Welfare Reform Bill

What we are talking about, and what I was describing, is where a payment would be going directly to a landlord, but it is for the rent. There would be recovery from that, so then the obligation becomes the debtor’s to replace that amount for the landlord, so, no, the landlord does not have a right to appeal because it is not his money. It is just a direct payment device. As my noble friend recognised with his amendments, claimants may have other debts that are being repaid that will impact their ability to repay their DWP debt. In such an instance, we may agree that recovery should be suspended until a particular financial commitment of the debtor ends. Additionally, because we recognise that hardship need not solely be financial, these considerations will include whether recovery is likely to be a threat to the health and welfare of not only the debtor but their immediate family. Exceptionally, where it is warranted, DWP may decide not to pursue or to stop pursuing recovery. These hardship situations are well established and balance the needs of the debtor and those of the taxpayer. I believe that this approach is more effective than the prescriptive considerations set out in the amendments. This approach ensures that those claimants who are able to meet the repayment obligations do so and recognises that in some instances there is a need to take into account a claimant’s specific personal circumstances. I trust I have assured noble Lords that these amendments are unnecessary as we already have protections in place to ensure that a debtor does not suffer undue hardship when deductions from benefits or earnings are made and that, where appropriate, a claimant’s individual circumstances will be fully considered. The noble Baroness, Lady Hayter, asked about limits on universal credit recovery. Recovery will be subject to a maximum rate, as it is currently. This will differ depending on whether the payment is wholly universal credit or a combination of universal credit and earnings. We still have well established hardship considerations. If repayment causes difficulty in those circumstances, we will be able to discuss it. I therefore urge noble Lords not to press these amendments. The noble Lord, Lord McKenzie, has given notice of his intention to oppose the Question that Clause 105 stand part of the Bill. Clause 105 clarifies that the Limitation Act does not apply to the recovery of benefit overpayments and of social fund and tax credit debts by methods other than court action. It ensures that recovery of such debts by deduction from ongoing entitlement can continue beyond the six-year limitation period for bringing court action. DWP has long taken the view that the statute of limitations has no application to the recovery of benefit overpayments or social fund debts by means other than court action, including by deduction from continuing benefit entitlement. However, in a 2009 case involving recovery of a housing benefit overpayment by a local authority the High Court came to a different view. DWP was not involved in that case, but given that it could be read as applying also to the recovery of other benefit overpayments and of social fund payments, we believe it is necessary to introduce this measure so that we remain able to balance the recovery of public funds against the financial circumstances of the debtor. In many cases, seeking to recover social security or tax credit debt by means of deduction in a period of no more than six years would place an unfair or impossible burden on the debtor and their family. We are not proposing anything new; Clause 105 merely clarifies a long-standing and well accepted interpretation of the application of the Limitation Act limitation to the recovery of social security and tax credit debt. The provision ensures that all deductions of benefit made more than six years after the debt became due since Section 9 of the Limitation Act came into force were, or will be deemed to be, legitimately made. It is retrospective to cover the legality of recoveries of six years of debt already made under the presumption that that was the legal position. By contrast, without this clause—Egyptian calligraphy is very complicated—we may be forced to endeavour to recover all overpayments within six years, and this would imply higher recovery rates and potentially hardship for claimants affected. We have made this measure retrospective to cover all recoveries already made, as I have already said. I hope this clarification will convince the noble Lord and the noble Baroness to allow Clause 105 to stand part of the Bill. I beg to move.