Welfare Reform Bill

Baroness Hayter of Kentish Town Excerpts

Wednesday 23rd November 2011 Grand Committee

Moved by

[Baroness Hayter of Kentish Town]

102ZA: Clause 97, page 65, leave out lines 10 to 13 and insert—
“(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the corollary of the earlier amendment, in that if the payment can be split between two recipients, it should also be withdrawn, whether for reason of the taper or of any benefit cap, in the same proportion, rather than be taken either from the childcare element or the housing element.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.

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[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.

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[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.

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[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—

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[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.

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[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 Hayter of Kentish Town]

That is right.

[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.