Draft Bereavement Benefits (Remedial) Order 2022

Michael Fabricant Excerpts

Tuesday 24th January 2023 General Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Mims Davies)]

I beg to move,

That the Committee has considered the draft Bereavement Benefits (Remedial) Order 2022.

Good morning, Mr Dowd; it is a pleasure to serve under your chairmanship. I am pleased to introduce this order, which was laid before the House on 13 October.

The order will extend the higher rate of bereavement support payment and its predecessor, widowed parent’s allowance, to bereaved cohabitees with dependent children.

[Michael Fabricant (Lichfield) (Con)]

I am grateful to my hon. Friend for giving way at this early stage. I notice that the order applies, as she has just said, to cohabiting couples with children who were not at the time married or in any legal relationship. How would that apply to same-sex couples with dependent children, who are not married and not civil partners?

[Mims Davies]

My hon. Friend has kindly reminded us of all surviving partners, dependent children and the access to support that is available irrespective of that partnership and sexuality. I hope that the Committee find that welcome. That provision is absolutely right, and it is helpful to put that on the record early in our proceedings.

The benefits can only be paid to survivors who were in a legal union—married or in a civil partnership—with the deceased on the day that they died. However, the McLaughlin judgment in the Supreme Court, handed down on 30 August 2018, and the Jackson case in the High Court, handed down on 7 February 2020, identified that legislation on widowed parent’s allowance and the higher rate of bereavement support payment respectively was incompatible with article 14 of the European convention on human rights. That article requires all rights and freedoms set out in legislation to be protected and applied without discrimination. In both cases, the courts found that by restricting eligibility to those in a legal union, current legislation discriminates between children on the grounds of the legal status of their parents’ relationship.

The order provides a remedy for Great Britain and Northern Ireland by amending the Social Security Contributions and Benefits Act 1992, the Social Security Contributions and Benefits (Northern Ireland) Act 1992 and the Pensions Act 2014. I am satisfied that the provisions of the draft Bereavement Benefits (Remedial) Order 2022 are compatible with the ECHR. The Joint Committee on Human Rights has reported on the draft order and recommended its approval.

For the Committee’s wider understanding, I will provide an overview of bereavement benefits as I take Members through the proposed changes. Widowed parent’s allowance was introduced in 2001 alongside the bereavement allowance and the bereavement payment. The WPA was intended to provide ongoing financial support following the death of a spouse to those with dependent children, and from 2005 that support was extended to cover the death of a civil partner. With the introduction of universal credit, a benefit designed to help with ongoing living costs, it was necessary to look again at the whole package of bereavement benefits. That applied particularly to WPA, which could be paid for the same purpose as universal credit, and which was complicated to claim and to administer.

We modernised financial support for the bereaved by introducing a new benefit from 6 April 2017. Bereavement support payment was intended to help with the more immediate costs of bereavement and to allow for a period of adjustment following the death of a partner. It consists of an initial lump sum, followed by 18 monthly instalments. A higher rate is paid to those with dependent children. Unlike its predecessors, it is tax- free and disregarded for the purposes of income-related benefits, helping those on the lowest incomes the most.

Bereavement benefits have only ever been payable to those who were in a legal union with their deceased partner. They are contributory benefits, with eligibility linked to the national insurance contributions of the deceased partner. Such inheritable benefits, derived from another person’s national insurance contributions, have historically been based on the concept of a legal union.

I will now outline what this draft order covers. Eligibility for widowed parent’s allowance and the higher rate of bereavement support payment will be extended to surviving partners who have dependent children and who were living with their deceased partner as if they were married or in a civil partnership at the date of their death. That includes partners who are or were pregnant on the date of their partner’s death, and there will be no qualifying period of cohabitation. This change will benefit thousands of families with dependent children.

--- Later in debate ---

[Mims Davies]

I fully appreciate that there has been a long gap between laying the proposed draft and the draft order. During the period, there has been a small cross-departmental team of officials looking at exactly the point that my hon. Friend makes, in terms of the complexity and ensuring that the policy is drafted properly and the implementation issues are covered. It is important that we get this right, and that throughout the process, the remedial order is made the priority for the Department to look into. My hon. Friend is absolutely right that we are looking at the issue. That goes to the point about who will be captured. I will be happy to confirm that more fully later in my comments, if that helps.

When deaths occur after the order comes into force, the bereavement support payment will be paid, subject to the usual claim time limits, which are 12 months for the initial lump sum, and three months for each instalment. It will help the Committee to learn that claimants will be eligible for widowed parent’s allowance if their partner died before 6 April 2017 and they continued to meet the entitlement conditions on 30 August 2018. They, too, must claim within 12 months of the date on which the order comes into force. They may also be entitled to ongoing payments if they continue to meet the widowed parent’s allowance eligibility criteria at the point of claim. I hope that gives my hon. Friend clarity.

The extension of the benefits to cohabiting partners means that there may be cases in which more than one person claims for the same death. That could apply in cases of polygamy, or of people dividing their time between two households, or where a separated spouse no longer lives with the deceased. As hon. Members can appreciate, this is a complex area, and my officials have been working hard to develop an approach that not only balances the need to protect taxpayers’ money with the contributory principle, but reflects people’s real-life circumstances. In such cases, the order proposes that we pay just once per death, prioritising the person who was living with the claimant on the date of death. If there are claims from different addresses, entitlement would be established as part of the normal decision-making and appeals processes.

In very rare cases, more than one potential claimant may have been living with the deceased on the date of death. Here, entitlement will be decided according to a hierarchy that is intended to reflect which claimant had the most established relationship with the deceased, as that person would usually bear the majority of the bereavement costs. Should that leave more than one potential claimant, the Secretary of State would determine who was entitled to the benefit.

[Michael Fabricant]

I am curious: it sounds as though my hon. Friend is saying that where there is a counter-claim, an absolute decision is made in favour of one person over another, or indeed all the rest. Why cannot time in the relationship be taken into account, and the benefit be apportioned among more than one person?

[Mims Davies]

I thank the hon. Gentleman for his point.

[Michael Fabricant]

Friend!

[Mims Davies]

Sorry, my hon. Friend. He is absolutely right, which is why we need to look into individual cases and treat them sensitively. Some people may find retrospectively that someone else is making a claim for a relationship of which they were simply not aware. That is, however, extremely rare. In all our engagement on the order, we have been looking in the round at all the circumstances that could come to pass, so that we can ensure that the decision made is fair, and so that situations in which families later find out things that are new to them can be managed. I hope that is helpful to my hon. Friend, and I thank him for that point.

Transitional protection will ensure that those who are in receipt of widowed parent’s allowance or the bereavement support payment before the date on which the order comes into force do not lose their entitlement for the duration of their award. The Joint Committee on Human Rights asked whether splitting the benefit might be more appropriate in cases of the kind that we are discussing. I am mindful that this is an incredibly sensitive area. If we split bereavement benefits, it would prove complex to administer, and it would be challenging for claimants to understand their potential entitlement before applying. That would be particularly true where claimants were, for example, eligible for different rates under bereavement support payment. We are determined to treat the issue appropriately and get this as right as we can.

Widowed parent’s allowance is treated as income for the purpose of income-related benefits, such as universal credit, and is assessed at the point of award. The order provides for all retrospective widowed parent’s allowance payments, up to the date of the claim, to be treated as capital and disregarded for 12 months or 52 weeks for the purposes of income-related benefits. That ensures that claimants will not lose any existing entitlement to income-related benefit as a result of receiving a retrospective award.

The order also ensures that there is a disregard for the same period for retrospective bereavement support payment awards. The usual rules will apply to future bereavement support payment and widowed parent’s allowance entitlements. We do not propose any changes for the treatment of income tax. Bereavement support payment is already tax-free, and widowed parent’s allowance will be taxed according to the period of entitlement, as per the existing rules.

We will communicate to widowed parent’s allowance claimants to make sure that they are fully aware of any payment under the draft order that may incur an income tax liability. We know that Members are particularly interested in how the Department will work with His Majesty’s Revenue and Customs to ensure that people can deal quickly with any potential income tax liability following the receipt of a payment under the draft order.

Where claimants pay tax as they earn, they will tell HMRC about any widowed parent’s allowance payment, including backdated payments. Claimants will not need to contact HMRC about income tax implications. Claimants who use the self-assessment process will need to declare payments on their tax returns for each tax year or write to HMRC to include back payments on previous tax returns.

The payment of bereavement support payment does not affect a person’s tax credit entitlement. Widowed parent’s allowance will be treated as income for tax credit purposes, as is commonplace for social security benefits. It will be assessed in the year of the payment rather than entitlement, so no adjustment to past years will be needed for these claimants.

In accordance with paragraph 3(1) of schedule 2 to the Human Rights Act 1998, a proposed draft of the order was laid for a period of 60 sitting days, on 15 July 2021, to allow for Members of both Houses and other stakeholders, including the JCHR to make suitable representations. I assure the Committee that Ministers fully considered all the representations made on the proposed draft order before preparing this draft for affirmative resolution. In doing so, Ministers agreed with the JCHR’s recommendation to amend the order to ensure that pregnant widowed parent’s allowance claimants were covered in the same way as those in a legal union. Ministers also agreed with its recommendation to ensure that the implications of the retrospective effect of the order on entitlement to income-related benefits were fully taken into account. Ministers have also included a number of technical amendments in response to comments from the JCHR.

Finally, before I let other Members contribute, I emphasise how easy the payment will be to claim. We know from our evaluation that claimants have had a very positive experience of claiming bereavement support payment, with 97% reporting satisfaction with the process.