New Clause 17
Welfare Reform Bill
4:00 pm
Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)
I beg to move, That the clause be read a Second time.
The new clause relates to the process by which overpayments of housing benefit are legally recoverable. The Committee will know that, under the current housing benefit regulations, all overpayments are recoverable unless three conditions are satisfied: that overpayment was caused by official error; that the claimant did not cause that error; and that the claimant could not reasonably have realised that an overpayment had been made.
The new clause probes the Government’s thinking on how to deal with overpayments of housing benefit. The test that I have described—in particular the third element—is harsher than that for other Department for Work and Pensions benefits. As I understand it—I am sure that the Minister will correct me if I am wrong—the tests for those benefits do not include the third element. The new clause probes whether that additional third hurdle is reasonable.
Once again, I am indebted to Citizens Advice and Shelter for some useful briefings. Perhaps I should have stated earlier that I am vice-chair of the all-party group on citizens advice. I am not sure if that counts as an interest, but it certainly makes me interested. [Interruption.] I would not go too far. Citizens advice bureaux report regularly their concerns that overpayments are being recovered despite the fact that claimants have promptly and correctly reported their full circumstances and the overpayment is due to an official error or failure to act promptly on information provided by claimants in a timely, correct and appropriate way.
Failure to recover overpayments has an impacton local authorities’ performance targets so theyare reluctant—perhaps understandably—to use their discretion not to recover the money. In some cases, the resultant debt caused by somebody realising that there has been an overpayment that must be repaid, much like the problems in the tax credit system, puts a major strain on the household budget of the claimant, who by definition of the fact that they are in receipt of housing benefit is on a low income.
Where the claimant already has a suspended possession order against them and is repaying rent arrears, for example, on a set rate over a set time, the additional burden of repaying a housing benefit overpayment can easily tip them into breaching an order and facing eviction. The consequences of asking people to repay overpayments in circumstances in which they have done everything right except understand the rather byzantine and complex way in which housing benefit calculations are made can be serious, and in some cases cause severe hardship to claimants. In that shared spirit of concern about those in such circumstances, I look forward to the Minister’s response.
In many cases, it seems that the root of the problem is the regulation that allows the recovery of overpayments even in cases of administrative error, if the person ought reasonably to have known that they were being overpaid. It is worthy of the Committee’s consideration that the complexity of the housing benefit regulations, the scheme and scheme application process means that collecting overpayments on those grounds could in some case be unreasonable. I hope that the Minister will respond to that point in his reply to this short debate.
A further issue is that sometimes, in cases in which repayment is demanded even when someone has done everything that could possibly have been expected of them, bar understanding the complex procedures that would have been necessary for them to have realised that they were being overpaid, claimants do not seek advice and simply accept the overpayment recovery as inevitable and pay up. I am sure that many hon. Members in this Committee will have had that experience, not least in connection with tax credits, but I am sure in connection with other benefits as well. Those people have to cope with the consequences, which are likely to be long-term rent arrears threatening their housing security and living standards. As a result, they are more likely to get into debt in other areas. I know that the Minister is rightly concerned about child poverty. He will be aware of the impact that such long-term financial considerations can have on child poverty and I hope that he will look at the new clause in that light.
In his response, I would like the Minister to address the contention that, in the cause of fairness and benefits simplification, which we have been discussing, the housing benefits rules should be aligned with those of other means-tested benefits by removing from the provisions the words “reasonably have been expected” to realise, so that overpayments are recoverable only if the claimant has failed to disclose or misrepresented a material fact. Running through the Bill is the underlying principle of responsibility and we have debated during earlier clauses the idea of reciprocal responsibility. It is quite right that the claimants should have responsibilities—indeed, local housing allowance in particular will increase those responsibilities by giving claimants responsibility for paying rent themselves—but surely authorities have responsibilities too. Local authorities have a responsibility when they have made an error not caused by the claimant. Surely they should accept that rather than expect repayment to be made in all such circumstances. I look forward to the Minister’s response.