Social Security (Claims and Payments) Amendment (No. 2) Regulations 2010

Debate between Baroness Thomas of Winchester and Lord Goodlad

Monday 21st June 2010 Lords Chamber

[Baroness Thomas of Winchester]

My Lords, I thank the noble Lord, Lord Lucas, very much for the comprehensive way in which he introduced his Motion and welcome him to this most exclusive of gatherings in London; the tiny number of us in this House who speak on DWP orders and the even tinier number who table regret Motions to them.

Before going any further, we have discovered from the response given by my right honourable friend Steve Webb to a letter from the chairman of the Merits Committee last Session that the new Government may decide not to go ahead with this pilot, but I suppose that we must carry on as though they will go ahead at this stage, unless the Minister wants to interrupt at this point to say that they will not. There is no interruption, so I shall carry on.

First, I am glad that the Government have listened to the Social Security Advisory Committee's recommendation, which urged them to bring the list of benefits from which HMRC debt recovery repayments can be made into line with the current list of benefits from which priority debts can be deducted. In other words, any deductions would be from means-tested and not contribution-based benefits. I take the point made by the noble Lord, Lord Lucas, about that being money from the poorest people in the country, whichever benefit it is from.

I am also glad that the SSAC highlighted the vital point that claimants understand the voluntary nature of the trial and the impact on their income of signing up for the trial. A lot of people will not know what “voluntary” means—although they may pretend that they do. The Government have responded positively to that point, saying that they will share copies of the letters sent to claimants with the committee, and that they will ensure that the letters, and contact centre staff, will direct the claimant, or customer, to the availability of independent advice.

The SSAC understandably believes that there is scope for confusion among claimants who receive letters from HMRC. Just seeing that letterhead is likely to lead to many claimants into thinking they are being hounded for recovery of their tax credit overpayments, whatever the letter actually states. If claimants then telephone HMRC, is the Minister satisfied that they will be told in every case that they do not have to repay their debts by having them deducted from their benefits? Will they be told in all cases that they might want to take independent advice, which might lead to some of their debt being overturned or even written off?

Before leaving the subject of letters from HMRC, perhaps the Minister can tell us why it does not provide an explanation of a tax credit overpayment to claimants in all cases; that seems not to be provided as a matter of routine. I cannot think why not. I know that the Minister does not speak for HMRC, but as this SI is a joint project between the two departments, I make no apology for asking him that on this occasion.

We must remember that the Government did not agree with the SSAC that repayment should be at a lower level than they are proposing in this trial, which is three times the normal amount per week. As the noble Lord, Lord Lucas, pointed out, benefits are not generous, and there are rumours that they will not be uprated as usual—we shall hear more in tomorrow's Budget. If claimants in debt have no other source of income except their weekly benefits, many of them will suffer severe hardship if they are being encouraged to repay their tax credit overpayment from those pretty meagre benefits. I may have got the wrong end of the stick here, but I find it horrifying that the SSAC understands that HMRC staff may suggest that debtors apply for a commercial loan to pay off debts—presumably they would never suggest a commercial loan to pay off a tax credit overpayment.

Turning to the design of the pilot, and first, to the aim of the pilot, this appears to be twofold: to find out if there is a demand from claimants for this method of repayment—that sounds almost like an oxymoron—and to see if the scheme is cost-effective. There is more information in the answers to questions from the ever-vigilant Merits Committee about how the scheme will operate. As the noble Lord, Lord Lucas, said, there are to be three groups for evaluation purposes. The first group will be those who volunteer to take part in the trial. The explanation goes:

“The evaluation will look at how much was recovered, the spread of weekly deduction rates, how long a person is in receipt of a relevant benefit and what could have been recovered had they been taking part in the trial for the whole two years taking account of expected levels of movement on and off benefit”.

That sounds fiendishly complicated with so many permutations that you wonder whether any comparisons will really make sense. The next two groups are about those who declined to take part in the trial who will form the control group. First, they have to agree to respond to a letter asking them to take part. I wonder how many will be keen to do that. Not very many, I imagine. Therefore, a key question is: how small does the sample size have to be to produce robust data? I note that the Government say:

“We accept that the smaller the sample, the less able we will be to draw definitive conclusions."

I also note what the Government say about those who go off benefit during the pilot period; namely, that there is no minimum number of weeks for which deductions have to be made in order to regard the participant and repayments made as significant for evaluation purposes. I would have thought that was a rather significant fact.

Perhaps the most encouraging sentence in the whole explanation is:

“In addition the performance of new joined up operational processes between HMRC and DWP will be assessed”.

Is the Minister really confident that this trial will produce a reliable result, in view of all the problems that the SSAC and others have pointed out?

[Lord Goodlad]

My Lords, I have very little to add to what has been said by my noble friend Lord Lucas. The Merits Committee reported to the House on this matter in April and again following a meeting last week. He has deployed all the considerations that we had in mind with his usual thoroughness. The noble Baroness, Lady Thomas, added to that. We will hear what the noble Lord on the Opposition Front Bench has to say. Whether to proceed with the trial is clearly a matter that will have to be considered in the light of, among other things, what is said tonight. A very large number of people, including the poorest people in our society, are involved in all this, and we look forward to hearing what the Minister has to say, but it is an extremely important matter.