Welfare Reform Bill

Baroness Hollis of Heigham Excerpts

Wednesday 25th January 2012 Lords Chamber

The Government have two options to remedy this situation. They can explicitly include in the code of practice a requirement not to seek repayment in cases of official error and claimant good faith, but this would really need to be supplemented in the Bill by a requirement on officials to follow the code of practice. Alternatively, they could choose the simpler option of accepting this amendment. I beg to move.

[Baroness Hollis of Heigham]

My Lords, we should be grateful to the noble Baroness, Lady Hollins, for raising this issue, which comes at a point at which existing recipients of benefit may be experiencing real pressure. I hope that the Minister will be able to illuminate more fully than he has so far the Government’s intentions in this field. We are exceedingly grateful to the noble Baroness.

I think we all accept that one of the big problems with our current benefits system, which I strongly hope and believe universal credit will help to rectify, is that the complexity of benefits—the fact that they overlap and there is no simple, clear or obvious way of ensuring the appropriate entitlement—has been a great cause of error by both officials and claimants, and of fraud. These are built into the system in the present way in which it is organised. One of the reasons why I welcome universal credit is that the simplicity of a single benefit—with its clarity, its monthly paper trail and so on—should, I hope, allow us to overcome some of those difficulties.

Overpayments will still happen, and there must be a presumption, as with banks, that if there has been an overpayment one should seek to recover it because it properly belongs to the taxpayer. However, many benefit claimants cannot afford it and that should be one consideration; it may in that case properly be wiped out. Secondly, the benefit claimant may be under great stress, perhaps suffering from terminal illness or caring for someone with terminal illness, which has been overlooked and it is not now possible for them to repay; or the claimant may be in a mire of debts, including for utilities or rent, and if one sought to have a speedy recovery of any overpayment one could end up leaving that claimant homeless.

I am happy to leave it to the discretion of the local offices as to whether any overpayment should be pursued, deferred or patterned slowly for repayment, only if the Minister can give us full assurances about how that discretion will be used wisely and decently. Perhaps we could, in conjunction with the relevant voluntary organisations, go over the code of practice again in the light of its need to be clarified, given universal credit, and ensure that that code of practice has a statutory basis and that, if local decision-makers do not follow it, that would be a basis for appeal to a tribunal.

As I have said, I believe that if someone can afford to repay an overpayment and it is reasonable and decent to seek to get that repayment, we should do so, but for many people on benefits that will not be the case. It would be very helpful if the Minister could explain exactly how he will ensure that local discretion is exercised wisely and decently.

[Lord Bichard]

I support this amendment as someone who used to be responsible for delivering the benefits system. When I was in that position, I remember railing against the complexity of the system and am therefore delighted that we are doing something about that. I also railed against the complexity of some of the bureaucratic communications that were sent out. Since I am now more often on the receiving end of those kinds of communications, I fear that my railing had little impact because they are still excessively complicated and I find it quite difficult to understand some of the letters that I receive.

It is placing a very heavy burden on benefit recipients to expect them to understand fully all the communications that they receive and therefore fully to appreciate sometimes when an overpayment has been made. For those of us who had an overpayment of, say, an occupational pension that we have to repay, irritating though it is, we can probably afford to do that over a period of time. It is a very different issue for a benefit recipient to repay a large sum of money in their circumstances. Therefore, I support the amendment. It is really important to get some clarification of the situation as we move forward.

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I am sure that we are all in agreement that, in the current financial climate, it is important to protect public money. Thus, wherever possible, while ensuring that recovery will not cause undue hardship, we should pursue the recovery of overpayments. I therefore urge the noble Baroness to withdraw the amendment.

[Baroness Hollis of Heigham]

My Lords, the Minister reminded the House that the current maximum weekly repayment for overpayments is some £10 a week. Will he assure the House that when a local decision-maker decides on the pattern of repayments that may be appropriate, one of the key factors to be taken into account is any other debts and debt repayments that that person may have? Under the old social security system the rule was that no more than 10 per cent of a benefit income should be top-sliced to repay debts for utilities, the Social Fund and the like. Can we have that assurance? Otherwise someone could find themselves trying to repay housing, fuel and pay check debts, and now overpayment debts. Each claim may seem reasonable, but the total may plunge the benefit recipient into total desperation.

[Lord Freud]

My Lords, I think I can give that assurance on the basis that we are looking at financial hardship as the key criterion. Clearly the benefit recipient’s other debts form part of that consideration, so they will clearly be considered.

[Baroness Hollis of Heigham]

Does the Minister think it reasonable that no more than 10 per cent of total benefit income should go towards the repayment of any or all other debts.

[Lord Freud]

My Lords, I am not sure that I am in a position to give assurance on precise figures and percentages. I am giving a general assurance that that factor will be looked at as part of the financial hardship consideration.

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[Lord German]

My Lords, I should like to follow that because it is an interesting perspective. I come to this issue as one who has been an ardent devolutionist and as someone who believes in power being passed—obviously, in my case—to Wales and to local government. So, although I come with a different historical perspective, I understand the historical perspectives of the noble Lord, Lord Fowler, and the noble Baroness, Lady Lister, because I read all about it in an article that I am afraid I have lost. It quotes her at the front about how the money would be used in Wales.

I hope that for once the Minister can tell me the mechanism by which the money will be transferred to Wales and Scotland. I understand that it will be part of the local government settlement in England and in Wales part of the Barnett formula. If that is the case, we are transferring the power to deal with those matters to Wales and Scotland. Why should I not argue for that sense of purpose? I am arguing for it and am also arguing for local government to have responsibility. After all, would you expect the swimming pool attendant to have his case heard in London for a swimming pool somewhere in the valleys of Wales? Of course not. The people closest to this—colleagues and decision-makers—will know the local circumstances. This is only a very small part of the Social Fund that is being devolved.

There is accountability because there are elections for local government. Local government is held to account, and the Scottish Parliament and the Welsh Assembly are both held to account by their electors. Clearly, there is a role for those who are receiving the money to be accountable to their electorates. I cannot believe that if there is a purpose to deliver something locally it should not be passed on to local government. We do ourselves a disservice by not accepting that there is a democratic right for local government to exercise this ability. I say to the noble Baroness, Lady Lister, that where I live in my country, her party supports no ring-fencing whatever for local government. It trusts local government to make those decisions. That is a form of devolution that is the right way.

We have to consider what functions are being transferred, whether to Wales or local government. I know that the noble Lord, Lord Brooke, in his usual manner of creating an environment, is absolutely right. If these are very small decisions about loans to people with whom the local council will already be in contact, surely it is right to trust local government to do it. I know that local government in England is ready, willing and able to do the job, and I know that there is an opportunity for their electorates to hold them to account. Sometimes it is important to let go and have the decision-making closer to the people whom it most affects.

[Baroness Hollis of Heigham]

Perhaps I may challenge the noble Lord, Lord German. What he is saying is entirely applicable to Wales, where every local authority is a unitary authority and therefore has responsibility for both housing and social services and can read across, for example, from the help that will come from the discretionary housing allowance to the Social Fund. Often the same families need support in a crisis if, for example, a house has been flooded, has caught fire, or if someone is coming out of care, and so on. They will need both housing and social services help, and a unitary authority is rightly placed to give that, provided that it spends the money as it should.

However, the noble Lord has not mentioned that most local authorities in England do not want this because they are lower-tier authorities, and the social services which handle the Social Fund are upper-tier authorities. In the county of Norfolk, which is some 60 miles long and 40 miles wide, yellow lines are put on roads that you do not even drive down, and schools that you have never even visited are closed, which happened when I was a county councillor, because it was too large to be called local government. None the less, that social services authority will be determining the Social Fund for seven district councils, including one wholly urban authority, two semi-urban authorities and three or four rural authorities. As a result, there will be a postcode lottery within Norfolk because a county council of one political complexion will be dealing with half a dozen different authorities below it, responsible for housing and trying to manage the discretionary housing allowance at the same time.

We will therefore have two sets of officials, one at district level and one at county council level, dealing with the same vulnerable family, each of them focusing discretionary money with no mutual interlocking, decision-making or accountability. It is a bloody silly system that is being proposed and I hope that my noble friend presses the amendment to a vote and that, as a result, we give the other place a chance to think again.

[Lord McKenzie of Luton]

My Lords, we support the amendment moved with the great passion and inescapable logic which we have come to associate with my noble friend Lady Lister. I say to the noble Lord, Lord Newton, that I prefer the noble Lord of Wednesday to the one of Monday. As my noble friend said, this is light-touch and effectively cost-free, so we should not have the usual argument about what this would do to the deficit reduction programme. Most noble Lords, with the possible exception of the noble Lord, Lord German, were pretty much on the same page, as the right reverend Prelate the Bishop of Manchester said. To the noble Lord, Lord Fowler, I say that this is not about trying to roll back the decision and retain the Social Fund as it is; it is simply trying to ensure that the money allocated through this process will be spent as it was meant to be. I should have thought that, in these times of austerity, the Government would feel it particularly incumbent on them to ensure that.

The amendment is intended to build on the useful reassurances we had from the noble Lord, Lord De Mauley, at earlier stages in response to concerns we raised about the localisation of the discretionary Social Fund. Those concerns primarily centred on the lack of a ring fence for the money that is to be transferred to local authorities to allow them to provide services that replace those that the Social Fund currently provides to some of the most vulnerable people when they are facing a particularly difficult situation.

Those concerns about the lack of a ring fence were raised by more than 40 per cent of respondents to the Government consultation on reform of the Social Fund. They have been raised by a wide range of charities, including Scope, Crisis, and Family Action, which state that they are seriously concerned that the abolition of the discretionary Social Fund and its replacement with a patchwork of local arrangements will remove one of the final safety nets for some of the most vulnerable and needy members of society.

Those concerns are so acute because of the degree of vulnerability of those to whom the Social Fund community care grant scheme provides support. Thirty-two per cent of those receiving a community care grant in 2009 were disabled, 26 per cent were lone parents and 10 per cent were pensioners. Many women fleeing domestic violence see community care grants as a vital lifeline when setting up a new home on exit from a refuge. The fear is that, without some way to ensure that local authorities use the money for the purposes for which it has been allocated, the needs of those groups will go unmet and the money will be diverted to other purposes—a lesson we learnt the hard way, as my noble friend Lady Lister pointed out, when we were responsible for removing the ring fence for the supporting people grant when we were in government. Crisis points out that councils are, on average, cutting supporting people services by 13 per cent, despite the overall supporting people budget being cut by only 2.7 per cent.

Local authorities themselves are worried about that possibility. DWP research published in December 2011 into local authorities’ plans to replace the Social Fund found that a number of authorities were concerned that without a ring fence and some level of reporting, funding would quickly become amalgamated into existing budgets and that, as a result, its identity, visibility and purpose would be lost. A second concern was that councillors or directorate heads would redirect the funding to plug gaps in other budgets. The most common example mentioned was the social care budget.

The amendment would not place a ring fence around the funding, which the Minister argued would be restrictive. He also argued that the settlement letter which accompanies the transfer of moneys to the local authority will be sufficient to ensure that those funds are used for the purpose for which they are intended—the meeting of often urgent need. If this is the case and local authorities intend as a matter of course to use the funds for this purpose, there should be no barrier to the Minister accepting the amendment, which merely puts in place a checking mechanism to ensure that what he is confident will happen takes place. We support the amendment.