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Mr. Archy Kirkwood (Roxburgh and Berwickshire): All hon. Members will support the right hon. Lady's attempt to increase expedition and dispatch, but does she acknowledge that there is an independence to the current system, and, shot through with anomalies though the system may be, some people are worried that the Bill will erode that independence? Will she address that point?
Ms Harman: The hon. Gentleman raises an important issue. People applying for benefits want accountability for decisions made when they first make the claim and, if their claim is not accepted, they want an independent appeals process. The Bill seeks to guarantee both--an initial system for making a decision that is accountable, focused, clear and uncomplicated, and then the opportunity for everyone who wants to challenge that decision, which will be made on behalf of the Secretary of State rather than by a plethora of different people wearing different hats or by the same person wearing different hats, to appeal by means of a system that they can understand and which is genuinely independent. Therefore, we hope to deal with both those points.
Mr. Iain Duncan Smith (Chingford and Woodford Green): While the right hon. Lady is on the case of Enid and her problems, will she deal with clause 70, under which someone in Enid's position, who may not be able to discern exactly when her husband died, will have her entitlement to benefit for a past period curtailed from three months to one month, which will directly hurt and affect that person? Will the right hon. Lady explain how that will work?
Ms Harman: It is not that Enid did not know when her husband died. She knew when her husband died, but she
claimed the full amount when she was entitled to only part of it. Her claim for the full amount was refused and she appealed, when she should simply have been allowed to claim a partial amount.
Mr. Simon Burns (West Chelmsford): Returning to clause 70 and the reduction from three months to one month for a backdated claim, when a person is bereaved, particularly having been married for many years, shock and unhappiness may mean that she does not make a claim in time. In those circumstances, particularly for elderly people who have lost a loved one after many years of marriage, may one month not be enough time? Should not there be more flexibility rather than the draconian measure in clause 70?
Ms Harman: We do not want a system that does not help a bereaved person to make a claim at the right time, but which allows a claim made 12 months late to be backdated. We want people to have the right information at the right time. In that respect, bereavement counselling is important. Data need to be shared, so that when someone dies, the DSS can ensure that the right benefits are received there and then, rather than that the system should go wrong, resulting in claims having to be backdated.
The Bill will reduce the number of decision makers from six to just one, who will act on behalf of the Secretary of State. It will allow decisions to be processed automatically, leading to the quicker receipt of the accurate amount of benefit, and it will enable staff to take an early second look at disputed decisions and to correct any errors there and then, without affecting the claimant's right to have an appeal heard by a tribunal if he or she is still not satisfied.
Mrs. Maria Fyfe (Glasgow, Maryhill):
Will my right hon. Friend comment on clause 2? I am concerned in case inaccurate information is fed into the computer and claimants do not realise that they have an opportunity to dispute a decision. The resolution of such disputes may take some time. What processes would be in train to cope with such a problem?
Ms Harman:
It is important at all times to ensure that the receipt of information is correctly recorded and that it is correctly acted on, because people should have to give the information only once. The Bill provides the legal framework to allow data sharing between different parts of the Department. My hon. Friend is absolutely right: further work needs to be done to improve the process of checking information and the quality of decision making. That is one part of the jigsaw puzzle. Ensuring that the information given is correctly recorded and that the right decision is made is very important.
Audrey Wise (Preston):
I understand and accept the need to use advanced technology, but the terminology used in the Bill suggests that the decision will be made by the computer. That causes me considerable anxiety. I do not believe that we should use computers as a substitute for civil servants. The Bill does not say that decisions will be made by civil servants aided by the computer: it refers to decisions made by the computer.
Ms Harman:
That is a legal technicality to allow computer printouts to be used in court proceedings.
I was in the benefits office in Brighton the other week, where I saw a piece of carbon paper. There was new technology on the desk of the person assessing the claims; she was writing letters using carbon paper. I do not lead a sheltered life, but it is a long time since I have seen a piece of carbon paper used in what is supposed to be a modern, up-to-date, efficient service. I said to her, "Is that a piece of carbon paper?" and she said, "Yes. I'm very lucky, aren't I, it's a new piece of carbon paper and everyone else in the office is trying to get it off me."
We cannot run a modern, efficient service by old-fashioned work methods, because that undermines the quality of people's work. We must have a sound legal framework to ensure that we improve the quality of service. The thrust of the Bill is to provide that legal framework and to give people who claim benefits a better service, so that instead of resenting the system, they support it. That is not the present position.
We want to enable staff to take an early second look at disputed decisions, and to correct any errors there and then rather than wait for the appeal process. At the moment, decision making on applications for budgeting loans from the social fund is unnecessarily complex. When the social fund was introduced, the idea was that it should be a simple, discretionary application of common sense, but it has not turned out like that. The current system is confusing for customers and time-consuming for staff.
I shall give an example of a family on benefit, whose washing machine breaks down and who cannot afford to get it fixed. They apply for a budgeting loan of £80 for the repair. It is a simple matter, but they must complete a 20-page application form. They have to answer questions that may have nothing to do with their application, because by statute the form must cover both loans and grants, each of which has different requirements for an award. Staff are required by statute to consider which member of the family the washing machine is for, why and how badly it is needed. Staff are also required by statute to use their discretion to judge whether the requirements for a grant rather than for a loan have been satisfied, even though the applicant has not applied for a grant. Only when they have decided that the requirements for a grant have not been satisfied can they use their discretion to judge whether the original loan application is of high enough priority to receive an award.
The Bill will enable the current confusing system to be replaced with a modern fact-based approach. That will enable staff to reach quicker decisions, which are easier for customers to understand.
The Bill will enable us to provide a streamlined and straightforward system for claimants who appeal against decisions to an independent tribunal. I know that many hon. Members are concerned about the independent appeal tribunal system. At the moment, the system is slow, complex and cumbersome. Appeals take on average six months to be resolved: many take more than a year, and some take two and a half years.
The week before last, I sat in on a number of tribunals. The first person whom I sat next to in the waiting room was a woman with severe rheumatoid arthritis. She had waited two and a half years for her appeal against the
decision on her benefit to be heard by the appeal tribunal. She had no idea why it had taken so long. She was suddenly called in at short notice. Appeals take far too long.
Each year, 20,000 people appeal against a decision on their claim for income support, even though they have no chance of success, possibly because they already receive the full amount and no further award can be made. Those 20,000 hopeless appeals proceed through the system and delay other cases, at a cost of £5 million a year. They go to a three-person tribunal, only to be told that they never had a chance because the law had been clearly applied to the undisputed facts of their case.
There is no independent right of appeal on national insurance decisions, except to the High Court on a point of law, which is inaccessible to most people. We want people to have access to a quick, straightforward process for appealing disputed decisions. The Bill will rationalise and clarify the appeals procedure and significantly reduce waiting times. If any hon. Members are not convinced of the need to reduce waiting times, I suggest that they talk to anyone in an appeal tribunal waiting room and discover the problem for themselves.
The Bill will replace the five separate tribunal jurisdictions. We do not need five: we need only one, but we have the social security appeal tribunal, the child support appeal tribunal, the medical appeal tribunal, the disability appeal tribunal and the vaccine damage tribunal. They are held in the same rooms in the same building, but they wear different hats. We want to replace those five separate tribunal jurisdictions with a single independent body.
We want to remove the rigid requirement for all cases to be heard by three-person tribunals, and instead enable the president of the appeal tribunal to draw additional members from a panel of experts if and when the need arises. We want to allow tribunals to be able to correct their own mistakes, and thus cut out the time wasted when cases go to commissioners unnecessarily. If the tribunal and the appellant realise that something has gone wrong and that it can be sorted out, why require cases to go to the commissioners? Mistakes should be put right there and then. We want to introduce a new right of appeal against decisions in respect of national insurance contributions. That is important, because it is quite wrong that there is no appeal except to the High Court.
The proposals in the Bill will also enable those 20,000 hopeless appeals each year to be sifted out and dealt with quickly, as they are in all other jurisdictions, such as the county court and industrial tribunals. We do not want those appeals to delay cases that have a genuine ground for appeal. In future, any hopeless cases will be identified early, and the people concerned will be given a full explanation of the decision at first instance and why it was taken. If they are dissatisfied with that explanation, their appeal can go forward, but the president of the independent appeals tribunal service will be able to choose to constitute a one-person tribunal to decide the appeal if he or she thinks that that is appropriate.
The flexibility of choosing between a three-person, two-person or one-person tribunal is necessary. We do not want to take away people's right to appeal: we want to guarantee their right, but if there are no disputed facts and the law is clear--for example, they have received the maximum amount of benefit--we want to ensure that
the appeal is heard by one person who can sort out the problem. That will enable such cases to be dealt with more speedily in future. There is no point people going through the whole appeals procedure, perhaps waiting more than two years for an appeal in front of three people, when there is no dispute over the facts and their claim has clearly been decided correctly.
When people are told by tribunals that their appeals have failed and that they never had a chance of success in the first place, they sometimes say, "I wish that someone had told me. If they had, I would not have wasted two years waiting, and taking the bus to the tribunal." It is unacceptable that people are routinely being kept waiting up to two years for their appeals to be heard, and I am determined to improve the system to ensure that, in future, they receive the fair and swift service that they have a right to expect.
Not only will my proposals streamline the current process; I shall assume personal responsibility for the administration of the appeals system. I shall set demanding targets to shorten the time that it takes for appeals to be heard, and for appellants to be told the outcome. When we have set up the new tribunal service and the new administrative system that will underpin it, I shall publish those targets and report on the results. People must know that there is a time limit within which appeals will be heard, and we must ensure that that limit is stuck to. At present, there is no time limit.
The essential independence of the current system will, however, be reinforced. The Lord Chancellor, as head of the judiciary, will appoint not only the president of the appeal tribunals but all the members of the panel. Currently, the Lord Chancellor appoints the president, who then appoints the panel members. All the measures that I have described will help us to rationalise our dealings with claimants, providing them with a simpler, more streamlined service and cutting out unnecessary duplication and frustrating delays.
Let me now refer to the second major strand of the Bill, which focuses on reinforcing people's responsibilities in relation to the welfare system. The national insurance scheme is based on rights and responsibilities: it provides people with rights to contributory benefits and, in return, expects individuals and employers to meet their responsibility to make contributions in order to fund those benefits. We expect everyone to meet their responsibilities, and we want to help them to do so. At present, however, a minority of employers are deliberately shirking their responsibilities. Those employers are not playing fair with their employees, who lose out on their benefit rights, and they are not playing fair with the large majority of employers who pay their fair share.
The Bill will make those employers pay up. It will make national insurance contributions payable on non-cash payments given to employees through restrictive covenants, which have become an increasingly common method of avoiding contributions. It will replace the current outdated and virtually unused criminal offence of non-compliance with cash fines similar to those imposed by the Inland Revenue for tax evasion. We are aligning the two systems. The Bill will provide for new, tougher criminal penalties in serious cases of deliberate evasion and fraud. We need to distinguish between those who are simply not paying and would be encouraged to do so by
the introduction of fines, and those who are involved in heavy fraud. We shall also allow the Contributions Agency to take distraint action to recover debts. That, too, aligns the contributions recovery process with the Inland Revenue's tax recovery process.
Those measures will make people who would otherwise try to avoid meeting their responsibilities think twice. In return, we are making it easier for employers to pay their fair share, by aligning the ways in which certain benefits and expenses are dealt with in the tax and national insurance systems, removing the need for separate record keeping and accounting for national insurance purposes.
Three further changes in the national insurance scheme that are not currently included in the Bill will be introduced in the form of Government amendments. The first will prevent funded unapproved retirement benefit schemes, which are little more than deferred cash bonuses, from being used for the avoidance of national insurance contributions. The second will make it easier for national insurance contributions to be charged on the provision of vouchers by employers who pay their employees by means of such vouchers rather than cash. I call that the Great Yarmouth amendment, because it was in Great Yarmouth that it was brought to my attention by two hon. Members--one was my hon. Friend the Member for Great Yarmouth (Mr. Wright)--that the owners of a residential care home for the elderly were paying their staff £60 a week in cash, an amount just below the national insurance contribution limit, and £70 a week in Asda vouchers. The intention was clearly to avoid national insurance contributions.
Under the current rules, payment in Asda vouchers rather than cash enables people such as the owners of that home to avoid their national insurance liability, thanks to the previous Government's abolition of the Truck Acts. Moreover, that method of payment means that the employees have no contribution records for the period of their employment, which jeopardises their rights to national insurance benefits. They will not have contributed to the contribution-based jobseeker's allowance, to incapacity benefit, to maternity allowance, to widows' benefit or to their basic state pension. The Bill will wipe out that practice. Child care vouchers, however, will remain exempt from national insurance contributions for the time being, because we are looking at their use in the context of our work on developing national child care strategy.
The third new amendment relating to national insurance contributions will align tax and national insurance rules with regard to company share options.
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