Examination of Witnesses (Questions 140-159)|
MP, MR TONY
14 MARCH 2007
Q140 Mr Mudie: Yes, that is fraud.
We are not arguing about that, Minister.
Dawn Primarolo: We operate that
on the reasonableness test where the claimant was aware that they
were being overpaid, whether it was reasonable for them to have
thought that when they were told they were going to get one amount
and got another. Since April 2006 I am informed that DWP have
increasingly sought recovery of official error overpayments, so
the operation in terms of HMRC is where there is an official error
and it is reasonable that the claimant did not know that error
had occurred then there is more
Q141 Mr Mudie: I think that is not
entirely correct. That latter part is the DWP inferring or being
strong enough to suggest that was misrepresentation where they
do have the ability to go ahead. Where it is official error that
gives them the excuse for not recovering. You get official error,
there should be no recovery, but where there is fraud or misrepresentation
or lacking in material facts there is no difference between us,
if the DWP think the latter is there under the Social Security
legislation they can go for a recovery but if it is not there,
if it is official error, then they actually You are not
doing that. It is not that you are not doing it, you are not willing
to tie your legislation up to their legislation so that claimants
are treated in exactly the same way. You would need an amendment
to the Tax Credits Act 2002.
Dawn Primarolo: I do not know
how this can be resolved in terms of a dispute about the interpretation
of how DWP operates. I am informed that DWP increasingly seek
to recover where there is official error.
Q142 Mr Mudie: Why speculate, Minister?
Why do we not just ask the Treasury Solicitor to actually examine
how both Acts operate as far as claimants are concerned and we
can have a definitive look at it.
Dawn Primarolo: Okay.
Q143 Mr Mudie: Let us take you to
where you are on good behaviour and then you spoil yourself.
Dawn Primarolo: Thank you.
Q144 Mr Mudie: A person apparently
has an appeal when your award is challenged, when they do not
think you have paid enough. You very nicely, on the one hand,
give them the right of appeal but then you decide whether the
appeal is valid.
Dawn Primarolo: I am sorry, I
do not understand that.
Q145 Mr Mudie: I think you had better
consult either side of you. That is the complaint we receive in
great number, that you decide whether it is valid and goes to
Dawn Primarolo: I think it is
on the award notice, it is on the letter that they are informed
they have a right of appeal against entitlement.
Q146 Mr Mudie: No, CPAGthis
is true, according to my righthave given us written evidence
with figures. If I challenge your entitlement you decide whether
it goes to the tribunal, you decide whether it is valid, and if
it is valid you first of all attempt to negotiate with me and,
if notA penny is dropping somewhere.
Ms Walker: Perhaps I can help.
We have been in discussion with the CPAG about the handling of
some appeal cases within the Department where they have not been
happy with the details of the way that we have handled cases.
I think we have now reached an agreement with them.
Q147 Mr Mudie: Can we just be clear
then. If I challenge your award and I wish to challenge the validity
of it, is it like an immigration appeal where it is immediately
off the Department's desk and off to a tribunal without the Department
having any right to decide whether it goes to a tribunal?
Ms Walker: Yes.
Q148 Mr Mudie: You are absolutely certain?
Ms Walker: Yes, you have got a
right to appeal.
Q149 Mr Mudie: So CPAG are wrong
Ms Walker: There have been some
problems in the past but we have resolved them and that is what
will happen now.
Q150 Mr Mudie: I have a last question.
This is the inter-relationship between benefits and tax credit.
Both the Citizens Advice Bureau and One Parent Families have given
us examples of where the interaction between the two benefits
can cause difficulties: somebody comes off Jobseeker's on to income
support, working tax credit do not immediately stop that and the
claimant ends up very much worse off in the very short-term once
the mistake is realised. If we supply you with details will you
agree to have a look at this?
Dawn Primarolo: Yes.
Q151 Mr Mudie: We will ask both organisations
to pass you details.
Dawn Primarolo: Yes.
Q152 Jim Cousins: This is an issue
I have raised before on previous occasions. Pension contributions
are disregarded in the assessments of tax credits but I think
very few people know that. Do you have any idea, if I could ask
you, Sarah, how many claimants of tax credits are actually claiming
such a disregard of their pension contributions?
Ms Walker: I think it would be
difficult for us to tell. We ask people to put on their claims
their taxable income from their P60 or from their tax return and
that ought to be net of pension contributions where those are
netted off by their employer or personal contributions, so we
would only see the net figure.
Q153 Jim Cousins: There is a facility
for people to set out when they make a claim for working tax credit
to specifically make a claim for disregard of pension contributions,
but I think it is only on about page 30 of the big booklet. Do
you know how many people actually do that?
Ms Walker: I am afraid I do not
Q154 Jim Cousins: The Government
is about to introduce the personal pension accounts to which people
will be auto-enrolled. Will you have a system of auto-disregarding
the contributions that people make? Are you thinking ahead for
such an eventuality?
Mr Orhnial: I suspect it will
work in exactly the same way as they are disregarded on a payslip.
If you are an employee and you are making contributions to your
employer's pension arrangements that is taken off your gross pay,
which is essentially the point Sarah made earlier. So the pay
that you enter on to your tax credits claim form will essentially
be net of that contribution in the first place. The only cases
where the point you make arises will be if they are independently
making contributions, for example if they are self-employed. It
is certainly something we will need to bear in mind.
Q155 Jim Cousins: As a matter of
fact, I think the point I am raising is rather more widespread
than that because some people will find themselves in a situation
where their job changes and the pension contributions they make
are made in different ways. You are just simply relying on the
P60 to automatically disregard the pension contributions.
Mr Orhnial: Yes. If that person
stayed in the new scheme, the NPSS or whatever it is called, they
would stay in the scheme, provided they did not opt-out, as they
moved from one employer to another, that would be my understanding.
We can certainly bear in mind the point and make sure that tax
credit claimants are not disadvantaged by the move. My understanding
is that it will work pretty much as the occupational pension scheme
does now except for the fact that it is a common pot so if you
move from one employer to another employer you have still got
your pension pot and the money is being deducted.
Q156 Jim Cousins: But if somebody
was making a contribution, say, to a stakeholder pension it would
not necessarily show up in their P60.
Mr Orhnial: That is true, if they
are doing that independent of their employer. I am sorry, I had
forgotten that particular case. Presumably that was what your
question was relating to.
Q157 Jim Cousins: So there could
be quite large numbers of these people?
Mr Orhnial: There could be a number,
I have no idea.
Q158 Jim Cousins: People who have
taken out stakeholder pensions following the Government's advice
might find their contributions are not disregarded for the tax
credits that they are getting?
Mr Orhnial: It rather depends
on whether they are doing it through their employer or not.
Q159 Jim Cousins: Let us be clear
about this. If people are making payments other than through their
employer, which will show up on the P60, then it is quite possible
that their tax credit assessment will not be right.
Dawn Primarolo: If they do not
Mr Orhnial: The facility to tell
6 Note by witness: When a customer appeals
against entitlement, HMRC will try and reach a settlement with
them before the case goes to a Tribunal. But there is no question
of the Department having the right to decide whether it goes to
the Tribunal. Back