Examination of Witnesses (Questions 40-59)
DAWN PRIMAROLO
MP, MR TONY
ORHNIAL AND
MS SARAH
WALKER
14 MARCH 2007
Q40 Jim Cousins: I do accept that
the figure of 5% which you have just now given us, which I think
is the first figure of that kind that I can recognise seeing,
is only an estimate based on a pilot, but can I ask you to agree
with me that is more than twice the rate of official error for
income support and jobseeker's allowance?
Ms Walker: Can I make clear that
that is not on the same basis as the DWP figures. What we have
done is measure the cases where the customer has raised a dispute,
so where they have come to us and said, "We think there is
an error," only in 5% of those cases do we actually identify
an error having been made. The DWP figures that they have published
are on the basis of a sample of all cases in the benefit and not
just the ones where a dispute has been raised.
Q41 Jim Cousins: When will you be
able to publish comparable figures to those the Department for
Work and Pensions is already publishing?
Ms Walker: I do not know is the
answer, but we will certainly look at whether we can.
Q42 Jim Cousins: Within the next
12 months?
Dawn Primarolo: Look at it or
do it?
Q43 Jim Cousins: Do it. The Department
for Work and Pensions is already producing these figures for every
single category of benefit. When are you going to be able to do
the same for tax credits?
Ms Walker: We are concentrating
on looking at the disputed cases first because that is where the
issues are general going to arise.
Q44 Jim Cousins: Is there no date
that you are working to to publish such figures which the Department
for Work and Pensions are already routinely publishing?
Dawn Primarolo: We do not currently
have a plan to do that, but there is no reason why we should not
be able to do that and we will look at doing that.
Q45 Jim Cousins: Can I ask you, the
amount of money overpaid and the extent of the overpayments; the
last figure we have is for 2004-05. Paymaster, are you in a position
where you can give us a figure for 2005-06 or a current figure?
Dawn Primarolo: I do not have
that figure. Those figures will be published in May on a date
to be announced. It is not actually a matter for me as Minister.
I do not see those figures until a short period before publication,
I think that is limited to 24 hours, and that is a matter that
is sorted out between the ONS and the Department.
Q46 Jim Cousins: It is very difficult
because we are dealing with a very serious matter which is affecting
millions of people and it does concern me that we are not able
to get the recent extent of this problem. Can I now draw your
attention to the last set of figures we have which are for 2004-05.
What these show is that there are five million families benefiting
and two million who are affected by overpayments; that is 40%.
Minister, you have just told this Committee that 97% of families
earning less than £10,000 a year are receiving tax credits.
Is it reasonable for the Committee to draw the conclusion that
on the basis of the best information we have now that 40% of such
families will be involved with difficulties about overpayment?
Dawn Primarolo: The statistics
showed that the number of awards has risen—that is a matter
of national statistics—and therefore the proportion of award
with overpayments has declined slightly as has the amount that
is overpaid. The figures are compiled not to my specification
but under the requirements to look over the whole year when it
has been finalised. When those figures are produced they will
be for the year before the PBR changes have been implemented.
I hope that the figure will go down but I do not have access to
them. My Department monitors in-year for me but these are statistics
that are produced under certain conditions—
Q47 Jim Cousins: Look, this is extremely
serious. You have just given this Committee a figure that shows
that 97% of people earning less than £10,000 a year are receiving
working or child tax credits and on the basis of the last figures
this Committee has one in five of them will be affected by underpayments
and two in five of them might be affected by overpayments, and
this is happening to people and to families many of whom have
gone back to work and are earning £10,000 a year. This is
just not acceptable.
Dawn Primarolo: But, as you said,
Mr Cousins, it might show that; it might not, and the work of
this Committee and the Ombudsman and the PAC in terms of changes
to the system, and how we progress with those, is to deal precisely
with those points.
Q48 Jim Cousins: Hang on, if that
is not correct, if the contemporary figures are better than the
ones that I have just distilled from the information that is available,
it is absolutely essentially that that is made known. Can I ask
Mr Orhnial, you are responsible for the Government's welfare reform
policies; do you not see that it is going to be very difficult
to convince people to go back to work if something like 60% of
the very lowest income people returning to work are likely to
be caught up with either under or overpayments of tax credits?
That undermines the whole policy.
Mr Orhnial: Can I just take you
back to the some of the principles of the system—
Q49 Jim Cousins: No, do not take
me back to the principles of the system, Mr Orhnial, I am trying
to get you to recognise that these administrative deficiencies
have a major impact on the Government's welfare reform policies.
Mr Orhnial: I think end-of-year
adjustments are a feature of a system that is based on annual
awards. That is also why we cannot give you the figure for the
year that has just ended on tax credits because we do not have
those numbers until the process is completely finalised for the
year.
Q50 Jim Cousins: Do you accept, Mr
Orhnial, that if we have a policy of encouraging people to go
back to work, quite properly, earning very low incomes, as they
do, depending as they do on tax credits, to have a situation where
60% of them may be affected either by under or overpayments of
tax credits is a shocking, devastating damage to the whole welfare
reform policy? Do you suppose people are not aware of the difficulties
they might face when they return to work?
Mr Orhnial: It is not a figure
that I recognise as being current.
Q51 Jim Cousins: The last figure
that this Committee or indeed anyone else has shows that two million
families out of five are affected by overpayments and nearly a
million families out of five are affected by underpayments. Imagine
yourself to be a family on £10,000 a year going back to work
and look at the implications of that.
Dawn Primarolo: But the implications
are also demonstrated by the continued take-up and the figures
demonstrate that there are some 700,000 families who would be
worse off if the system did not exist as it is. You made a series
of propositions based on how you think people would react to the
information. The statistics do not indicate that that is going
on. However, we are not sitting in front of you today, Mr Cousins,
saying that we are not doing a great deal of work—hence
all the changes that are going on—to ensure that the overpayments
problem, whilst keeping the flexibility of the system, is considerably
reduced by all of the changes that are being made. You pray in
aid one set of statistics and we pray in aid alongside that other
statistics saying that it may not be as straight forward as—
Q52 Jim Cousins: Paymaster General,
I was hoping very much that you would come here this afternoon
and pray in aid a new set of statistics which would demonstrate
these very obvious difficulties were now going down. I am extremely
concerned that you are unable to do that.
Dawn Primarolo: Well, you will
need to take that up with National Statistics then because these
are not—
Q53 Jim Cousins: It is not a matter
for National Statistics.
Dawn Primarolo: —Because
these are figures produced under arrangements for showing how
it is assessed on the complete year.
Q54 Jim Cousins: This is not an issue
for National Statistics.
Dawn Primarolo: This is not an
issue of me saying I have the information and I will not give
it to you. It is the way the information is collected and reported
on and produced, and that is just as difficult for me as it is
for you.
Q55 Mr Newmark: Are you saying the
figures are wrong; this is what I am not clear about?
Dawn Primarolo: No, I am not saying
the figures are wrong. Mr Cousins wants me to give figures now
that I am not privy to.
Mr Newmark: They are either right or
they are wrong. You cannot throw your hands up in the air. The
buck stops with you and the Chancellor. The Chancellor has decided
to say it is your responsibility, Paymaster General, which is
why you are before us and not he. It is a serious allegation.
Chairman: Colin Breed?
Q56 Mr Breed: Can I say, Paymaster
General, that the emotion of the outrage that Mr Cousins has demonstrated
is but minor to that of some of the people who phone us up, I
suspect, who are without money and without the means sometimes
to pay for their family's food on the weekend that they have been
promised a cheque or promised a payment. We have got lots of fresh
evidence from the voluntary sector that there still are very significant
numbers of people who are disputing overpayment who are getting
an absolutely lousy service. They write an extremely long letter
explaining in huge detail what is actually happening and they
get back months and months later a few lines which often do not
seem to refer to the case they are talking about. People are promised
payments on a regular basis and then nothing happens. What actually
are you doing to ensure that the senior management of your service
actually knows what is happening on the ground and does not just
receive information from HMRC in some sort of statistical manner?
These are real people, as you know.
Dawn Primarolo: I do know that
and I also know what provisions are in the system to make sure
that the issues you are talking about do not occur. I think that
the interaction—and I am not going to speak for them, I
am going to ask Sarah to do it herself—between the management
of HMRC and representative groups and directly with claimants
is developing all the time. There are a number of pilots that
have been running and contact methods used in order to speak directly
to claimants. I am happy to give you a note on it as well, but
Sarah?
Ms Walker: I have to say that
I do recognise that there have been a lot of problems and cases
such as you describe and it is nothing that we are happy about,
but perhaps I could just say two things that we have done recently
to address those specific issues. One is after an instruction
from the Paymaster General last year, we have put work into reducing
the turnaround times for disputes so that the vast majority of
disputes are now dealt with within four weeks and not the months
that may are happened in the past that you suggest. The other
thing is that we have put in a lot of effort to improving the
explanations we send out to people to help them understand why
their disputes are not successful. As I say, only 5% of the disputes
that we are dealing with at the moment turn out to be justified
in terms of mistaken overpayments, but in all those cases we need
to do better to explain to people why it is that the overpayment
has arisen. In November, we introduced new guidance and new scripts
for the letters that we send out so that we can improve the explanations
we give to people when the dispute is resolved. I personally think
that is a very important thing and we will keep watching that
and make sure that the improvements continue.
Q57 Mr Breed: Can I ask are levels
of disputed claims going up or levelling off or are they actually
coming down? From my experience, and I suspect from others' experience,
there seems to be no discernable change in the whole level of
the number of people who are disputing overpayments.
Ms Walker: It is roughly the same,
it is roughly constant.
Q58 Mr Breed: It is roughly the same,
so more resource has gone in, there are more opportunities for
people to speak and more explanation, and yet still the disputes
are at about the same sorts of levels.
Ms Walker: I think it is understandable
that people do not like being told they have an overpayment that
they have to pay back and a proportion of people will always ask
for an explanation and will want to dispute it and know why that
overpayment has arisen. As I say, what we need to do is deal with
those cases quickly and give them a good explanation of what has
actually happened.
Q59 Mr Breed: One of the other anecdotal
figures on that is that in recent times the proportion of disputes
that have been settled in the claimants' favour has dramatically
dropped away. We are talking about relatively small numbers of
those and now it seems to be that you have become much harder
or much more robust and there is very little now that is being
settled in the claimants' favour.
Ms Walker: It is not a change
in our attitude. It is a reflection of the fact that we are actually
making fewer errors. As I say, only 5% of the cases we are getting
in now are genuinely reflecting errors that we have made. Where
there is an error we will examine that and again we will apply
the test which we use, which is could the customer reasonably
have realised that the payment was wrong? If they should have
realised it was wrong having checked some specific things that
we asked them to check, we would have expected them to tell us.
If having checked those things, they thought it was right but
actually because of our error it was wrong, we will write off
the overpayment.
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