House of Commons

Session 2008 - 09
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Public Bill Committee Debates
Welfare Reform Bill

The Committee consisted of the following Members:

Chairmen: Mr. Jim Hood, † Mr. David Amess

† Banks, Gordon (Ochil and South Perthshire) (Lab)

† Baron, Mr. John (Billericay) (Con)

† Clappison, Mr. James (Hertsmere) (Con)

† Harper, Mr. Mark (Forest of Dean) (Con)

† Howell, John (Henley) (Con)

† Jones, Helen (Warrington, North) (Lab)

Lilley, Mr. Peter (Hitchin and Harpenden) (Con)

† McKechin, Ann (Parliamentary Under-Secretary of State for Scotland)

† McNulty, Mr. Tony (Minister for Employment and Welfare Reform)

† Mason, John (Glasgow, East) (SNP)

† Munn, Meg (Sheffield, Heeley) (Lab/Co-op)

† Plaskitt, Mr. James (Warwick and Leamington) (Lab)

† Robertson, John (Glasgow, North-West) (Lab)

† Rowen, Paul (Rochdale) (LD)

† Shaw, Jonathan (Parliamentary Under-Secretary of State for Work and Pensions)

† Ussher, Kitty (Parliamentary Under-Secretary of State for Work and Pensions)

Liam Laurence Smyth, Committee Clerk

† attended the Committee

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Public Bill Committee

Thursday 26 February 2009

(Morning)

[Mr. David Amess in the Chair]

Welfare Reform Bill

Clause 19

Loss of Benefit Provisions

9 am

The Minister for Employment and Welfare Reform (Mr. Tony McNulty): I beg to move amendment 94, in clause 19, page 23, line 45, leave out ‘in England and Wales or Northern Ireland,’.

This amendment ensures that the loss of benefit provisions in new section 6B of the Social Security Fraud Act 2001 apply where a person in Scotland is cautioned for a benefit offence. As currently drafted, they apply to cautions in England and Wales or Northern Ireland, but not in Scotland.

I do not need to detain the Committee on this particular amendment. I apologise for there being Government amendments at all at Committee stage. There are others, but we have tried to keep them to a minimum.

As currently drafted, clause 19 applies to cautions only in England, Wales and Northern Ireland. The amendment will mean that provision to remove or reduce benefit entitlement for a period of four weeks for all first offences of benefit fraud will apply to Scotland, so the provision will become UK-wide.

Amendment 94 agreed to.

Paul Rowen (Rochdale) (LD): I beg to move amendment 63, in clause 19, page 25, line 41, at end insert—

‘(14) Sanctionable benefits shall be returned to the claimant with compensation where the benefit offence is attributable to a mistake made by the Secretary of State or anyone acting under his authority as provided in paragraphs (1) to (11) above’.

It is a pleasure to serve under your chairmanship, Mr. Amess. Amendment 63 attempts to ensure that if a mistake is made, it is rectified not only with the restoration of the benefit, but with the payment of compensation to the people who have suffered the loss. We have concerns about this clause because it is a change from the current two-strikes rule to cover the loss of benefit after one sort of incident. We are worried that such an incident may include an administrative error as well as fraud. The clause strengthens any action that may be taken against a benefit claimant, so if it is proved that a sanction was taken as a result of an administrative error, the claimant should receive not only what they lost, but a form of compensation. I hope that the Government will appreciate that the amendment is fair and reasonable. Such a practice applies to many other cases in which someone has suffered a mistake. For example, it applies with tax credits, so it should also apply in this particular case.

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Mr. James Clappison (Hertsmere) (Con): It is a great pleasure to serve under your chairmanship, Mr. Amess. I listened carefully to the detailed description of the amendment given by the hon. Member for Rochdale. Notwithstanding what he said, I have one or two concerns that the Committee should consider.

The hon. Gentleman might not have fully reflected on the effects that his amendment might have. He referred to the extension of the benefit sanction to include the case of one offence. In his opening remarks, he referred to that as one sort of an incident, but it is not; it is a benefit offence that would include all cases where somebody had been convicted of one or more benefit offences in any proceedings, had accepted an administrative penalty as an alternative to prosecution, or had agreed to be given a caution.

The amendment includes the word “offence”. Under the amendment, somebody who had committed an offence, including somebody convicted of an offence before a court, not only would be allowed to keep the money that he had wrongfully received, but would be given compensation as well when that was “attributable to a mistake”. However, the hon. Gentleman’s amendment mentions a “benefit offence”, so to talk about “a mistake” misses the point about there being an offence. It would follow that, if there were some element of mistake in the background to someone being convicted of a benefit offence—this particularly concerns me—such a person would then be entitled, under the terms of the amendment, not only to be allowed to keep the benefit that they had received, but to receive compensation as well. I look to the Minister’s response, but because the amendment uses the word “offence”, the courts could interpret it as covering cases in which somebody had been convicted of a criminal offence.

Paul Rowen rose—

Mr. Clappison: If the hon. Gentleman wants to say that the word “offence” means something other than an offence, I shall look forward to his explanation.

Paul Rowen: I would only ask the hon. Gentleman to look at the clause. The terms that I have used are exactly the same as the ones in the clause.

Is the hon. Gentleman suggesting that if a mistake is made—not an offence—the clause should allow a claimant to be sanctioned either through the courts or though administrative means? We are saying clearly what should happen if an administrative sanction proves to be a mistake. I know of scores of cases in which that has happened. Does he not accept that an innocent party should be entitled to compensation, because that is what happens under tax credits?

Mr. Clappison: The hon. Gentleman is even more confused than I thought he was in the first place. He talks about an innocent mistake, but his amendment does not refer to an innocent mistake. May I read his amendment to him, because he might not have reflected carefully on it during its drafting? It says:

“Sanctionable benefits shall be returned to the claimant with compensation where the benefit offence is attributable to a mistake made by the Secretary of State or anyone acting under his authority as provided in paragraphs (1) to (11) above”.

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The hon. Gentleman refers to the Bill. When I made my first remarks on his amendment, I carefully set out the circumstances that were covered by the Bill: when somebody is dealt with by an administrative penalty or a caution or they are convicted before a court. The hon. Gentleman’s amendment would cover all those circumstances, including the third one—a conviction—but the first two deal with where an offence has been admitted and are alternatives to a matter being brought before a court and the person being subject to a conviction, if found guilty, because an administrative penalty and a caution both involve an admission of guilt.

The hon. Gentleman now says to the Committee that his amendment would deal with somebody who is innocent and where there has been a mistake. If there has been a mistake, there has not been an offence, because such a person would be able to plead not guilty to the charge and would be found not guilty if the courts accepted their version of events. If there were a wrongful conviction, they could appeal against it. However, the hon. Gentleman’s amendment mentions an offence.

When somebody is subject to an administrative penalty or is given a caution—in both cases they will have admitted their guilt—or is brought before a court and convicted and sentenced, if there has been an element of mistake in the background, as there often is on the part of the authorities in benefit fraud cases, that does not negate the dishonesty of the person who has committed the benefit offence. Things might begin with a mistake, but there has been an offence if someone has dishonestly received benefits to which they are not entitled.

Let us clearly set out the effect of the hon. Gentleman’s amendment. Under it, someone who, in common parlance, would be called a benefit cheat would be entitled to receive the amount that they had wrongly been given and compensation on top. People who are convicted of these offences are sometimes given discharges, community sentences or suspended sentences. If the hon. Gentleman’s amendment was passed and such people were able to establish that there had been some mistake somewhere in the background on the part of the administrative authorities or the Department for Work and Pensions, they could say, “Oh yes, but I’m entitled to keep what I received and I want compensation as well.”

The hon. Gentleman is sending out a strange message. Many people are honest claimants of benefits, such as those who are in need and have circumstances that entitle them to benefits, or those who happen to have been made unemployed—particularly at this time. Such people honestly claim their benefits and go to great lengths to make sure that all their circumstances are known. What on earth are they supposed to think if somebody who has dishonestly received benefits is allowed to keep the fruits of their dishonesty and get compensation on top? I am not sure that that is something with which many of my constituents would agree. I might be wrong about this, but I am not persuaded by what the hon. Gentleman has said because he has used the word “offence” in his amendment. I believe that I have described the consequence of his amendment.

Paul Rowen: Will the hon. Gentleman give way?

Mr. Clappison: Certainly, but the hon. Gentleman’s last intervention did not help him.

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Paul Rowen: I refer to proposed new section 6B(13) of the Social Security Fraud Act 2001, as inserted by clause 19. It states:

“In this section and section 6C...‘benefit offence’ means”

and sets out clearly what a benefit offence is. The provisions to which the amendment would add also set out the circumstances in which any sort of benefit that had been withheld would have to be repaid. All we are seeking to do is to add to the provisions, not replace them.

Mr. Clappison: I am not going to read the provisions out now, but I think that the circumstances to which they refer are, in effect, the same as those that I set out. What those circumstances cover are actually in the note supplied by the House of Commons Library. The hon. Gentleman may, with the best of intentions, have drafted a defective amendment, so I invite him to reconsider and withdraw it. If he wants to press the amendment to a Division, I will have no hesitation in advising my hon. Friends to vote against it, because the legal effect of what is proposed is dubious. Let him be in no doubt that his amendment refers to an offence. It would give compensation and benefits that had been wrongly received to somebody who had committed an offence, and we should not go down that road.

The Parliamentary Under-Secretary of State for Scotland (Ann McKechin): It is a pleasure to serve under your chairmanship, Mr. Amess.

I think that it would be helpful if I were first of all to summarise the provision to which the amendment of the hon. Member for Rochdale relates. A one-strike sanction will apply to cases of benefit fraud that result in a conviction, or when a caution or administrative penalty is offered as an alternative to prosecution. There is a need for legal certainty and we need to make a clear distinction between a conviction, caution or administrative penalty on the one hand, and official error on the other. The sanctions are in respect of fraud, not official error.

Clause 19 allows for all benefit withheld as a penalty for benefit fraud to be repaid to the customer if a conviction is quashed. That also applies when an administrative penalty is no longer appropriate if, following a review or appeal under the internal procedures that already exist, it is decided that there was no overpayment, or that the sum is not recoverable. Those are obviously matters of fact. The Department already has a widespread scheme to provide redress for maladministration, which allows for compensation to be paid to customers in appropriate cases. If customers remain dissatisfied, a complaint can be made to the parliamentary ombudsman.

The hon. Member for Hertsmere raised an interesting point about the phraseology of the amendment and the fact that it may cover items and cases that the hon. Member for Rochdale did not intend to cover, such as if a mistake is actually a fraud perpetrated on the Department. In the light of that, I urge the hon. Gentleman to withdraw the amendment.

9.15 am

Paul Rowen: I listened to what the Minister and the hon. Member for Hertsmere said, but I am afraid that I violently disagree with them. It is a sorry state when

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someone who has been subject to a sanction that has been wrongly administered is not entitled to receive compensation.

Question put, That the amendment be made.

The Committee divided: Ayes 1, Noes 14.

Division No. 4]