Department for Work and Pensions: Management of Benefit Overpayment Debt - Public Accounts Committee Contents


Examination of Witnesses (Question Numbers 80-88)

DEPARTMENT FOR WORK AND PENSIONS

  Q80  Mr Davidson: Fine. If you let us have a note on that.[9]

  Sir Leigh Lewis: Just one thing of course to say because I think it is so important I must say it: we do devote huge energy to increasing take-up.

  Q81  Mr Davidson: I understand that. I just wanted to clarify whether or not there is any cross-fertilisation. The other point is about appeals. I am somewhat surprised at the fact you do not seem to methodically monitor what happens at appeals and the extent to which you lose judgments. Maybe you could give us a note indicating what information you have about that.[10] I am particularly interested in clarifying the extent to which the result of an appeal depends upon who was representing the individual and whether or not people were represented by a CAB or another agency. I do not know whether Legal Aid has managed to get into this area and whether or not there are any records of that and whether or not somebody who is unrepresented from a modest educational background really gets a much worse deal in terms of their appeals than anybody else. That would be helpful.

  Sir Leigh Lewis: In preparing for this hearing I did actually go into this and the truth is we do not have as good information on appeals as I think we should have so it is one of the things I am asking the team to address.

  Q82  Mr Davidson: The final point I wanted to make and I mentioned it earlier on, every time your Department comes in front of us it does seem to be populated by normal people in contrast to the Foreign Office which is full of people from public school and Oxbridge. Can you give us any explanation as to why that might be?

  Sir Leigh Lewis: Having come from a grammar school and Liverpool University, I am not sure that I want desperately to get into this. I do not have those figures to hand. Look, I am a Permanent Secretary of some standing across the Civil Service and I think we have left some of those things behind, Mr Davidson. What we value in the Civil Service today right across the Civil Service is people with ability who can do the job that the Government wants them to do completely irrespective of their background.

  Q83  Mr Davidson: You think you have left these things behind. Maybe you could give me a note[11] because I have asked for the same note from the Foreign Office of what percentage of your top board, say the top ten or top 20, were Oxbridge and public school just so that I can compare it and see the extent to which they are similar or different and the extent to which the Foreign Office has left these things behind,

  Sir Leigh Lewis: I will try and do that.

  Chairman: Which is worse, Oxbridge or public school?

  Mr Davidson: It is a toss up really, is it not, but if you have got both of them then really!

  Q84  Chairman: You remember I asked you earlier about this target and I said it was rather an easy target. In January 2009 you took a decision to redeploy 300 of 1,900 Debt Management staff for a six-month period. Presumably as you achieved this target with 300 people missing next year's target should be proportionately higher, should it not?

  Sir Leigh Lewis: Yes, I absolutely believe that it should because the target this year would have been higher if we had not taken a decision, which I absolutely believe was the right decision incidentally, to enable Jobcentre Plus to use up to those 300 staff temporarily. It is worth saying that between them we estimate they have taken over a third of a million claims to Jobseeker's Allowance. One of the reasons we have been able to keep absolutely on top of the very large growth in numbers is because as a department we did take very early decisions to shift our resources where they were absolutely needed. The basic answer to your question is yes, all of those staff will be back at the end of this month and we are at the 28th today and of course when we come to look at next year's target we will be looking at a full complement of staff again.

  Q85  Chairman: Have you ever considered charging interest on long-term debt to incentivise early payment as other debt collection agencies do?

  Sir Leigh Lewis: I just wonder, Chairman, whether you have been sat in my room and I did not notice because it is a good question that I have asked in preparing for this hearing and it is one of the things I have asked that our review should cover. We do not at the moment but I think it is a very good question.

  Mr Codling: We presently do not have the legislative power to do that.

  Q86  Chairman: You were asked earlier about selling debt. Could you just go into that a bit because a lot of other organisations do that.

  Sir Leigh Lewis: I do not want to present myself as a great expert on debt recovery in the private sector because I am certainly not, but a lot of other organisations, retailers and others, which by their nature end up with people owing them money at a certain point, will sell some or all of their debt book to a more specialist organisation for something in the pound, so they will sell that debt for whatever it is in the pound. That has the advantage for them of giving them a definite figure. It is not the 100 pence in the pound that they are owed but it is something, and then that organisation, if it does well, recovers more than that amount, and if it does not it recovers less and it takes the risk. I think that is something that is worth us looking at.

  Mr Codling: We have looked at that before, Chairman, a couple of years ago without it demonstrating a good business case, but I think we should look at it again.

  Mr Morse: It just occurs to me as you look at the aging debt the net present value of that book must be quite low, so every year—

  Mr Codling: About 700 million. The balance sheet value of our £1.8 billion debt when it is impaired and discounted is £700 million compared to the £1.8 billion.

  Mr Morse: I am now doing a very simple and totally wrong bit of arithmetic, but if you think about it there is an annual impairment of the book of debt because it is sitting there every year and having long-term debt, although it is not having a cash charge, is actually costing a very significant amount each year in the depreciation of the value of the debt book. I know you are not disagreeing with me about that but what I am saying therefore is if you are making a business case for doing something with the debt book it is not difficult to find one side of the equation which is the very considerable degradation in the value of the debt that you have on your books.

  Mr Codling: It has already happened.

  Mr Morse: Yes, but it continues to happen, does it not, every year?

  Mr Codling: Yes.

  Sir Leigh Lewis: I think this is a really interesting question. We would need to consult with our colleagues in the Treasury. It is not a decision that we should take alone. I am interested in this. The key question has to be, and I am sure the Comptroller and Auditor General would agree, does it represent value for money to the public? That has to be the key question.

  Chairman: This has engendered another couple of questions from Mr Davidson.

  Q87  Mr Davidson: Can I just clarify on this because I am a bit worried that going down this road might develop silo working. How many of the people whose debt might be sold on would already have multiple debts so they would be in debt to the council for council tax or rent and so on and to what extent would selling the debt on to perhaps more aggressive collectors simply allow your debt to leap ahead of other people's debt with no actual general benefit to the public purse but just simply a shuffle around, and to what extent would any business case be developed in consultation and co-ordination with other potential debtors?

  Sir Leigh Lewis: I absolutely do not want to give you an impression that we have thought further about this than we have. All I have done is I have said that this is a question worth exploring and I think we should explore it. I think the kind of questions that you have put forward are all extremely pertinent ones that we should consider as part of that. I do think the question is worth exploring.

  Q88  Mr Mitchell: This brings to mind nightmare visions of securitisation of debt, special purpose vehicles flogging it on and bringing about a big bubble like the banks. I suppose this is for the NAO: is there a register of debts owed to government? It is possible to conceive that somebody who is fiddling their taxes or has a tax debt or somebody who has a tax credit debt or somebody who has got a jobseeker's debt or whatever or housing fiddles are co-ordinated in a register of government fiddlers?

  Mr Morse: I am not sure a fiddle register is something I recognise, Mr Mitchell. I think the truth is that it is possible to have systems running across agencies that would allow you to see what the total amount of debt was, if you can identify the individuals accurately, and that is a big "if". Do not under-estimate the cost of achieving that. It is a desirable place to get to, I think my colleagues in DWP would agree, but do not underestimate how hard it would be to get there. Yes, theoretically you should be able to say what are the total debts someone has. Certainly you find in the private sector credit rating agencies do that sort of thing. Could we do it? I think we would find it quite difficult and costly but it might be somewhere we might reach ultimately. That is my best answer.

  Mr Codling: We are doing some work with HMRC to identify mutual debtors and to see if we can assist in recovery on either side.

  Ms Hinds: We would be interested in looking at that work because it is quite a new level of co-operation between two significant agencies and I think there will be a lot of learning out of that that may inform future developments.

  Mr Mitchell: Of course after May we will all be on it as well!

  Chairman: That concludes our hearing on a happy note. Thank you very much, Sir Leigh, as always, for the effective way you have sought to answer our questions. Undoubtedly you have now got a more efficient indication of debt but the fact is that your recovery is not keeping pace with overpayments. We now have a total debt owed by benefit recipients of the Department of £1.8 billion so as you are only recovering at a very slow pace obviously from people I am sure our report will focus on the urgent need for you to concentrate help and effort at the beginning of this process so that people do not build up debt. We have had a discussion about selling debt. I will not burnish my already right-wing reputation by saying as well as considering selling debt you should also consider selling your debtors into slavery. That is not a question.

  Mr Davidson: I know he is not joking!






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