Benefits: Reductions

Baroness Buscombe Excerpts

Thursday 1st November 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I join all other noble Lords in congratulating the noble Lord, Lord Bassam, on securing this debate. It gives me great pleasure to respond. Once again, I pay tribute to the life of Lady Hollis. I have already said once before that she and I were opponents back at the beginning of this century. That said, I will never forget the hug that she gave me when I was appointed to this position. The noble Lord suggested an annual debate in her honour. No doubt he will take that matter up with the usual channels.

This is a Government who support families. Our welfare system supports those who are vulnerable and helps people into work. Let me dispel the idea that we are not providing financial support for families: this country spends more than any other developed nation on family benefits. Through our employment success—with 1,000 more people in work on average each and every day since 2010—we are creating a great working nation. Let us not forget that, under the last Labour Government, the number of households in which no one had ever worked almost doubled. Every time Labour is in government, it leaves office with unemployment higher than when it entered office, so ripping the heart out of families across the country, denying people the dignity of work, and removing aspiration from a generation. This was a consequence of the Labour Party’s mismanagement of the economy and its perverse welfare system. It was a system that, through a complicated mix of benefits and tax credits, created effective tax rates of more than 90% for some and cliff edges at 16, 24 and 30 hours, thereby discouraging further work and punishing families for doing the right thing. This was a broken system that did not support families: rather it trapped people out of work.

As noble Lords will know, under the last Labour Government, 1.4 million people spent the best part of Labour’s last decade on unemployment benefits. This resulted in the benefits bill soaring by £84 billion in today’s prices, a rise of more than 60% in real terms. As my noble friend Lady Jenkin said, vast sums of money were being spent, while people were being locked into a life on welfare. This was why we had to introduce a benefits freeze. The system was simply not sustainable. We even had people claiming more than £100,000 a year in housing benefit. This meant that households were contributing £8,350 a year—up by nearly £3,000 from 1997-98—to fund the welfare system. How does that help families and how is it fair?

In stark contrast, this Government have helped more than 3.3 million more people into work since 2010. On average, that is 1,000 more jobs each and every day, and the vast majority of these are full-time, permanent roles. I want to stress that: they are not zero-hours contracts and they are not part-time. We have created more new jobs in the UK since 2010 than France, Spain, Ireland, Netherlands, Austria, and Norway combined. Youth unemployment has more than halved under this Government. There are now 964,000 fewer workless households in the UK since 2010, close to a record low. This means there are 637,000 fewer children growing up in workless households since 2010. This is the best support that we can provide for families, because—I say this to the noble Lord, Lord Bassam—work is the best route out of poverty, including getting people out of in-work poverty. Children in households where all adults are working are around five times less likely to be in poverty than those in workless households. Compared with 2010, there are now 1 million fewer people in absolute poverty, including 500,000 fewer working-age adults and 300,000 fewer children.

Work sets children up for the future. Children who grow up in workless families are more likely to be workless themselves as adults, compared to children with working parents. I say to the right reverend Prelate the Bishop of Portsmouth and the noble Baroness, Lady Lister of Burtersett, that it is a tough choice, but the same considerations and choices faced by people not in receipt of benefits should also be faced by those claiming benefits—those able to work.

We are not complacent and I do not accept any reference to us being a department in denial. I find that a shocking statement, referencing the 83,000 people who work tirelessly in the Department for Work and Pensions. I thank the noble Lord, Lord Young of Norwood Green, for his reference to those brilliant people. We do all we can to support them, and we must do more, because they do an amazing job throughout the United Kingdom. While there are almost a million fewer workless households than in 2010, there are still 3 million where no member of the household is in employment. We want to help those people.

The two-child policy has been referenced as a reason why many people are in poverty. That policy was brought in only in April 2017. It is important to stress that it is not retrospective and that we have child benefit, which continues for each and every child. While there are almost 1 million fewer workless households, the department has great ambitions to return many more people to work, such as our target to increase the number of disabled people in work by 1 million. It can be done. We currently have more than 800,000 job vacancies across the country. These great ambitions are the reason why we created universal credit, in recognition that the punitive legacy system took opportunities from families, creating—I repeat that extraordinary quote from my noble friend Lord Farmer’s brilliant speech—

“a shadowland of complete welfare dependency, with some saying, ‘I cannot afford to work’”.

Instead, we want to give people the dignity of work and we have changed the welfare system to give people a hand up rather than a handout.

As we have heard, universal credit is an up-to-date system that replaces six benefits with one monthly payment and ensures that work pays. The taper system means that people can take on more hours and part-time seasonal work, as the benefit adjusts to their earnings. There are no cliff edges. I am proud that work transforms lives, because it helps to improve the well-being of families—their health, and their children’s prospects and preparation for later life. Of course, it improves their chances of building a pension through, for example, automatic enrolment. We will help an extra 200,000 people in work and empower people to work an extra 113 million hours a week. Those in work under universal credit earn on average £600 extra a year. That is how we will deliver a sustainable welfare system.

Make no mistake, we are supporting families that need support. This country spends more than any other developed nation on family benefits. Through universal credit, around 1 million disabled households will receive an extra £110 on average per month through more generous support. Universal credit pays up to 85% of childcare costs, compared with 70% under legacy, regardless of the number of hours worked, unlike tax credits. This provides the extra cash boost to pay for childcare and allows people to work extra hours.

Working families in England can also claim up to 30 hours’ free childcare for three and four year-olds from support from other government departments. This has helped drive profound cultural change in this country, with 1.6 million more women in work since 2010. As a working mother, I know so well that most women really want to work and stay connected. I agree with my noble friend Lady Pidding that universal credit unlocks work opportunities for everyone, unlike the legacy system—and, yes, we will not stop the rollout of UC.

We know that work does not just pay financially—it does much more than that, it provides people with a sense of purpose, identity and personal achievement—all those things that we in your Lordships’ House experience and perhaps sometimes take for granted in our own lives. It also helps with physical and mental health as it tackles loneliness head-on. It allows people to develop their skills and transform their lives. That is what this Conservative Government are doing, and we are doing it through universal credit.

We will make a success of universal credit by being an open department that listens. In response to my noble friend Lord Sherbourne, who is so right, it is important that we listen. We are travelling the country to speak to experts, workers and those on UC to understand where the system can be improved. That is quite right. As the noble Lord, Lord Young, said, we need to keep listening and travelling the country. This year, my ministerial colleagues and I have met with over 500 colleagues, charities and stakeholders; visited over 50 jobcentres, service centres and pension centres; tabled 35 Written Ministerial Statements and appeared 15 times in front of Select Committees.

As a Government we have listened to concerns and responded. This week, the Chancellor announced significant changes in the Budget that will make a huge difference to working families and those moving to universal credit. For those in work, we have put an extra £1.7 billion a year into work allowances, increasing the amount that hard-working families can earn before universal credit is tapered away. This provides 2.4 million families with an extra £630 a year. This is a pay rise of 7% or more for these workers, showing that hard work pays off. This measure will increase the incentive to enter work and focuses support on some of the most vulnerable—parents, disabled people and carers, as referenced by the noble Baroness, Lady Pitkeathley—who may face greater barriers to entering employment.

We will also support those moving to universal credit, especially the vulnerable. My noble friend Lord Farmer asked about the £1 billion package announced by the Chancellor in his Budget. This will provide two additional weeks of legacy out-of-work benefits for people moving on to universal credit, providing claimants with extra money during the five-week period before receiving their universal credit payment. I think that is possibly where the noble Lord, Lord Young of Norwood Green, suggested three weeks. People will receive an extra two weeks of benefits to help them with a more seamless transition from legacy on to universal credit. This is extra money that does not have to be paid back. It will provide 1.1 million people with an average one-off additional payment of £200, on top of the two additional weeks of housing benefit announced in autumn 2017 and put into place this year.

We think that about 700,000 people have been missing out on their benefits under legacy. We have worked that out to be to the value of about £2.4 billion. There will be a significant change in how people find out about what they can receive, because they will have constant contact with, and will work together with, their work coach.

We have gone further in the Budget to support families. We will support those in debt by reducing the normal maximum deduction rates from 40% to 30% of a person’s standard allowance. This will have a huge impact, helping over 600,000 families at any one point when rollout is complete. It will provide them with on average £295 extra a year as their debts are repaid over a longer period.

With particular respect to the self-employed, I say to the noble Baroness, Lady Donaghy, that we will support new businesses by opening up a 12-month grace period before the minimum income floor comes into effect. In 2023-24, around 130,000 self-employed households will benefit from exemptions from the minimum income floor, giving them the opportunity to grow a successful business. This is alongside extending new enterprise allowance contracts, which provide support for those out of work to set up a business and become self-employed. This will add to the 45 new businesses a day that have been created since the introduction of the scheme in 2011. We have listened, we have acted and we continue to listen.

Next month, universal credit will be in place in every jobcentre in the country, and this autumn we will bring forward regulations to deliver the managed migration phase of universal credit, to move people without a change of circumstances. These are positive regulations which allow us to protect 500,000 people’s severe disability premium at the point of migration; and deliver transitional protection for those we move, to ensure that at the point of moving those who are manage-migrated do not lose a penny. We will take a measured approach to delivering managed migration. It will start later: this is not a pause but we will be taking longer to introduce the managed migration, because we need to do test and learn to make sure that we get the system right. The process will start later in 2019.

[Lord Young of Norwood Green]

The Minister says, “It is not a pause, we will take a little longer”. Will she just clarify that? What does she mean exactly?

[Baroness Buscombe]

Let me clarify: we are not stopping the rollout. The rollout for all people coming on to universal credit will be completed by the end of December 2018, and they will continue on universal credit. The system will carry on and all those new people will come on, but we are not going to start moving people from legacy benefit over to the universal credit system until July 2019. We want to spend the first six months of next year building a system that works, through a process of test and learn, to make sure we get it right for those people. I promise that we will work with all our stakeholders to make sure that people do not fall through the cracks. I think the noble Lord has a family interest in this, in terms of jobcentres. The reality is that everybody is working hard to make this enormous change we have undertaken work to the best of our ability. I hope that that explains it.

In response to my noble friend Lady Wyld, I say that our migration processes will be co-designed with stakeholders, as I just said, to ensure that we have listened and understood claimants’ experiences. That obviously relates very particularly to people with disabilities—we want a process that works well for everyone. We are focusing on building safeguards for vulnerable claimants and ensuring we have all the necessary information to ensure a smooth transition with uninterrupted support. We will target support to the most vulnerable, as referenced by my noble friend Lord Shinkwin, and will focus on working to support those with mental difficulties. To ensure that the most vulnerable claimants are supported, we have improved the learning journey for our work coaches, which includes training to work with people who suffer from mental health issues. We have also increased the number of disability employment advisers who can provide additional support.

It is important to add that we are working holistically across government, including the Department of Health, the Department for Education and the ministry of housing. It is very important that all our systems work together for the benefit of all, so no more than 10,000 people will be moved in the first six months of the preparation phase for the managed migration. Let me say that this side of the House will not play politics with these regulations, as I am sorry to say we all know the Labour Party did earlier this year when they voted against the £1.5 billion of support we announced at the 2017 Budget. I confirm for the noble Lord, Lord Kirkwood, that we will lay the managed migration regulations very shortly. Pausing or scrapping universal credit—whichever is the Labour Party’s policy; we are not quite sure at the moment—will not support the families that Labour purports to stand for.

I hear what the noble Lord, Lord Kirkwood, said about universal support. We are working hard on universal support—our new partnership arrangement with Citizens Advice is an example of that—and we continue to work with local authorities. In terms of affordable credit, we will work with stakeholders on a feasibility study on a no-interest loan scheme—something that was announced in the Budget.

I will try in the last moments to answer one or two more questions. Her Majesty’s Treasury published a cumulative distributional analysis alongside the Budget in October 2018, which shows that government policy continues to be highly redistributive. In 2019-20, the 10% of households with the lowest incomes will receive over four times as much support in public spending as they contribute in tax on average, while the 10% of households with the highest incomes contribute over five times as much in tax as they receive in public spending. I listened to the noble Lord, Lord Livermore, and the noble Baroness, Lady Drake, and their analysis was wrong. There has been no sudden increase in in-work poverty. The chances of a working family being in poverty are broadly the same as they were in 1997.

In terms of housing support, we are working hard. A number of noble Lords referenced housing. We are working closely with the department of housing to improve what we can do to support new builds, as well as supporting those in social housing.

We spend £50 billion on benefits to support disabled people and those with health conditions—a record high—and £9 billion in real terms since 2010, so I do not recognise all the references to cuts. We are doing an extraordinarily difficult job. My noble friend Lord Sherbourne referenced the word “hard”. It is very hard to get this right, because we are working with millions of people on a daily basis across the United Kingdom to support them.

We stand to provide opportunities for families across the country, through the opportunity to work, and through a sustainable, fair welfare system—fair to those claiming through it and those paying for it, fair because we support vulnerable families as compassionate Conservatives, and fair to those who can work by rewarding hard work.

Child Support (Miscellaneous Amendments) Regulations 2018

Baroness Buscombe Excerpts

Tuesday 30th October 2018 Grand Committee

Moved by

[Baroness Buscombe]

That the Grand Committee do consider the Child Support (Miscellaneous Amendments) Regulations 2018.

Relevant document: 41st Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I begin by thanking noble Lords for bearing with me as I take these regulations through from a seated position. I want to say a particular thanks to the noble Baroness, Lady Sherlock, for giving me early notice of her response to the regulations, for which I am extremely grateful. The regulations were laid before both Houses on 12 September 2018. They enable the Government to make amendments to child maintenance legislation to deliver the new child maintenance compliance and arrears strategy. Let me give the Committee some context and background to the regulations.

The Government introduced a reformed child maintenance scheme in 2012. The reformed scheme provides stronger incentives for parents to work together following separation and, where possible, to make a family-based arrangement for maintenance, avoiding state intervention altogether. The Child Maintenance Service is there for families unable to make a private arrangement. It delivers a simpler scheme, avoiding the problems which beset the previous statutory child maintenance schemes. These draft regulations will strengthen the statutory scheme and introduce measures to prevent parents artificially minimising their child maintenance liability. They will also introduce new collection measures, close loopholes and broaden the sanctions that we can bring against the small number of parents who persistently fail to meet their obligations to their children.

Now that the majority of cases with ongoing maintenance have been closed on the CSA schemes, the Government want to draw a line under the regrettable legacy of the CSA and end the years of uncertainty that families who have historic CSA cases have experienced. For many years, these cases have been held in limbo. The debts outstanding are often small, and in some cases, when asked, parents have moved on with their lives and are not interested in pursuing the debt. These regulations will give parents in certain circumstances a final chance to tell the Government that they still want to consider taking action to collect their debt where it is likely to be possible at reasonable cost to the taxpayer. This will enable these cases to be closed finally in the next few years.

A small number of parents are currently able to lower their child maintenance liabilities artificially, or avoid them altogether, by drawing an undeclared income from assets. Whether this is via loans against the value of bullion or through the acquisition of virtual currency, the cultivation of a cash-poor but asset-rich lifestyle is a rare but growing method of evading child maintenance responsibilities. These regulations introduce new powers to address this problem. Where a client believes their ex-partner possesses the relevant assets, the Child Maintenance Service will investigate, escalating to its financial investigations unit if appropriate. If possession of a relevant asset is confirmed, and the value exceeds £31,250, a notional income will be calculated at 8% of the asset’s total value. This will be added to the total income used to calculate the maintenance due. It is recognised that assets can be acquired for legitimate reasons, which is why this power will be used in only a very small number of cases. The draft regulations protect assets in certain circumstances, including where the asset is used for business purposes or is the primary home of the parent or a child.

It has become evident that some parents are able to place all their funds in joint or unlimited partnership accounts, rendering them inaccessible to our current powers. These regulations extend the Government’s powers to enable the Child Maintenance Service to use regular and lump sum deduction orders in relation to joint and unlimited partnership bank accounts and to use lump sum deduction orders in relation to sole trader accounts. The introduction of this new power will mean that an additional £350,000 of maintenance per year may be collected for children.

To protect the rights of other joint account holders, a number of safeguards have been put in place to prevent deductions being taken from the other joint account holder’s funds. Joint or unlimited partnership accounts will be targeted only where there are insufficient funds in the parent’s solely held accounts. Before action is taken, the last six months’ account statements will be checked to establish the ownership of the funds. In a small number of cases where, despite investigation, it is not possible to establish how much of the funds within the account belong to the parent—for example, because no evidence is furnished as to ownership—a pro-rata approach will be adopted. This will assume that the parent’s share of the funds is equal to that of the other account holders. All account holders will be notified before a deduction order is made in respect of a joint account and given the opportunity to make representations in relation to the funds targeted. The standard representation periods will be 14 days for regular deduction orders and 28 days for lump sum deduction orders. All account holders will also have appeal rights. Further safeguards are in place to ensure businesses have sufficient cash flow to continue to trade. A deduction will not be taken if it would reduce the account balance below a reasonable amount; we suggest, for example, £2,000. There is also a requirement for the Government to review these provisions every five years.

--- Later in debate ---

Perhaps I may ask the Minister some final questions. What is the Government’s current target for the proportion of parents who do not use CMS and who will go on to have an appropriate family- based arrangement? What target has been set for increasing compliance by non-resident parents from that 57% current base? What target has DWP set for future arrears to avoid us simply being back here again in five years, with Ministers wanting to write off arrears on the current system on the grounds that they need to have a fresh start for everyone before a new system is devised? If the Minister could reply to those questions, I would be grateful. It would also be helpful if she could tell the Committee whether she is satisfied with the level of resourcing going into this. Is it really about powers or resources? Either way, we will be interested to hear how the Government plan to make sure that having an administrative child maintenance system is worth the regulations that are written about it.

[Baroness Buscombe]

I thank noble Lords for their contributions to this debate and for the constructive approach that they have taken towards today’s proceedings. I will now respond to some of the key issues raised. I will attempt to do this in order but I doubt whether I will succeed. I will do my best and if I fail to answer any questions, please be assured that we will write to the Committee following the debate.

I wish to put into context the justification for what we are doing. This has not been a quick or easy decision; it has involved exhausting other approaches to deal with the debt. We have also had numerous long debates and discussions within the department in trying to decide the best thing to do. We are talking about huge sums of money here. I say immediately that when considering resources and budgets, the truth is that we have to be proportionate—what is reasonable in the circumstances; what is more pressing; and what is more important. In our department we are already spending 25% of the entire government budget across Whitehall, so we have to think about resources and the degree to which we want to protect and support children going forward versus the difficulty of writing off such a considerable debt. We have to balance that against the fact that if we do not write it off and keep it on our books it would cost us approximately £30 million a year, which would not be money well spent. It has been a difficult balancing act.

Moving all the debt to the CMS IT systems would incur a one-off cost of at least £250 million, without the resources to action it. We have taken various actions to collect this debt, including using debt collection agencies to chase what is owed. More than 63,000 cases were passed to debt collection agencies for them to arrange collection, but after three years we took back 55,000 cases because the DCAs had not been able to make any debt collection arrangements.

This is our approach following exhaustive discussions, debates and thinking through what is fair to the taxpayer. As the noble Baroness, Lady Sherlock, said, the most important thing is to put the children at the forefront of our minds while seeking ways to send out the critical message that no one should cease to be responsible for their children. Enforcement matters.

I say to the noble Lord, Lord Kirkwood, that I absolutely respect his considerable and lengthy involvement on this really important subject. Of course, there have all along been compelling arguments on both sides. It is interesting what he said about the economic environment being different. Maybe there is also a sense that people are becoming more artful in how they seek to avoid their responsibilities, which is depressing. I am not sure what that says but the truth is that we must have the well-being of children at the forefront of our minds. In a sense, yes, these regulations are overdue, so it is important that we look forward. It is also important to say here that they form the first of two packages. We plan to lay a further set of regulations in 2019 to secure the remaining powers to deliver the 2018 compliance and arrears strategy. These will allow us to take a consistent approach to deduction from benefits.

I should explain that the regulations are being laid in two packages because the Social Security Advisory Committee needs to consider the regulations that make changes to deductions from benefits. But we would not wish to delay the rest of the regulations so that we may lay them all together. Those regulations are not yet drafted, so there is still time—I stress this—to take into account any thoughts on these provisions from noble Lords and honourable friends in another place. We welcome any input on that.

[Lord Kirkwood of Kirkhope]

That is an opportunity perhaps, under an SSAC consideration of the second package of regulations, for affected parents with care and non-resident parents to make submissions to the SSAC scheme later this year. If I understood what the Minister was saying, the Social Security Advisory Committee will undertake a normal consultation and will be looking for people to make submissions for consideration as the committee makes its recommendations. Am I right in thinking that?

[Baroness Buscombe]

I ask the noble Lord to bear with me, because I do not want to get this wrong. The answer is: only if the committee decides to report the regulations.

I will focus on some of the questions put to me, which are welcome. I start with the question from the noble Lord, Lord Kirkwood, on case closure timescales and the fact that there has been slippage. We are still on course to have ended all existing liabilities on CSA cases by the end of this year, 2018. The noble Lord referenced the NAO report. In that context, it is really important to say that we are continuing to consider the recommendations in the report. The department, in a broader context, has really taken on board that we need to be much better at listening. We thought that we were doing enough perhaps, but there is always more that we can do—within time and resource constraints, of course—but it is very important that we listen.

The noble Baroness, Lady Sherlock, asked how the representations will be sought. Will each parent to whom money is owed be written to individually? Depending on which category a case falls into, a client will receive a different letter or series of letters explaining what is happening and why, and, where appropriate, giving them the opportunity to ask us to try to collect their debt. These letters will be sensitively worded and will acknowledge that this may not be the outcome a client is hoping for. I was asked whether, if there has been a payment in the last three months, we will continue to collect. The answer is yes. If the case is in payment, we will continue to collect any arrears still outstanding for as long as the case remains in payment.

I was also asked whether our power to confiscate passports will be used only in a few cases. We will use this power in a targeted, proportionate way. I noted what the noble Baroness, Lady Sherlock, said about our having tried driving licences and asking whether that worked. The keyword here is “deterrent”. The vast majority of parents, we must stress, willingly pay towards their liabilities; we will seek to apply sanctions only in cases where parents wilfully refuse to pay. This happens only in limited circumstances. As with other enforcement powers, such as removing driving licences, the threat of exercising it can be very persuasive. The threat of denying people a passport is certainly something that stood out, when I first read the draft regulations, as something quite exceptional. I hope noble Lords will agree that it should send out a strong message to those who, frankly, are consistently refusing to take responsibility for their children.

The noble Baroness, Lady Sherlock, and the noble Lord, Lord Kirkwood, enquired about compliance rates for cases of collect and pay, asking what we are doing to improve the figure of 57%. The latest data, published in September, for collect and pay compliance shows it is going up; it is now 62%. Of the £1.85 billion due to be paid since the Child Maintenance Service began, £1.6 billion has been arranged through direct pay or collected through collect and pay while £290 million is currently unpaid—around 12% of the total. This percentage share continues to decline from 12.4% last year and 13.1% two years ago.

The CMS is not the only option available for separated parents to arrange child maintenance; it is there for people who cannot work together to make their own arrangements. The collect and pay service is in place for those parents unable to work together, who are less likely to be compliant. This means that the caseload is smaller but naturally more challenging than the CSA caseload.

The noble Baroness, Lady Sherlock, asked how many cases will be affected by the notional income power each year. We have not made projections on this point, but we anticipate the number to be small as, historically, only a small number of parents attempt to avoid their liabilities in this way. On the question of how many passports we expect to be disqualified every year, the figure referred to indicates that we project 20 applications for all types of sanctions will be made in the year. These include commitment to prison and disqualification from driving. Sanctions must only ever be a last resort; this is not just about how many we pursue but about targeting the right people. The threat often results in payments restarting.

The noble Lord, Lord Kirkwood, asked why the passport power is not being introduced for people in Northern Ireland. I can assure the noble Lord that this is not a particular sop to those resident in Northern Ireland who do not respect their responsibilities for their children. This is not being introduced in Northern Ireland simply because Northern Ireland citizens are entitled to an Irish passport; they have options for dual nationality, which would reduce the effectiveness of the power—they would simply find an easy way around it.

The noble Baroness, Lady Sherlock, asked whether giving periods of representation to account holders would mean that NRPs can move money to other accounts. This change is intended to close down a known loophole. If we intend to deduct a lump sum from a joint or business account, the funds will be frozen during the representation period. If parents move their funds to another type of account—for example, a sole account—we will target that account. If the funds are moved to an account we are unable deduct from, we will use our other strong enforcement measures to collect the debt.

Employment and Support Allowance

Baroness Buscombe Excerpts

Thursday 18th October 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, with the leave of the House, I shall repeat in the form of a Statement an Answer given to an Urgent Question in another place by my right honourable friend the Minister for Disabled People, Health and Work. The Statement is as follows:

“The department is correcting some historic underpayments of ESA, which arose while migrating people from incapacity benefit to employment and support allowance. We realise how important it is to get this matter fixed. Clearly the mistakes should not have happened, and we know it is vital that it is sorted as quickly as possible.

For the initial stage of the exercise, we expect to review around 320,000 cases, of which around 105,000 cases are likely to be due arrears. We now have a team of over 400 staff working through these cases and have paid around £120 million of arrears. We expect to complete the vast majority of this part of the exercise by April 2019, and we have to date completed all cases where an individual is terminally ill and has responded to the review, thereby ensuring they receive due priority. The additional cases will be undertaken throughout the course of 2019.

The announcement in July about paying cases back to the point of conversion requires us to review an additional 250,000 cases, of which we estimate around 75,000 could be due arrears. We will undertake this work throughout the course of 2019, and an additional 400 members of staff will be joining the team throughout this month and November. We will assign further staff throughout the review of the 250,000 cases. This will enable us to complete this very important activity at pace.

The department has prioritised checking claims from individuals whom we know, from our systems, to be terminally ill; to date we have completed all cases from the initial 320,000. Where an individual is terminally ill and has responded to the review, we want to make sure that they get that money as soon as possible, so we are now contacting cases identified as most likely to have been underpaid according to our system. Some of those cases will undoubtedly be the most complex.

Yesterday, the department published an ad hoc statistical publication, setting out further detail on the progress we have made in processing cases and revised estimates of the impacts of this exercise, including details of the number of claimants due arrears and the amounts likely to be paid. Also yesterday, I updated the frequently asked questions guide and deposited it in the Library, and I will continue to update this House”.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that Answer. This week we learned that 180,000 sick and disabled people have been underpaid vital social security. The problem goes back to 2011 when the Government began migrating people on to ESA from incapacity benefit, but did it wrongly. In many cases, they migrated them across to contribution-based benefit when they would have been entitled to income-based benefit, which means that they could have got other payments, such as severe disability payment premiums and the like.

Initially Ministers said that they were allowed to pay claimants back money only until 2014, until CPAG went to court—at which point, they changed their minds. At the time of that migration an independent expert working for the DWP, Professor Malcolm Harrington, urged Ministers not to proceed until he was certain that the system was robust. But they did. Last July, the Public Accounts Committee published a scathing report about this error, in which it suggested that some people had lost out by as much as £20,000. It described the DWP as being defensive and unwilling to listen to warnings, which is very worrying. Claimants are now getting money, but in some cases it seems they have no idea how the sums were arrived at. The DWP now estimates that it is going to pay £1 billion as a result of this very serious error.

Will the Minister tell us, first, what steps are being taken to ensure that all claimants will be compensated for the lost value of passported benefits such as free school meals, NHS prescriptions or dentistry treatment? Secondly, what compensation will be paid to claimants on top of the arrears? Many of those will have found themselves forced into rent arrears, some into destitution. All of this costs money. How much compensation will they get for it? Thirdly, the DWP has identified those whom it knows to be terminally ill. How is it going to go about maintaining that, to include people who become terminally ill while the review carries on until the end of next year? What systems are in place to identify those people and prioritise their cases? Finally, and most importantly, what lessons has the DWP learned from this to ensure that it listens to the many warnings about universal credit migration and does not make the same mistakes?

[Baroness Buscombe]

My Lords, first, I will respond to the noble Baroness by referencing passported benefits, which are of course the responsibility of each government department. It would be impractical for the DWP to undertake an exercise to uncover who might have been entitled to those other passported benefits. However, we are talking to other departments to make them aware of the issue. In terms of compensation, it is important to make it very clear that no one saw a cash reduction when they were transferred to ESA. This is about extra money that they might have been entitled to. Also, it is really important to explain that we are learning lessons from this. The key lesson is that it is a mistake to try to prepopulate information without being in touch with claimants. It is very important for us to make sure, when we are changing benefits or introducing new benefits, that we do so in a way that involves working with claimants so that, rather than trying to be clever with a seamless process, we actually engage. That is what we are doing now, with what will be 800 people working with claimants to get this right.

[Lord Stoneham of Droxford (LD)]

My Lords, this announcement is a stark warning that a botched transition, which very sadly took place under the coalition, can leave vulnerable people thousands of pounds out of pocket for years to come. As the noble Baroness, Lady Sherlock, has just said, in the move to universal credit, we must take more care. What lessons are the Government learning from this mistake for the big changes to come and what new safeguards are they putting in place? In particular, will the Government amend the proposed Universal Credit (Transitional Provisions) (Managed Migration) Amendment Regulations 2018 so that claimants are transferred automatically from legacy benefits such as income-related employment and support allowance to universal credit?

[Baroness Buscombe]

First, I want to make it clear that we are constantly looking at how we can make our procedures more robust. In fact, our Permanent Secretary is in discussion with the Public Accounts Committee about how we can do this. The key lesson that we have very much taken on board in developing our processes and our thoughts on managed migration is—as I have just said, and I will repeat it—that it is important that we engage properly with the claimants and that we do not have a system that is entirely automatic without the opportunity to understand up-to-date data, information and circumstances with regard to each and every claimant. That is to ensure that claimants do not lose out on benefits to which they are entitled, unlike the legacy benefits, which about 700,000 people are not receiving. That is about £2.4 billion because there is not sufficient contact.

[Lord McKenzie of Luton (Lab)]

My Lords, will the Minister say a little more about the reasons for these underpayments? Is it fundamentally a systemic problem, or simply a collection of ad hoc errors?

[Baroness Buscombe]

It is right to explain—indeed I did explain this in July—that the reality is that a mistake was made that should never have been made. No mistakes are acceptable when it comes to people who genuinely need this important support. What we did back in 2013 was respond to individual cases. Clearly, the department was not aware that there was a much bigger problem. We worked to legal advice at the time, and we took the view that the law prevented us from paying arrears beyond the date of the LH judgment in October 2014. An Upper Tribunal in Scotland endorsed that approach. The department is, however, now in a position to extend the payments back to the date of the original conversion from incapacity benefit to ESA. The department expects to pay back around £970 million in arrears between now and 2020.

[Lord Pickles (Con)]

My Lords, the Minister has been quite contrite about what has happened, and I think the whole House will welcome that. Can we briefly return to the question of passported benefits? I understand how difficult this is, but the regulations on passporting have become better known since they originally came in. Will my noble friend look again at that and make it more of an automatic process rather than relying on the good offices of other government departments? But I have to say that I am extremely impressed by the way in which the Minister and her department have approached this.

[Baroness Buscombe]

I thank my noble friend for his question. I agree that it is not sufficient for the medium and long term just to say that we are talking to other departments. We are looking to see how, when we move to universal credit, we can ensure through managed migration that nobody loses out and that, where possible, all the benefits that can be passported are passported. However, we have to accept that we are dealing with a really complex system and with millions of people. It is right to put this in the context of ESA: we are dealing with 2.3 million working-age people and, up to now, we have spent £54 billion on benefits for these people with disability and health conditions. That is over 6% of all government spending. We have to do this in a way that is sensible and practical and as careful as possible. That is why we are also now employing 400 people in addition to the 400 we have already in order to sort out this particular mistake.

[Baroness Thomas of Winchester (LD)]

My Lords, perhaps I might ask about communications. Will all the JCP offices be able to tell people that they do not have to take any action themselves to get compensation for what has happened? Sometimes people have asked JCP officers whether they need to fill in the form and have been told that they do. Obviously, there is a bit of mis- information flying round. Will the department keep JCP office staff up to date with how they should carry on?

[Baroness Buscombe]

The noble Baroness is right to raise this point. The core communication hub is at Oldham and it is working hard to send out letters with phone numbers to absolutely everybody, so that people can be in touch by phone. We are constantly training our work coaches in all job centres to make it absolutely clear that this is something we are prioritising and have to sort out. It is up to us to do it; it is not for claimants or others to have to make that move. We are in touch with people who think they might be within this group and we urge them to be in touch with us on the numbers we are sending them by letter.

House adjourned at 4.28 pm.

Universal Credit

Baroness Buscombe Excerpts

Tuesday 16th October 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I begin by paying tribute to Baroness Hollis of Heigham, who was a Minister in this House from, I understand, 1997 to 2005. Baroness Hollis was a formidable Minister—I know because I was a shadow Minister for Social Security during some of that time. I remember her as a fantastic champion of the welfare system, women’s rights and in particular women’s pension rights. I feel privileged to have known her.

By leave of the House, I shall repeat as a Statement an Answer given to an Urgent Question in another place by my right honourable friend the Minister for Employment.

“Mr Speaker, I note the precise wording of the Urgent Question from the right honourable gentleman, for whom I have a great deal of respect. I know he cares deeply about welfare matters and is an excellent chair of the Work and Pensions Select Committee. Of course he, his committee and the whole House have a right to hold the Government to account, and that includes the Department for Work and Pensions. I do not wish to be unhelpful in my response. However, some of the matters that he may be alluding to are the subject of speculation in the media. There has been a great deal of speculation around universal credit in the last few days. I cannot comment on speculation.

When it comes to rollout, we have long said that we will take a slow and measured approach to managed migration. That is why we will continue to take a ‘test and learn’ approach, acting on feedback and improving the system as it rolls out. By December 2018 universal credit will be in every jobcentre in the country. People who are making new claims to our benefits system now apply for universal credit rather than being put on the old system. Next year we will start the wider process of moving people from the old benefits system on to universal credit. The process will begin later next year in a measured way with no more than 10,000 people moved over, to ensure that the system is working well for claimants and to make any necessary adaptations as we go. We have said for a long time now that the managed migration process will take place from 2019 to 2023.”

[Lord McKenzie of Luton (Lab)]

My Lords, I start by thanking the Minister for her kind comments about my erstwhile colleague Baroness Hollis. It is with regret that we have the absence of her voice for our deliberations today. She had unparalleled experience on universal credit. She was determined, she was passionate, and her oratory rang out across this Chamber. I fear that we will not see her like again.

Universal credit is causing severe hardship for many people claiming it. Over the past two weeks, conflicting statements from the Government have caused real confusion about the impact it will have on people who are required to move across to claim it in the next phase. First, we were told that austerity was over, then that families on low incomes are in danger of losing up to £200 a month as a result of transferring to universal credit. Next, the Prime Minister said that nobody would be worse off, but the Secretary of State contradicted her the following day. This morning, we had the BBC report—I understand the Minister’s position on that—saying that the Government are planning changes to the universal credit system that will include the end date for the rollout being put back by a further nine months. This is the sixth time since 2013 that this benefit has been recalibrated.

Is the reported delay to the start of the next phase the result of the warnings that the Government have received from right across the voluntary sector and expert organisations that their draft regulations are simply not fit for purpose? Will they now publish their impact assessment of that next phase? How will the changes reported by the BBC affect the savings that universal credit is expected to make for the Treasury? How many households currently claiming legacy benefits will be worse off between now and 2023 as a result of making a new claim for universal credit? Together with dozens of disability and advice organisations, we call for a halt to the rollout of managed migration until it is fit for purpose.

[Baroness Buscombe]

My Lords, I am grateful for the noble Lord’s questions. Let me say straightaway that we have not been recalibrating anything. He will be aware that there have been a number of PQs in the past few months. There was a Written Ministerial Statement in June this year, wherein we set out very clearly that from the beginning of next year, we want to move to managed migration in a very slow and careful way. We want to be sure that we get it right, that the right systems are in place. As we also made clear to the Social Security Advisory Committee, we will not begin to introduce managed migration, which is those who are on existing benefits—the legacy system, as we call it—rather than those who are new to the benefit system who are going on to universal credit, until July next year. That has long been the case.

We are now waiting for the end of the rollout of the system into every jobcentre by the end of December this year. We are also now in receipt of some important recommendations made by the Social Security Advisory Committee as a result of our proposals to it with regard to managed migration regulations, which we hope to lay before the House in the near future. We are now considering those recommendations very seriously and I will report to this House in the very near future.

The most important answer that I must give straightaway is that a key point for the managed migration regulations, which we will bring forward, is to protect the most vulnerable. We are not halting any rollout. Our concern is to protect the most vulnerable— those who cannot work, those with severe disabilities—through the severe disability premium and careful full transitional protection through migration on to universal credit.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am grateful to the Minister for repeating the Statement. I concur with her tribute to Patricia Hollis. She was an integral part in the creation of this legislation and delivered a complete masterclass in parliamentary scrutiny in the 2012 committee which I was privileged to share with her. She will be missed.

Can I confirm that there will be no delay in the publication of the managed migration regulations and that the Social Security Advisory Committee report will be published in due time? There should be no delay in either of those two things. Some of us are a little surprised that the recent controversy about the cuts has suddenly blown up, because it has been painfully obvious since 2012 that a moment would come when these things would bite and things would get really tough in terms of financial hardship for low income families.

I will make two points. First, I am now really worried about the requirement for managed migration people to have their benefits turned off and then to make their own application. We need to seriously look at these regulations to make sure that there is automaticity of transfer to universal credit, and then we can sort out the difficulties afterwards. Otherwise, hardship will be exacerbated.

The other thing I will say strongly to the Minister is that Church Action on Poverty has produced a very interesting report indicating that the safety net that was available in 2012, according to its research, has been slashed. Community care grants and crisis loans totalled more than £200 million a year, and we are now at the stage when the Government have just announced £37 million as the total amount of money for universal support across the country. Frankly that is not enough to prevent hardship occurring in ways that will hurt families in the future. The House will need to turn its attention to these things during consideration of the managed migration regulations.

[Baroness Buscombe]

I thank the noble Lord and say straightaway that there will be no delay to the publication. Indeed, because we have to see these regulations on the statute book by the end of this year, it is very important to ensure that they are laid shortly and that we can debate them in your Lordships’ House. We very much hope that, unlike the package of £1.5 billion in extra support for universal credit that was introduced in another place following the Budget last autumn, the managed migration regulations will not be rejected, as the package was last autumn.

It is important to remember that we introduced a package that made advance payments quicker and easier for people to access. They could have a 100% advance up front for their first month’s claim, with no interest to repay for 12 months. We scrapped the seven-day waiting period and introduced a two-week run-on for people receiving housing benefit, with a cash payment that was not repayable. We are helping more than 500,000 people by protecting severe disability premiums.

That package was rejected in another place. Let us hope that this managed migration package will be supported in another place and in your Lordships’ House, because we want to protect the severely disabled, those with health conditions and those who genuinely need our support. We, too, are surprised by the recent controversy, because we are trying to do the right thing to support the right people. Benefits will not be turned off. We will be very careful to ensure that there is a transfer. That is why we will introduce the system slowly and carefully. We are using six months of next year to try to get this right.

[Baroness Lister of Burtersett (Lab)]

My Lords, I echo what has been said about my noble friend Lady Hollis. She was an inspiration.

This morning, at a meeting of the APPG on universal credit, organisations working with claimants around the country were unanimous that so-called managed migration—as the noble Lord, Lord Kirkwood, made clear, it will not be managed on behalf of claimants—should not go ahead until UC’s design flaws are rectified, especially inflexible monthly assessment, which is creating huge problems. Will the Minister undertake to look at these problems as a matter of urgency? UC needs to be recalibrated.

[Baroness Buscombe]

My Lords, I do not recognise the word “inflexibility” when it comes to universal credit. The whole point of the system is to take six different benefits and put them into one simple one that tracks people’s circumstances on a monthly basis, rather than leaving people with no contact, sometimes for literally years, under the legacy system. We are spending £3.1 billion on transitional protections for 1.3 million claimants to ensure that no one loses out at the point of transition. This will ensure that no families receive less money than they do today. We are spending an additional £1.4 billion on protection for 500,000 disabled people receiving disability premium.

Personal Independence Payment

Baroness Buscombe Excerpts

Wednesday 10th October 2018 Lords Chamber

[Baroness Thomas of Winchester]

To ask Her Majesty’s Government what action they are taking to improve Personal Independence Payment assessments in the light of the number of successful appeals.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

Of the 3.5 million decisions made since the personal independence payment was introduced, 9% of all decisions have been appealed and 4% of all decisions have been successfully appealed. We are committed to making further improvements to the quality of decision-making and have now deployed 150 presenting officers across PIP and ESA to provide valuable insight into why decisions are overturned at tribunal.

[Baroness Thomas of Winchester (LD)]

I thank the Minister for that reply. Maybe that takes us slightly further on, but she will know that the chairman of Scope, who is appealing his own PIP decision, has drawn our attention to the 71% of successful, but expensive, PIP appeals in the first three months of this year. The figure goes up and up. This tallies with the experience of Muscular Dystrophy UK, which reports a huge increase in PIP cases, with many claimants left in real financial hardship, such are the delays in the system. What practical, concrete steps is the department taking to improve the quality of assessments right now?

[Baroness Buscombe]

I am pleased to say to the noble Baroness that appeals actually reduced by 9% in the last quarter, April to June of this year. We are doing a great deal to try to ensure that we get the decision right the first time. To that end, we have changed the guidance to ensure that those on the highest awards, with needs that will not change or will deteriorate, get an ongoing award; we have made changes to the PIP assessment guide; we have restructured our decision letters to make them easier to understand; we have introduced mental health champions to support assessors who undergo specific training to emphasise the functional effects of mental health conditions; we have launched a series of videos outlining the claim process in a simple and clear way; and, to help to improve trust in the assessment process, we are considering options to video record PIP assessments. We are designing a live-testing pilot, due to begin later this year. I assure all noble Lords that my honourable friend in another place, the Minister for Disability, is constantly looking at ways to improve.

[Lord Clark of Windermere (Lab)]

My Lords, will all those individuals who were assessed for PIP in the months leading up to the judicial interference be reassessed? Will they be informed that they are going to be reassessed, and will they be informed of the outcome?

[Baroness Buscombe]

The answer to all those questions is simply yes.

[Lord Low of Dalston (CB)]

My Lords, what the Minister says is all very well but she will be aware of the publicity recently given by the chairman of Scope to inconsistencies that he experienced in his assessment for PIP, with different weightings being given to characteristics that had not changed from one assessment to another. What reassurance about the fairness of the system can the Minister give to people like the chairman of Scope, for whom this is an all too common experience?

[Baroness Buscombe]

I think it is important not to conflate the appeals figures with assessment or decision-making quality. Having said that, we are constantly looking at how we assess the quality of those decisions. On the appeals themselves, oral evidence, which is critical in determining appeal outcomes at tribunal, often greatly assists in drawing out the right evidence more effectively, as the Social Security Advisory Committee has said. New written evidence provided at the hearing that has not previously been seen by decision-makers can make the difference. Also, tribunals sometimes draw a different conclusion based on the same evidence. However, it is important to add that we are talking about nine different possible awards, and each and every one of those is capable of mandatory appeal. It is not so straightforward when people have such individual and complex needs.

[Baroness Couttie (Con)]

My Lords, the Government are clearly putting forward a number of amendments to try to improve the process and payment of PIP. What are they actually doing to make improvements for mental health patients, who might find the system quite complicated and difficult?

[Baroness Buscombe]

My Lords, there has been a very strong focus, particularly in recent months, on mental health conditions. PIP has a much better understanding of non-physical conditions such as mental health conditions than existed under DLA. Indeed, overall, 65% of PIP recipients whose main disabling condition is a mental health one are getting the enhanced rate of the daily living component, compared to only 22% of mental health recipients under DLA; and 33% of PIP recipients whose main disabling condition is a mental health one are getting the enhanced rate of the mobility component, compared to only 10% of mental health recipients receiving the higher rate of the DLA mobility component. PIP is showing a greater and more generous focus regarding delivery for those with mental health conditions.

[Baroness Sherlock (Lab)]

My Lords, the Minister seems to think that tribunal decision rates do not reflect quality. If 71% of cases are overturned at tribunal—for example, the figure for JSA is only 36%—something has gone badly wrong. The noble Lord, Lord Low, and the noble Baroness, Lady Thomas of Winchester, mentioned the case of the chairman of Scope, who has Parkinson’s and incurable prostate cancer. At two subsequent assessments he was awarded 11 points; you need eight to get PIP. At last March’s assessment, he got only two. His Parkinson’s is progressive and now very severe, and his prostate cancer is incurable. He has described the experience of navigating this as Kafkaesque, complex and unprofessional. I think any noble Lord who has ever spoken to a single person who has navigated this will recognise that. What are the Government going to do about this?

[Baroness Buscombe]

My Lords, I absolutely hear what the noble Baroness, Lady Sherlock, is saying. But I think it is really important to stress that we genuinely believe the PIP system is working, and it is a vast improvement on the DLA system. It is not perfect and we are constantly looking to improve it, but it is only right that support is targeted at those disabled people who require the most assistance to lead independent lives, and personal independence payment will achieve that. But key to the benefit is a more objective assessment which allows us accurately and consistently to assess individual needs. We are focusing more on training the assessors and working with champions to support them, to improve the outcomes right from the start.

Personal Statement

Baroness Buscombe Excerpts

Tuesday 4th September 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, with the leave of the House I will make a short personal statement concerning comments I made on 24 July when, in response to an Oral Question, I spoke about the position of Refuge on split payments in universal credit. I said:

“Refuge has made it clear that it is not convinced that split payments help”.—[Official Report, 24/7/18; col. 1597.]


Refuge has clarified its position to me, saying that split payments should happen by default for all couples. I apologise for my inadvertent error. I recognise that I did not accurately represent Refuge’s views, and I am grateful to Refuge and the noble Baroness, Lady Lister, for drawing this error to my attention. Further, I am grateful to the House for allowing me to correct the record at the earliest opportunity. Lastly, I thank Refuge for its continued service to victims of domestic abuse, which, as noble Lords know, the Government take incredibly seriously.

Domestic Abuse: Universal Credit Payments

Baroness Buscombe Excerpts

Tuesday 24th July 2018 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the implications for their proposed domestic abuse strategy of the default joint payment of universal credit to couples.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, there are no implications on the provision of the default joint payment of universal credit to couples as a result of the domestic abuse strategy and consultation. We already provide split payments and additional support to victims of domestic abuse who request them. More broadly, the Government are currently considering stakeholder responses to the consultation on domestic abuse that closed on 31 May and will publish a response and a draft Bill later this Session.

[Baroness Lister of Burtersett (Lab)]

My Lords, domestic violence, welfare rights and women’s organisations are all warning that default joint payments will undermine the new domestic abuse strategy—which rightly includes economic abuse. With all the money bundled together in UC, such payments increase the risk of economic abuse. Requiring a victim to request a split payment, as the Minister said, makes her vulnerable to retribution from a violent partner. Why are the Government not actively trying to find a way of meeting the widespread calls for default split payments?

[Baroness Buscombe]

My Lords, it is important to stress that most couples can and want to manage their finances jointly, without state intervention, so split payments should not be the default. When an individual suffering from domestic abuse and violence requests a split payment, we will support them in putting the arrangement in place—but split payments in universal credit cannot be the solution, the panacea, to what is a criminal act. They are provided to any individual who requests them as a result of domestic violence.

[Baroness Burt of Solihull (LD)]

My Lords, to get split payments, the survivor of domestic abuse has to disclose the abuse to their work coach and provide written evidence from an official. They are eligible for split payments only when the abuse has already reached crisis point in very exceptional circumstances. Why cannot each partner nominate a bank account, enabling separate payments to be made as routine? I am sure that that is not beyond the wit of man or woman to design a better, safer and fairer system.

[Baroness Buscombe]

My Lords, as I have already said in a previous answer, most people do not want split payments. They want to be able to judge their household affairs together as one. Therefore, it is important that we and our staff work hard with Women’s Aid and ManKind to develop as much as we can our support and training facilities to help people who are subject to domestic violence. It is not necessarily the case that domestic violence has reached crisis point. We treat this carefully as a private matter. We make training for our work coaches in Jobcentres Plus a priority so that we can give the right support at the right time.

[Baroness Barran (Con)]

How will the department ensure that victims of domestic abuse who are in receipt of universal credit can meet their basic needs? I am thinking particularly of those who suffer such severe financial abuse that they struggle to meet their accommodation costs and provide for their children.

--- Later in debate ---

[Baroness Buscombe]

My Lords, we have a range of measures to ensure that a family’s basic needs are met, including housing benefit and universal credit housing support. Victims do not need a bank account to claim immediate advance payments from universal credit to cover immediate needs. Fast-track payments can be made into alternative accounts to avoid rent arrears. In addition, child maintenance fees are excepted and a parent can apply for child benefit to be paid direct to them. Work coaches may also signpost and refer domestic violence victims to organisations that can provide further support.

[Baroness Sherlock (Lab)]

My Lords, I wonder whether the Minister has properly understood what Members of the House are saying to her today. The old system used to separate out payments for children, which were paid every two weeks to the main carer, and in-work benefits, which were paid directly into the bank account of the main earner. Universal credit has taken all these payments, and housing payment, and made them available only once a month, all into the bank account of one partner. What happens in practice if the relationship breaks down? The Government have been very good at recognising that financial and economic abuse are part of domestic abuse. It means that a person, often a woman, who is in that situation simply has no access to funds to protect herself and her children. Will the Government please listen? The Scottish Government consulted and decided to commit to going to split payments. Will the Government please think again?

[Baroness Buscombe]

My Lords, with regard to Scotland, the Scottish Government have discussed split payments with stakeholders and are now starting to think about developing their own policy. We will continue to watch and observe how that proceeds. But I have entirely understood what we are talking about today and I think it is really important to make clear that we want to simplify the system for everyone making claims under universal credit. It is important that we simplify the system. Noble Lords shake their heads, but we want to treat people in the normal way, whereby they have a joint approach, in most instances, to receipt of their income, to managing their household bills and to managing how they can cover their costs on a monthly basis—but with exceptions where people who are suffering abuse or any other kind of coercive action can ask for and will be given split payments as a matter of course.

[Baroness Watkins of Tavistock (CB)]

My Lords, will the Minister please answer two questions? First, is this purely because of cost savings, in that it may be more costly to deliver split payments? Secondly, what about preventing abuse in the first place? If women have their own money, it quite frequently prevents abuse.

[Baroness Buscombe]

On the latter point, I have to say that the charity Refuge has made it clear that it is not convinced that split payments help. In fact, they can exacerbate violence if the perpetrator of violence knows that their partner has her own pot of money. We have to be extremely careful about this: each individual case is different. This is nothing to do with cost savings. The reality, I know, is that this is all about the legacy. Noble Lords opposite prefer the legacy—the complex, difficult system that the party opposite preferred, which kept people trapped on welfare. It was much more complicated. We are simplifying this through universal credit, which is delivering a much simpler to understand system to support people into work and support them to manage their household finances.

Pensions: Online Dashboard

Baroness Buscombe Excerpts

Tuesday 24th July 2018 Lords Chamber

[Lord McKenzie of Luton]

To ask Her Majesty’s Government what progress they have made towards establishing an online pensions dashboard.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, with automatic enrolment we are delivering a complete change in the UK’s savings culture. We are currently exploring the many complex issues associated with developing a pensions dashboard. Our feasibility work is nearing completion and we will report to Parliament in due course. The Government are committed to ensuring that people are supported to plan ahead for retirement, including with automatic enrolment, existing digital services and a new single financial guidance body, launching in January next year.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for that reply. At a time when 9 million new workplace savers are being auto-enrolled and the average worker changes jobs 11 times during their working life, there is clearly a compelling public policy argument for having mechanisms to track pension pots, including the state pension, throughout life. The DWP has estimated that 50 million pension pots, with some £3 billion in savings, would be lost without a dashboard. Already one in five adults admits to having lost a pension pot.

There is widespread support for the concept of the dashboard, although there are different propositions. We believe that the Government are right to give ownership to the DWP, as a government lead is essential. Does the Minister agree that lessons from overseas show that the best way of providing a comprehensive service is to make participation compulsory? That requires legislation. Given all the work the DWP has done, why are we considering changing tack now? What can we glean when Parliament is not sitting which we cannot not glean when it is? Is there not an issue of capacity, with the universal credit debacle overwhelming the department?

[Baroness Buscombe]

My Lords, let me first say that the figure of 50 million referred to is an estimate made in 2012 of the number of dormant, not lost, pension pots by 2050. To suggest that 50 million pension pots will be lost unless a pensions dashboard is introduced is wholly inaccurate: I want to make that very clear. We are looking through the whole process and at experience overseas in order to understand more about pensions dashboards. The noble Lord knows that the whole process is very complex. We are working through the options around scheme participation in any potential pensions dashboard. The decision whether to compel participation depends on a number of issues, such as the functionality, delivery model and governance of the dashboard. We will set out the Government’s view in due course.

[Baroness Kramer (LD)]

My Lords, can the Minister address this feet-dragging? George Osborne announced that this project would go ahead in 2016, it was meant to be up and running next year, and Guy Opperman, in his role, constantly says that he is actively supporting it. The industry is—to put it mildly—cross, having done all the work it needs to contribute towards creating a pensions dashboard. It is vital so that savers can make the best investments of their pension money, and it is key to fraud prevention. Both of those are crucial issues. Can the Minister confirm that the rumours that the scheme is in jeopardy are false, and can she please finally give us a timetable?

--- Later in debate ---

[Baroness Buscombe]

My Lords, the noble Baroness will know that we are talking about something quite complex. As we look at it, the more we explore and the more questions we ask ourselves and the industry. My honourable friend in another place was right to talk about what was set out in 2016. We want to be careful to ensure that we cover all the challenging issues associated with the dashboard, not least questions of governance, funding, what role the Government might have and whether legislation is necessary. The department has been working closely with stakeholders across the pensions and financial services industry, the regulators, consumer bodies and others, as part of this feasibility study.

[Baroness Altmann (Con)]

My Lords, I welcome the potential of the pensions dashboard and I thank the Minister for her answers so far. It does not sound as if the whole project has been parked, but can my noble friend comment on the accuracy of pensions data and whether the problems of errors in pension recording have led to some concerns about a dashboard containing past pension records? Can she perhaps reassure the House that, at the very least, all auto-enrolment pension records could be put on to a dashboard funded by the industry—not by government but facilitated by her department?

[Baroness Buscombe]

First, I congratulate my noble friend on being appointed as the chair of pensionsync. I noticed that the question she has just asked was on her blog this week, suggesting that it is perhaps due to errors. I entirely refute that suggestion. The reality is that we already have, as my noble friend well knows, the online Pension Tracing Service to help people more easily locate their pension savings. We have also established the “Check Your State Pension” service, which has provided more than 9 million estimates since its introduction in 2016. We also have the development of a single financial guidance body. This department is doing a huge amount towards a revolution in the way that we support people to save in their retirement. Auto-enrolment, to which nearly 10 million people have actually signed up in the last six years, is an example of where we are working with this quiet revolution.

[Lord West of Spithead (Lab)]

My Lords, the Minister will be aware that war pensions were included in the figure of 2% of GDP that is spent on defence. It is therefore a false figure. Can she assure us that this will be looked at within the ongoing modernising defence programme so that we actually have a realistic amount of money for defence to support the Armed Forces, not least to have some more ships so that when we are all away on holiday on the oceans, we see some grey funnel line around rather than anything else?

[Baroness Buscombe]

I thank the noble Lord for his question. He knows my particular affection for the Navy.

[Noble Lords]

Oh!

[Baroness Buscombe]

I have a personal interest. That said, I must be clear with the noble Lord that there has been growth in the budget for the Navy, which is ongoing, and for the Armed Forces overall. His point about war pensions is an important one and if I can enlighten him any further, I will certainly attempt to do so in writing. We are doing all we can at the Department for Work and Pensions to support the lives of those in our Armed Forces in every way that they impact upon our department. That is for both those who are serving and those who have served this country well.

Occupational Pension Schemes (Master Trusts) Regulations 2018

Baroness Buscombe Excerpts

Tuesday 24th July 2018 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 18 June be approved.

Considered in Grand Committee on 18 July.

Motion agreed.

Employment and Support Allowance

Baroness Buscombe Excerpts

Thursday 19th July 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, by leave of the House, I shall repeat as a Statement an Answer given to an Urgent Question in another place by my honourable friend the Minister for Disabled People, Health and Work. The Statement is as follows:

“Mr Speaker, in 2017 my department identified an error that had resulted in some claimants being underpaid employment and support allowance between 2011 and 2014 while their claim was being converted from incapacity benefit, a legacy disability payment. The department proactively informed the House of this problem in December 2017 through a Written Statement before briefing the media.

On 15 March this year, I tabled a Statement setting out how this work to correct the underpayments was progressing. I explained that the department would supply 400 staff for this exercise to ensure that we identified as quickly as possible any cases where underpayment had occurred.

Yesterday, I tabled a further Statement to confirm that this work is now under way. Staff are reviewing cases, contacting claimants and making payments; so far, we have paid out more than £40 million in arrears.

As outlined in yesterday’s Statement, the department has analysed the relationship between “official error” and Section 27 of the Social Security Act 1998 in regulating how and to what point in time arrears can be paid out. As a result of this analysis, we will now pay arrears to those affected back to their date of conversion to ESA. Where we have already corrected cases by paying backdated arrears up to 21 October 2014, we will review these cases again and pay any additional arrears that are due prior to that date.

As planned, my department will be contacting all those we have identified as potentially affected. Once an individual is contacted and the relevant information gathered, they can expect to receive any backdated payments within 12 weeks. Once contacted, individuals are provided with a dedicated free phone line on which they can contact the department to discuss their claim”.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that Answer—another day, another DWP mistake. Back in 2011, 70,000 sick and disabled people were underpaid thousands of pounds after they had been migrated from incapacity benefit to contributory-based employment support allowance, without the possibility being recognised that they had paid enough stamps to entitle them to non-contributory ESA. The result was to deny them access to additional premia that they might have been able to get had the Government done that correctly.

The error here is that the Government have now accepted their mistake but have decided that people’s payments could be backdated only to 2014, because in 2014 a tribunal judgment made it clear that the Government had been doing this the wrong way. Yet again, therefore, it took a small charity to go to court to judicially review the department. And yet again, at the very last minute the DWP caves in and says, “Fair enough, we will now backdate payments to 2011”.

This raises a couple of questions. The scale is enormous: the National Audit Office said that the decision not to go back before October 2014 would have resulted in that group of disabled claimants losing out to the tune of between £100 million and £150 million. Individuals might be entitled to up to £10,000 of wrongly underpaid benefits.

There is a pattern to this. Six reviews are in progress to identify disabled people who may be entitled to back-payments, five as a result of legal cases against the Government. I therefore have two questions for the Government. First, why did it yet again take a tiny charity—the CPAG, to which I pay tribute—to use money donated to it to go to court to get Ministers to do the right thing? Secondly, there is the systemic issue: the PAC, in its report on ESA, and the NAO, in its report on universal credit, described a department that was defensive when dealing with outside organisations, and unwilling to listen to warnings about problems that were occurring. What steps, therefore, is the Minister’s department taking to make sure that in future it listens to warnings—from inside and outside—and does not wait until someone takes it to court?

[Baroness Buscombe]

I thank the noble Baroness for her response. I turn straightaway to her point about restricting—as it were—the payments. Initially the department believed that we were legally restricted to calculating repayments from 2014 due to a statutory rule—Section 27 of the Social Security Act 1998—which governs the position with regard to payment of arrears when a court of tribunal finds that the department has made an error of law. Following a thorough investigation, however, we realised that this interpretation was incorrect. We have made this very clear in previous Statements to the House and we have made it clear that we have been working extremely hard to do everything we can to correct a mistake that should never have been made in the first place. We believed, however, that the law prevented our paying benefit back to the date of conversion. We now understand that we can do that. We have listened to a range of opinions, including those of the CPAG, undertaken a thorough investigation of the legal position and realised that the law that dictated that we could not do this in the first place was wrong.

We want to be sure, therefore, that we pay back everything that is owed. I would add that the staff have been working extremely hard to put this right and to help everybody who may have lost out from these payments since the whole process of migrating people from incapacity benefit to ESA began in 2008.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, is the Minister satisfied that the reduction in the departmental expenditure limit that the DWP has experienced over the past five to 10 years has not contributed to this error? She has just said that the DWP is now putting 400 staff on the case. I have a serious concern about the extent to which staff shortages are occasioning these massive administrative blunders that cause not just inconvenience but serious financial difficulty to large numbers of the population. Can she confirm that passported benefits will also be paid by way of compensation, because some of the people who have been left out in these underpayments have also lost out on free dentistry, NHS treatment, travel and free school meals, to the extent that it would accumulate to large sums of money each year, in addition to not getting the benefits to which they are entitled?

[Baroness Buscombe]

My Lords, let me make it clear that we do not believe that this is attributable to staff reductions at the Department for Work and Pensions. We still have over 70,000 employees. We have also been working hard to do more since 2010. Since this Government came to power, we have spent £5.4 billion a year more than we were doing in 2010 to support people with disabilities. We continue to do so while upping our game and, yes, demanding more from our employees, who are working extremely hard. That is to ensure that we have the proper resource and the staff to make sure that we can review all these cases at pace. We have already started making payments—over £40 million in arrears so far—so we are doing everything we can to ensure that people get the support they are entitled to and at pace.

Based on my meetings with the Minister of State for Disability and our Permanent Secretary, who made a robust case for delivery by our department in front of the Public Accounts Committee last week, I can say that the department is working hard. Yes, we are doing more, so noble Lords could say we are a little stretched, but we are proud of what we are doing and delivering. We want to get this right. On passporting benefits over to UC, we are making sure that people will not lose out in what they are entitled to.

[Lord Touhig (Lab)]

My Lords, in the part of Gwent where I was born, the letters “dwp” form a word. It is pronounced “dup” and means stupid or daft. Could that account for why the accounting officer at the Department for Work and Pensions says that he does not understand all the letters that his office sends to claimants? If the author of the letters does not understand them, how on earth are the claimants supposed to do so?

[Baroness Buscombe]

My Lords, I hear noble Lords laughing but this is no laughing matter. I take great exception to the suggestion that I am working for anything that could be described as a dump. I am the lead Minister for the correspondence that goes out to claimants and we work through that correspondence with a fine-toothed comb to make sure it is in clear English, polite, responsive and on time. Since I have been in office, we have been at 100% in terms of our timing. We are doing everything we can to support so many people, particularly those with disabilities and health conditions, to improve and transform their lives. I therefore will not listen to the noble Lord talking about—

[Lord Touhig]

The department admitted it.

[Baroness Buscombe]

My Lords, no, somebody in the department may have said something but, as far as I am concerned, I am proud to work for the Department for Work and Pensions.

[Lord Laming (CB)]

My Lords, I am sure that most of the House accepts what the Minister says: the department is working extremely hard and trying very hard to get these things right. I do not think that is in doubt, but is it not also the case that each of these underpayments affects the quality of life of a very vulnerable person? Sometimes that degree of distress undermines their quality of life. Can the Minister continue to do all she can to ensure we all recognise that at the end of this process is somebody who will be much damaged by underpayments of this kind?

[Baroness Buscombe]

My Lords, I thank the noble Lord for his question, which gives me an opportunity to say that my honourable friend in another place, the Minister of State for Disabled People, Health and Work, is working tirelessly not only to do the job but to do so in an exemplary fashion. She absolutely understands that each individual life is affected when we get it wrong—where there is a mistake. As she said in another place only an hour ago, one mistake is one too many. But the reality is that we are working hard and we have wonderful staff who are very proud of what they do.

I am a little afraid of saying this in case it is misunderstood but, on underpayments, I should be clear that no one suffered a cash loss. We did not take any money away. That does not excuse the mistake that was made. The reality is that we needed to ensure that underpayments from the transfer were corrected as quickly as possible, and we continue to do so.