Welfare Reform Bill

Lord Freud Excerpts

Monday 28th November 2011 Grand Committee

Moved by

[Lord Freud]

104: Clause 111, page 78, line 12, at end insert—
“(2) In section 190 of that Act (parliamentary control of orders and regulations), in subsection (1), before paragraph (za) insert—
“(zza) an order under section 115A(3B);”.”

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[Lord Freud]

My Lords, Amendments 104A and 104B, tabled in my name, are similar in intention to an earlier suggested amendment to Clause 102. These two amendments will ensure that where a claimant’s benefit is paid to a third party, usually a landlord, recovery of any civil penalty, along with recovery of the associated benefit overpayment, may be made by making appropriate deductions from that benefit payment. Currently, there is a slight difference in the wording used by this clause and Clause 102 when specifying that amounts are recoverable. This was unintentional.

Amendments 104A and 104B remove that difference and ensure a consistent read across. This will mean that, in the limited circumstances in which the third party benefit payment is the only one from which we can make a recovery, we can ensure that whenever a civil penalty is imposed, that penalty and the benefit overpayment may both still be recovered by deduction from that benefit.

In every civil penalty case there will always be an overpayment of benefit and we intend that the civil penalty will be added to the overpayment and recovered in the same way. Being unable to recover the civil penalty in the same way as the overpayment would mean that some claimants could evade the consequences of their negligence or failures to provide accurate and timely information and unnecessarily limit the methods of recovery available for civil penalties.

We want to make it clear that the civil penalty is always recoverable from the person at fault, even if in practice the claimant’s benefit is being paid to a third party. The process for recovery of the civil penalty needs to fit appropriately with debt recovery processes. Aligning the wording in new Sections 115C and 115D with that used in Clause 102 helps us to do that.

Amendments 104AA and 104ZA seek to prohibit the setting of targets for the civil penalty and limit our ability to impose a civil penalty to cases in which there has been a failure to provide information. The noble Baroness, Lady Drake, and my noble friend Lord Skelmersdale asked about negligence. We consider that the requirement of negligence in new Section 115C already implies that there is no reasonable excuse for the failure to take care of their award or claim. However, new Section 115C(1)(b) ensures that if reasonable steps to recover the error have been taken, the penalty will not apply. I certainly understand the possible ramifications if targets were attached to a penalty such as this. It is for exactly those types of reasons that we are not attaching penalties.

Perhaps I may update the noble Baroness, Lady Drake, on the figures in the impact assessment and the number of penalties. Last week, on 22 November, a revised impact assessment was issued that reflects updated estimates relating to the new civil penalty. We are assuming that the changes based on assumed overpayments of above £65, rather than the overpayment of £15, which was part of the earlier working assumption, has led to a substantial revision, and the number of penalties that we will consider moves down to 400,000 a year. We expect to make only half of those, 200,000, which is a substantial decrease on the figures mentioned by the noble Baroness.

[Baroness Hollis of Heigham]

I warn the Minister that that is one of the biggest elephant traps he is setting himself in the entire Bill.

[Lord Freud]

My Lords, I have to make clear that we are taking powers to do this. We do not have to use them.

[Noble Lords]

Oh!

[Lord Freud]

Let me make this absolutely clear. There were concerns that we would have a kind of speed camera situation here. This is about behaviours and making sure that people pay real attention when they are filling in their forms. The actual figures—

[The Countess of Mar]

The noble Lord referred to new Section 115C(1)(b), which states:

“the person fails to take reasonable steps to correct the error”.

Is this after the person has been told that there is an error, or must he find out that he has made an error in order to correct it?

[Lord Freud]

“Negligence” and “reasonable steps” are legally bound words. There is a huge case law about what they imply. One needs not to be negligent when filling in an application and to take reasonable steps to correct mistakes. If you do not know that you have made a mistake, you cannot expect to be able to correct it. That would not be a reasonable step. However, there is a legal framework around these words. I go back to the point I was trying to make about the incentives on the system as opposed to on the individual. On the penalty rates that I gave noble Lords, we expect that the amount collected in a year, for example 2014-15, will be roughly £9 million and the cost of delivering that system of civil penalties the same figure, £9 million, so there is no incentive in the structure to have unnecessary civil penalties. That is not the point. The point is to—

[Lord McKenzie of Luton]

Will the noble Lord help me? Do the penalties accrue to the department or to the consolidated fund?

[Lord Freud]

That is as I would expect from the noble Lord. It is such a wicked question that I am baffled as to the answer. I think everyone is baffled. It is a magnificent question. It has bowled me out on my middle stump. I will have to find out the answer. I will not even hypothesise about where the different funds go. The right analogy for this is when you go to the dentist, having made an appointment, and you fail to attend. The dentist will charge you an amount in many cases in order to discourage that behaviour. When you are giving out a free good, it is very easy for the recipient to abuse it. You counterbalance that by making that somewhat expensive. When you go beyond a free good and you are giving out a positive good, that is even more the case.

[Baroness Hollis of Heigham]

My Lords, the point is that, on any reasonable analogy, the simpler it is for the individual to make an appropriate response such as telling the dentist they cannot come, the more reasonable it is to have a penalty if they fail to do so. The more complicated quantum of knowledge that they are expected to have about their entitlement, and therefore the easier it is to make a mistake or to have a misunderstanding, the more unreasonable it is to have a penalty. Would the noble Lord care to share with us an analogy in civil life as complex as knowledge of this Bill is for the complainant or applicant, rather than the dentist analogy?

[Lord Freud]

My Lords, I hope that it will be as simple as the dentist analogy. The whole point of introducing universal credit is that we get something as simple as saying yes or no with regard to your situation. The existing position is much more complicated than that. As some noble Lords will have seen when I did a presentation on the universal credit, we are trying to boil it down to simplicity. Where it is complicated, that is prima facie evidence that there is no negligence. The noble Baroness’s suggestion that we might take time to check out how the system is bedding in is not a bad one.

[Baroness Hollis of Heigham]

Oh!

[Lord Freud]

Let us not bargain. It is not a bad suggestion. One of the things we want to do—

[Baroness Meacher]

The Minister said that if something is complex, you will not have negligence. Does he accept that what is complicated for one person might be not complicated for another? Certainly what is perfectly straightforward for somebody of average intelligence, for example, might be incredibly complex and difficult to follow for somebody with an IQ well below average. Is there any intention to check that sort of thing out? I know there is a later amendment on this, but it is relevant to this discussion.

[Lord Freud]

It is very relevant. One of the things that we are going to be monitoring as we look at the system is clusters of mistakes because, by definition, the system is not working properly where we are in that position. We will need to work this system in carefully. The noble Baroness, Lady Hollis, who is right on a lot of things, gives a warning, which is right. We cannot use this in an arbitrary way. We must have something, just as the NHS, HMRC and the train companies—I suppose everyone has boilingly paid the extra train ticket surcharge when they were on the wrong train—have systems to encourage people to comply with particular rules. It is particularly necessary where you have a system that is not even a free good. You are giving money out, so you have a positive incentive to shade a few inaccuracies without being fraudulent. We just want to keep people straight.

[Baroness Hollis of Heigham]

I thought it was very revealing when the Minister said the answers are yes/no. Most of these questions are binary—yes/no—but all the difficult ones, the ones people are going to appeal on, are not yes/no; they are shades of grey. When is a lone parent no longer a lone parent? Does a boyfriend stay one night, two nights or three nights? Does he contribute £20 for his weekend food or £50? Is he on the tenancy agreement? In that case, there is no question. That is a shade. It is a judgment call, not a negligence call. It is the same with the student son. It probably would not occur to parents in social housing that their son, who is at the local university and doing bar work at night, could be in the non-dependent adult deduction range. Why should they think so? It is a line, but they do not know where those lines are drawn.

The Minister is right that if somebody deliberately says, “I am not working and I want JSA”, but is actually earning £200 or £300 on the side in the building trade, that is a yes/no, but most of the issues that go to appeal—most of the difficult issues—are shades of grey, and many of us around this table would not be able to advise somebody. I really do not see how the client could possibly judge whether it was appropriate to tell the department or not.

[Lord Freud]

I do not think that we disagree on this. It would not be reasonable where there is clearly a lot of grey in the assessment, and I do not think a court in the land would allow us to say that someone was being negligent. That is not what negligence means. Negligence means not caring at all and just slamming down the wrong information or having information that you did not bother to put down. That is negligence. Getting something wrong on shades or “It didn’t occur to me” are not negligence and would not be construed as negligence in any court in the land. A lot of this is concern about things that the language does not support.

[Lord Touhig]

In my experience over years in the other place of dealing with cases in which people had been overpaid and the department sought to reclaim money, the department always took the line that the claimant was at fault and had been negligent. If we do not get away from that, we are storing up a huge problem. The line of the department has been that it is the fault of the claimant who has deliberately got this wrong, is in the wrong and therefore must repay some benefit they have had.

[Lord Freud]

I do not think that that is what is happening with overpayments, which are a separate category from these civil penalties. On overpayments, the department has taken the view that if people have received money they were not entitled to, that money should come back to the department, and there is no fault or blame attached in that requirement, so it is quite different from the civil penalty.

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[Baroness Lister of Burtersett]

Is that also the case with any other penalty, not just the civil penalty? Is it a benefits sanction?

[Lord Freud]

We absolutely will not do that. The noble Baroness drew a comparison with current levels of JSA usage. The online facility that we offer claimants is so markedly inferior that people would not want to use it. We need to make sure that people will want to use the online provision, and we are taking a lot of active steps to look at how to encourage and help people to use it. Indeed, this is one of the discussions that I am currently having with the various groups and charities that are trying to get the most disadvantaged in society online, because that is one way in which they become a full part of the economic life of the country, and indeed of the whole life of the country. They and I see that this could be an immensely powerful force for getting that inclusion. As I said, we will work very hard to encourage people to use it. One does not encourage people to do something that could be life-transforming for them through some of the things which the noble Baroness suggests I might be doing.

The aim of the civil penalty is to reinforce the importance to claimants of providing accurate information that we require in order to administer their claims and awards in advising us when they have a change of circumstance. It is a different issue when someone does something knowingly. That is fraudulent, and we will target that behaviour by looking at tougher punishments than the one for missing a dental appointment—I had better not talk about my teeth. We want claimants to take more responsibility for overpayments and to encourage a positive change in claimants’ future behaviour so that they take proper care of their benefit claims and awards.

The noble Baroness, Lady Drake, made an important point about mental health. We will take that into account. Indeed, that is why we require the claimant to have acted negligently and to have no reasonable excuse. The department must satisfy itself that the claimant has failed to take appropriate care. Each case will be considered individually by the decision-maker, and the penalty will not be imposed if a claimant’s state of health or mental health is considered relevant to the error that has been made.

Amendment 147ZA would mean that a civil penalty could be imposed only on those who failed to notify us of changes of circumstances and the failure resulted in an overpayment, while a claimant who incurred an overpayment by virtue of their negligence and who failed to take reasonable steps to correct the error would evade a penalty. We already help claimants in Jobcentre Plus and, as I have said, we will reinforce that. We believe that everyone should take responsibility for the accuracy of the information they provide in order to receive a benefit, whether that be at the start of their claim or during the life of their claim when there has been a change of circumstances.

As for the question asked by the noble Baroness, Lady Drake, on legal aid, information on benefits and the conditions of entitlement for them is readily available to the general public. If claimants remain uncertain of which benefit is most applicable to them or have a question about their benefit entitlement, they can and should seek further advice from the department. New Sections 115C and 115D will therefore act together to remind claimants that it is just as important that they correctly report their circumstances at the start of the claim as well as report changes that occur within the life of a claim.

I will aim to answer the remaining three questions, having been bowled out on the fourth. On the ability of local authorities to impose fines, we consulted local authorities on the detail of the initiatives in the strategy and on our plans to implement them. Local authorities have provided input to the various projects that we have set up to implement the strategy. We have local authority staff collocated with the DWP and working on the strategy. That includes the sanctions and penalties project, which is doing the work on civil penalties. We will support local authorities in their work to implement the new penalty, which will include providing clear instruction and guidance on how to operate the new scheme. On the £50—

[Baroness Hollis of Heigham]

Perhaps that would not work. For example, in two side-by-side authorities, a family with two siblings lives with one sibling in each borough. One local authority may decide to exempt in such cases. They have to make 10 per cent cuts and are required to exempt pensioners, which would make 30 per cent cuts. One local authority decides to exempt disabled people all together, so they would have nil. The other does not and the matter is worked out on income. In that situation, how will two disabled siblings who live in two side-by-side boroughs work that out? How will the local authority work out what they should declare, what they should not and what the appropriate penalty could be? It is a complete minefield.

[Lord Freud]

Clearly, there are always difficult and special cases. I suspect that an old lady would not be eliminated entirely. The answer is that there is support for people with particularly tricky circumstances. We will work with local authorities that will be collocated in many cases, especially with the single fraud operation being set up. The shades of grey, which will start to rule out negligence, will be very evident in most of those cases.

In justification of the £50, that sum was chosen because we believe that this is a sufficient amount that will act as a punishment and make claimants more personally responsible for the overpayments they incur and encourage a positive change in their future behaviour. We have also set a significantly lower amount than the harsher punishments available for fraud offences, which reflects the fact that it is directed at the failure to take proper care of a benefit award and is not about fraudulent behaviour. Under the appeal process, the claimant will be able to appeal against the overpayments decisions, the civil penalty or both.

For those reasons, I urge noble Lords to reject Amendments 104AA and 104ZA.

[Baroness Drake]

I thank the Minister. Perhaps I may address some of the points that he raised because I still feel deeply concerned. I probably have slightly more concerns now than I did previously. I do not say that provocatively and I will try to say why. First, it should be made clear that this is a civil penalty that does not deal with fraud issues. There are separate clauses for that. The stated purpose of this civil penalty is to improve people’s behaviour in the accuracy of their form-filling. The concept of introducing the civil penalty worries me, particularly for a community of people with a greater concentration of the vulnerable and lower levels of numeracy and literacy, and when we are taking this means of a civil penalty to address behaviours, some of which are systemic and cannot be dealt with simply by handing out civil penalties here, there and everywhere—notwithstanding that the Minister said that that is not the intention.

The Minister said that Clause 113 goes on to say that there will be no penalty if you take reasonable steps to correct the error, but the point is that someone cannot take reasonable steps to correct an error if he does not know that he has made it. That is the problem. Someone could face the civil penalty before having the chance to put it right because he does not know that he has done something wrong. A concentration of people will be increasingly in the category of not knowing that they have made the error when filling out the form.

The Minister also said that I should not be worried about how the powers will be deployed, but he gave me one of the reasons why I am concerned. Quite rightly, and I do not disagree with him, he said that a civil penalty always comes at the same time as recovering an overpayment. If you issue a civil penalty, you have confirmed that there is an error, so it must follow that there is the recovery of an overpayment. If ever an incentive were articulated, that is it. You do not have to exercise discretion on overpayments; the awarding of a simple penalty puts you straight into going for that overpayment. No other considerations come into play. You make the easier decision to award a civil penalty because you do not then have to make the more complex decision about how to apply a discretion to an overpayment.

[Lord Freud]

My Lords, let me make this absolutely clear. It is the other way round. You can charge a civil penalty only when there has been an overpayment and you would not necessarily charge a civil penalty when there was an overpayment unless you associated that overpayment with negligence.

[Baroness Drake]

That is my point. If civil penalties and overpayments are inextricably linked, you would not award a civil penalty unless there had been an overpayment. You can almost produce an incentive to put something into the category of an error attracting a civil penalty because it makes it easier to justify chasing the overpayment.

[Lord Freud]

My Lords, I must make this absolutely clear—it is my third go at this. An overpayment happens when someone is paid something they should not have been paid. A civil penalty will be charged only when there is both negligence and an overpayment. I forget the logical post hoc, or whatever. We need to get it round the right way.

[The Countess of Mar]

Let me get this absolutely clear. The department finds that there has been an error. Does it then tell the claimant that there has been an error, who says, “Oh dear, I’ll put it right”, and that is it, or does the department say straightaway that it is negligence? Is there a step in the middle when it goes to the claimant?

[Lord Freud]

My Lords, in practice it will depend very much on the circumstances. Clearly, if one had a blanket rule it would be possible every time an error was uncovered to say, “Oh, just a mistake, I’ll put it right”, or, “It was negligence”. There will have to be occasions when it is pretty clear that there was genuine negligence. That will be testable and appealable on a set of definitions around what is negligent.

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[Baroness Hollis of Heigham]

I think that the power exists for tax credits but not for other benefits. At a briefing session, I asked one of the Minister’s officials— I shall not land that person in it—how often it had been used. Their answer was that they were not absolutely sure. I asked whether it was 20 or 2,000 times. Nearer 20, came the reply—in which case, I wonder where that figure of 200,000 would come from and whether it suggests that a lack of clarity is expected in the forms rather than negligence on the part of the people filling them in.

[Lord Freud]

Let me quickly pick up three issues. First, when I talked about clusters, I meant that, where there are clusters and mistakes, something is clearly going wrong with the way in which we are presenting universal credit. In those circumstances, we would look very hard at fixing that problem and we would not be able to accuse anyone of negligence.

Secondly, I shall look very closely at the run-in to operating the universal credit system. I agree with the noble Baroness, Lady Hollis, on lots of things. She is absolutely right that we cannot have a system that demonstrates problems in its run-in phase.

Thirdly, on targets, I need to write to noble Lords. I would not mind forbidding the DWP from ever using those targets in that way—and I could offer it as a deal any day—but a future Government might not want to be so constrained.

[Baroness Lister of Burtersett]

I thank the Minister for his clarification about clusters. How many £50 fines would there need to be before there was a cluster? If it was then accepted in the department that the problem lay in universal credit or in the way in which the form was designed, would the department then consider paying back any £50 fine?

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[Lord Freud]

No, I meant a cluster of mistakes. When we begin to see a cluster of mistakes around a particular set of questions, it clearly means that we have not got it right and need to do something about it. But we will know very fast.

[Baroness Lister of Burtersett]

I accept and quite understand that, but the point is that, before the department realises that there is a cluster, a number of people might have been fined.

[Lord Freud]

My Lords, I buy the point about the delicacy of the run-in. I have a tool with which to monitor it very carefully. However, we must have a system that tells people that they must take care with their application. This is an application on which tens or hundreds of thousands of pounds are riding. It is no good people just putting in slapdash figures and not caring; this is really important information and it must be put down carefully. That is what we are trying to ensure with this relatively modest civil penalty.

[Lord McKenzie of Luton]

My Lords, I am very happy for the Minister to write to us on this rather than to spend more time today, because we need to make progress. This is about the practicalities. He has already indicated that the system could cost £9 million a year to operate. If a local authority seeks to collect both an overpayment and a penalty, the overpayment presumably reverts to the local authority. We do not know whether the penalty reverts to the Consolidated Fund or the DWP, but I presume that it is not to the local authority. The Minister will see that, in those circumstances, which may be quite common, one needs rules about how what is collected in respect of the two components is allocated between them. That presumably creates some administrative costs as well.

[Lord Freud]

I will need to write.

[Baroness Drake]

On the clusters point, clusters will presumably arise by type of error or a particular demographic of those filling in the form erroneously. I come back to my point that that issue should be dealt with not by civil penalties but by taking a more focused look at how one deals with those types of problem. I welcome the Minister saying that he is absolutely for the forbidding of targets. As to whether a future Government would be so constrained, no doubt noble Lords can argue with a future Government if they want them to be so constrained. We are trying to constrain this Government, so I certainly welcome any offers to constrain the way in which this civil penalty is used, although my preference is for it not to be there. I worry about the concept of a civil penalty and its deployment in the community of people whom we are discussing.

Finally, the Minister said that information is readily available, but you need to be able to understand it. No doubt he would say that if you do not understand it you should seek further advice from the department. However, I come back to the issues around the numeracy and literacy skills of this community of claimants. My point is that a new system of civil penalties is coming in. This partly goes to the point that my noble friend Lady Hollis made about trying to run a system of civil penalties when a new system is coming in. There will be less opportunity to find the people who this community of people normally approaches for support and help in filling out their forms because legal aid support through the advice system will not be there. We know that the local authority service will be run down, given the way in which benefits will be dealt with. We know that Jobcentre Plus venues are closing, and the jury is out as to how efficient a call centre system can be—certainly in the first few years—in supporting some of the vulnerable claimants who could be caught by erroneously filling out their forms. I beg leave to withdraw my amendment.

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Moved by

[Lord Freud]

104A: Clause 113, page 79, line 8, leave out subsection (4) and insert—
“(4) A penalty imposed under subsection (2) is recoverable by the appropriate authority from the person on whom it is imposed.”

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Moved by

[Lord Freud]

104B: Clause 113, page 80, line 5, leave out subsection (4) and insert—
“(4) A penalty imposed under subsection (1) or (2) is recoverable by the appropriate authority from the person on whom it is imposed.”

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Moved by

[Lord Freud]

105: Clause 113, page 80, line 16, at end insert—
“(2) In section 190 of that Act (parliamentary control of orders and regulations), in subsection (1), before paragraph (za) insert—
“(zzb) regulations under section 115C(2) or 115D(1) or (2);”.”

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[Lord McKenzie of Luton]

My Lords, as has been said by my noble friend Lady Sherlock, the noble Lord, Lord Ramsbotham, has made a powerful case in principle. Like the noble and learned Lord, Lord Mackay, I am not quite sure that the formulation set down here is quite right, as it lumps together sanctions, penalties and recovery of overpayments, and there might be arguments for unpicking those. It would be helpful, in any event, if, following this debate, we could have in writing a note as to what information decision-makers would routinely have in front of them when they make the decision with regard to each of those various categories. That would help us as we move to Report.

We debated issues around the claimant commitment earlier, as has been said. My noble friend Lady Lister made the important point again about that being more about co-production rather than something that is delivered and given to the claimant. That is an important point. As my noble friend Lady Sherlock said, we are dealing with people whose resources are, almost by definition, incredibly stretched. In many cases they are on the edge. If we are going to further reduce the means that they have, then we ought to be very clear that we do that in the knowledge of all of the circumstances and the impact on their well-being.

[Lord Freud]

My Lords, I agree that it is right and proper that a decision-maker gives full consideration to all the relevant facts provided by a claimant when deciding whether to impose a sanction or penalty. It is also important that claimants have appeal rights when sanctions and penalties are imposed. I believe that the amendments are unnecessary because we have adequate protections in place, but I am very happy to meet the noble Lord on this matter. Let us go through it, because it is important that we get it right.

The essential difference between us—although, as the noble Lord, Lord McKenzie pointed out, we need to tease out three different things here—is that the noble Lord, Lord Ramsbotham, is looking for a specific process, whereas we are aiming, in the legal framework as it stands, at a general process of cover. The noble Lord will be aware that, if you have a whole load of specific things, you have a problem when you get the special case that is not covered, whereas if you have a general protection you are covered. I think there is a fruitful discussion to be had around that, and I would welcome a discussion to see that we have the right protections because, again, I do not think there is a huge difference between us here. We want to have the right protections for a vulnerable group. We do not want arbitrary behaviour; we want common sense. It is just a question of looking through. I will circulate the note on this matter to the noble Lord, Lord McKenzie, as well.

We are training decision-makers on a number of areas: retaining impartiality; identifying what constitutes evidence and where the burden of proof lies; on the concept of the balance of probabilities; and on an understanding of social security law. It is vital that we do this.

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[Baroness Hollis of Heigham]

I trust this information is reliable, but in today’s press there were quite a lot of stories about how long appeals are taking and that the department—or, rather, following Leggatt, the tribunals system—is having to appoint a further 85 judges to sit on appeals tribunals because of the backlog, which is up to 12 months. Can I have an assurance—I am sure that this must be the case—that, while waiting for an appeal, no interest is ticking up on sanctions, penalties, overpayments or anything like that?

Secondly, checking with the law on tax credit as opposed to what may be the case on UC, I think that nearly all the difficulties with tax credits were not at the initial point of claim but were changes of circumstance and nearly all of them were associated with childcare changes. Half of all lone parents had more than a dozen changes of circumstances in a year, the system never caught up with itself and the computer nearly toppled. How is this going to work in this situation? People’s childcare circumstances inevitably change over half-term, a Baker day, Easter and Whitsun. By the time you keep reporting them or not reporting them—or feeling that you do not need to report them because there has been no reply to the previous report—you could be in a complete mess. I do not see how the Minister is going to manage this.

[Lord Freud]

The answer to the first question is that interest is not ticking.

On the second question, I share the noble Baroness’s concern about how the present childcare system works on reporting, which is why we are producing an entirely new system with a monthly report and a monthly payment system. Basically, how the system will work is that you put in the receipt for what you have paid, and then that payment is repaid on a monthly basis. The problem presented by a change of circumstances will go. Roughly 15 per cent of problems are caused at the initial stage of the original application. It does not seem sensible to privilege one set of mistakes against another when it is a reasonably substantial proportion.

I am very happy to meet the noble Lord, Lord Ramsbotham, to go through these issues in some detail, because I share his and other noble Lords’ concern that we get this right.

[Lord McKenzie of Luton]

My Lords, if the noble Lord, Lord Ramsbotham, agrees, might we join in with those discussions or reflections?

[Lord Freud]

I would be utterly delighted to invite noble Lords, but not too many. Perhaps the noble Lord, Lord Ramsbotham, will give permission for the Official Opposition team to join him. If he does, I would be delighted to see you all.

[Lord Kirkwood of Kirkhope]

If there are invitations floating around, could I add my name to the list? Two things worry me that we have not touched on. I support the amendment. I do not think that any of us really understands the full consequences of localism as it is finally rolled out. In terms of the public purse as generally described, if we do not have sensible means inquiries within the DWP provisions, we may just be handing on costs, charges and families in distress to our local government colleagues. That does not take us very far.

Another obvious point is that the legal aid changes that are coming are very worrying. If we look at some of the wider context in any such meeting, that would be extremely valuable, too.

[Lord Brooke of Sutton Mandeville]

My Lords, I reassure my noble friend the Minister that I am not asking to come to this meeting, but, as somebody who has sat through long hours in Grand Committee, I would diffidently make the suggestion that both matters might be treated at the same meeting.

[Lord Freud]

Yes, my Lords. I think, actually, I withdraw my offer of a meeting, because, given the level of interest, it is probably not appropriate. We should rather have a little seminar where the noble Lord, Lord Ramsbotham, is the leader, but I must welcome anyone who wants to attend that, because it does not make much sense to be too exclusive. Does that suit? Let us sit down and see whether there are any cracks in this, as some noble Lords are concerned about.

[Baroness Hollis of Heigham]

Sorry, if somebody puts the same information into their applications for universal credit and for localised council tax and the information is negligent or erroneous, though not fraudulent in both cases, are they exposed to two penalties?

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[Lord Freud]

No.

[Baroness Hollis of Heigham]

Then who will get the money? Will it be the local authority or the department?

[Lord Freud]

When I have worked out the various recipients to the main fund and written, I will let the noble Baroness have a copy of the letter that I send to the noble Lord, Lord McKenzie.

[Baroness Hollis of Heigham]

Thank you.

[Lord Freud]

I ask the noble Lord to withdraw his amendment.

[Lord Ramsbotham]

My Lords, I was not quite certain what we were going to end up with after all that. I was very grateful to the noble Lord, Lord McKenzie, for pre-empting me in suggesting that others should come to that meeting, not just those who put their names to the amendment but also those who have spoken, because I suspect that there is quite a lot to be done. I think that it might be sensible also to include some of the groups that approached me in the formulation of the amendment to hear from them on the ground as they have a great deal to contribute. I found it encouraging that the Minister agreed that this was an issue that really has to be tackled so we all start from a common ground.

As always, I am grateful for the wisdom of the noble and learned Lord, Lord Mackay. I absolutely accept what he says and indeed, I have looked at this process in Grand Committee as being a way of refining what we were saying. It was getting something done that needs refining, which I saw as the purpose of the Grand Committee. I entirely take the Minister’s idea that we take this on with a seminar. It is too important an issue not to be explored in detail. The noble Lord, Lord Kirkwood, has introduced the issue of localism, and so on, so there are other issues, as well as the Legal Aid, Sentencing and Punishment of Offenders Bill on the impact on legal aid and access to justice, which should all be taken into account. On that basis, and in thanking everyone who has taken part, I beg leave to withdraw the amendment.

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Moved by

[Lord Freud]

107B: After Clause 124, insert the following new Clause—
“Unlawful disclosure of information supplied to DPP
(1) A person to whom information is supplied under section (Information-sharing between Secretary of State and DPP), or an employee or former employee of such a person, may not disclose the information if it relates to a particular person.
(2) Subsection (1) does not apply to—
(a) a disclosure of a summary or collection of information so framed as not to enable information relating to any particular person to be ascertained from it; (b) a disclosure made for the purposes of a function of the Director of Public Prosecutions, where the disclosure does not contravene any restriction imposed by the Director;(c) a disclosure made to the Secretary of State, or a person providing services to the Secretary of State, for the purposes of the exercise of functions relating to social security matters (within the meaning of section (Information-sharing between Secretary of State and DPP));(d) a disclosure made for the purposes of a criminal investigation or criminal proceedings (whether or not in the United Kingdom);(e) a disclosure made for the purposes of—(i) the exercise of any functions of the prosecutor under Parts 2, 3 and 4 of the Proceeds of Crime Act 2002;(ii) the exercise of any functions of the Serious Organised Crime Agency under that Act;(iii) the exercise of any functions of the Director of the Serious Fraud Office, the Director of Public Prosecutions for Northern Ireland or the Scottish Ministers under, or in relation to, Part 5 or 8 of that Act;(iv) investigations or proceedings outside the United Kingdom which have led or may lead to the making of an external order within the meaning of section 447 of that Act;(f) a disclosure made to a person exercising public functions of law enforcement for the purposes of the exercise of those functions in civil proceedings;(g) a disclosure which in the opinion of the Director of Public Prosecutions is desirable for the purpose of safeguarding national security;(h) a disclosure made in pursuance of an order of a court;(i) a disclosure made with the consent of each person to whom the information relates.(3) Subsection (1) does not apply in relation to information relating to schemes and arrangements under section 2 of the Employment and Training Act 1973.
(4) Subsection (1) is subject to any other Act or to an instrument made under an Act.
(5) A person who contravenes subsection (1) commits an offence.
(6) It is a defence for a person charged with an offence under this section of disclosing information to prove that he or she reasonably believed—
(a) that the disclosure was lawful, or(b) that the information had already and lawfully been made available to the public.(7) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both, or(b) on summary conviction, to imprisonment for a term not exceeding twelve months or a fine not exceeding the statutory maximum or both.(8) A prosecution for an offence under this section may be instituted only with the consent of the Director of Public Prosecutions.
(9) In relation to an offence under this section committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (increase in maximum term that may be imposed on summary conviction of offence triable either way), the reference in subsection (7)(b) to twelve months shall have effect as if it were a reference to six months.”

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Moved by

[Lord Freud]

108: Clause 126, page 96, line 20, leave out second “prescribed” and insert “relevant social security”

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[Lord McKenzie of Luton]

My Lords, we have a good deal of sympathy for the amendment of the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Thomas. My understanding is that draft regulations—or proposals for regulations—have to be submitted to the SSAC except in certain circumstances. One of them, which has been mentioned, is that regulations made within six months of the enactment of primary powers do not have to be submitted.

This amendment seeks to say that the six-month clock should start when the Bill becomes an Act, not when the particular provisions are drawn down. That could widen the scope of what the SSAC should review. I support that. It is sometimes uncomfortable as a Minister being on the receiving end of a report from the SSAC, but in a sense that is part of the process that we need to engage in. Clearly there would be issues of capacity if this change were to happen overnight, particularly given the Bill that we are now considering. It seems that Bills of this nature will inevitably be framework Bills. Our Bills were. There is always tension between working on the basis of draft SIs, trusting to luck or assurances as to what eventually comes through, and having a degree of certainty.

It is not our official position but it seems to me that one way round this would be for Parliament to be able to amend SIs. It would take us away from some of the debates that we have about trying to get stuff into primary legislation, but that is probably a debate for another day. We should take seriously the prospect of the SSAC looking at SIs more widely and not being pre-empted by the six-month rule. There is clearly an issue not only about the capacity of the SSAC but about its expertise. It is very important that that is maintained.

[Lord Freud]

My Lords, I am not alone, I know, in acknowledging the vast knowledge of my noble friend Lord Kirkwood in this area. He was, of course, chair of both the Social Security Advisory Committee and the Work and Pensions Committee in the House of Commons—I think I can say that now, if I am not pre-empting. His involvement in this important subject stretches much further than that. I welcome the probe and hope that I will be able to persuade him that the amendment is unnecessary.

The SSAC provides a valuable function and goes about its work very effectively. From my perspective and that of my ministerial colleagues, the relationship between the department and the committee is productive. We enjoy a similar relationship to the one that the noble Lord, Lord McKenzie, had. More specifically, the SSAC is currently working on a major study of passport of benefits in the light of the impact of these reforms. As my noble friend acknowledged, this is really the most significant ad hoc study by the committee that Ministers have commissioned for many years. It is a wish to look at situations in the widest possible way.

The committee’s current remit does not include the scrutiny of draft regulations made under powers recently enacted by Parliament. As my noble friend pointed out, this is for a period of six months, beginning from the commencement of the relevant enabling power. The amendment would therefore set the clock ticking from Royal Assent in all cases rather than from the commencement of the relevant enabling power. It follows that if an enabling power was commenced at a point more than six months after Royal Assent, regulations under that power would automatically be referred to the committee. I believe that that would be unnecessary. Informal arrangements are already in place in this area. As I explained when we debated Clause 1, we will continue to talk to the SSAC as we move to the implementation stage of this Bill and use the arrangements that are currently in place and that allow us to provide it with information on new powers and regulations made within six months of the commencement of those powers.

Noble Lords are aware that when the Government implement major welfare reforms, the relevant primary powers are sometimes commenced at different times, reflecting the staggered implementation process that can apply in such circumstances. Under the amendment, some of the regulations brought forward in this scenario—those brought forward within six months of Royal Assent—would not be subject to the committee’s scrutiny, but others brought forward subsequently would be, even though Parliament would have approved the primary powers applicable to the reform as a whole. That inconsistency would be undesirable and we do not believe that adding to the committee’s former role in this way would be warranted. Implementing the reforms in this Bill is an enormous undertaking.

A huge number of officials in the department are working on it, and others are working on changes to a very challenging timetable. It follows that the weight of draft regulations following the reforms would place an unreasonable burden on the SSAC if the Secretary of State were required to refer all regulations to the committee made six months after Royal Assent. That point was touched on by the noble Lord, Lord McKenzie, and I need to confirm that this is an overwhelming process, particularly right now.

I have emphasised that we already have effective informal processes in place in this area. I also believe that the application of the affirmative procedure to, for example, the first core set of universal credit regulations is another safeguard, making it less necessary to consult the SSAC on a formalised basis in respect of those regulations in particular.

[Baroness Hollis of Heigham]

I think we would all accept that there is a difference between this Bill and, for example, a pensions Bill and its draft regulations, on which the Minister, his officials and his staff need to consult what I would call the professional organisations. These are quasi-technical and may be associated with the process; they have their own exchange and interchange of information and of what they flag up, and so on. In other words, there is a professional body of interested but skilled parties who can negotiate with a department on an equal base, and, as a result, draft regulations may be improved before they subsequently become full regulations.

The trouble with welfare reform and a Bill such as this is that, apart from the charitable organisations and lobby groups that have a wealth of expertise, for the most part there are not the bodies that the noble Lord and his staff would expect to negotiate with in the same way as he would expect to negotiate with business organisations or the NAPF about pension structures. Therefore, the very fact that there might be 200 regulations coming our way means that Members too find that they have no input from professional bodies that are equivalent to those pension bodies but that deal with welfare, in order to help shape our thoughts and give us an extra resource of experience.

This is not necessarily appropriate for Bills for which there are bodies that can serve that function, but for framework Bills and where bundles of regulation are likely to cluster in a particular field—housing here, or the benefit cap there—it would be very helpful for all of us seeking to scrutinise those regulations in due course to have had the input of the SSAC before we commence, because otherwise there is nothing between us, the draft regulations and the framework Bill, and we will not get the appropriate input that we need.

[Lord Freud]

My Lords, what we are designing here is a massive undertaking. I know that I set a considerable challenge for the SSAC in the passporting arrangement alone. The noble Baroness and my noble friend ask whether adequate information flows are coming through to Parliament as we consider the regulations. We are in regular contact with the stakeholders on a wide range of issues. We have published a series of detailed policy notes. We are trying to have a very open process.

[Baroness Hollis of Heigham]

My issue is that there are no stakeholders as there are in other types of legislation. My argument hinges on that fact. In pensions legislation, and even in some of the disability legislation that is very specialist, such as the Disability Discrimination Act, which is a more legal framework, there are specialist organisations that can negotiate. We have no such organisations with this Bill. We have charities, but they are client-group representatives rather than bodies of equal professional standards, in the way that the Department of Education has teachers, the Department of Health has doctors and so on. The DWP has no equivalent.

[Lord Freud]

I accept the point. In practice, we face lobbyists and stakeholders, although one could argue that the pensions industry is also facing lobbyists, albeit slightly better resourced ones who are more interested. The core issue is what the SSAC can do with this Bill in its scale and size. The SSAC is a relatively small organisation. It has a secretariat of three or four, internal to the DWP. It has 13 or 14 members. When you look at the literally thousands of people who are creating this, it is very hard to imagine an ability to take this in its entirety, with all those regulations for the SSAC to deal with.

The SSAC has two functions. It deals with a regulatory rolling process, which is outside the major revolution that we are talking about. I hope that it will apply itself to particular issues on which we would really value its help. The first example is passporting. It was very much my own view that this would be a good way in which to start this process.

I think that noble Lords in this Committee underplay their own prowess in this area.

[Noble Lords]

Oh!

[Lord Freud]

It never failed in the past. They also underplay their ability to gather the views of stakeholders that have been coming and do come to them directly. I suggest that a major expansion of the powers of the SSAC, which this would represent in practice, is not appropriate. Any regulations for universal credit that rely on existing legislation relating to claims, awards, payments and joint claimants will still be subject to SSAC examination. I ask the noble Lord to withdraw his amendment.

[Lord Kirkwood of Kirkhope]

I do not know whether I am more frightened now than I was previously. I accept that there is a capacity issue, but I am looking for the comfort that I have heard in the past that significant matters will reach our desks as legislators faster. None of us can keep up with the flow of things. If you are just a guerrilla opposition Member, which I used to be, the default position was to table negative prayers against everything.

The Minister has to be careful that we do not get back to that safety default position where you could just give the Minister of the day a bit of a kicking at the Dispatch Box and go home. Sometimes you might hit lucky on something that the Government did not want you to know about, but that is not where we want to be. I absolutely accept that the Minister in particular has been transparent to a fault. You can see straight through him on things that are coming down the track. It is impossible to read it all, but I worry that he will struggle if these regulations come in in wodges and packages immediately after Royal Assent. I do not want people like me to be put into the position where I think, “Well, safety first. Let us just pray against it anyway”. That would not be sensible.

I would like the SSAC to say, “Of this batch, if you want to concentrate on anything, this is what you should concentrate on”. That would be massively reassuring to me. I would go home at the weekend thinking that I was earning whatever it is that we get to come here. Obviously, I will withdraw this amendment, but I hope that the Minister will reflect on that point. This is a probing amendment. I understand capacity issues and the importance of him using his expertise within the Government to get to a better place. I will read the record and try not to worry more than I did before I tabled the amendment. I beg leave to withdraw the amendment.

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Moved by

[Lord Freud]

114: After Clause 133, insert the following new Clause—
“Recovery of child support maintenance by deduction from benefit
In section 43 of the Child Support Act 1991 (as substituted by the Child Support, Pensions and Social Security Act 2000), for subsections (1) and (2) there is substituted—“(1) The power of the Secretary of State to make regulations under section 5 of the Social Security Administration Act 1992 by virtue of subsection (1)(p) of that section may be exercised with a view to securing the making of payments in respect of child support maintenance by a non-resident parent.
(2) The reference in subsection (1) to the making of payments in respect of child support maintenance includes the recovery of—
(a) arrears of child support maintenance, and(b) fees payable under section 6 of the Child Maintenance and Other Payments Act 2008.””

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[Baroness Hayter of Kentish Town]

I am going to apologise because I think that I now stand between the Committee and what I gather is the custom that the Minister buys drinks for the whole Committee at the end.

Despite the late hour, this is a really important issue that needs raising, but I fear that because of the hour we may need to return to it later. The Child Poverty Act 2010, which established the Child Poverty Commission, was passed with cross-party support, and we believe that there is now similar support for the proposal to expand its remit to deal with social mobility, a move which the Opposition certainly welcome. However, we have serious concerns about what will happen to child poverty in the coming years. It has been mentioned several times in the Committee. The Institute for Fiscal Studies has predicted that the number of children in poverty, which had fallen to its lowest level for 25 years by the end of the previous Labour Government, will now under this Government rise to its highest rate since 1999-2000 by 2020, by which time one in four children will be poor, measured in relative terms.

I am going to raise the main points. The main point is the duty. The potential rise in child poverty over the coming years makes the work of this commission essential. The debate about its function—whether it is simply going to help count numbers or whether it is going to give advice about the impact of the numbers—is crucial. If we look at the role of the commission, one of the most important things has been the proposal that it should have a duty to advise Ministers, but this is now to be taken out. It will therefore have no duty to advise Ministers on the preparation of their strategy. It has meant that this is only the responsibility of government.

Surely the commission should not just look at technical issues around the measurement of poverty and social mobility, but should also look at advising on the results of that measurement—to advise the Government on its role. If it was only measuring it, the commission itself would neither attract a high level of membership nor would it be able to do its role properly. We therefore ask why should there not be a requirement that it advise Ministers on the policy itself? Also, how can it be that this commission could be put together without a requirement that people so appointed should be expert in its field? The final question is that it should have to have the ability to get its own research otherwise it would be dependent simply on research from the Government, which it is meant to be scrutinising. I beg to move.

[Lord Freud]

My Lords, I will speak first to Amendments 114B, 114C and 114D, which would require the Government to consult the commission on the development of child poverty strategy, and for the commission to provide advice to the Government on eradicating child poverty.

We believe that unelected public bodies should be established only in cases where there is a clear need for their role to be carried out by an arm's-length body rather than within government. The new commission, with its remit to objectively assess government progress towards improving social mobility and reducing child poverty, is just such a case. A commission established to provide advice is clearly not. There are already a variety of consultation mechanisms by which the Government can obtain independent advice on child poverty and social mobility policy. Indeed, the consultation on the current child poverty strategy received 280 responses. Moreover, it is a fundamental principle of this Government that Ministers are accountable for the policies and strategies they put forward. These amendments put this principle at risk. They offer a degree of scope for Ministers to shrug off responsibility for any lack of success of their strategy.

Amendment 114E requires that the Government publish a response to each of the commission’s reports. By giving the commission the power to publish annual reports, we are actively ensuring that progress on social mobility and child poverty remains a priority for government. The legislation requires that the commission reports be laid before Parliament, providing the opportunity for parliamentary debate.

Amendment 114F reintroduces the requirement from the original Child Poverty Act that the commission should have a particular balance of child poverty expertise. This requirement has been removed because it is clear that the new commission will require a different balance of expertise. It will monitor progress towards both reducing child poverty and improving social mobility, meeting the child poverty targets and implementing the child poverty strategy. I can assure you that Ministers are fully committed to creating a commission with the right combination of expertise. To ensure that this is the case, the recruitment process for all members of the commission, including the chair and the deputy chair, will be carried out in accordance with the code of practice of the Commissioner for Public Appointments.

Finally, Amendment 114G would give the commission the right to request Ministers to commission research on its behalf. It would also require Ministers to provide a reason if they decide not to meet the commission’s request. We do not believe that this provision is necessary. This is because the commission’s new role means that there will be no need for the commission to be able to access new research as it will not be responsible for developing new policy or strategy. Instead, the commission will produce annual progress reports, and we would expect the vast majority of the evidence needed to fulfil this role to already be available either in the public domain or from the Government. If the Government need more and need to access new research to fulfil their duties, the new legislation already enables Ministers to provide the commission with such resources,

“as the Minister may determine are required by the commission in the exercise of its functions”.

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Moved by

[Lord Freud]

115: Schedule 14, page 173, leave out lines 5 to 10

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Moved by

[Lord Freud]

118ZA: Clause 139, page 104, line 5, at end insert—
“( ) section (Calculation of working tax credit) (calculation of working tax credit);”

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Moved by

[Lord Freud]

118B: Clause 140, page 104, line 16, at end insert—
“( ) section (Calculation of working tax credit) (calculation of working tax credit);”