Examination of Witnesses (Questions 580
- 597)
WEDNESDAY 19 APRIL 2006
SIR DAVID
VARNEY, MR
PAUL GRAY,
MR STUART
HARTLIB, MR
STEVE LAMEY
AND MR
RICHARD SUMMERSGILL
Q580 Jim Cousins: I am sorry, you
have not been very clear about that. I have asked you what the
timescale is. This was an issue which was put into the public
arena by the Ombudsman. The right of appeal is a well-established
feature of our benefits system and much of the design of tax credits
comes from a benefit-style payment which preceded it. It is a
fundamental aspect of our benefits system. Surely this is something
which you must be coming to a conclusion about?
Mr Gray: Can I just start with
your comment on right of appeal in the benefits system. There
is a right of appeal in the benefits system in relation to awards
of benefit, just as within the tax credit system we have a right
of appeal in relation to award decisions on tax credits. In the
benefits system in DWP there is not a statutory right of appeal
in relation to recovering overpayments generated by official error,
which is the closest parallel to the specific recommendation which
the Ombudsman made. It is not about the right of appeal on awards,
where we are lined up with the benefits system, it is a question
of right of appeal in relation to overpayments, where also our
current practice is very close to the benefits system. Were that
further appeal right to be granted, obviously this is a policy
and ministerial decision. It is something which would require
primary legislation to institute. The reason I have not been clear
on the precise timetable is because the set of issues we are trying
to consider here is quite complex and we are anxious to get to
the right decision rather than possibly get to the wrong decision
on an artificial timescale.
Q581 Jim Cousins: Have you yet given
advice to ministers on how you would guide them? I am not asking
for what that advice is, I am asking have you offered advice to
ministers on what conclusions they should reach about this?
Mr Gray: We have already had a
number of exchanges and dialogue with ministers on this, yes.
Q582 Jim Cousins: Have you got to
the point where you have given formal advice to ministers on how
you think this matter should be concluded?
Mr Gray: This has been an evolving
dialogue and, no, we have not reached that definitive point.
Q583 Jim Cousins: You will obviously
see the contrast in our discussions here this afternoon between
considerations of £20 million court cases and the right of
an ordinary citizen to dispute the recovery of an overpayment.
There is a contrast, is there not?
Mr Gray: A contrast in what sense?
Q584 Jim Cousins: There is a contrast
between the ability of people who can deploy huge resources of
lawyers to defend their position and threaten the Government with
legal action, which will be deeply embarrassing, and the rights
of our constituents to dispute the recovery of overpayments. That
is the contrast I am inviting you to consider.
Mr Gray: I understand the point
you are making, which is why we have been having an ongoing dialogue
with the Ombudsman, who made the original recommendation. We are
also having a continuing dialogue with the HMRC Adjudicator, who
obviously also looks at cases on behalf of your constituents if
they are not satisfied with the way we are dealing with them.
One of the possibilities we are looking at, which would fall short
of a formal statutory right of appeal, is whether there is some
new enhanced procedure of an independent sort which might be administered
by the Adjudicator. That again raises all kinds of resourcing
and do-ability issues, but that gives you another dimension of
the sorts of issues and possibilities we are considering to try
to address the underlying point the Ombudsman has raised.
Jim Cousins: Thank you. That last point
at least was helpful.
Q585 Chairman: Just to be clear,
on the statutory test there is a recommendation from the Ombudsman,
I think recommendation number 11, which back in October you told
this Committee you were still considering, yet you have re-issued
the Code of Practice 26 last month and that does not mention it.
Sir David Varney: No, we re-wrote
it. I think Mr Gray has given a description of the process we
have been going through. There was advice which we should re-write
COP 26 to better explain what we did in disputed overpayments
cases and that is what we have done, and we did not think it was
worth holding that up for the other issues which we have got to
resolve.
Q586 Chairman: How long does it take
to consider whether a statutory test should be adopted?
Sir David Varney: Clearly it takes
some time.
Q587 Chairman: It has taken six months
now. How much longer is it going to take?
Sir David Varney: As we have described,
we are in discussion with ministers and giving advice on an ongoing
basis.
Q588 Chairman: With ministers?
Sir David Varney: Yes.
Q589 Chairman: I see. If we could
just turn to that particular Code of Practice which you have revised
now, I think I am right in saying that the last option open to
a claimant is judicial review, is that right?
Mr Gray: Yes, it is, which I think
is brought out in the revised text of COP 26.
Q590 Chairman: Do you think that
is a legitimate option, and is it likely to be exercised?
Sir David Varney: There have been
suggestions from some of the voluntary groups that they will make
us the subject of judicial review. They have taken the precursory
view on that. We put this together, as I say, with the voluntary
organisations, trying to lay it out as clearly as we could.
Mr Gray: What we have spelt out
on p.6 of the new Code of Practice is a statement which says,
"If you are still unhappy with the decision or if there is
any new relevant information, you may wish to contact a professional
adviser or an organisation like Citizen's Advice to consider what
options are open to you to dispute the recovery, including any
through the courts," which picks up the point you were making
about judicial review.
Q591 Chairman: Okay. Could I revert
to a couple of issues we touched on earlier. One is the availability
of the information which you make available. Are you able to tell
us what you are doing to improve the analytical evidence base
which is available to you in developing policy? Have you considered
doing anything comparable with the DWP's work, for example, on
its Work and Pensions Longitudinal Study?
Sir David Varney: Yes, we have
brought over from DWP, I think, one of the chaps who was responsible
for that sort of work, trying to improve the quality of analytical
work.
Mr Gray: We are seeking to improve
in our analytical database not only the extent to which at any
point in time we can bring together and make better use of coordinated
information about any of our customers, but also picking up your
point about the longitudinal study to look over time at our ability
to track samples and cohorts of customer groups over time to see
the sorts of changes through which they go, and we are working
extremely closely (subject obviously to data protection issues
and any statutory limitations) with DWP in developing very similar
methodologies.
Q592 Chairman: Can we take it from
that that more of your internal data on tax credits will eventually
be published, even in summarised form, as raw data for academics
and other people outside your little world to look at?
Sir David Varney: It is not so
little, but our direction of travel is to bring more of the analytical
information in our sort of annual reports and spring reports into
the public domain, and obviously working with voluntary groups
and sharing experiences. I think that is something that is the
direction of travel, for exactly the point you have made, that
there may be people outside who can see things more clearly and
have got suggestions which obviously we want to take into the
policy debate.
Q593 Chairman: Thank you. Finally,
on two related credits, the increase in the disregard to £25,000
apparently creates the possibility that some people could substantially
increase their tax credit entitlement by fluctuating their income
levels from one year to the next, for example by altering their
pension contributions?
Sir David Varney: That sounds
like an avoidance scheme.
Q594 Chairman: Yes, and have you
put measures in place to ensure that people do not do that, that
they alter their pension contributions, for example, year on year?
Mr Gray: I think this is quite
closely related to the point I think Mr Newmark was making earlier
on about the at least theoretical possibility of adjustments to
income between years. That is something which we have not put
formal measures in place on, but we will be reviewing it extremely
closely once the new disregard regime is in place in the coming
year.
Q595 Chairman: We have also had evidence
that the provision of child care support through the working tax
credit is unduly complex and perhaps unworkable. Have you made
any assessment as to whether it would be desirable to remove the
child care element from the working tax credit altogether?
Mr Gray: I think this is the proposition
which is, as I recall, in the evidence you took from the Paymaster
General on 1 February, and Ms Keeble, who is not here today, had
some dialogue with the Paymaster General about. As she made clear
on that occasion, that is not an option which we have modelled,
but she pointed out that obviously there would be a significant
implication of any move of that sort because if one were thinking
about integration with child benefit one would be talking about
trying to align a targeted benefit with a universal benefit.
Q596 Chairman: But it is something
which has been recommended in evidence to us by, for example,
the Low Incomes Tax Reform Group and the Child Poverty Action
Group, amongst others.
Mr Gray: I am aware of that, but
as the Paymaster General made clear at the beginning of February,
that is not something which we have modelled.
Q597 Chairman: You have not done
any work, for example, on assessing the pros and cons of removing
the family element of child tax credit and adding it to child
benefit?
Mr Gray: We have not done detailed
work on that, but as I say the Paymaster General pointed out the
clear implication of what would happen in cost terms if you were
to take a benefit which is currently tapered out in relation to
income and aligned it with a benefit which is universal and does
not have any tapering element to it, which is the case with child
benefit.
Chairman: Good. Thank you very much.
I think you have offered us at least a couple of notes during
that session, which we look forward to getting from you as rapidly
as possible in view of some of the delays we have had. We are
now going to adjourn into private session. Thank you.
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