§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]
§ 12.47 p.m.
§ Sir Archer Baldwin (Leominster)
The case I want to bring to the attention of the House is one relating to a constituent of mine named R. J. Bethell, who was issued a postal draft for £5 6s. 8d. for sickness benefit. He failed to read the notice which appears on the draft to the effect that if it is not cashed within a certain time it will not be payable.
There are two warnings on the front of the draft and there is also one on the back, which it says:If you delay in obtaining payment you may find that your right to money has ceased and that you may lose it."You may find." It does not say definitely, "You will lose it unless you cash it within six months".
My constituent, who is an old man, living alone and recovering from sickness, no doubt put this postal draft on a shelf and forgot it and failed to discover it again until it was one month out of date. In other words, instead of trying to cash it within six months he made an attempt to get it cashed within seven months.
1721 The local officer decided that the nonpayment would stand and refused to recognise that it was due to this man. An appeal was made to the local tribunal and, unfortunately, my constituent did not appear; nor was he represented. Unfortunately, also, he did not write to me in the first place to give me a chance of taking some action, or giving him advice about what he should do before the local tribunal. The case, therefore, was dismissed. It was then sent to a commissioner in London, who issued a very lengthy document. I do not know how much of that was really necessary if it is a fact that a payment order cannot be cashed when not presented within six months. I should have thought that was sufficient without going to the expense of a commissioner writing something more than a foolscap page giving his decision.
The facts are these. The National Insurance Advisory Committee was appointed towards the end of 1951 to give advice and assistance to the Minister and a Report was issued in March, 1952. In the course of that Report, apparently, the Committee replied to representations which had been made calling attention to the fact that a time limit of six months might involve hardship. So, at that time apparently, there were cases in which some of these old people were failing to get paid sickness benefit because they had not cashed their payment orders in time. The Committee would not recognise the representations and gave the following reasons:We recognise that many insured persons consider that they should be entitled to obtain payment of a benefit draft or order which they have received, after almost any lapse of time. There are, however, substantial objections to this since any extension of the existing time limit would necessarily throw doubt on the validity of the declaration contained in many benefit orders, regarding satisfaction of the benefit conditions relating to the earnings, maintenance of dependants, etc., for it is doubtful whether claimants could accurately recall the necesary facts after a longer period than six months, and it would often be impossible for the Ministry to check the facts. An extension would also give rise to serious difficulties in the Ministry's accounting system.I do not understand that paragraph in the Report one little bit. It has no reference whatsoever to the case I am putting before the House now. There was no question of the validity of the declaration contained in any benefit orders and no necessity to check the facts. That had 1722 already been done, otherwise this payment order would not have been made. Therefore, the reasons given in that paragraph do not apply to the case of my constituent. In this case the facts had been agreed and the order issued. The Ministry admitted the claim and the issue of the payment order is in the form of an I.O.U. If the facts are as stated by the Ministry and payments are not possible after six months, why was it necessary to have two appeals and to go through all this rigmarole, which must have cost considerably more than the value of this payment order?
I have not the slightest doubt that there are many recipients of payment orders who do not read those orders. We must clear our minds of the thought that if we had received an order of this sort and failed to cash it in the necessary time we should have no reason for objection. Let us put ourselves in the place of these old people, recovering from sickness, not very bright, who receive this I.O.U. and look upon it—as no doubt many people would—as equal to a £1 note, cashable at any time. Therefore, they fail to read that document. I have not the slightest doubt that there are thousands of recipients who fail to read the document but do not suffer because they want the money and cash it forthwith.
I suggested to my hon. Friend that when these drafts were checked in the Ministry's books and it was found that one of these payment orders had not been cashed, a notice should be sent to the recipient warning him and letting him have, say, a further month in which to cash the document. My hon. Friend called attention to the fact that there were many millions of these orders in existence at the same time and that checking is not possible. That may be. All I can say is that if the checking of these documents does not take place, I wonder how any fraudulent alteration of an order can be found out. I cannot conceive that with the many local district officers it would not be possible to check these payment orders just as a business person has to check the counterfoils of a cheque book with the bank statement when he receives it from his bank.
If that is not possible, I suggest something further. I asked my hon. Friend 1723 how much money accrued to the Ministry through failure of recipients to cash these orders. In the course of her reply, my hon. Friend said:' cases in which such failure is brought to notice are very rare."—[OFFICIAL REPORT, 13th July, 1959; Vol. 609, c. 5.]I emphasise that cases are very rare. If they are very rare, it would not entail much work on the part of the Ministry to deal with them when they are brought to its attention. Why not do what any person would—alter the date of the order and return them? If necessary, a notice could be enclosed with the document when it is returned to the effect that if the recipient did not cash it within one month he would lose the benefit. I could not bring any excuse forward if a person did not comply with that condition.
I suggest that my hon. Friend should draw the attention of the Ministry to this, to see whether any alteration can be made. I must not suggest legislation when raising a matter on the Adjournment, as that would be out of order, but I make that point. It is something which any reasonable person would do. There are many cases in which cheques are issued and not presented to the bank until they are out-of-date. One does not then say, "Ah, we caught you out", but one alters the date and returns the cheque to the payee. That is what should be done in this case. This man is owed money by the Ministry and should be paid. Why should a Government Department, of all people, take advantage of an old-age pensioner, living alone and recovering from sickness?
I apologise to my hon. Friend for having rather spoiled her week-end by keeping her in this House after a very hard-working Session, in which she has done very valuable work and when she is justly entitled to enjoyment of the week-end. I wish that it were possible for her to have delegated this job to the Minister himself. Then I could have said a little more of what I think about the matter. I have asked many questions about this case and have had many letters from my hon. Friend about it. She has taken a great deal of trouble in giving me all the facts and all the help she could.
1724 I should not have taken up the time of the House and of my hon. Friend had the Minister himself been a little more forthcoming. Had he agreed, as I feel sure that, in his mind, he must agree that this person who is owed the money should be paid it, and would see what steps could be taken to ensure payment, or had he undertaken that if no steps could at present be taken he would see whether the conditions could be altered, I should not have ventilated this case here. As it is, I have felt compelled to call attention to it, and I am sorry to say that I think that the whole matter brings a great deal of discredit on the Ministry.
§ 1.0 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Edith Pitt)
My hon. Friend the Member for Leominster (Sir A. Baldwin) has concluded by saying that he wished that my right hon. Friend the Minister had been present to listen to this Adjournment debate. As my hon. Friend is well aware, it is customary for the junior Minister to answer these debates, and that is one reason why I have to be available on Fridays. But, much more important, no discourtesy is intended to my hon. Friend by my right hon. Friend not being present. Indeed, the Minister and I have discussed both this case and the principle behind it, and what I have to say represents the views of us both.
My hon. Friend has told the House that he has had considerable correspondence with me on this subject. I sympathise with my hon. Friend—I know how he feels. His constituent ought to be very grateful to him for his persistence in pursuing this matter as he has done. My hon. Friend has written to me a number of times, he has asked Parliamentary Questions, and has now taken advantage of the facilities available to back benchers to raise the case on the Adjournment.
I will not cover the details of the case—my hon. Friend has already set them out. Briefly, the case is that his constituent failed to cash a postal draft which had been issued by my Ministry for sickness benefit. His constituent exercised his rights of appeal, first to the local tribunal and, when that failed, to the Commissioner. Here, perhaps, I 1725 may be allowed to answer a point made by my hon. Friend. He thought that the expense of going to the highest level of appeal in this case was not justified, but surely this is part of the pattern of National Insurance as we now know it.
The person who contributes to, and has rights under the scheme, is protected also by rights of appeal when his claim is disallowed. There are three levels of review: first, the insurance officer; secondly, the local tribunal; and thirdly, and the highest of these independent statutory authorities, the Commissioner. I think it very proper that my hon. Friend's constituent should have those rights and should have exercised them, even though, in the event, the Commissioner disallowed the appeal and held that the right to payment had been extinguished under the Regulations.
Since there are independent statutory authorities, and as this case has gone through the whole machinery of appeal, it would not be proper for me to comment further on it, but I will say something about the principle behind this rule. Section 46 (2) of the National Insurance Act, 1946, says:Regulations made under this section as to the time of payment of benefit may provide …(b) for extinguishing the right to any sum payable by way of benefit where payment thereof is not obtained within six months or such shorter period as may be prescribed from the time at which that sum is receivable in accordance with the regulations.It was under the powers conferred by the 1946 Act that the National Insurance (Claims and Payments) Regulations, as amended, provide, under Regulation 12, that the right to any sum payable by way of benefit is extinguished if the payment is not obtained within six months, but that in calculating the six months certain specific periods are to be disregarded. The periods that may be disregarded are:(a) any period when the draft is in the possession of the Minister, or an employment exchange or any post office at which it is payable;(b) any period during which the Minister has under consideration any representation that the order or draft has not been received or has been lost, mislaid or stolen;(c) any period (not exceeding one year) during which the person concerned is for the time being unable to act by reason of any mental incapacity;1726(d) any period during which the determination of any question as to extinguishment is pending.The National Insurance Commissioner, in deciding the case, specifically considered whether any of these provisions for disregard were applicable, and came to the conclusion that they were not. I know that my hon. Friend has a copy of the Commissioner's decision, because he has referred to it.
This extinguishment rule was reviewed by the National Insurance Advisory Committee, as my hon. Friend has said, as part of a general review of time limits for claiming benefits under the National Insurance Act, and that Committee reported in 1952. I had intended to quote paragraph 51, but as my hon. Friend has forestalled me in that I will not take up the time of the House except to say that the Committee, at the time of the review, made two recommendations about the time limits for claiming payment.
The Committee said that the position which then existed—in 1952--whereby the six months period applied only where good cause for delay had been established—that is, in cases in which the independent authorities had conceded that good cause had been shown—whereas the normal period for obtaining payment was three months, was unnecessarily complicated, and recommended that it should be six months in all cases, but not further extensible for good cause. This is effected by the amending Claims and Payments Regulations of 1952, which also introduced the four disregard concessions applicable in calculating the period of six months to which I have just referred.
The second recommendation of the Committee was that the warning notice on benefit drafts and in order books about loss of benefit if payment was not obtained in time should be clarified and strengthened. That recommendation did not need Regulations, and was implemented by my Ministry. In the letter that I wrote to my hon. Friend on 3rd July, I gave full details of the three clear warnings that are contained in the postal draft, a copy of which I have in my hand. My hon. Friend, in fact, quoted from a copy of a postal draft that I sent to him, but only quoted from the third of the three warnings. I should 1727 like to stress, because it is important, that the warnings are in simple language.
I concede my hon. Friend's point that old people sometimes have difficulty in understanding and filling in forms, but we are not talking about old people all the time. It is true that my hon. Friend's constituent is an old person, but what I have to say applies to everyone drawing benefit from my Ministry, and we have tried to make the warning as simple as possible.
The postal draft is headed:Not payable unless presented for payment at a post office within three months of the date of issue …".That, I think, is quite clear, and much more specific than the part that my hon. Friend quoted from the third warning, which says, in effect, that "You may find that you lose benefit."
Similarly, on the face of the Order, the second warning says, in heavy type:Warning. See Note 7 overleaf, regarding encashment within three months of this date.I therefore hope that I have made the point that we have tried to show quite clearly on these drafts that if the order is not cashed in time there is a risk of losing payment.
In the same letter that I wrote to my hon. Friend enclosing a specimen draft, I told him about the general publicity we give to remind people of their duties in this matter. Statements are included in the leaflets we issue about sickness benefit. They are included in order books, where recipients are paid by order book. They are all designed to make it clear that drafts and orders are valid for only three months. If they are not cashed, the recipient should immediately contact the local office of my Ministry.
If at any time within the overall period of six months, as I have explained to my hon. Friend, a claimant presents a postal draft to the local office—this is assuming that he has overrun the three months, but finds out before the end of six months—he will receive a new draft. That six months is extensible if any of the disregard provisions apply.
In its 1952 Report the National Insurance Advisory Committee referred to some of the reasons which have always proved conclusive in favour of applying a time limit, and they were 1728 included in the quotation my hon. Friend gave to the House. Perhaps I can amplify them a little. Benefit orders and drafts do not represent an unconditional right to payment. In many instances the receipt given on the order to acknowledge the payment includes a declaration that certain conditions have been fulfilled. Examples are that recipients are still incapacitated, still continue to be sick and that either they have had no earnings within the period or their earnings are limited. It may contain a statement about their dependants. I am talking about the broad picture, not the specific case about which my hon. Friend is concerned. This declaration must be given within a reasonable time of the period to which it relates if claimants are accurately to recall the facts in their own particular cases or if we in the Ministry, where necessary, are to check any of those facts.
Benefits under the National Insurance scheme are designed primarily to meet current needs. To allow arrears of benefit to accumulate against the Fund, often possibly to become payable to someone unconnected or unrelated to the beneficiary because the beneficiary failed to obtain payment in his lifetime, would be inconsistent with this principle. It is necessary to protect the Fund, which is contributed to by everyone liable to comprehensive insurance, against the accumulation of liabilities simply on account of dilatoriness in cashing instruments of payment. Such liability would, moreover, give rise to accounting and other practical difficulties, because the instrument of payment is the evidence that the benefit has been paid. If speed and economy of administration are to be preserved, some time limit must clearly be maintained.
To give an example of the size of the job which we have to do, about 3,000 claimants a month express some doubt whether they have been paid. Half of these specifically deny that they have ever received an instrument of payment from us. If the extinguishment provisions were relaxed, it would be impossible to check such claims, except by retaining for a longer period than the present eleven months all cashed drafts and orders. Eleven months is the period for which we retain orders at present. 1729 There is nothing sacrosanct about eleven months. It is simply that that is the longest period for which we have storage space to keep the postal drafts and orders which have been paid. There would be a very practical problem involved for us if we were to try to keep them for a longer period, because we should need so much more storage space.
My hon. Friend suggested that we should warn beneficiaries that they run the risk of having the benefit extinguished if they fail to cash the order. I am afraid that that is impracticable, again because of the size of the job. the systems of checks on payments applied for various purposes from time to time do not admit of such a procedure being generally introduced. About 7 million postal drafts and pension orders are payable at 20,000 post offices all over the country each week. The sub-division of that is about 6 million pension orders and about 1 million postal drafts. The total is 350 million a year, excluding family allowances, which also have a time limit. All the benefits are subject to a time limit on encashment.
My hon. Friend's suggestion would mean that some time before the end of six months after the issue of every single postal draft, or after the issue date of every pension order, a special check would have to be made to find whether the instrument had been cashed and, if not, a reminder would have to be sent. It would not be possible with pension orders, because they are made up in books sent to pensioners and held by them. They are normally current for twelve months, so we would not have that six months' interval. The system of checks which it is practicable to impose on these payments would not permit of a reminder procedure. Even if it were possible with postal drafts to identify in time the cases where reminders would be required, there would still be formidable administrative difficulties arising from the fact that paid drafts are not returned to the offices which issue them, but to the Central Office of our Ministry at Newcastle, and the drafts do not show the addresses of the payees. Therefore, the extra work involved would be very substantial.
We take all reasonable precautions to safeguard beneficiaries against dilatoriness in presenting drafts for payment, 1730 and only a tiny proportion are not cashed within the time limits allowed. Even if the system of checks could be adjusted to make a procedure possible—it would not be possible with pensioners, who make up the majority of beneficiaries—it would be unfair to the great majority of contributors, who deal with payments promptly, that they should bear the administrative cost of a procedure which would be cumbersome and expensive to operate and of advantage only to the few.
I have stressed that drafts and orders are not unconditional payments. The recipient must satisfy the conditions. The benefit is intended for current needs. I hope that I have shown that some limits are necessary. To alter the present six months would need legislation, and it would not be proper for me to comment on that. I think that the present system works. Furthermore, it has the support of the National Insurance Advisory Committee, which is an important and high-powered body having the duty of advising my right hon. Friend. We go to considerable trouble to make the limits known and understood. This system works, and we must abide by the fact that we need a time limit on payments.
§ Sir A. Baldwin
Before my hon. Friend sits down, will she answer my second suggestion, which was a much more simple one? I appreciate that, if checks of these postal drafts are not made, it would be impossible to give a month's notice. My second suggestion was much more easy than that and would involve practically no expense. When these payment orders are issued they are a promise to pay; they admit that they are due. My hon. Friend told me that there were only rare cases when they were not cashed in time. Why is it not possible to adopt this procedure, which could have been adopted in the case of my constituent? He sent the payment order back to the Ministry. The Ministry has not got to check anything except the order itself, alter the date on that order and give him one month's further time in which to cash the order.
§ Question put and agreed to.
§ Adjourned accordingly at eighteen minutes past One o'clock.