabled simply in the interests of fairness.
Lord Freud
My Lords, I am delighted to hear such full-hearted support for monthly payments. First, I would like to speak to Amendment 103ZZA in my name. This amendment is technical in nature and seeks to restore the policy intent and simple premise that where a claimant has a debt, the debt should be recoverable from them. In the majority of cases, overpayments of benefit, penalties, payments on account and certain hardship payments will be recoverable from the claimant and will be recovered by deduction from the benefit that is paid to them. As the Bill is drafted, however, the Secretary of State is prevented from recovering such payments where the claimant’s benefit is paid directly to a third party, for example a landlord. This means that recovery from a claimant is limited to deduction from those benefits paid directly to them. This is unintended and so this amendment seeks to ensure that where a claimant’s benefit that is subject to recovery is paid to a third party, recovery may be made from that benefit.
This ensures that the DWP maintains the same powers of recovery as it does presently for recovery by deduction from housing benefit where it is paid directly to a landlord. Although the claimant may have other benefits from which deductions could be made, to do so adds both cost and complexity to the recovery process. In such cases, where no benefit is payable other than that paid to the third party, the DWP would be reliant on negotiating repayment from non-benefit income or potentially using direct earnings attachments to recover from debtors who are in pay-as-you-earn employment.
The situation becomes even more difficult where the debtor will not negotiate repayment, has no benefits paid directly to them and is not in pay-as-you-earn employment. Without the amendment, this would result in a situation where the DWP or local authorities have no effective way to recover the overpayment or penalty. I am sure noble Lords will agree with me that where there is an obligation to repay benefit debt, the fullest possible powers should be available to the relevant authorities to make recovery by the most efficient means.
I shall now address Amendments 103ZZB, 103ZZC, 103ZZD, 103ZZE, 103ZA and 103ZZZA. These opposition amendments seek to achieve a number of objectives, but are primarily concerned with protecting debtors. I am sure that there is no disagreement over the need for safeguards for vulnerable claimants and those in financial difficulty. We recognise, like the noble Baroness, Lady Lister, that protection needs to extend to the calculation of overpayments as well as their recovery. In common with the noble Baroness, we recognise that such a provision has value in ensuring that an overpayment reflects the true loss of public funds and for this very reason, such a provision already exists in secondary legislation relating to the recovery of overpayments of current benefits.
Like the noble Baroness, we believe that similar provisions should apply here, but feel that such a provision sits more happily in secondary legislation. For that reason, I am happy to offer my assurances that it is our intention to make provision for such a calculation in the regulations to be made under Clause 102, new Section 71ZB(4), which allows regulations to provide that recoverable amounts,
“are to be calculated or estimated in a prescribed manner”.
Placing the provision in secondary legislation allows for both flexibility and review.
Concerning the other issues raised within these amendments, I believe that future overpayment recovery from working-age claimants will be more streamlined and efficient than it is presently. Recovery will thus provide both greater returns and better value for money for taxpayers. For example, under the previous Administration, it was believed that there was a right under common law to recover overpayments occurring due to official error, and the DWP thus requested repayment of those overpayments on that basis. I see that noble Lords who may have been responsible for those requests are in agreement. The Supreme Court, however, ruled that there was no such right and that is why we are legislating to bring the law for working-age benefits back in line with the policy of the previous administration—a policy that we support.
Prescribing that an overpayment caused by official error would not be recoverable if the claimant could not reasonably be expected to know that they were being overpaid brings forward a need to make subjective assessment of the debtor’s capacity to understand entitlement before the overpayment is determined. Although I sympathise with the lack of understanding of the noble Baroness, Lady Hayter, about all the incredible overpayments that she gets and the £1 million that goes into her bank account on a regular basis, I have to say that that is not workable in this context. The DWP will not be prescribing those circumstances for the discretionary write-off or non-recovery of an overpayment. Cases will be considered carefully on their individual merits because each case is different.
As mentioned earlier, the code of practice will outline the policy as to whether recovery should be pursued, and lead to considered, consistent decision making. in response to the noble Baroness, Lady Lister, I am happy to confirm that that will be published in the form of a leaflet.
Considering whether an overpayment can, or should be recovered, the DWP will look at a number of factors, not solely whether the claimant received the money in good faith. It will have regard to ensuring that deductions from benefit or earnings—
Baroness Meacher
Will the code of practice be available to us before Report so that we know whether we have a reasonable situation?
Lord Freud
Yes, I am pleased to confirm that it will be available in draft. I want to avoid the cost of printing up a leaflet.
We will ensure that deductions from benefit or earnings to repay an overpayment should not lead a debtor to suffer undue hardship. That remains a cornerstone of our overpayment recovery policy. As presently, future benefit recovery will be subject to regulations that provide for a maximum rate of recovery. In many instances, however, this maximum rate of recovery may still prove unaffordable for some claimants. In such cases, the DWP will discuss an alternative repayment rate.
Baroness Hollis of Heigham
I realise that the Minister is going fast, but let us be quite clear. In the past, and I stand to be corrected, my understanding is that when there has been official error and overpayment we would request a repayment. If that request was not responded to or met, effectively, that was pretty much the end of the story. In particular, somebody with a history of disability, poor health, financial pressures and so forth, almost invariably would not reply.
We need to hear from the Minister whether he is moving from request to require; whether he is moving the discourse from the first to the second. I thought that the first was reasonable, so that if they could afford it, they should repay, but if it was unreasonable, then they did not. If he is going from request to require, we need another step in the procedures to try to ensure that those from whom he will require the repayment of debt are in a reasonable position to do so. He cannot just change the words. He has to institute another procedure and another step in the equation. I know that the Minister is going fast but perhaps he might reflect on this and write to us so that we can take this up later. That must be the case.
Lord Freud
I am going to come on to that point, which is critical. Although the starting point for overpayment recoverability will be that almost all overpayments of working-age benefits within the scope of Clause 102 will be recoverable upon application, DWP will consider a claimant’s means, income or expenditure if the debtor considers that they are in hardship.
Baroness Hollis of Heigham
The point is that under the previous system the recipient determined what would happen. What the Minister is suggesting is that the DWP will determine whether recovery takes place.
Lord Freud
No. I think what I said is that if the debtor considers that they are in hardship, they can say that and then there is a process built on that.
Baroness Hollis of Heigham
I am sorry to take up the Committee’s time, but previously if the recipient said that they were not going to do it, that ended it. There was not an assumption that there was space for negotiation. What the Minister seems to be suggesting is that there will be a requirement, and then the claimant has to opt out rather than the old arrangement, which is that if the recipient said that they were not in a position to repay, that ended the matter. It is a question of where the power lies. Under the old system, the power of refusal lay with the claimant. The Minister is suggesting that it will lie with the DWP, and only if the DWP is persuaded will the claimant be allowed to opt out.
Lord Freud
Yes, that is the process. It becomes a requirement, and then if the claimant says, “Look, I can’t afford that rate, I’m in hardship”, then it is adjusted. That is a regular process. In practice, only half the people now make repayments at the maximum rate. That is a very well established process which works pretty well, and I do not think we need to put in extra processes.
My noble friend Lord Kirkwood—Kirkwood of Kirkhope, some people were unaware—asked about an independent appeal right. There is just a general appeal right here for overpayments, and I think that covers this as much as anything else.
Baroness Hayter of Kentish Town
Is that an appeal that is open to landlords as well?
Lord Freud
What we are talking about, and what I was describing, is where a payment would be going directly to a landlord, but it is for the rent. There would be recovery from that, so then the obligation becomes the debtor’s to replace that amount for the landlord, so, no, the landlord does not have a right to appeal because it is not his money. It is just a direct payment device.
As my noble friend recognised with his amendments, claimants may have other debts that are being repaid that will impact their ability to repay their DWP debt. In such an instance, we may agree that recovery should be suspended until a particular financial commitment of the debtor ends. Additionally, because we recognise that hardship need not solely be financial, these considerations will include whether recovery is likely to be a threat to the health and welfare of not only the debtor but their immediate family. Exceptionally, where it is warranted, DWP may decide not to pursue or to stop pursuing recovery. These hardship situations are well established and balance the needs of the debtor and those of the taxpayer. I believe that this approach is more effective than the prescriptive considerations set out in the amendments. This approach ensures that those claimants who are able to meet the repayment obligations do so and recognises that in some instances there is a need to take into account a claimant’s specific personal circumstances. I trust I have assured noble Lords that these amendments are unnecessary as we already have protections in place to ensure that a debtor does not suffer undue hardship when deductions from benefits or earnings are made and that, where appropriate, a claimant’s individual circumstances will be fully considered.
The noble Baroness, Lady Hayter, asked about limits on universal credit recovery. Recovery will be subject to a maximum rate, as it is currently. This will differ depending on whether the payment is wholly universal credit or a combination of universal credit and earnings. We still have well established hardship considerations. If repayment causes difficulty in those circumstances, we will be able to discuss it. I therefore urge noble Lords not to press these amendments.
The noble Lord, Lord McKenzie, has given notice of his intention to oppose the Question that Clause 105 stand part of the Bill. Clause 105 clarifies that the Limitation Act does not apply to the recovery of benefit overpayments and of social fund and tax credit debts by methods other than court action. It ensures that recovery of such debts by deduction from ongoing entitlement can continue beyond the six-year limitation period for bringing court action. DWP has long taken the view that the statute of limitations has no application to the recovery of benefit overpayments or social fund debts by means other than court action, including by deduction from continuing benefit entitlement.
However, in a 2009 case involving recovery of a housing benefit overpayment by a local authority the High Court came to a different view. DWP was not involved in that case, but given that it could be read as applying also to the recovery of other benefit overpayments and of social fund payments, we believe it is necessary to introduce this measure so that we remain able to balance the recovery of public funds against the financial circumstances of the debtor. In many cases, seeking to recover social security or tax credit debt by means of deduction in a period of no more than six years would place an unfair or impossible burden on the debtor and their family.
We are not proposing anything new; Clause 105 merely clarifies a long-standing and well accepted interpretation of the application of the Limitation Act limitation to the recovery of social security and tax credit debt. The provision ensures that all deductions of benefit made more than six years after the debt became due since Section 9 of the Limitation Act came into force were, or will be deemed to be, legitimately made. It is retrospective to cover the legality of recoveries of six years of debt already made under the presumption that that was the legal position.
By contrast, without this clause—Egyptian calligraphy is very complicated—we may be forced to endeavour to recover all overpayments within six years, and this would imply higher recovery rates and potentially hardship for claimants affected. We have made this measure retrospective to cover all recoveries already made, as I have already said. I hope this clarification will convince the noble Lord and the noble Baroness to allow Clause 105 to stand part of the Bill. I beg to move.
Baroness Lister of Burtersett
My Lords, I will be very brief. I thank the various noble Lords who have contributed and really strengthened the case that was made. Readers of the Official Report may not be able to tell a joke when they see it—my noble friend was not supporting monthly payments, and we will be coming back to that on Report.
Baroness Lister of Burtersett
I am very glad that the noble Lord has put on record that the question about underlying entitlement will be covered in the regulations. I am sorry that he is not prepared to put into statute the protection of claimants where it is the department that has made the mistake, not the individual. I am unhappy with so much discretion, and the noble Baroness, Lady Hollins, made that point. I am very pleased that the code of practice will be published in the form of a leaflet and that noble Lords will be able to see it before Report. I welcome that, and I welcome what I think the Minister said that there would the general right of appeal on overpayment questions. It is good to have that on the record. I beg leave to withdraw the amendment.
Lord Freud
Lord De Mauley
My Lords, this might be a convenient moment for the Committee to adjourn until Monday at 3.30 pm.