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Session 2007 - 08
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Public Bill Committee Debates

The Committee consisted of the following Members:

Chairman: John Bercow
Atkins, Charlotte (Staffordshire, Moorlands) (Lab)
Duddridge, James (Rochford and Southend, East) (Con)
Gilroy, Linda (Plymouth, Sutton) (Lab/Co-op)
Gwynne, Andrew (Denton and Reddish) (Lab)
Howell, John (Henley) (Con)
Jones, Helen (Warrington, North) (Lab)
Kawczynski, Daniel (Shrewsbury and Atcham) (Con)
Kidney, Mr. David (Stafford) (Lab)
Marsden, Mr. Gordon (Blackpool, South) (Lab)
Rowen, Paul (Rochdale) (LD)
Skinner, Mr. Dennis (Bolsover) (Lab)
Taylor, Ms Dari (Stockton, South) (Lab)
Waterson, Mr. Nigel (Eastbourne) (Con)
Willott, Jenny (Cardiff, Central) (LD)
Winterton, Ms Rosie (Minister of State, Department for Work and Pensions)
Young, Sir George (North-West Hampshire) (Con)
Celia Blacklock, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 118(2):
Kirkbride, Miss Julie (Bromsgrove) (Con)

Seventh Delegated Legislation Committee

Thursday 13 November 2008

[John Bercow in the Chair]

Social Security (Miscellaneous Amendments) (No.4) Regulations 2008

8.55 am
Jenny Willott (Cardiff, Central) (LD): I beg to move,
That the Committee has considered the Social Security (Miscellaneous Amendments) (No.4) Regulations 2008 (S.I. 2008, No. 2424).
It is a pleasure to serve under your chairmanship so early on a Thursday morning, Mr. Bercow.
The first issue that I want to raise about the regulations is that I am deeply disappointed and concerned that they were tabled during recess and came into effect on the first day that Parliament came back. That gave neither this Committee nor the other place a chance to debate them before they came into force. That issue was raised in the House of Lords this week when it had an excellent debate on the subject.
Although tabling such regulations during the recess is not technically against the rules, as I understand them, it does not appear to me to be acceptable behaviour by the Government. It shows a total disregard for the importance of the scrutiny role of Parliament. It comes across as if the Government are trying to sneak through controversial measures which have clearly raised a number of concerns among Members of this House, Members of the other place and people outside. The Social Security Advisory Commission recommended that the Department for Work and Pensions abandon the regulations altogether. It is therefore a deep concern that we have not had the opportunity to discuss them before they came into force. I would be grateful if the Minister told us why they were tabled during the recess.
The second issue that I want to raise is about consultation. The Merits Committee produced a report on the regulations which was strongly critical of the approach of the Department for Work and Pensions to secondary legislation. It said that, all too often, consultation was non-existent, which seems to be the case with the regulations under discussion. The DWP had informal consultation with only two non-governmental organisations. It appears almost as if it were using the SSAC as an alternative to consultation; that is not its role and not what it should be used for.
The SSAC carried out a consultation and it had a huge response—probably more than it was expecting—which was overwhelmingly negative. That came from NGOs, advice groups and local authorities, and reflected a real depth of concern about the regulations. Will the Minister clarify whether the DWP is treating the SSAC as the only form of consultation, which clearly the Merits Committee does not feel is appropriate? If that is the case, why are the regulations being pushed through, given the fact that the SSAC said unequivocally that they should be abandoned?
The proposals are almost identical to the ones that were tabled and then withdrawn after overwhelming criticism from the SSAC back in 2000. Will the Minister let us know why, if the DWP listened to the SSAC’s recommendations in 2000, it is not listening to them today? What has changed in the proposals to make the DWP think that this time the SSAC is wrong and that the concerns are unfounded? I cannot see that big a difference.
One of the main issues with the regulations is the lack of evidence provided to back up the proposals. The Merits Committee raised concerns about the quality of the explanatory memorandum, saying that it completely fails to make the case for the regulations. It described the memorandum as more of a press notice and said that it was rather vague. I share those concerns and agree that its quality leaves a lot to be desired.
It is also deeply worrying that no impact assessment has been carried out on the regulations; the ferocity of the SSAC’s criticism should be reason enough for one. In addition to that, the Department has broken its own rules. It says that an impact assessment should be carried out on anything proposing savings of more than £5 million. The Department also says that it expects to save £170 million in the first year of operation of the regulations, which is significantly higher than the limit. Will the Minister therefore tell us why the Department has not done an impact assessment, because that matter was not clarified in the other place this week?
The explanatory memorandum also says there will be no impact on the private or voluntary sectors. The voluntary sector would beg to differ about that. It is quite clear that it is on the front line. It deals with many of the claimants that will be affected by the regulations. The Department should therefore have considered the impact that the regulations will have on the work done by the voluntary sector.
There is a complete lack of data on the number of people who will be affected by the regulations. From answers to parliamentary questions and the equality impact assessment, I have managed to find only six months’ worth of data to estimate the numbers affected by the changes to housing benefit and council tax benefit. The estimate is about 3,000 households for each benefit. That is a very low number, which means that the accuracy level is very low. That implies that the Government have no accurate idea of how many people will be affected by these changes, yet they are ploughing on regardless.
Last week, I asked a parliamentary question about the number of people that will be affected by these changes. I broke them down into four groups: pensioners claiming housing benefit, pensioners claiming council tax benefit, working-age people claiming housing benefit and working-age people claiming council tax benefit. The answer that I received was:
“The information is not available.”—[Official Report, 6 November 2008; Vol. 482, c. 699W.]
Given that these measures have been in force for a month, that is not good enough. The Government had no idea before these measures came into operation and they have no idea now they are in operation. I would be grateful if the Minister gave a breakdown of the numbers that she expects to be affected by these changes.
Sir George Young (North-West Hampshire) (Con): It seems to me that the SSAC estimated the number of people who will be affected. In the 40 per cent. of new claims that were backdated for more than three months in 2006-07, 25 per cent.—some 7,000 claims—were backdated for 12 months. So do we not have a rough idea of the population that might be affected?
Jenny Willott: The right hon. Gentleman is correct but what concerns me is that the Government are not providing those figures. The estimates are being put together by other people. The Government are proposing that the Committee accepts the regulations and agrees to them today. They should have provided the information that is needed to back up the proposals that they are making. Those figures are deeply lacking in the evidence they have put forward.
As the right hon. Gentleman says, more information is available regarding the effect of the pension credit changes. The Government have been able to provide some figures, although they seem to be slightly contradictory. One set of figures shows that 280,000 pensioners claimed backdated pension credit in 2006-07, although they were not able to provide figures on how long those claims were backdated for. More recent figures show that 340,000 pensioners received backdated pension credit. Of them, 190,000 claimed for less than three months and so would be unaffected by these changes, but 140,000 claimed for more than three months and therefore would be affected. Will the Minister confirm that it is accurate to assume that about 140,000 pensioners are likely to be affected by the regulations?
Those 140,000 people—if we accept that assumption—are likely to be the poorest and most vulnerable in society. To be entitled to pension credit, they must be below the Government’s poverty line, even though they have not previously claimed it. Therefore, they have been living well below the breadline and are some of the poorest people in the UK. That includes 60,000 people who claimed for guarantee credit backdated for more than three months. Those are people who have been living on less than £124 a week. To get an idea of the amount that people are missing out on, according to Government figures, 110,000 people out of the 140,000 who might be affected are likely to miss out on more than £1,000 of the pension credit that they are entitled to. A further 30,000 people are missing out on about £700, which is a huge amount of money for someone on a low income and could seriously affect their chances of falling into deeper poverty.
I asked the Government through a parliamentary question for an estimate of the impact that the changes will have on pensioner poverty. They referred me to the equality impact assessment that is associated with these measures. However, that does not include such an estimate, so I would be grateful if the Minister answered my question today. Will she clarify how she squares this policy with the Department’s aim of reducing pensioner poverty? Given that 300,000 more pensioners fell into poverty last year, it seems fairly clear that more people will fall into poverty as a result of the measures.
In the explanatory memorandum, the Department argues that the measures on pension credit are justifiable because it has existed for more than five years and
“the vast majority of potential claimants should now be aware of Pension Credit”.
However, take-up figures suggest that the opposite is the case. The Government believe that up to 41 per cent. of people who are entitled to pension credit are not claiming. The figures are getting worse every year. The take-up rate of pension credit is falling; I believe that it now has the lowest take-up level of any income replacement benefit. If that is the case—I would be grateful if the Government confirmed whether it is—the assumption that the vast majority of people are aware of pension credit is simply not correct.
According to Government figures, if there were a 100 per cent. take-up of pension credit by those who were eligible, pensioner poverty would be reduced by 700,000 people. The regulations will instead reduce pensioner credit take-up and the reverse will be true. Research published in September showed that one in eight older people had not heard of pension credit. For those coming up to retirement age and for those over 80, that increased to one in six.
At the same time, the number of those eligible to apply for pension credit continues to rise. If eligibility is increasing but awareness and take-up are decreasing or remaining stable, the number of people potentially affected by these changes will increase.
Mr. Nigel Waterson (Eastbourne) (Con): I am following the hon. Lady’s argument closely and agree with it thus far. Has she seen the evidence that suggests that pensioners who backdate claims beyond three months tend to be older pensioners who, on average, tend to be poorer?
Jenny Willott: That is the case. I have seen that evidence. That issue was acknowledged by the Government in the equality impact assessment. Among older pensioners, it is overwhelmingly women who face living in poverty. Therefore, the gender impact of these proposals is also quite serious.
Will the Minister give some clarification on the underpayment of pension credits? The Government figures show that about £500 million of pension credit has been underpaid since pension credit was introduced. Will the Minister clarify the extent to which those who have been underpaid will be able to backdate their claims? Will it be restricted to three months, or will they be able to get their money back if they have been underpaid for longer? Will she also clarify why over-60s are being treated differently from those under 60? As the hon. Member for Eastbourne said, the equality impact assessment acknowledges that older pensioners will be more severely hit. The backdating period for over-60s is restricted to three months, whereas for those under 60 it is six months. It feels like pensioners are being discriminated against. Why is that the case and what are the Government doing to mitigate it?
On the backdating of housing benefit and council tax benefit, it is very hard for people to prove entitlement for the full 12 months. Both are covered by a good cause test and ignorance of the benefit is not considered good cause. The whole point of the good cause test is to determine whether somebody is legitimately claiming backdated benefits. It only applies to a relatively concise group of people, and it is difficult to prove. Since it is difficult to prove, I would be grateful if the Minister clarified today whether there is evidence that people claiming backdated housing benefit and council tax benefit are defrauding the system, which seems to be the Government’s suggestion. However, they also suggest that people are delaying applying because of complacency, which the Government wish to avoid. Will the Minister tell us what evidence there is of complacency, because that does not appear to be coming forward from the voluntary sector and other organisations?
As well as the effect on pensioner poverty, the loss of the backdating period for working-age families with children is equally worrying. Surely that will have an effect on child poverty. I asked a parliamentary question about the impact on child poverty—this might sound familiar—and I was referred again to the equality impact assessment, which does not have an assessment of the effect on child poverty. Therefore, will the Minister clarify for us today what the impact will be on child poverty?
I welcome the compromise, in the face of opposition from the SSAC, to change the backdating period for working-age claimants from the proposed three months to six months, although I would prefer, obviously, that it was not changed at all. However, I am concerned that the change is only temporary, and that the Government intend to reduce it to three months next year, which clearly will have an even more significant impact on child poverty.
The explanatory memorandum says that the time lag will allow the Department for Work and Pensions to work with stakeholders to mitigate the impact of the change to three months, which is an implicit recognition that there is a negative impact. In that case, will the Minister clarify why it is being moved automatically to three months for pensioners? What work will be done to look at how to mitigate the negative impact? Why does she feel that people would no longer have good cause to claim for longer than three months for backdated housing benefit and council tax benefit?
Daniel Kawczynski (Shrewsbury and Atcham) (Con): The hon. Lady has said that the Minister will work with stakeholders to make sure that the information is disseminated. Does she agree that simply sending out millions of pamphlets and leaflets is not the way forward? There must be far more direct engagement with forums, at the House of Commons and nationwide, to get the message across.
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Prepared 14 November 2008