PREVENTION OF DOUBLE PAYMENTS AND RECOVERY OF OVERPAYMENTS (Hansard, 1 December 1970)

§ Mr. S. C. Silkin
I beg to move Amendment No. 17, in page 3, line 37 leave out 'disclosed all material facts' and insert: 'throughout used due care and diligence in making the claim by virtue of which the said sums were paid'. An Amendment intended to have a similar effect—to reduce the hardship which we believe will flow from the strict wording of the Clause—was not accepted by the Government in Committee, but the Secretary of State was good enough to say that he sympathised with its object and was impressed by the homework done by my hon. Friends. We have done a little more because the right hon. Gentleman, when upholding the form of words in the subsection, mentioned that it was not unprecedented and referred in particular to the National Superannuation and Social Insurance Bill which was intro- 1208 duced by the Labour Government but which, unhappily, did not become law. We therefore thought it appropriate to do our homework by seeing what that Bill said on similar subjects.
We found that in Clause 45(2) the words used in circumstances analogous to the present circumstances are those which we have proposed in the Amendment. We felt that the right hon. Gentleman would applaud our proposal to follow what he regarded as a precedent. The words which we seek to substitute are much less harsh to those concerned than the present wording. At present the Clause provides that regulations can provide for the recovery of over-paid sums where the persons by whom the sums were receivable cannot satisfy the Commission or the Appeal Tribunal that they had disclosed all material facts.
That is a very stringent provision. We believe that it would be sufficient to use the wording of the Bill to which I have referred. The obligation upon those involved should be simply to show that throughout they have used due care and diligence in making a claim by virtue of which the sums are paid.
That is not a very extensive Amendment, and I hope that at this late hour the Minister will find within himself sufficient feeling and generosity to accept it.

§ Mr. Dean
The hon. and learned Member for Dulwich (Mr. S. C. Silkin) has suggested that the proposal in the Amendment is less harsh than the proposals in the Bill. I am rather doubtful whether that is so. If we felt that it was, the case would be very strong for substituting the words the hon. and learned Gentleman proposes.
The Amendment would change the test to be applied before repayment can be required of a sum of family income supplement which has been overpaid. Under the Bill, the payee need not repay if he can satisfy the adjudicating authorities that he has disclosed all material facts. The Amendment would substitute the test of due care and diligence. The test in the Bill is based on the Ministry of Social Security Act, and will therefore be familiar to the Appeal Tribunals which will consider disputes. Due care and diligence, the test which the hon. and learned Gentleman seeks to substitute, is a test used for National 1209 Insurance purposes, and would be a new one for the supplementary benefit determining authority.
I readily concede that in practice it is likely that in the majority of cases they would produce much the same result, but the important point is that the material facts test is objective, and therefore easier and more straightforward to apply than the subjective test of due care and diligence.
I do not claim that there is a substantial difference here, but I think that in the light of experience in the working of the National Insurance Scheme and the Supplementary Benefits Scheme the chances are that the test in the Bill would be both fairer and more familiar to the adjudicating authorities, and therefore less harsh than the hon. and learned Gentleman's proposal.
The powers to recover over-payments are discretionary, and it will not be the Government's policy to make recovery if hardship would thereby result. I hope that the hon. and learned Member will feel that the objective, which we share, will probably be better achieved by the wording of the Bill rather than by the Amendment.

§ Mr. Hugh D. Brown
The hon. Gentleman says that the power to recover is discretionary. I do not want to go into the question of disregards or what is meant by "discretionary", but will this matter be covered by regulations? I do not share the confidence of my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) in what he said about whether we had done our homework on the last occasion, but the instance which I gave was that of an over-payment of family income supplement and whether it would be possible to recover it from a widow's benefit.
Will the Minister give some indication of the broad lines on which this discretion will operate; or will the matter be left for decision by an officer?

§ Mr. Dean
With leave, may I say that the intention is to follow the well-established normal practice in our social security arrangements—and this is a wide discretionary power—to ensure that repayment is not recovered if it would result in hardship for the family concerned.

§ Mr. O'Malley
I beg to move Amendment No. 18, in page 3, line 43, after '1970', insert 'or'.

§ Mr. Speaker
I suggest that we discuss at the same time Amendment No. 19, in page 3, line 44, leave out 'or the Family Allowances Acts 1965 to 1969'.

§ Mr. O'Malley
Clause 8 deals with the prevention of double payments and recovery of over-payments. The Secretary of State and myself had exchanges about whether the powers in subsection (4) were unprecedented. He was right, and I was not. I apologise to him.
On 18th November the Secretary of State said: On reflection, therefore, after listening to the hon. Gentleman, I think that I ought to reconsider the new power which is covered by the Amendment, namely, the power to recover an over-payment from future family allowances. I give the assurance that I shall look again at that element in the Clause". Later the right hon. Gentleman said: I am not happy about the implications of recovery of family allowances."—[OFFICIAL REPORT, 18th November, 1970; Vol. 806, c. 1363 and 1365.] We should like to know the Government's thinking in the meantime.

§ Mr. Dean
As the hon. Member for Rotherham (Mr. O'Malley) said, the powers in subsection (4) are not unprecedented. He went on to point out that my right hon. Friend the Secretary of State said that he would consider the arguments which had been put forward. I should like to give the reasons why, on consideration, we do not feel that it would be appropriate to go as far as the hon. Gentleman would like us to go.
In Committee my right hon. Friend said that he wished to have a look at the arguments which had been put forward and to consider whether there was need to make changes in the arrangements, particularly as we were here dealing with very poor families. As the hon. Gentleman has agreed, there are precedents, in particular in the Ministry of Social Security Act 1966, which provides specifically for the recovery of over-paid supplementary benefit from any national insurance or industrial injury benefit. The only over-payments that can be recovered from family allowances are over-payments of family allowances.
In effect, the family income supplement is a supplement to family allowances. 1211 The great majority of families claiming it will also be receiving family allowances. It will be a matter of chance whether at some future date they receive national insurance or industrial injury benefit. Thus, removal of the provision for recovery of over-payment from family allowances would be a serious weakening in our power to deal with abuse, but hon. Members can be assured that we shall not use this power where hardship would be caused. This is exactly the point which I have just made in answer to the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown).
For example, there would be no question of withdrawing family allowances altogether from a family only just above the F.I.S. level. It has always been the policy to avoid pressing recovery to the point of hardship, and it is the firm intention of the Government that this should continue to be the rule. However, it is possible that someone quite comfortably off, by understating his income, might get a family income supplement, and it would be reasonable in such cases for us to have power to recover from the family allowance, which may be the only allowance which is in payment.
I emphasise that there would be no question of recovery if it caused hardship to the family concerned, but to have no power of recovery in instances where there had been over-payment and in particular where there had been abuse through income being understated, would leave us wide open to abuse within the scheme which we would not without this power be able to deal with adequately.

§ Mr. O'Malley
I note that I was to some extent right in the exchange to which I have referred, in that over-payment of another benefit cannot be deducted from family allowances. Indeed, I thought it went wider than that.
We should be more comfortable about the Government's refusal to change the Clause as we are suggesting if the hon. Gentleman could give us statistics of how sparingly or on how many occasions these general powers have been used to recover, for example, national insurance benefits. Secondly, who has the discretion? Does the Supplementary Benefits Commission have discretion? Thirdly, does the hon. Gentleman assume that this method of recovery would be used 1212 only as a last resort and that it would be used extremely sparingly as it is under the present system?

§ Mr. Dean
Yes, as the hon. Gentleman knows from his experience in my Department, this is very much a reserve power which is used extremely sparingly and is never used within the discretion which is available so as to cause hardship to the families concerned. The answer is that it is on a few occasions and never so as seriously to embarrass the family concerned. In the light of what I have said, I hope that the hon. Gentleman will feel, that it would be undesirable to open the gate to abuse by having available no power of recovery.