Bereavement Benefits (Remedial) Order 2022

Viscount Younger of Leckie Excerpts

Tuesday 17th January 2023 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Bereavement Benefits (Remedial) Order 2022.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I am pleased to introduce this remedial order, which was laid before the House on 13 October. It will extend the higher rate of bereavement support payment and its predecessor, widowed parent’s allowance, to bereaved cohabitees with dependent children. These benefits can currently be paid only to survivors who were in a legal union—that is, married or in a civil partnership—with the deceased on the day they died.

In 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, the legislation on WPA and the higher rate of BSP respectively was declared incompatible with Article 14 of the European Convention on Human Rights. This article requires all rights and freedoms set out in the Act 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.

This order provides a remedy for both Great Britain and Northern Ireland. It does so 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 order are compatible with the European Convention on Human Rights. The Joint Committee on Human Rights has reported on this draft order and recommended its approval.

I will put this draft remedial order into some context. It was in 1925 that financial assistance following a bereavement, in the form of national insurance pensions for widows, was first introduced. This was open to all widows whose husbands fulfilled the contribution conditions, paid at a flat rate with additional allowances for children. This reflected the widely held expectation at that time that a woman would not return to work after marriage.

Further reforms culminated in the introduction of three new bereavement benefits: widowed parent’s allowance, bereavement allowance and the bereavement payment, all in 2001. WPA replaced widowed mother’s allowance, and extended support to both widows and widowers with dependent children. Like its predecessor, it was intended to provide ongoing financial support following the death of a spouse or, from 2005, a civil partner.

The bereavement payment was a one-off payment for surviving spouses, both with and without dependent children. Bereavement allowance was a short-term payment for widows and widowers aged 45 or over with no dependent children. It was not possible to get both widowed parent’s allowance and bereavement allowance.

It became evident that this system of bereavement benefits, based on outdated assumptions, was complex to understand and administer, and could be unfair to claimants. With universal credit’s introduction—a benefit designed to help with ongoing living costs—there was a need to look again at the whole package of bereavement benefits, but especially widowed parent’s allowance, which could be paid for the same purpose. So we modernised bereavement support by introducing a new benefit, the bereavement support payment, from 6 April 2017, to help with the more immediate costs of bereavement and to allow for a period of adjustment.

Although we do not specify what these costs are, it is our intention that they should be those associated with the bereavement. Each family will have different priorities. For some, it could be funeral costs or dealing with debts left by the deceased. For others, it may include budgeting adjustments following a loss of income or additional travel simply to meet family members.

BSP consists of an initial lump sum followed by 18 monthly instalments, and a higher rate is paid for those with dependent children to recognise that families with children may need extra help. Unlike its predecessors, it is tax-free and disregarded for the purpose of income-related benefits, thereby helping those on the lowest incomes 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 move forward and outline what this draft order covers. Eligibility for WPA and the higher rate of BSP will be extended to surviving partners with dependent children who were living with their deceased partner as if they were married or in a civil partnership on the date of death. This 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.

This draft order applies to those who would have been entitled to either of these benefits on, or from, 30 August 2018. This was the date on which the Supreme Court, in the McLaughlin case, ruled existing WPA legislation incompatible with the European Convention on Human Rights and, effectively, the date on which the incompatibility was accepted as final. The Committee will know that it is exceptional to make social security change retrospectively; we consider this a logical and fair start date.

For BSP, where the death occurred before this order becomes law and the claim is received within 12 months of that date, claimants will get the full amount due to them. If the claim is received later, the claimant will get up to three backdated monthly payments, plus any remaining monthly payments due. The claim must be made within 21 months of the order coming into force for any BSP to be payable.

Where a claimant’s partner died before 30 August 2018, we will make a part payment and no initial lump sum will be payable. Where the death occurred after this order comes into force, BSP will be paid subject to the usual claim time limits: 12 months for the initial lump sum and three months for each instalment.

Claimants will be eligible for WPA where 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 the order comes into force. They may also be entitled to ongoing payments if they continue to meet the WPA eligibility criteria at the point of claim.

Extending these benefits to cohabiting partners means that there may be cases where more than one person claims for the same death. This could apply in cases of polyamory or people dividing their time between two households, or where there is a separated spouse who no longer lived with the deceased. As noble Lords can appreciate, this is a complex area and my officials have been working hard to develop an approach that balances protecting taxpayers’ money and the contributory principle, while ensuring that any approach reflects people’s real-life circumstances.

In these cases, this order proposes that we pay just once per death, prioritising who was living with the claimant on the date of death. Where 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, intended to reflect the most established relationship as this person would usually bear the majority of the bereavement costs. Should this leave more than one potential claimant and become more complex, the Secretary of State would determine who is entitled.

Transitional protection will ensure that those already in receipt of WPA or BSP before the date this order comes into force do not lose their entitlement for the duration of their award. WPA is treated as income for the purpose of income-related benefits, such as universal credit, and is assessed at the point of award.

This order provides for all retrospective WPA payments up to the date of claim to be treated as capital and disregarded for 12 months, or 52 weeks for the purposes of income-related benefits. This ensures that claimants will not lose any existing entitlement to income-related or passported benefits, such as free school meals, as a result of receiving a retrospective award. This order also ensures there is a disregard for the same period for retrospective BSP awards. The usual rules will apply to future BSP and WPA entitlements.

We do not propose any changes for the treatment of income tax; BSP is already tax-free and WPA will be taxed according to the period of entitlement, as per the existing rules. We will communicate to make WPA claimants aware that any payment under this order may incur an income tax liability. The payment of BSP does not affect a person’s tax credit entitlement. WPA will be treated as income for tax credit purposes, as is common practice for social security benefits. It will be assessed in the year of payment rather than entitlement, so no adjustments to past years will be needed.

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

Finally, I emphasise how straightforward it will be, as we see it, for people to claim. We already know from our evaluation that claimants have a very positive experience of claiming bereavement support payment, with 97% reporting satisfaction with the process. We have also provided a paper claim form especially for cohabitees, accessible online at GOV.UK or by calling DWP’s bereavement service. For BSP, there will also be the option to claim online.

With that detail behind me, I have pleasure in commending this order to the Committee. I beg to move.

[Baroness Hayman (CB)]

My Lords, I am grateful for the opportunity to speak today and to the noble Viscount for the clarity with which he introduced this order. As he made clear, there are many complexities around the subject but the reason that I am here today is very simple.

In October 2020, I received an email and I shall read some of it: “Dear Madam, I am writing to you to raise an issue with the Department of Work and Pensions. On 12 September 2020, my partner of 12 years sadly passed away after losing his five-year battle with kidney cancer. He leaves behind me and our six year-old son. When going to apply for a bereavement support payment, I learned I was not entitled to claim this support as my partner and I were not married or in a civil partnership. I am writing to you because I feel this is a very unfair law and needs to be reviewed straight away, especially when we are going through a national pandemic and I find that I am not the partner of a very strong and resilient man any more, and I have been left these difficulties and increased anxiety as I face bringing up a child alone. I am by no means begging but I do think that this is discrimination to couples who love each other and live with each other as man and common-law wife with children, because they haven’t got a piece of paper to say they are together. I hope you can raise this issue.”

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I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

My Lords, I start by thanking the Committee for its overall support for and approval of this order. I wholly appreciate that I am very much the messenger here as I am new to the role. For once, having spent 12 years in the Lords, having dealt with some challenging legislation and issues and having said myself that something will be brought forward “in due course” or shortly, I am the messenger for the great work that my predecessor, my noble friend Lady Stedman-Scott, has done and brought to fruition. I am delighted that we have come to this point, with this order bringing cohabitees into this area; as I say, I pay tribute to my predecessor for that.

A vast number of questions were asked. Many of them were very technical so, again, I feel that I have been thrown in the deep end. All the questions were fair; I will do my best to answer them. I know that I will not be able to answer all of them; certainly, I can already feel quite a detailed letter coming the way of noble Lords to be sure that I answer all their questions. When bringing in a new order of this nature, such questions are obviously natural. I am particularly aware of the question asked by the noble Baroness, Lady Brinton; I will come to it towards the end of my speech. I am not sure how much I can help her, but she referred to an interesting case.

Let me start with the noble Baroness, Lady Hayman. First, I thank her for her points. Secondly, I thank her for the letter she mentioned; as I moved into this role and took over from my predecessor, I picked up a letter, and there is a letter answering some of the noble Baroness’s question on its way to her. Her first point was very fair. She asked why this order has taken so long. My answer is that remedial orders can take longer than many other orders because they involve extensive consultation and, of course, parliamentary scrutiny. Also, in the introduction of the pandemic, we needed to divert departmental resources.

That said, the main reason was the delay resulting from the McLaughlin judgment in 2018; it made sense to wait for the conclusion of the Jackson case in 2020 before deciding how to proceed. Let me be the first to say that I appreciate that there was a pretty long gap between laying periods, but it is by no means unusual. I would also say that it was too long; I know that from the different cases that have been raised.

Additionally, officials have had to work through a number of complex policy, drafting and implementation issues, including those raised by the Joint Committee on Human Rights, which have required careful consideration. It is also vital that we get this right—I would say that, wouldn’t I, but I mean it. Throughout the process, the remedial order has remained a priority for this department and will continue to do so. Bearing in mind the number of questions that have been raised, I know there is quite a bit of work to do to see this through. I hope that provides some reassurance.

The question of raising awareness was raised by a number of noble Lords, starting notably with the noble Baroness, Lady Hayman, and continuing with the noble Baroness, Lady Sherlock. We are taking a range of steps to raise awareness of the remedial order, including updating GOV.UK and using existing DWP channels to communicate about this change. We are also working closely with external organisations to ensure that people have what they need to make an informed decision about making a claim.

To go a little further on this and answer a question raised by the noble Baronesses, Lady Hayman and Lady Sherlock, we want to ensure that people have what they need to make an informed decision about making a claim, but we will not be contacting previous claimants directly. We do not routinely keep details of people who had originally claimed and been refused benefit on the basis of being in a cohabiting relationship. However, my officials will develop an effective communication strategy that reaches out to as wide an audience as possible. That may not entirely satisfy the noble Baronesses who raised this question, but we were prepared for it and this is where we stand on that issue.

There is more, because how DWP staff reach out is also important. These changes will be delivered by the DWP’s existing bereavement services team, and officials have already been developing guidance, training and other products to ensure operational readiness on the go-live date. I am sure that there is more that can be done, but I hope that helps to begin with.

My noble friend Lady Altmann and the noble Lord, Lord Davies of Brixton, asked how payments of WPA are usually treated for tax and benefit purposes. As I think I said in my opening remarks, but to clarify, WPA is taken into account as income when assessing entitlement to other means-tested benefits, so is also taxable. I can and will write, because there is further detail that I can give the noble Baronesses on the lump sums, which they raised specifically.

The question of tax credits and how they will be treated was raised, again, by my noble friend Lady Altmann and by the noble Baroness, Lady Sherlock. Payment of BSP does not affect a person’s tax credit entitlement. To be clear, WPA will be treated as income for tax credit purposes, as is common practice for social security benefits. It will be assessed in the year of payment rather than in the year of entitlement, so no adjustments to past years will be needed.

However, I know that the noble Baroness, Lady Sherlock, raised a point about back payments. I do not have an answer to that, so I will write to her and copy in all Members of this Committee to answer that question.

My noble friend Lady Altmann asked about claimants’ use of their retrospective payments and whether, as I mentioned in my opening speech, it is viewed as deprivation of capital. We have a duty to ensure that means-tested benefits are paid to those who most need them, while also ensuring fairness to the taxpayer. The deprivation of capital rules are intended to apply to those who act with the intention to access or get more benefit. Therefore, provided any capital is spent reasonably, and not with the purpose of accessing or getting more benefit, claimants should not be treated as having notional capital. To define that, notional capital is taken into account in the same way as normal capital, where claimants get a retrospective lump sum. That was a bit of a convoluted response, but I hope that the department’s consideration of this was helpful.

A broader question from my noble friend Lady Altmann was on how payments of BSP are usually treated for tax and benefit purposes. She may know this, but the lump-sum element of BSP has a grace period, as it is intended to meet immediate needs—I think I alluded to this in my opening remarks—and is disregarded as capital for a full 12 months of universal credit. Additionally, the smaller monthly instalments of BSP are not taken into account as income for the full duration of the benefit award. This is more generous than the previous bereavement benefits, which were taken into account for income-related benefits. Unlike the previous benefits, BSP is not taxed.

The noble Lord, Lord Davies of Brixton, raised some further points about tax. Perhaps I might give an overarching response. BSP is tax free, as mentioned, while only WPA is taxed and is a legacy benefit; it can be paid only for deaths before April 2017. BSP and WPA are available only to working-age people, which I think the noble Lord will probably know.

Questions were raised about the ease of navigation. I hope that I can be helpful on that to the noble Baroness, Lady Sherlock, and the noble Lord, Lord Davies. This is an important point, as the operation of it is essential. I am happy to say that we already know that the process for claiming BSP is quick and clearly explained. I mentioned that the satisfaction level is very high at 97%. I am sure there is more that we can do but I am aware of some of the concerns raised about this. We are alive to this, as it is very important that people are not put off by not being able to operate the system properly.

My noble friend Lady Altmann and the noble Lord, Lord Davies, also asked about awareness of the changes. This perhaps goes a bit further than I went earlier. I already mentioned updating GOV.UK; I may also have mentioned that we are working closely with external organisations to ensure that people have what they need to make an informed decision about making a claim. I am pleased to say that for those previously refused entitlement, either by the Secretary of State or the tribunal, it will be open to them to make a new claim for benefit. The remedial order deliberately extends the time period for making such claims; this should ensure that all who qualify can access support, irrespective of whether they have claimed before. I think I pointed out, as far as I could, what we are doing to make people who had claimed unsuccessfully before aware that they could claim again.

The noble Lord, Lord Davies, and the noble Baroness, Lady Sherlock, raised a very important point on the evidence of cohabitation. They asked what evidence people will need to provide. The Committee will know that the onus will be on the claimant to prove cohabitation. We intend to use existing DWP IT systems to verify information provided by the claimant as part of their claim. If the information provided cannot be confirmed, the claimant will be required to provide two forms of documentary evidence. We will accept evidence in line with that currently accepted by DWP as proof of address. Where claimants are unable to provide documents, we will take a customer declaration over the phone. This approach follows the existing evidencing strategy for married couples and those in a civil partnership. We believe that this is a pragmatic and compassionate approach which minimises the impact on the claimant, is deliverable and protects against the risk of fraud. I would say also that, as this is new and coming in, we will obviously monitor it carefully, but that is where we stand at present.

The noble Lord, Lord Jones, asked an interesting question about the statistics on future retrospective payments and the average amounts. Unfortunately, as he might probably guess, I am unable to give the figures to him. They are not yet in the public domain but, of course, I am happy to write—but not quite sure when I can write—to him with the figures. It may be that somebody behind me can say it might be soon. The point is that his question is very much noted; I think it was echoed by the noble Baroness, Lady Sherlock.

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[Baroness Sherlock (Lab)]

I am grateful to the Minister and thank him for the answers he has been able to give. He was unable to answer questions from my noble friend and me about the treatment of the lump sums, which are extremely important. They are at the heart of the way this order will be operationalised. Given that, according to the order, it takes affect the day after it is made, can the Minister undertake to write as quickly as possible?

[Viscount Younger of Leckie (Con)]

The noble Baroness raises a very fair point. I will speak to the team and see what we can do to write a letter quickly covering all the points, not just that particular point.

Motion agreed.