HC Deb 18 May 2004 vol 421 cc954-60

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

7.1 pm

Dr. Vincent Cable (Twickenham)

I am grateful for the opportunity to introduce this Adjournment debate, which concerns one individual and an extraordinary injustice in the benefits system. I shall briefly summarise the problem and talk the Minister through it. He knows some of the background because we have had correspondence on the matter.

The problem relates to a young man of 24 who suffers from a variety of complex invalidities. He has had to be cared for at home by his parents for most of his life, but was transferred to a residential care home at the age of 20. Up to that time, his parents had saved the state between £1 million and £2 million in care costs as a result of their sacrifice. In the process of transfer to a care home, various charges were unwittingly incurred, without the knowledge of the parents and without them benefiting in any way. Despite attempts to persuade the Department for Work and Pensions to withdraw the claim for the overpayments, the family, who are in considerable financial hardship, are left with a debt of just over £3,000. The problem illustrates some wider policy issues and h gal problems connected with the overpayment of benefits, but I wish to focus primarily on that individual, his family and their problems.

I shall give the House the background to the case and describe John's difficulties. He is now 24 and he has a variety of conditions. He is autistic, he has severe learning difficulties and, in addition, he has Lennox Gestalt syndrome, which means that he has epileptic fits two to three times a day, on average. The fits sometimes occur in the middle of the night and if he were left unattended, he would die. His carers have to be constantly in attendance. In addition, he cannot swallow, so his food has to be liquidised and fed to him by spoon. He has severe toileting problems, so his carers constantly have to change him and deal with his personal hygiene. It is a 24-hour job.

For the first 18 years of John's life, he was cared for by his parents, Mr. and Mrs. Redman, who received very little help from the local council. Although this debate is primarily concerned with the role of the DWP, much fault lies with the local council. The council responded only slowly and belatedly to the family's needs.

After 18 years, the family received limited respite care of about one week a month. In 2000, when John was 20, he was admitted to a residential home, the Roy Kinnear home in my constituency. The cost, which was negotiated between the Department for Work and Pensions and the local providers—the health service and the council—was about £95,000 a year. That gives some indication of the costs to the family and the sacrifice that they made to care for John during his young adult life.

The residential home proved highly unsatisfactory. Complaints were made and are being investigated. The family had to withdraw John from the home because a critical situation arose. The liquidising machine broke down and the home's management refused to replace it, so John could not eat and was in danger. His family withdrew him and he is now back at home. His parents are once again shouldering the full costs of his care, which, as I indicated, were estimated at about £95,000 a year.

During this long and arduous time, John's parents have not only suffered enormous physical exhaustion and emotional pressures, but have made a considerable financial sacrifice. As Mrs. Redman was unable to cope, her husband retired early so they have sacrificed much of their pension entitlement and have only small savings. That is the context in which the family now live.

I turn to the financial problem that is the source of the difficulty with the DWP. For most of his life, John was cared for at home and received help from the Department through disability living allowance. The complications arose when he went to the care home. The move was managed by the local social services department working in partnership with the local health service and negotiated with the DWP. The transaction was complex and the process was managed by the local statutory services. At no stage were John's parents told that the funding arrangements materially affected them and that they had a legal obligation to notify the DWP. They were never told about that, which is why the difficulties arose.

Apart from those difficulties, the relationships in such cases are inherently extremely complex, as the Minister knows, and would defeat even a person of considerable financial sophistication. To put the matter simply, under the arrangements in the care home, the family continued to derive some limited DLA benefits, notably the mobility component—a limited allowance of £17.50 a week. However, to complicate things, in addition to the statutory payments made to the home, the family were required to make, from the payments they received, a further limited contribution. Payments were going in and out of their bank account and it was very difficult for them to keep track.

Any discretionary income that the family received was entirely spent on John's welfare. Conditions in the home were not ideal and the family were often called in two or three times a day to help him. They frequently had to buy new clothing to replace soiled clothes. They had to give John special health supplements. Any additional benefit that the family derived was spent entirely on John.

The difficulty with the Department arose due to a complex mixture of simultaneous overpayment and underpayment of benefit. The family were underpaid residential care allowance. They had never heard of that benefit but they were entitled to it and after a year of misunderstandings found out that there had been substantial underpayment. However, the regulations governing residential care allowance meant that the family was unable to make a claim for back-payment. At the same time, because they had not notified the Department of John's situation, they had been overpaid disability living allowance, which he Department tried to claim back. So they lost one payment because they were unable to claim retrospectively, while another payment that they had received was claimed back by the Department.

The net position after a year was that the family had accumulated a liability of about £6,700, which the Department sought back from them. Fortunately, the local council accepted part liability. In other words, it had been imposing charges on the assumption that the family had been receiving residential care allowance, which they had not, and the council agree to settle that component of the bill. The family were left with a bill of £3,122, which is still at issue. I want to emphasise several key points about why it is utterly and totally unreasonable under any common-sense system that the family should be left with that bill.

The family were completely unaware of the complexities of the arrangement. They draw absolutely no benefit from it. Any income was entirely spent on John's welfare. They suffered a net loss as a result of the move to the residential home because of the underpayment of benefit to them. They were out of pocket; they were not in surplus, as a result of the benefit changes. Of course, they have now taken their son out of the residential care home. Since removing him from the home last November, they have already probably saved the state £9,000 or more—three times the amount that the Department for Work and Pensions feels that it is owed.

In my concluding remarks, I wish to consider what remedies are available. The family have been helped by the citizens advice bureau and by me, to some extent. They were advised that they could pursue the problem through one of two channels. They could make a complaint against the local council. There is still a possibility that a complaint might lead to the local government ombudsman and to some form of compensation, but the family have been advised that the chances of success are not high. The complaint against the council was essentially that it did not provide sufficiently comprehensive advice. That would not normally be regarded as maladministration. None the less, they can consider that course of action.

The family was advised from the outset that by far the most promising and appropriate channel was to pursue the overpayment issue through the Department for Work and Pensions. The matter went to a tribunal, where they lost. I was then requested to write to the Minister. It is important to summarise what the position is with regard to overpayment. I shall quote from a parliamentary answer given back in 1999, by the Minister's colleague, now the Minister for Energy, E-Commerce and Postal Services, in which he summarised succinctly the precise position: In individual cases of overpayments the Secretary of State can apply his discretion in relation to the recovery of the overpayment. This discretion is exercised only where recovery would cause extreme hardship. Guidance is contained in "Government Accounting", a copy of which is held in the House of Commons Library." —[Official Report, 16 March 1999; Vol. 327, c.624.] That document defines and defends the concept of hardship thus:

Repayment may be waived if it would cause hardship, but hardship must not be confused with inconvenience. To be required to pay back money to which there was no entitlement does not in itself represent hardship, especially if the overpayment was discovered quickly. The test of hardship should therefore be real. To be acceptable, a plea of hardship should be supported by reasonable evidence that the recovery action proposed by the department would be detrimental to the welfare of the debtor or the debtor's family.

The citizens advice bureau and I have placed sufficient evidence with the Department and it is certainly available from the local council to demonstrate that real

hardship is involved in this case. The family have accepted enormous financial as well as other sacrifices. In that spirit, I wrote to one of the Minister's colleagues in January and the Minister replied very quickly. He indicated that he could not accept such a request, but he said: Due consideration will be given to Mr and Mrs Redman's financial circumstances before a suitable method and rate of recovery is decided. I want to ask him whether he will reconsider the question of waiving the payment, given the circumstances, which are extraordinary. I have never previously come across a case in which a carer family have taken on such an enormous burden on behalf of society. At the minimum, we are talking about a saving of £1 million for the taxpayer, but the family are now being pursued for a very small debt to the state—large to them—when, under no circumstances, can they possibly have been said to have benefited. They are in hardship.

As a tailpiece, I want to say that since the family returned to their home with John where they are caring for him with all the difficulties surrounding that and limited respite care, they have had great difficulty in getting their disability living allowance re-established. They believe—certainly the citizens advice bureau believes this—that the Department for Work and Pensions has been deliberately dragging its feet over the benefit because of the difficulties that they were having with the overpayment. That may be unfair and completely untrue, but that was the perception. It is a product of the ill-feeling that the case has generated. I hope that it is not true.

I am concerned with the bigger issue. I recognise that the Minister has a duty with regard to public funds, but I ask him to exercise the limited discretion that he has to waive the overpayment.

7.16 pm
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)

I congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate and on his diligence in pursuing this issue on behalf of his constituents. I am grateful to have the opportunity to explain the basis both of entitlement to disability living allowance for disabled people who move into care homes, and of recovery of benefit when overpayments occur. I assure him that the Department attributes the utmost importance to ensuring that people receive the amount of benefit to which they are entitled. This case provides a stark illustration of why we need to do so.

Towards the end of his remarks, the hon. Gentleman asked me to reconsider waiving recovery of the outstanding balance, and I want to make it clear at the outset that I have done so. We do not intend to make further recovery of that outstanding balance from Mrs. Redman. As he rightly points out, this is due to the exceptional circumstances of the case. I shall say something more about that in a few moments.

I further reassure the hon. Gentleman, the family and the citizens advice bureau that there has been no dragging of feet on this issue. I note that he does not put his name to that suggestion, but I would not wish the family to consider it to be the case.

It is a fundamental principle that those in receipt of benefit or their appointed representatives ensure that they continue to meet the entitlement criteria for that benefit and report any changes in their circumstances to the appropriate benefit-paying body. Any overpayment of benefit that arises owing to those criteria changing and that change not being reported in a timely way will normally be recovered. We have a duty to the taxpayer to ensure that overpaid benefit is recovered.

In pursuing such recovery, the Department seeks to do so as quickly mid effectively as possible but, as the hon. Gentleman acknowledged, without causing undue hardship. When representations are made that recovery will cause hardship, regard is had to an individual's circumstances in determining the rate and method of recovery. Again, as he acknowledged, that was the tone in which I wrote to him in January on this issue.

There are certain exceptional circumstances in which recovery of an overpayment may not be pursued. That would normally be when recovery would be seriously detrimental to the health or welfare of the individual or a member of their household. Each case is looked at on its individual merits. In this case, the initial decision not to waive recovery was based on the fact that there was sufficient capital available to enable recovery without apparently causing undue hardship. On reflection, it is accepted—and I accept this—that due regard was not had to the exceptional circumstances of the case.

Those circumstances involve, in particular, the great personal sacrifice that Mr. and Mrs. Redman have made to support their son over many years; the fact that the overpayment arose in good faith; the fact that they have not personally gained financially; and the fact that they appear not to have been correctly advised by those bodies supporting them. If the correct course had been taken and the appropriate benefit claimed, the loss to public funds would have been significantly reduced. I have therefore agreed that the Department will not seek recovery of any of the remaining overpaid benefits. Mrs. Redman has made a part-repayment, in view of which I will arrange for officials to consider a compensation payment. I hope that the hon. Gentleman agrees that this is quite an exceptional case and is worthy of such an exceptional decision.

In more general terms, disability living allowance is a tax-free, non-contributory and non-means-tested benefit that is paid as a contribution towards the extra costs faced by severely disabled people as a result of their disabilities. Entitlement to the allowance is linked not to specific disabling conditions but to the level of someone's need for help with personal care or with getting around. It therefore has a care component and a mobility component. In broad terms, entitlement to the care component depends on the effect that physical and/ or mental disability h is on someone's need for personal care from someone else, while entitlement to the higher rate mobility component depends on whether physical disability means that they are unable, or virtually unable, to walk. Entitlement to the lower rate mobility component depends on whether a physically and/or mentally disabled person needs supervision or guidance from another person when walking outdoors on unfamiliar routes.

When someone goes into a care home, as in John's case, their needs for personal care should be met in the home. The cost of meeting those needs is included in the cost of their place in the home. Local authorities, rather than the Department for Work and Pensions, are responsible for providing help with those costs. That makes sense, because local authority social services departments provide care home accommodation and have the necessary skills to arrange suitable placements in private care homes. When local authorities assess how much help a person needs with their care home costs, they ensure that they are left with a standard amount for their personal expenditure. To pay disability living allowance for someone's personal care needs when account has already been taken of those needs would amount to duplicate provision. Payment of the care component therefore stops after 28 days' residence in a care home.

Different considerations apply, to the mobility component of disability living allowance. Care homes are not funded to provide for residents' mobility needs, so payment of that component is not affected by residence in a care home, and local authorities cannot take account of it when assessing someone's need for help with the cost of their placement. Disability living allowance has the advantage of providing flexible help for disabled people, whose needs can vary greatly and change significantly over time. There must therefore be ongoing discussion of who should be entitled to it. The rules have changed over the years to reflect the discussion, but the discussion itself will continue. That dynamic process helps to ensure that disability living allowance can continue to provide relevant help for disabled people who face costs over and above those of their normal daily living needs, for which other benefits are available. At the same time, it will always produce differences of opinion about the qualifying criteria for receipt of the benefit.

In conclusion, I offer my apologies for any distress caused to Mr. and Mrs. Redman and, indeed, John. They will accept that when an overpayment is made, even when it is the result of an honest error by the person receiving payment, we have a responsibility to recover it. In this case, however, there were exceptional circumstances, which I am pleased we can now acknowledge. I congratulate the hon. Gentleman on bringing the case to the attention of the House, and I hope that he is satisfied that we have reached a suitable conclusion for the family and especially for John.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Seven o'clock.