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There are three reasons why the department has said that the regulations must go in relation to people coming from abroad. First, they are too complicated. If they are too complicated for people from abroad, maybe they are just too complicated and maybe Regulation 13 needs to go. You cannot have it both ways and say that a DLA case can be foreseen over a three-month period but the case of someone coming from abroad is too complicated. I do not accept that reasoning. That is a judgment that must be made, but I have come down on the other side of the argument from the Government, if that is one of their arguments.

The second case that is made is that decision-makers cannot speculate. I know enough about the DWP to know that there is a specialist unit of people who do this difficult work. They have been trained over many years—since 1992—to do this important work. This is not a question of anyone in any part of the United Kingdom suddenly being faced with this. It is specialist work and in the cases that I know about it has been handled with expertise and great sensitivity. It is not uniquely difficult to predict what will happen over the next three months in any case. Particularly in habitual residence cases, the prospect is entirely within the competence of the professionals who are already doing the work in the department. In any case, the Court of Appeal found that the test was reasonable foreseeability. There is no certainty and there can be no guarantees, because people’s circumstances change endlessly. For that reason, to say that decision-makers cannot speculate is a very weak argument.

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Finally, the department is founding its case on the fact that there would be a greater propensity for fraud. I do not know where the evidence for that is, either way. If we are going to take that kind of approach for regulations of this kind—that it might lend itself more to abuse—I cannot for the life of me fathom why that should be the case. Again, if I am missing something, I would really like to hear some substance to that argument. I saw the statement made in the papers of the SSAC consultation, but I saw nothing that supported it to any extent that gave me pause for thought.

Most significantly—I ask the Minister to take this away and to think about it—Regulation 13 seems to bestow a “discretionary power”. Both of those words are important. It is possible for the decision-maker to say, “Yes, in three months’ time or within that period you will achieve eligibility”. But when that day dawns, without any more due process and without recourse to further inquiries or anything else, if the circumstances have changed—and there is an onus on the claimant to report such changes—it is possible for the same decision- maker to say, “No, I have changed my mind”. This is not something that gives the game away and cannot be retrieved without a heavy reinvestment of bureaucratic administrative time, it is a discretionary power that is capable of being used by the decision-maker and could be used without let or hindrance if he felt that a mistake had been made and that circumstances had changed.

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The department must be very careful that people will not say that it just cannot be bothered anymore with such decisions, that it is all a hassle and that the people in the department are thinking nothing other than, “This is too much trouble, let’s just get rid of it”. I do not believe that, but that is what people are starting to say. It is a potential reputational issue for the department if serious stakeholders are beginning to say that. There are those who say that that is happening because we are dealing with people from the furth of the United Kingdom and we are discriminating against them. That is not part of my case, but it is what people are saying and that should be of concern to the Government.

At the end of the day, the Child Poverty Action Group, which has studied these matters more closely than the rest of us, says that welfare rights advice will change if this Motion is not accepted and the Government stick to their proposal. The advice to people will be, “If you do not have access to the advance claim provisions in future, we advise you to claim every week; and every time that claim is rejected, appeal until a significant period has passed”. There will be weekly claims and, when they are rejected, weekly appeals. How that would help anyone in terms of the bureaucracy within the DWP defeats me completely. This is a counterproductive regulation. I can see no substance in the Government’s argument and I look forward to what they say in their defence.

Moved to resolve, That this House calls upon the Government to revoke the regulations laid before the House on 2 May (SI 2007/1331). 21st Report from the Merits Committee.—(Lord Kirkwood of Kirkhope.)

Lord Taylor of Holbeach: My Lords, I thank the noble Lord, Lord Kirkwood, for bringing this matter to the attention of the House and for placing this short debate in its historical context. The Merits Committee does important work and when it brings secondary legislation to our attention, it is generally for a very good reason.

This Government have promoted a great many Bills in the past decade that give Secretaries of State extensive powers to make regulations—so much so, that secondary legislation is now often the means by which new policy is announced, rather than merely implemented. Nowhere is that more true than in work and pensions, as the great complexity of the benefit system provides the Government with a fertile field for seeking enabling powers on the grounds of flexibility and responsiveness. This makes it a matter of concern when the Government do not accept a committee's recommendation. In this case, it is the Social Security Advisory Committee, which has recommended that these regulations are unnecessary and even counter-productive. I hope that the Government will be able to give us a full account of the reasons behind their decision to ignore this advice.

There is indeed a great need for flexibility in the application of benefit law. Too much control from the centre can make the benefit system prescriptive and unresponsive to the needs of the very people whom it is intended to help. I am worried that this Government's

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instinct in this case has the effect of reducing the scope of a decision-maker to exercise their discretion in this matter.

In paragraph 27 of the Government's response, they say that there has been inconsistency in how the provisions have been applied since the court judgment. The habitual residency test is indeed a complicated matter, but should the Government not be ensuring that their decision-makers are sufficiently trained to make complex decisions such as this? It should not be beyond the capabilities of a Government to produce guidance for them that can be consistently employed. The noble Lord, Lord Kirkwood, drew the House’s attention to the high skill base of decision-makers in this area. The Government should not be taking away a power that could do much, when properly exercised, to help a claimant just because the Government have failed to invest sufficient thought into how the power should be exercised.

However, this is not the only reason that the Government have given for disagreeing with the committee's recommendation. Another reason that they gave is that allowing an advance claim opens up the benefit system to increased fraud. Will the Minister explain why the Government have come to the conclusion that there would be a significant effect? I have not come across any evidence in any of the material on these regulations that would indicate this. In fact, the Government's responses seem to be based on very little evidence of any sort. I hope that the Minister will be able to reassure us that these regulations are, in fact, based on thoughtful analysis of the issue rather than a knee-jerk reaction to the Court of Appeal decision.

The Government also claim that the power to make an advance claim would open the door to repeated appeals against the decision-maker, should he or she refuse to allow it in a particular case. This statement cannot hold water. As the name suggests, a decision-maker's function is to make decisions. Why would the decision to refuse an advance claim be any more likely to provoke an appeal than any other? Is there any evidence to show that refusals to allow an advance claim for a benefit such as the disability living allowance are appealed against at a greater rate than other decisions? Given that the Child Poverty Action Group's advice to claimants attempting to pass the habitual residence test is to make repeated claims and appeals until the requirements are met, sensible use of these powers would surely reduce the caseload.

These regulations cover a matter of great complexity. It is unfortunate that there does not seem to be much data on which to base an informed decision. I look forward to the Minister’s response and hope that he can answer my questions as well as those raised by the noble Lord, Lord Kirkwood. A full answer would do much to address my concerns about these regulations.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I welcome the opportunity of this debate and the chance to explain, from the Government’s perspective, the need to remove the habitual residence test from the scope of the advance claims regulations.

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As the noble Lord, Lord Kirkwood, said, this is an important debate. I agree that it is right that we should be subject to parliamentary challenge on these matters. I accept that the change in the regulations is made in a way that is contrary to the advice of the Social Security Advisory Committee and the Court of Appeal decision. I should perhaps stress up-front that the regulations do not change the rules for eligibility at all; nor do they change the effective date from which a claim can properly operate. They concern a denial of administrative easement in circumstances where we would argue that that opportunity creates more administrative problems than it solves. Therefore, they do not fundamentally change the eligibility rules or the date from which a claim can operate.

The regulations before noble Lords affect the treatment of people from abroad when they claim an income-related benefit such as income support or state pension credit. They particularly concern the requirement that such claimants must be habitually resident in this country before they can become eligible for the benefits. As the noble Lord, Lord Kirkwood, outlined, the key factor in deciding whether a person is habitually resident is whether he has demonstrated that he has a settled intention to reside and whether he has been resident for an appreciable period of time. What amounts to a settled intention and an appreciable period of time depends on the circumstances of each case.

The regulations are needed to restore the manner in which this test operated before a Court of Appeal judgment last year, which ruled that these cases could benefit from a separate provision concerning advance claims. The provision in question was introduced to allow decision-makers to decide benefit entitlement in advance of a predictable future event. The advance claims provisions are a very useful administrative tool. They operate to the benefit of both customers and staff and avoid claims being disallowed and the claimant having to submit another claim when entitlement arises.

The noble Lord, Lord Kirkwood, suggested that advance claims are uncommon. In fact, they go back to at least 1987, although an extension to the provisions was made in 1992. They are more common than the noble Lord may think: nearly every claim for state retirement pension, for example, is made in advance.

The noble Lord asked about expenditure. We agree that small amounts of expenditure are involved in this matter, but they relate to administrative costs rather than entitlement and the quantum of benefit.

These provisions are among several which provide that particular benefits may be claimed in advance of the beginning of entitlement. A good example is when a person claims state pension four months before reaching pension age. It would be absurd to require him to reclaim on the date that he reached pension age when the date was already fixed and certain at the time of the first claim. Another example is where an expectant mother is allowed to claim maternity allowance 14 weeks before the expected week of confinement. Both those are predictable events. By

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contrast, deciding whether a person is habitually resident requires the decision-maker to weigh a variety of less certain factors in determining the degree to which the claimant has put down roots. The decision-maker would frequently have to speculate to an unreasonable degree as to whether the claimant’s intention to remain had been sustained long enough to constitute habitual residence.

Again, I should clarify a point made by the noble Lord, Lord Kirkwood, about the specialist units involved in this matter. A specialist unit looks at the right-to-reside requirement, which is one of the prerequisites of entitlement, but the second stage of the test—the habitual residence test—is dealt with by decision-makers generally.

Moreover, the claimant’s circumstances could change between the date of the decision and the date by which the test had been predicted to be met. People change their minds: they may have grown homesick and want to return to their country of origin, or their family circumstances may have changed, requiring them to cut short their stay here. To prevent abuse, we would have to review their circumstances again just before benefit was paid. This review would not always be a simple matter of checking a few straightforward facts; in many instances, it would entail a thorough check that the claimant really had maintained a settled intention to live in this country. In practice, that would cover the same ground as the decision-making arrangements we want, but with added complexity because of the doubtful speculation added through the use of the advance claim provisions.

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I grant that the habitual residence test is complex. It is complex because habitual residence is not a simple concept. It would be wrong to predict the future existence of this complex state of affairs with the aid of a regulatory easement designed to anticipate something as predictable as the attainment of pension age or the birth of a child.

The Government’s intention is quite clear: a person from abroad who claims an income-related benefit should demonstrate that they have a settled intention to live in the UK and that that settled intention has been sustained over an appreciable period of time. Only then can the person be said to be habitually resident. While a person can demonstrate an intention to settle in the UK, they have not at that point made any ties or lasting connections with the UK and are not habitually resident here. Use of the advance claims procedures to decide a future date when a person could be habitually resident is contrary to that policy intention.

As noble Lords are aware, the Government consulted on these regulations and have given very careful consideration to the Social Security Advisory Committee’s recommendation not to proceed with the regulations. However, for the reasons I have set out, we believe that, to continue to protect the integrity of the benefit system, it is reasonable to expect a person who fails the test for whatever reason to make a fresh claim to benefit.

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We believe that the advance claim provisions relating to income-related benefits should be applied on the basis of predictable events. The amendment restored that intention by removing the habitual residence test from the scope of the advance claims provisions. However, the Government are concerned that some claimants who initially fail the test are not informed to make a fresh claim to benefit. We intend to carry out a review of customer information and communications to ensure that claimants are made aware of the implications of failing the test. It is against that background and the Court of Appeal decision that these regulations have been laid before Parliament.

I shall try to pick up some of the points raised by noble Lords. The noble Lord, Lord Kirkwood, raised the issue of the mere passage of time and whether that is a change of circumstances. The Bhakta case says that it is theoretically possible that a future date of entitlement is predictable. However, given the complexity of the habitual residence test, we think it unlikely that that would apply in many cases.

The noble Lord also asked why a decision-maker would speculate on such decisions and said that there is no difference from other advance claims. Habitual residence decisions are subjective in nature and require decision-makers to make a judgment about a person’s circumstances since arriving in the UK. The Government believe that decision-makers would have to move into the realm of unacceptable speculation to establish a future date when someone would be habitually resident, particularly when they might have the opportunity of seeing what had actually happened to someone who had been resident for a period of time, which is another leg of the test.

The noble Lord, Lord Kirkwood, said that one result of that is that people will encourage claimants to make weekly claims until one is accepted. It would be incredibly irresponsible for people to suggest they should do that. I do not honestly believe that people advising claimants would act in that way.

The noble Lord also said that there is no difference between these decisions and, say, a decision on DLA. Of course, DLA cases require the disability criteria to be satisfied for three months before entitlement can begin. So if they are satisfied for one month, for example, the decision-maker can say, “I’ll treat the claim as beginning in two months’ time”. We are dealing here with objective facts.

The noble Lords, Lord Kirkwood and Lord Taylor, raised the issue of fraud. Although there are built-in protections, there are other factors that the Government believe will, without amendment of the legislation, lead to more instances of fraud and overpayment. In practice, a person who is receiving benefit at regular intervals is often more aware of his or her responsibility to report a relevant change of circumstances than a person not yet receiving any benefit. Where a person arrives in the UK, claims benefit and then leaves within a short period, it is not uncommon for there to be scope for overpayments to accrue, and they do not report the fact that they have left the UK. There is a difference between people in

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receipt of benefit who recognise that a change of circumstances has to be reported and where there is a prospective receipt of benefit—a decision made in advance of when that benefit will become payable. Changes of circumstances in the interim are less likely to be routinely reported by the would-be claimant.

The noble Lord, Lord Kirkwood, pressed me on the role of Ministers in all this. The person who has primary policy responsibility in the area is my honourable friend James Plaskitt. This was a government decision taken in the light of sound advice, giving due account to the facts and opinions put before us.

I hope that I have dealt with each point that noble Lords raised. This has been an important opportunity to debate the matter. I reject any assertion that anything to do with this is meant to be discriminatory to people coming from abroad, because the provisions apply equally to UK nationals who return to the UK. I stress again that they affect neither entitlement to benefit one iota, nor the effective date from which that entitlement can run. They are to do with administrative procedures, and we are changing them because of the difficulties of requiring an advance look at a test on which one has to draw conclusions and make predictions when looking at one’s current circumstances. The habitual residence test depends on a range of things—an individual’s engagement with the labour market, their circumstances, their family circumstances in the UK, their connections elsewhere, the basis on which they came to the UK, their accommodation, what has happened to the accommodation that they left abroad and so on. To try to predict in advance the point at which one could say that there was a settled intention to remain in the UK is difficult and unnecessary.

I conclude by reminding the House of the purpose of the regulations. They will preserve the safe operation of the habitual residence test by excluding it from the advance claim provisions. I hope that that satisfies noble Lords, but I am happy to try to answer further questions.

Lord Kirkwood of Kirkhope: My Lords, I will think carefully and reflect on the Minister’s speech tomorrow in Hansard, because it will repay careful study. I cannot resist the comment that the point about Mr James Plaskitt towards the end sounded very much like a plea of alibi.

Lord McKenzie of Luton: My Lords—

Lord Kirkwood of Kirkhope: I was being facetious, my Lords.

There is no conflict in the facts. I understand everything that the Minister said; nothing that he said was particularly new to me. Both he and Mr Plaskitt have responsibility to watch carefully the consequences of the change. With my usual rhetorical flourish, I was saying that once a week people would be advised to make claims, and of course they will not be. However, how does someone test when they pass the appreciable “period of time” test if they do not make regular and repeated applications?

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Lord McKenzie of Luton: My Lords, does the noble Lord not accept that the claimant is in a far better position to judge their settled intention than the decision-maker, who has to try to predict without the claimant’s fundamental knowledge?

Lord Kirkwood of Kirkhope: My Lords, that is not right, because of the legal tests applied. The decision-maker is in possession of the information and has the responsibility for making the decision. He has the rules and guidance, and is in a much better position. One of the eligibility criteria is a settled wish to remain, and that is either in the mind of the applicant or not. An appreciable period of time can vary dramatically according to the facts and circumstances of each case. I do not know how a welfare rights worker could test the fact that that appreciable period of time criterion has been passed without making an application.

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