No-fault Benefit Debts

Jim Shannon Excerpts

Thursday 21st July 2022 Commons Chamber

[David Linden (Glasgow East) (SNP)]

I am very grateful to have secured this debate, particularly as the last item of business before we rise for the summer recess. Before moving on to the substance of the debate, I would like to take this opportunity to wish everyone in the House, especially the staff, a very happy, peaceful and restful break.

A number of organisations have been incredibly helpful in briefing me for this debate, including StepChange, the Child Poverty Action Group, the Salvation Army and my local citizens advice bureaux in Easterhouse, Parkhead and Bridgeton.

Other than housing and asylum, benefits and social security issues make up the largest cohort of my constituency casework. In the five years that I have served in this House, I have seen endless problems with the social security system, which too often is found wanting when it comes to protecting the most vulnerable in our communities.

The issue I want to hone in on today is no-fault benefit debts. That is not to say that there are not other aspects of our social security system that could do with repair, but in the interests of time I will confine my remarks solely to no-fault benefit debts. I am particularly appreciative of my colleagues in the Child Poverty Action Group, whose early warning system flagged this matter up.

Let us look at a particular case study that brings a human angle to the issue, rather than focusing on dry regulations, as can often be the case. Jess and Mark have a benefit debt of £600 because they were accidentally paid too much universal credit. The Department for Work and Pensions has acknowledged that it made a mistake when it worked out their entitlement, but it is asking for the money back, and Jess and Mark are legally obliged to pay it. Since they do not have the £600—they thought it was theirs, so they have spent it on essentials for themselves and their two children—the DWP is recovering the debt by taking £80 a month off their universal credit. Jess’s and Mark’s income was already low, and now they simply do not have enough to live on.

Unfortunately, this issue is becoming a more common concern. There are a few more case studies I would like to draw the House’s attention to. One claimant with a mental health condition has been left with an overpayment because he was accidentally given too much help towards his rent—that is, the wrong local housing allowance rate was applied; he had his young son staying with him but only the minority of the time. He could not have been expected to spot that pretty technical error.

A lone parent of a 10-year-old with disabilities was overpaid UC through no fault of her own—she received the severely disabled child element of UC when she should have received the disabled child element only. Again, she could not have been expected to spot that; but again, she is liable to repay the difference. A bereaved claimant with diabetes and osteoarthritis was overpaid UC when the DWP failed to act on information that she herself had given them about a private pension she had inherited from her late husband. She is now paying back the overpayment at £48 a month. As of April this year, she still had another 17 months of that left to go.

No matter how an overpayment of universal credit happened, the Department for Work and Pensions can ask for it back, even when somebody has done nothing wrong and indeed has done everything that could reasonably have been expected of them.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this important issue forward. He has outlined some cases; I had a similar case, and I commiserate with his constituents. Does he not agree that when someone has done all they can to be open and honest and there is clearly no fault for which they can be responsible, the stress of debt repayments on a household can be crippling? There must be a compassionate clause that can be used to override the computer systems. I think that is what the hon. Gentleman is asking for; it is certainly what I would ask for.

[David Linden]

I thank the hon. Gentleman. When I and the hon. Member for Lancaster and Fleetwood (Cat Smith) visited his constituency office on holiday during the Easter break, I saw at first hand how hard he works for his constituents; there were piles of casework all around him that day. His intervention is born of the fact that he is a hard-working constituency MP and can see the reality of this issue. He is right to call for that special clause.

Speaking about the rule before the introduction of universal credit, the then Employment Minister, the right hon. Member for Epsom and Ewell (Chris Grayling), said:

“The practical reality is that we do not have to recover money from people where official error has been made, and we do not intend, in many cases, to recover money where official error has been made.”––[Official Report, Welfare Reform Public Bill Committee, 19 May 2011; c. 1019.]

Yet the DWP almost always asks for the money back now. Overpaid claimants can ask the DWP to waive recovery, but only about 10 waiver requests were successful in 2020-21, set against 337,000 new overpayments caused by DWP mistakes in the same period. The DWP openly asserts that it will abandon recovery only in “exceptional” cases.

When the DWP insists on recovering a no-fault debt, it has the power to make large deductions from somebody’s future universal credit payments—up to 15% of their standard allowance. To be clear for those watching today’s proceedings at home, I should say that the standard allowance is the amount that the Government believe a person needs to live on, so reducing it by 15% certainly causes hardship. The Government have already suspended energy companies from that, so why on earth are they doing it?

All this is out of line with basic ideas about fairness and fault. The rules about recovering overpayments are very different from what they were for the legacy benefits and tax credits that the universal credit system replaces.