Habitual Residence Test (Newham)

– in the House of Commons at 10:31 pm on 21st March 1995.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

Photo of Stephen Timms Stephen Timms , Newham North East 10:33 pm, 21st March 1995

I am grateful for this opportunity to bring the habitual residence requirement for income-related benefits before the House. Ten days ago, I received a letter from the Newham docklands citizens advice bureau which expressed its alarm at clients who we think have acted in a reasonable way but who are in danger of becoming destitute as a result of the habitual residence test". I share its alarm. I am deeply concerned that the habitual residence test is lacking a coherent basis at any level, is being implemented in a haphazard and arbitrary way and is in danger of driving into destitution dozens of British citizens living in the London borough of Newham. I think that the test will have to be scrapped, but I urge the Minister at least to give immediate consideration to making available urgent payments to people who are awaiting the outcome of an appeal against failing the test.

There is one far-sighted member of the Government who accurately predicted the impact of such a test and who rejected it in 1986 on the basis of all our habits and history".—[Official Report, Standing Committee B, 27 February 1986; c. 537.] That was the present Prime Minister speaking as a Social Security Minister. It is a tragedy for Britain that the Prime Minister's warnings were not heeded by his Ministers before they introduced the test last year.

The habitual residence test was introduced at the beginning of August. In the first six months of its operation, 15,564 people were refused benefits because of it, 2,599 British citizens were among them and 73 were in the London borough of Newham. Welfare organisations across the country have been making representations about the chaos which has resulted, but it was not until last month that the House had the opportunity to discuss it, other than through questions.

A serious constitutional point must be considered when the Secretary of State can, for the first time, exclude British citizens in this country from access to benefits, without any serious deliberation in the House, until almost seven months after the event, and only then as one of six separate orders which were allocated less than two and a half hours of parliamentary time.

The Government have said that the habitual residence test was introduced to end the mischief of "benefit tourism", but they have failed to provide any evidence that that is a significant problem. The Prime Minister said in his speech in 1986 that the number of people involved was a "tiny minority" and I believe that he was right. Certainly, the Government have conspicuously failed to provide any evidence of the scale of the problem other than on two occasions in Parliament, on which they resorted to quoting from an article which appeared in Time Out magazine. That is no basis for formulating a policy which is driving hundreds of people towards destitution.

In any case, before the test, had young Europeans claimed benefit when they were not economically active, they would have been excluded on the basis of existing law. Why was it not possible to proceed on that basis? As the Prime Minister pointed out in 1986, the appropriate remedy was already available. Why not use it and save the distress which is now being caused to thousands of others?

Newham rarely enjoys visits from European tourists. A benefits administrator in my constituency told me rather sadly: We do not have benefit tourists in Newham. Instead, we have people in genuine need who are being refused benefits.

The problem is not only that there is no basis for the introduction of this test, but matters are being made much worse by the chaotic way in which it is being implemented. Consider, for example, successive Department of Social Security estimates of the administrative costs involved. Originally we were informed that the cost would be £368,000 a year. Earlier this month, I was told in a written answer that the costs were now expected to be substantially higher than £800,000 a year.

The result of it all in Newham is that advice agencies are overwhelmed and the Benefits Agency, which in Newham is admirably ready to respond to the problems raised by the advice agencies with which it deals, and which has been getting on top of its previous administrative problems, seems to be losing ground again as habitual residence tests and appeals clog up the system.

Had the Government been willing to listen, they would have anticipated the crisis. The Social Security advisory committee warned that just such a situation was likely. It said about the test: The costs of administration and the aggravation and anxiety caused for the many claimants who would be required to face the test, but who were never the target of our proposals, may well turn out to be too high a price to pay in order to provide a solution to a relatively small issue. Perhaps the clearest evidence of the chaotic reality of the test is provided by the appeals process—and it appears that almost all the failed applicants are lodging appeals. The Minister has not been able to tell my hon. Friends or myself about the results of appeals against the test, but it appears that at least half and perhaps three quarters of all appeals are being upheld. That must be a reflection of the fact that the benefits staff implementing the test in the first place do not know what criteria they are supposed to apply.

The Stratford office of the Benefits Agency tells me that the average length of time between failing the test and the date of the appeal hearing is approximately four months. That is four months during which people, over half of whom are ultimately found to be habitually resident in the United Kingdom, are deprived of all means of subsistence. That is a shambles on a national scale, and I urge upon the Minister the fact that it requires a response from him.

In Newham the burden of a new income maintenance function has fallen on to the council's social services department, which is making payments to needy families under section 17 of the Children Act 1989. Those are families with children, who, because they have failed the habitual residence test, would have no means of subsistence at all, so the local authority has no alternative but to step in so that at least the children can be fed.

However, the section 17 system is not designed for payments to families over a long period; and social services departments are hard enough pressed already, without having to set up new functions duplicating those of the Benefits Agency. The care of children, which is the proper responsibility of social services departments, will inevitably suffer as a result.

I shall concentrate tonight on the unprecedented plight of British citizens subjected to the habitual residence test. In a debate on the issue in another place, eloquently initiated by Lord Russell, Lord Mackay of Ardbrecknish, on behalf of the Government, conceded that the Government had been forced to broaden the regulations to include British nationals so as to avoid conflict with European legislation. So it seems that it had not been the Government's intention to include British citizens within the scope of the test.

What I find extraordinary, however, is the complacency with which the Government nevertheless embarked on what the Child Poverty Action Group described as the effective downgrading of British citizenship. British citizens are being left destitute in their own country by their own Government. No other European Union country makes its own citizens destitute by excluding them from subsistence benefits in that way. The British Government maintain that they have had to do so in order to avoid breaching European law. How is it, then, that no other European Government have deprived their own citizens of the means of subsistence within their own country?

If the numbers from the first six months of the habitual residence test are projected forwards, more than 5,000 British citizens will be refused income support in the first year of the test. The Government tell us that those people belong in a new category of scrounger—the undeserving British national with little or no contact with this country. Canadian or Australian backpackers were recently cited as examples. However, again the Government have not been able to tell us how many such people there really are. The policy is based on anecdote and prejudice, not on fact.

Let me describe for the Minister the position of a real-life victim of the test who lives in my constituency. Mr. Pierre Bevis, a British citizen whose father was a British service man, went to live in Germany when his father was posted there in the 1970s. Since 1983 Mr. Bevis has had spells working both in Germany and in the United Kingdom, and he obtained a heavy goods vehicle licence in the United Kingdom.

In 1994, after three visits to seek work in the United Kingdom, he moved back to take up permanent residence in London, bringing with him his wife, all his belongings and a letter inviting him for an interview with a London construction company. When that job fell through Mr. Bevis applied for income support in October, and in November, having taken a habitual residence test, he was told that he was not deemed habitually resident in this country. Mr. Bevis was absent from this country for a time because his father was serving in the British forces overseas. Is it really the policy of the Government now to penalise people because their parents served in the forces overseas? How have we come to this?

When Mr. Bevis sought an explanation for the shabby treatment which he received, all he could find were profoundly offensive references on the part of the Secretary of State for Social Security to him and others like him as "benefit tourists" or, on 23 January, as "Canadian backpackers". What have the families of British service personnel done to deserve being insulted by their own Government in that way?

Mr. Bevis is not an isolated case. The cases of many British citizens in similar situations—none of whom are Canadian backpackers—have been brought to my attention. There is evidence that British citizens from the ethnic minority communities have been disproportionately affected, and such cases must cause deep concern to all hon. Members. The result is that hon. Members are, for the first time, being faced with constituents who have literally no means of subsistence.

Mr. Bevis has been given food by a reporter on the Newham Recorder who has been covering his plight. Was that the Government's intention in introducing the measure? I understand that Mr. Bevis's appeal was due today, but on arriving at the appeal he was told that a decision had been made by somebody last week that he was habitually resident—some four months after his benefit was stopped—and that his appeal therefore did not need to proceed.

On 12 December the Minister told the House that someone in extreme circumstances had the right to apply to the social fund for a crisis loan, and it appeared to me that that might be an answer. I investigated, but found that crisis loans are available only to those with the capacity to repay them, which someone with no means of subsistence clearly does not have. I have asked the Minister how many people failing the test have been given crisis loans, but he does not know. In Newham, the Stratford Benefits Agency tells me that

there have only been a handful of crisis loan applications and they have been unsuccessful". That is why welfare organisations and citizens advice bureaux are in despair. Experienced workers say that no other change has caused so many real cases of hardship. Even people whose appeals were later upheld have been left destitute for months.

Last week, I received another despairing letter from a constituent whose appeal was upheld five weeks ago, but who has still not received a penny in benefit. The Newham Docklands citizens advice bureau has written to me, saying that even if clients get income support as a result of winning appeals, they still have to survive for two to three months without any money after the appeal.

In 1986, the present Prime Minister said: What is clear from all our habits and history is that when people are in desperate need it has never been the fashion in this country … not to provide assistance that is sorely needed. But that provision has not been made. The Prime Minister's implication—made, as he said, on the basis of all of our habits and history—that not even a Conservative Government would be willing to see their own citizens pressed into destitution, has been cast aside by this measure. The Prime Minister's confidence in habits and history has proved valueless.

The Prime Minister—who was then a Social Security Minister—also said: A costly administrative system would have to be set up to deal with people who failed to qualify for benefit, yet who were in need, that we would not in practice ignore". I am sad to say that that need has, in practice, been ignored.

I hope that the Minister will recognise that the problems which I have raised are real, and that they have been raised with the desire to see positive action taken for those in real need. In particular, I ask him to address two immediate proposals to mitigate the damage being caused by the test.

First, urgent payments should be made available through the Department for those awaiting the outcome of an appeal against failing the habitual residence test. Secondly, the Government should seek thorough information about the impact of the test, and that information should be made public. In future discussions, Members on both sides of the House should not have to rely on anecdotal evidence—as we do now—nor on articles in Time Out, which have been relied upon by Ministers. I believe that in due course the legislation will be scrapped, as other errors in the past have been scrapped. The poll tax and the flaws in the Child Support Act 1991 come to mind.

It is astonishing that all the problems to which I have referred were foreseen by the now Prime Minister in his remarkably prescient speech in 1986. He said that such a test would be too rigid, too cumbersome and perhaps too unfair. He said that it could penalise British citizens returning from abroad, United Kingdom citizens on work contracts returning home and missionaries who had been abroad for a long time. He said that the test would have enormously disproportionate administrative costs and could become an administrative nightmare. He said that it would be contrary to all our habits and history not to provide assistance that was sorely needed. The Prime Minister was absolutely right.

Of course the test that was being debated in 1986 was slightly different from the one which has been introduced now, but the Prime Minister's warning about that test are all being fulfilled now in reality in a remarkable way. I commend the Prime Minister's speech to the Minister and urge that, for all the reasons that he spelt out in 1986, the Government repeal the test now rather than wait for months or years until the damage to thousands of our citizens is beyond repair.

Photo of Mr Roger Evans Mr Roger Evans , Monmouth 10:50 pm, 21st March 1995

I congratulate the hon. Member for Newham, North-East (Mr. Timms) on raising important points about what is undoubtedly a most serious issue. It obviously affects the particular constituent whom he mentioned and other constituents and it is an issue of general concern.

I begin by dealing with a theme that ran throughout the hon. Gentleman's speech, that is, the observations made in 1986 by my right hon. Friend the Prime Minister when he was Under-Secretary of State for Social Security. The hon. Gentleman has taken my right hon. Friend's words out of context. The proposal that was rejected in 1986 was that none of the benefits should be paid to anyone who had not been resident for at least 12 months. That is a very different creature from the habitual residence that we now contemplate.

The hon. Gentleman quoted in his closing remarks the example of people returning from abroad, bringing their families and all their possessions with them. On any basis, such a case is much more likely to become immediately or very shortly a case of habitual residence than that of someone who was subject to an arbitrary ban of 12 months.

The test that we have implemented was introduced because before 1 August last year work seekers from the European economic area could claim income support, housing benefit and council tax benefit for up to six months. Estimates made at the time suggested that about 5,000 EEA nationals did exactly that. I do not wish to swap stories of the type that the hon. Gentleman dismissed, but clearly there was considerable concern about the matter. It must be appreciated how difficult it is to tackle such an issue.

The hon. Gentleman fairly asked why the British Government had taken a course that appeared to be different from the situation that he described in other European countries. Perhaps he has not focused on the unique nature of the benefits system that we have in the United Kingdom, compared with arrangements in other European countries. For example, if a country has a benefits system based on an insurance or contributions principle, the issue does not arise because people have to be resident for some time to make the contributions or pay the insurance.

Photo of Ian McCartney Ian McCartney , Makerfield

The Government are abolishing the contributory benefits system.

Photo of Mr Roger Evans Mr Roger Evans , Monmouth

The hon. Member for Makerfield (Mr. McCartney), even from a sedentary position, occasionally causes me to laugh. Whether it be an insurance or contributions-based benefit, which classically the Bismarckian systems on the continent involve, the issue does not arise. The nearest equivalent of income support in the other European countries is locally administered and highly discretionary in character. Income support is a direct descendant of what the Labour Government did in 1966. They made supplementary benefit, now income support, a matter of legal entitlement, provided the conditions were met. That is a unique feature of income support. Prior to 1 August 1994, people coming from the European continent could make a claim and, provided that the conditions were met, they were treated on exactly the same basis as people who had resided in this country all their life.

That problem was unique to Britain. It was not faced by other European countries. The question that faced the British Government then and still faces us—it would face any Government who sought to introduce an alternative proposal—is how, in accordance with European law, we could alter that classic situation. I suppose that we could go down the radical road, which I cannot believe the Opposition would want, of scrapping legal entitlement to income support. One way or another, however, if the measure is to be consistent with article 6 of the treaty of Rome, we must introduce a proposal that does not discriminate on grounds of nationality. At first blush, it would be attractive. It would be powerfully attractive as a matter of rhetoric to say: why not exclude returning British citizens from abroad entirely from the test? One can understand why that question seems so straightforward to constituents faced with that problem.

They feel that there can be only one answer to that question but, regrettably, the answer is the converse: that cannot be done under European law.

So the point that faced the Government at the time and still faces us is how to introduce a rule that prevents this country from being the honeypot of the world for people who come here and accept our benefits as a matter of legal entitlement, while introducing some moderation to that excess, which most British taxpayers perceive to be excessively generous. The logic of the habitual residence test is that it does not discriminate on grounds of nationality but, to a great measure, meets the question fairly and reasonably. Clearly, returning British citizens, because of their connections with this country, will find it much easier either immediately to establish the links that amount to habitual residence or to establish those links over a much shorter period than somebody arriving from Spain, Canada or Australia with no immediate links with this country.

Photo of Mr Keith Bradley Mr Keith Bradley Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Social Security)

If the habitual residence test is so soundly based, will the Minister answer the question which he failed to answer when we debated the regulations and which the Secretary of State failed to answer yesterday at Social Security questions: how many people have won their appeals against refusal of benefit for habitual residents, and what were the reasons for winning those appeals?

Photo of Mr Roger Evans Mr Roger Evans , Monmouth

The hon. Gentleman knows the global figures full well as his question has been answered on a number of occasions. We have broken it down into the different categories concerned. As the system is computerised, without a disproportionate manual exercise of checking every appeal, we cannot tell him the reason in each specific case. I appreciate that he wants that information, but it is not possible to produce it by ordinary practices.

This is not a case of downgrading British citizenship. To prevent an unsatisfactory state of affairs, some action had to be taken and we believe that, within the limited constraints of European law, this test is a fair and reasonable way to do it. The hon. Member for Newham, North-East made a powerful appeal to British citizenship, but we have already seen in the Immigration Act 1971, which was not repealed by the Labour Government of 1974–79, that British citizenship does not necessarily involve all the incidents and privileges that people associate with that status, a classic example being the right of abode. We must take the matter issue by issue in a practical way.

Obviously, I accept that British nationals who have failed the test are a matter of concern, but taxpayers generally and the people of Newham would not be content with a system that simply swept away the test, as the hon. Gentleman contended. He has not proposed, and I am not aware of anyone else proposing yet, what might be described as a plausible alternative arrangement.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The rules as used by the appeal panels.

Photo of Mr Roger Evans Mr Roger Evans , Monmouth

The hon. Gentleman spoke from a sedentary position. I did not hear precisely what he said.

The key is that there must be a principle that can be practically applied. It is true that we know a certain amount, but we do not know a great deal of detail on the merits of individual appeal cases. However, it appears that, contrary to the anxieties that were expressed, those people are in general not returning business men coming home after the end of contracts, or students who have done admirable voluntary service overseas, or people returning home who have been nursing elderly relatives. We have simply had to draw the line here and, classically, sadly, some of the people who have turned up on our shores are those who have arrived with their children, who are penniless and who do not appear to have given a thought to their responsibilities, but have expected that the British taxpayer will bail them out.

The hon. Member for Newham, North-East, with his usual courtesy, gave me notice of Mr. Bevis's case. Obviously, a system of deciding benefits claims such as ours puts great reliance on the quantity and expertise of our benefit and adjudicating officers, but it also has a long stop by way of an independent appeal system, which is there to ensure that people obtain what the law passed by Parliament entitles them to. Inevitably, with such a process of adjudication, which we believe generally has the confidence of the country and of the people who run the system as the best way of doing that, an appeal will take some time.

The hon. Member for Newham, North-East made much of the workings of the scheme. That administrative system matches staff to work load, which has led directly to the marked increase in spending from £368,000 to £800,000. That is a result of sensible management planning and of dealing with the matter properly and efficiently.

Obviously, Mr. Bevis was ultimately held under that process to be, as he believes that he is entitled to be, habitually resident. I appreciate that there was anxiety about delay, but the story of Mr. Bevis has at least that satisfactory conclusion.

I am slightly surprised that the hon. Member for Newham, North-East has been worried about the lack of information held by the Department of Social Security. The hon. Member for Manchester, Withington (Mr. Bradley) also mentioned that to me.

I have been asked specifically by the hon. Member for Newham, North-East about the proportion of people who have failed the test who are students or pensioners. He also asked how many of the British nationals who have failed the test have one parent who is a British national and one parent who is a national of another country. He asked many further detailed and perfectly proper questions.

The difficulty is that the system is nowadays computerised, and in order to find the answer, a clerical check would have to be undertaken, because the Benefits Agency collects only information necessary for its purposes. To collect more costs more, and there is no justification in collecting information about a claimant's antecedents or occupation when the test depends on individual circumstances.

I sum up by saying that we believe that there was an abuse. That abuse had to be dealt with; otherwise it would obviously increase. It was a serious problem that we were an attractive place for benefit tourism. I have explained that, although it appeared attractive at first blush to introduce an arrangement that gave British citizens a guarantee that they would pass the test, under the arrangements that we have come up with, we have a system in which the test is passed by the vast majority of British citizens because they can demonstrate a commitment to the country. At the same time, it has stopped what was clearly becoming unsustainable.

I end with this. It is attractive to say, when first considering the matter, that there should be special arrangements for urgent payments in those cases, but the Government's opinion is that it would be wrong in principle to single out one class of claimants in the benefits system for special status or special treatment. There are a variety of arrangements—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at three minutes past Eleven o'clock.