Welfare Reform Bill

My Lords, as we have previously discussed, Clause 103 is based on the premise that for those benefits within its scope, most if not all overpayments will be recoverable. I think we are all in agreement that a benefit recipient should not receive any more money than they are due; nor should they receive any less. In keeping with this general principle, we believe that a benefit recipient should not be allowed to keep money that they should not have received and that this should hold true even if they were not aware of the mistake. I do not think that we can accurately compare the issue of tax credit overpayments, raised by the noble Baroness, Lady Hayter, with that of benefit overpayments. That is because awards of tax credit are based on an estimate of what someone will earn, whereas benefit entitlement is based on actual information—and of course it will not have escaped anyone’s notice that the level of tax credit debt has grown significantly. As we have discussed before, although the provision allows for all overpayments to be recoverable, this does not necessarily mean that overpayments will be recovered in all circumstances. We will endeavour to recover all overpayments where we are able to do so and where it is reasonable to do so without causing undue hardship. This remains a cornerstone of our overpayment recovery policy. The code of practice, a draft version of which has been distributed to noble Lords, will provide guidance about the circumstances in which recovery action will or will not be taken. It is intended that the code of practice will be available to the public in leaflet form and online. This will ensure that the decision-making process is transparent and that the right decisions are made about the recovery of overpayments. Where a claimant wishes to challenge a decision, they may exercise their right of appeal against it. To pick up on the point made by the noble Baroness, Lady Hollins, on what compels decision-makers to apply the code of practice, the application will form part of the decision-making process, and failure to adhere to it would leave the DWP open to challenge and appeal on the decision itself or, indeed, judicial review for failure to apply good practice. While there may be no legal duty to comply, failure to do so renders the department more open to successful appeal by the claimants. So we have every incentive to adhere to the code of practice. As DWP will not prescribe in legislation circumstances in which the discretionary write-off or non-recovery of an overpayment would be considered, we will be able to consider any application for non-recovery or write-off on the merits of that particular application. Whether an overpayment was received in good faith is only one of the considerations that we will apply. We will also consider whether recovery is likely to cause the claimant or their immediate family significant hardship or be a threat to their health or welfare. We will also take into consideration any further issues that the claimant considers to be relevant. In many cases, a claimant will not question the calculation or the constituent parts of the award. In some cases, this could be due to language or literacy problems or perhaps learning difficulties. If an error were to occur in such an instance, perhaps due to the fault of officials but perhaps not, is it reasonable for any claimant who has language, literacy or learning difficulties to avoid repayment solely because of this? Is it not reasonable that they should gain assistance in checking their award? In many cases, of course, they will have gained assistance in making their claim. Any test of reasonableness must be subjective. This amendment would require a subjective assessment not only of the debtor’s capacity to understand entitlement but of their capacity to gain assistance from others in understanding their entitlement, all before the overpayment is determined. As I have stated previously in Committee, we do not intend that the repayment of any overpayment, whether it is the fault of the claimant or officials, should cause undue financial hardship. We will gladly discuss an alternative repayment rate if a claimant cannot afford the suggested repayments. Indeed, as I have previously placed on record, only just under half our current on-benefit debtors repay at the maximum rate of recovery. That rate is currently £10.20 per week for those individuals on income-related benefit. We will prescribe in regulations that where official error causes an overpayment of housing credit to a pensioner, this will remain non-recoverable. This remains in line with how we treat overpayments of state pension credit and will provide greater reassurance for older people who may be on fixed incomes. The noble Baroness, Lady Hayter, asked whether we would inform claimants of their right of appeal. Yes, we will. She asked for more details of the write-off. It is our intention to judge exceptional circumstances on a case-by-case basis. The landlord will have a right of appeal if the recovery is due from them. I am sure that we are all in agreement that, in the current financial climate, it is important to protect public money. Thus, wherever possible, while ensuring that recovery will not cause undue hardship, we should pursue the recovery of overpayments. I therefore urge the noble Baroness to withdraw the amendment.