Welfare Reform Bill

Baroness Hollins Excerpts

Wednesday 23rd November 2011 Grand Committee

The amendment introduced in the Commons is welcome progress as far as it goes but I encourage my noble friend to think about, first, how he is going to roll this out and, secondly, whether he can be tempted to extend the protection a bit further so that basic family needs can be protected in the future. In addition to supporting the amendment tabled by the noble Baroness, Lady Lister, this is something that the Minister should seriously consider in the future gestation of the provisions of the Bill.

[Baroness Hollins]

My Lords, I rise to speak to Amendment 103ZA, which is in my name. I am grateful to the noble Baroness, Lady Lister, for speaking about it earlier and also to the noble Baroness, Lady Healy, and my noble friend Lady Meacher for their support. This Bill gives considerable discretion to jobcentre officials over many decisions and this amendment is about an area of their discretion that has been limited since the Supplementary Benefits Act 1976. Members of the other place have now proposed that this limit to their discretion should be removed. The provision of the 1976 Act was repeated in Clause 71 of the Social Security Administration Act 1992, in which the Secretary of State has to prove that a claimant must have either misrepresented or failed to disclose a material fact in order to recover an overpayment, thus protecting claimants from the recovery of payments arising entirely out of official error. Previously there was no provision for the recovery of administrative costs either, which the current Bill could also change.

Think about a claimant who has a letter from officials telling him that he is entitled to universal credit, which is paid to the landlord in rent. However, six months later, officials tell him that they have made a mistake and ask him to repay several thousand pounds—money that has already gone to the landlord, either direct from the local authority or from the claimant. The issue that then has to be discussed with the claimant is whether he or she could have known it was an error. If it can be proved that the claimant could not reasonably have known that it was, then the state has to bear the cost of the state’s mistakes. It is difficult to understand why such a reasonable and just law should be repealed.

This amendment is proposed by Caritas Social Action Network and the Zacchaeus 2000 Trust and I am grateful to them for their detailed briefings. It is also supported by more than 20 NGOs, including organisations from five different Christian denominations, the Royal College of Psychiatrists, AdviceUK, Community Links, Derbyshire Unemployed Workers’ Centres, Mind, Money Advice Trust, the National Housing Federation, Save the Children, Shelter and the United Kingdom Public Health Association. All of them, in one way or another, are working for the poorest citizens of the United Kingdom.

They are all concerned that overpayments of universal credit and council tax that claimants could not reasonably be expected to notice would be left to build up over time into significant cumulative debts that the state could then recover through court action or reductions in benefits. Such debt recovery would jeopardise basic living costs, housing security, payment of utilities bills and nutrition, and risk damaging mental health.

An additional concern relates to the announcement by the Minister for Employment in another place that the standard allowance of the universal credit will be £67.50 a week for a single adult. The Joseph Rowntree minimum income food standard is £46.31 a week for a healthy diet. The sum of £67.50 will not cover the weekly cost of all essential items for an adult, let alone the additional repayment of overpayments, debts or arrears.

The burden could be further increased, for example, through the state additionally recovering the costs that it incurs when making recoveries through the courts, or through employers recovering administrative costs that they incur when instructed to reduce a claimant’s wages in order to offset a benefit overpayment. In both of these circumstances, people may end up with debts larger than the sum they were originally overpaid by—a seemingly illogical and unjust situation.

Another concern is that it seems possible that the DWP would be able to recover the overpayment from landlords, or from anyone who happens to be living with a claimant who is a beneficiary of the benefit concerned. The recovery of large blameless overpayments will have a devastating effect, not just on the claimant but on all other members of the household, which might include children, a pregnant woman or a disabled person who has particular additional nutritional and health needs.

It is inevitable that a new IT system for the delivery of welfare will create errors that are the fault of the employer entering information, officials at HMRC or the jobcentre. This is most likely when pilots are being run to test the system. The poorest citizens and their families should not have to pay the debts arising from any faulty consequences of the Government’s reforms.

As well as these immediate and potentially devastating impacts, such significant financial burdens all too often result in mental health difficulties or exacerbate existing ones—a link consistently highlighted by prominent institutions such as the Government Office for Science or charities such as the Royal College of Psychiatrists and Mind. Numerous reports have drawn attention to the direct correlation between large debts and family breakdown, illustrating the further dangers of subjecting those dependent on benefits to unexpected reclaims. Clearly such consequences would be utterly at odds with the Government’s intentions with this Bill.

Assurances have been given in the other place that officials will exercise common sense and considered decision-making, so as not to cause undue hardship. But the removal of the existing safeguard in primary legislation will mean that each case is ultimately based on the discretion of different officials, and would leave absolutely no guarantee that decisions will err on the side of protecting vulnerable people. This could lead to expensive litigation, if advice and legal aid could be found, which could have been avoided had the prohibition remained in place. However, it is more likely that the vulnerable claimant will pay, because of the lack of advice and legal aid, all of which has been cut. Then the claimants will suffer the stress of unmanageable debt and an increased risk of mental health problems and family breakdown.

It should be emphasised that the proposed amendment would not affect recoverability when overpayments result from the misrepresentation or withholding of relevant facts by a claimant, thus providing no respite for those seeking to defraud the system. Rather, it seeks to maintain three decades of protection—rightly afforded, in my view, to benefit claimants—from human error or technical fault by departments, landlords or local authorities, and any future errors as the result of the new IT system.

I urge the Minister to give this amendment serious consideration, to reinforce an existing provision that protects those whose health and welfare will be further compromised without it.

[Baroness Healy of Primrose Hill]

My Lords, I will also speak to Amendment 103ZA. I will be brief. It may appear overly generous on the part of a cash-strapped Government already making severe cuts in benefits and public services not to demand repayments. However, in the interests of natural and administrative justice it cannot be right to request repayment when every penny is already allocated to get a family through the week—and now to be the month. Benefits are about to be cut and will no longer keep pace with inflation. Housing, energy, food and travel costs are all rising at frightening speed. With the best will in the world, I cannot comprehend how a family which is already struggling can be asked to pay back more than its members are currently being paid either in wages or benefits or both. Many charities and churches have raised the alarm over this element of the Bill. I strongly urge the Government to reconsider such a course. It may seem small in the overall picture of state spending but would be enormous for a family on an already modest income.