Social Security

Lord Harrington of Watford Excerpts

Wednesday 14th September 2016 Commons Chamber

[The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)]

I beg to move,

That the draft Pensions Act 2014 (Consequential Amendments) Order 2016, which was laid before this House on 4 July, be approved.

This order implements a small number of further minor consequential amendments in connection with the introduction of the new state pension. It does two things. First, it ensures that existing administrative arrangements that are designed to facilitate the annual uprating exercise will continue to operate as they do now. Secondly, it gives appeal rights to decisions about national insurance credits that count for new state pension purposes.

Let me deal first with the amendments to do with uprating. Article 2 amends the Social Security Administration Act 1992, which deals with alterations in the payable amount of certain income-related benefits due to uprating: that is, income support, income-based jobseeker’s allowance, income-related employment and support allowance, universal credit, and pension credit. These provisions allow an existing award of these benefits to be altered automatically to take account of the uprating of another benefit in payment to the claimant or their partner, without the need for a further decision by a decision maker. They can also enable the decision maker to take account of the new rates from the uprating date when he or she is determining a new award that begins before the uprating order has come into force, rather than having to revisit the award to apply the new rates at a later date. Article 2 retains long-standing administrative easements that support the annual uprating exercise. It is simply a case of delivering business as usual in a case where a person or their partner’s benefit income is the new state pension. These amendments will therefore apply for the first time in April 2017, with the first uprating exercise for the new state pension.

I turn to the amendment to do with appeal rights for national insurance credits. Article 3 amends schedule 3 to the Social Security Act 1998, which lists decisions that carry the right of appeal. This schedule already includes decisions on credits awarded under the old 1975 credits regulations, and also needs to include those provided for under part 8 of the new State Pension Regulations 2015. The policy intention is that decisions made in relation to those credits should carry the right of appeal. That should have been enacted with effect from 6 April 2016, but I regret to say that it was overlooked and that, as the law stands, they do not have that right. The amendment makes good that omission and it will come into force on the day after the order is made.

Of course, that means that there will be a period in which decisions will be made that were intended to carry the right of appeal but that cannot in law be appealed. Those decisions are made by Her Majesty’s Revenue and Customs officials on behalf of the Secretary of State for Work and Pensions, so my officials have been working very closely with HMRC to find a solution.

That solution involves a workaround. Once the order comes into force, any decisions made under the provisions in part 8 of the State Pension Regulations 2015 will be appealable. HMRC will revisit any decisions made before the order comes into force, and when fresh decisions are made they will carry an appeal right. There will be no substantial difference in outcome between an original decision, had it been appealable and successfully appealed, and a fresh decision that is successfully appealed. A successful appellant will have credits awarded to them.

Importantly, I reassure the House that, to date, no one has in practice been affected. That may seem unlikely at first glance, but there are a number of reasons for it. First, the omission can affect only certain decisions made since 6 April 2016. Secondly, it affects only credits for which a person has to apply.

The practical impact of this gap in the law relates only to decisions about credit that a person has applied for since 6 April 2016. They include new credits that cover past periods in which a person was accompanying their armed forces spouse or civil partner on an overseas posting. Ordinarily, credits awarded for the tax year 2016-17 would be taken into account only in the assessment of new state pension awards that will be made after 6 April 2017. However, those new credits could affect state pension awards made since 6 April 2016.

A further mitigation is that, before a person can lodge an appeal, they have to ask for the decision to be reconsidered by a decision maker—a process known as mandatory reconsideration. Mandatory reconsideration enables a decision maker to reconsider the decision and the facts taken into account in making it. If, on reflection, it is considered that the decision should be changed, it can be revised without the claimant having to go through the whole appeal process. HMRC data from the last tax year, 2015-16, tell us that fewer than 10 cases where a credits decision under the 1975 regulations was disputed ended up progressing to appeal.

Finally, out of 324 applications for the new armed forces partner credits that have been refused up to 5 September, 201 of those refusals were because the tax year being applied for was already a qualifying year for other reasons, so the applicant would not need the credit in order to establish their new state pension entitlement.

It is an unfortunate situation, but I hope that I have reassured the House that, even if a case did materialise, we have measures in place to ensure that, while justice may be delayed, it will not be denied. We are confident that no individual will be disadvantaged by the oversight.

I am sure you will be delighted, Madam Deputy Speaker, that I can confirm that I am satisfied that the instrument is compatible with the European convention on human rights, and I commend the order to the House.

--- Later in debate ---

[Richard Harrington]

I am grateful to the hon. Members for Oldham East and Saddleworth (Debbie Abrahams) and for Ross, Skye and Lochaber (Ian Blackford) for their contributions to the debate and for their kind words, which I appreciate. I am sure this will be the first of many occasions when we take part in such debates.

Let me deal briefly with the points that the hon. Gentleman made. I am aware that he has spoken many times on the frozen pensions issue, but the policy on that is unchanged. It has been in place for almost 70 years, under all sorts of Governments, and there are no plans to change it. The Government comply with their legal obligations where reciprocal agreements exist with other countries. There are no plans to change that and I would not like to mislead the hon. Gentleman by saying that there are.

On the triple lock, I will happily send the hon. Gentleman a copy of the Conservative party manifesto, if he is interested. I am sure it is still available from all good bookshops, and probably some bad bookshops as well. The Government are committed to retaining the triple lock throughout this Parliament. They have said so several times in the past and I am happy to repeat it for him.

The hon. Lady commented on the statutory instrument. On the transitional arrangements—for example, on ending the choice for mixed-age couples—the choice is ending because it is not right that a working-age customer should be exempt from any work-related conditionality just because they have a pension-age partner. Couples in receipt of pension credit at the date that the change is introduced will continue to be eligible for pension credit unless entitlement ends for some other reason—some change in their circumstances.

The hon. Lady asked me if I could indicate the number of claimants to date who had been denied a right of appeal as a result of the omission that we have mentioned. I will check and, if necessary, respond to her in writing. To my knowledge, we do not hold that information because administrative data are not routinely collected by HMRC on volumes of all clerically administered credit applications, but I am happy to get back to her on that point.

Very briefly—hon. and right hon. Members have had a lot of patience with this statutory instrument—the credits affected include applications predominantly for spouses and civil partners of members of the armed forces, as the hon. Lady said, but also for partners of recipients of child benefit where entitlement to the credit is transferred to the applicant, for people providing care for a child under the age of 12—that is called grandparent credit—for being a foster parent and for persons approaching pensionable age.

I have explained what the order covers and these consequential amendments, and we have been through them both in quite some detail. We have acknowledged the gap in the law. This is the first time we have dealt with that gap in the law, but we have put mechanisms in place to make sure that no one is disadvantaged. Fortunately, we have not yet needed to employ them because no one has sought to appeal.

I hope I have provided the clarification that the hon. Members required, but I am very happy to speak to them separately, should they require further clarification. I commend this order to the House.

Question put and agreed to.

[Madam Deputy Speaker (Natascha Engel)]

We now come to motion 4 on local government. I remind the House that as the Speaker has certified that this instrument relates exclusively to England and is within devolved legislative competence, this motion is subject to double majority. If a Division is called, all Members of the House are able to vote in the Division. Under Standing Order No. 83Q, the motion will be agreed only if, of those voting, both a majority of all Members and a majority of Members representing constituencies in England vote in support of the motion. At the end, the Tellers will report the results, first, for all Members and, secondly, for those representing constituencies in England.