Examination of Witnesses (Questions 360
- 379)
WEDNESDAY 1 FEBRUARY 2006
DAWN PRIMAROLO
MP, MR TONY
ORHNIAL AND
MS SARAH
WALKER
Q360 Lorely Burt: I take all your
points about the fact that you can only make changes slowly but
I would be interested in your comments on that and what sort of
priority you think that should have as a development which would
ease a lot of problems and frustrations that many people are experiencing.
Dawn Primarolo: We were talking
about whole case management on screen rather than the conversation
that Mr Cousins and I were having about whether it is deferred
to a complex case team or not, which is the interim arrangement
at the moment. Clearly that is important, it is more desirable
that it should be in the system now and is not. I have to balance
that between the importance of getting the award notice out and
correct, the playback, the guidance, the increase in the disregard,
the considerations that I am also still pursuing with regard to
whether or not there should be a pause. Even if we successfully
drive down overpayments there is still the Ombudsman's point about
should there be a pause between the notifying of overpayment and
starting the process of reclaiming that. All of that requires
IT changes and some of it legislative changes. I have got to balance
the importance, and that is what I am doing. At the moment I am
going for award notice, changes in in-year recovery, playback,
£25,000, being more proactive in making sure the claimants
understand what changes of circumstance are relevant to tell us,
which is one way of dealing with Mr Cousins' point, and how quickly
they should tell us and getting the renewals window from six months.
It was never planned to be six months, it was supposed to be three.
We had to go to six months because of what happened in 2003-04
and I think we need to start clawing back because that is also
a problem when people are on interim benefits.
Q361 Lorely Burt: I appreciate that.
Do you not think we should have had this in the first place? I
was quite shocked to learn that it was not an element of the system
that was built in. Perhaps it is too late to go there now.
Dawn Primarolo: I think that goes
over other ground about why the system does not do exactly what
it was expected to do from the beginning and ties into what became
second. I cannot remember that.
Q362 Peter Viggers: The long statement
that you read to us at the beginning of this session, was it a
platitudinous summary of what we knew already or did it contain
new information, in which case it should have been given earlier?
Which do you think it was?
Dawn Primarolo: It is new information
and I am giving the most up-to-date information to the Committee,
which has always been my practice as a minister. There is no difference
in what I have done this time from any other time that I have
been called before this Committee in the last eight years.
Q363 Peter Viggers: It is just that
as a Committee our job is to scrutinise Government, to hold Government
to scrutiny, and it is so much easier if the information is available
before the session. It is less easy for us to cross-examine on
the basis of information that is given to us at the beginning
of the session. That is the point I am making.
Dawn Primarolo: Indeed. It would
be a waste of time giving you information that was then out of
date by the time I got here so I was giving you new information.
There is a balance to be struck.
Q364 Peter Viggers: I am allergic
to being blindsided. The Chancellor of the Exchequer came to us
in July and announced a change to the periodicity of the Golden
Rule not really giving us a chance to consider it.
Dawn Primarolo: Mr Viggers, you
have an inquiry and it is up to you how long you want to progress
through this and how you want to deal with the information, it
is not for me to say. You are perfectly entitled to your observations,
as I am to mine.
Q365 Chairman: You have told us that
the economy is increasingly global and we know that, but what
we want to know is whether these two million people are going
to be properly paid in the future.
Dawn Primarolo: I think you should
also know there are nearly 20 million, which is one in three,
and the difference between a fixed award, which is part of your
consideration, and what is happening now and the scale of what
is happening now, so that you are in a position to judge, as you
will want to be I presume, what it is reasonable and what it is
not reasonable to do to such a big system requires me to make
sure that information is on. Reading all the evidence, it has
not been submitted at this point and I have read what everybody
else has said.
Q366 Mr Love: If there were a critic
present he might possibly say that the first part of your statement
was a bit of a party political broadcast. Can I ask, is the renewal
process for 2004-05 now complete?
Dawn Primarolo: I explained that
earlier on. The close of the process was 31 January, which was
yesterday, because for self-assessment taxpayers who are in receipt
of tax credits their tax returns are relevant to a final reconciliation.
So the process in terms of time finished yesterday and now we
will be going through all the analysis, as we did last year.
Q367 Peter Viggers: Can you comment
on the level of overpayments in 2004-05 compared with overpayments
in 2003-04?
Dawn Primarolo: At this stage
I am not able to give an accurate indication because I do not
have the information I need and therefore, as the Committee will
see, with the NAO I think it is prudent to say I am working on
the basis of the same figure as the year before. I will be able
to update the Committee when I have a full analysis of what is
going on with the statistics. That is not a matter for me because
these are independently adjudicated on and produced. I have been
told those figures will be available in the spring of this year
and at that point—
Q368 Chairman: Your working assumption
is that there will be another two million wrongly paid?
Dawn Primarolo: Accounting standards
require me to do that. That was clear in the NAO report and the
report to the PAC. It is no comment with a view to accuracy. UK
accounting standards require us to do that, as does the NAO, and
that is what we have done.
Q369 Peter Viggers: What study has
been made of the causes of overpayment and what further study
is to be made?
Dawn Primarolo: The first study
is the analysis is broken down which has been reported to Parliament,
which is part of the ONS series and breakdown. These are not produced
by the Department, they are produced by ONS. The next series will
be available in the spring of 2006 and the range will be by income.
These are requirements of ONS. I am not being difficult with you.
Other people need to make sure of the figures that are being used,
it is the checks and balances in the system.[7]
Q370 Peter Viggers: I have a copy
of your letter to our Chairman dated 31 January where there is
a paragraph on how overpayments and underpayments arise, which
is on page one. Also you made a statement on 5 December: "Analysis
of overpayments suggests these arise from a number of factors"
and then you list five factors, but all of these are the customer's
fault. When constituents come to see us and when the Parliamentary
Ombudsman became involved we had a rather different angle on this.
To quote the Parliamentary Ombudsman, for instance: "The
cases we are dealing with primarily are about official error.
When we talk to the Revenue they seem to be talking about customer
error". So there is a dichotomy here between the Revenue,
which seems to think that everything is the customer's fault,
and the people who present to constituency Members of Parliament,
and of course these are self-selected people for whom things have
gone wrong at the other end, but they think it is official error.
What study do you make of the split between customer error and
official error?
Dawn Primarolo: The first thing
I would like to say is, in no way has anything the Department
said or anything I have said as the Minister been able to be paraphrased
as "It is all the claimants' fault", quite the reverse,
as my statements to the House both written and oral and PQs will
demonstrate. As I said in the statement on the Pre-Budget Report,
it is about firstly making sure we get the correct information—and
that is an obligation on the Department to make sure it gets the
right information, it has to inform the claimant what that information
should be—and then of course the Department has to act on
that information correctly. So I absolutely refute somehow it
has been characterised as that. With regard to, and it is referred
to in the NAO reports, the breakdown between official error and
the work which needs to be done on that, there currently is work
going on in the Department, which has been referred to in the
PAC hearings and the NAO, looking at the relevant sample size
to give a figure of error and fraud. That is a statistical exercise
which needs to progress, is progressing and that will produce
the information that you are requesting. That is on 03-04 because
that is the only year we can operate on.
Q371 Peter Viggers: Yes. On 12 September,
you said, "No complete analysis exists of official error
causing or contributing to overpayments."
Dawn Primarolo: That is true.
Q372 Peter Viggers: This has been
studied. Can you give us an estimate of when such an estimate
will exist?
Dawn Primarolo: It was being studied
on 12 September, I was being absolutely truthful. What has to
be done in a survey of this importance is, firstly, a relevant
statistically large number of claims have to be looked at which
have been properly selected, and then they have to be checked
at every point, so there have to be all the papers, all the action,
which is very time-consuming, and then it has to be decided, if
there was an error at what point it occurred. I cannot remember
the date of the National Audit Office Report or the PAC hearing
but it was reported that the Department and those who were working
on it were, I do not know, a third of the way through completing
the information and that it would be available when completed
in 2006. I cannot recollect the exact date in 2006 but I am happy
to let the Committee know.[8]
Q373 Peter Viggers: There is public
money involved. Can you give us any estimate at all of the amount
of overpayments caused by official error?
Dawn Primarolo: No, I cannot,
but if you look at the interim findings it was 3.4%, and I think
it will be a little higher than that. You do not have to believe
me, Mr Viggers, look at the NAO Report and the information there
on this study, to see where the Department was at this particular
point in time, when that would be completed and what that would
show.[9]
Q374 Peter Viggers: I think your
statement said that the Code of Practice 26 is in draft form and
a final version is expected in 2006. Are you able to give us a
forecast of what kind of changes we can expect as a result of
the change of Code of Practice 26?
Dawn Primarolo: I am, except—and
I have to make sure this is not seen as a criticism—we gave
the community and voluntary sector as long as they required to
respond in detail to the drafts that were provided on that, and
we have only recently received some of those detailed observations.
That is not a criticism of them, they are under pressure, but
we should take note of what they have said. It is beyond the time
period we asked. It is in draft form but I do not see why the
Committee cannot have it, if you do not already have it—it
is in the Library I think—but anyway we can make sure you
have a draft copy. What it will do is make much clearer the precise
circumstances in which the reasonableness test will apply, and
that is still a matter of consultation with the groups. As I said,
I have a table of who said what, I do not think it is appropriate
I read that out but I can give you a general flavour.
Q375 Peter Viggers: Finally, my colleagues
were pressing you about the recovery of an overpayment before
Her Majesty's Revenue and Customs starts to collect it, and you
referred to the size of the computer programme changes which would
need to be made to implement that beneficial change, which would
alert claimants about the recovery of overpayment. Can I press
as to when you think that work will be completed?
Dawn Primarolo: I do not know
at the present time. It is an important issue and I recognise
that. It is quite complex, I am informed, to make the changes.
As soon as I am able to, I will inform the Committee and Members
of the House, but I do not have a timetable for that at the present
time. It is one of the Ombudsman's key recommendations, so you
would expect me to take it forward.
Q376 Mr Mudie: Minister, I am dealing
with something you have included in your statement, Code of Practice
26 on overpayments. It is not a question but a request really.
You say that you have given this to the voluntary organisations
and it will be published in April, so the draft is with the voluntary
organisations, can you supply this Committee with a copy of that
draft?
Dawn Primarolo: I can supply a
copy of the draft, yes, and I will. What I am not sure I can do,
and I will need to check with the organisations concerned, is
let you have what they have said on it.
Q377 Mr Mudie: No, I do not think
we want that.
Dawn Primarolo: Because that means
it is under amendment now. They submitted that in confidence and
I do not know whether we need to ask them. You can certainly have
our draft.
Q378 Mr Mudie: That would be good
for us. You also deal with the question in terms of dealing with
disputed cases. Your sentence is, "Tax credit officers are
making progress towards this target of dealing with disputed cases
within four weeks." Well, aye, but what does "making
progress" mean? We are all making progress.
Dawn Primarolo: It means they
are not at four weeks, which is where they should have been frankly.
That is what we agreed. They are currently at five, they will
be at four weeks, they have informed me, by March.
Q379 Mr Mudie: Is there any clue
as to where they are? How many weeks are they taking now?
Dawn Primarolo: Five.
7 Note from witness: Statistics on overpayments
are produced and published by HMRC as National Statistics in the
publication Child and Working Tax Credits Statistics, in
line with ONS guidelines. Back
8
Ev 191 Back
9
Note from witness: Analysis of a sample of 2003-04 awards
indicates that 3.4% of tax credits by value were overpaid because
of claimant error or fraud. This is an interim finding and HMRC
indicated in written evidence to the Public Accounts Committee
that it expects the final results to show a higher proportion
of non-compliant cases. The written evidence is published in PAC
Report Inland Revenue: Tax credits and deleted tax cases,
HC 412, published 8 September 2005. Back
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