HL Deb 09 July 2002 vol 637 cc653-6

8.30 p.m.

Baroness Hollis of Heigham

rose to move, That the draft order laid before the House on 26th June be approved [34th Report from the Joint Committee].

The noble Baroness said: My Lords, the responsibility for administering housing benefit, council tax benefit and discretionary housing payments rests with local authorities. Local authorities can already contract out many aspects of that work.

However, there are important functions which cannot be carried out. Contractors or agency staff cannot at present make the decision which determines entitlement to benefit. They can make recommendations, but an officer directly employed by the local authority must make the final decision. Neither can contractors or agency staff make decisions on the award of discretionary housing payments.

Checking the work done by the contractor or agency staff and making a benefit decision places a large burden on local authorities. It involves unnecessary and expensive double handling. Everything has to be done twice. We want to see improvements in benefits administration and we hope that the order, which is warmly welcomed by local authorities, will help us to do so.

The provisions are as follows. First, the order gives local authorities a power to authorise other people to undertake functions relating to housing benefit, council tax benefit and discretionary housing payments that at present only the local authority can undertake. That will enable contractors and agency staff to undertake those functions in so far as the local authority authorises them to do so. I refer to Article 3(1).

Secondly, it specifies the functions which the local authorities will not be allowed to authorise other people to undertake. Those are mainly areas which, because of subsidy or fraud implications, we believe should be reserved for the local authority to make the decision. I refer to Article 3(2). Thirdly, it imposes a condition that the authorised person passes a daily random sample of cases—10 per cent—to the local authority to enable the local authority to check the quality of the work. I refer to Article 4.

That requirement will apply only to people employing at least one other person; that is, only the contractor, not agency staff. I refer to Article 4(5). That is because local authorities have the same day-to-day control over agency staff as they do over their own employees. Finally, it provides that a local authority cannot give an authorisation to a person who has a financial interest in the outcome of a claim, or to whom rent is payable for a dwelling in respect of which a claim is made, to avoid any possible conflict of interest. I refer to Article 5.

I stress to your Lordships that the order does not remove any accountability from local authorities. They retain full responsibility, as now, for all housing benefit and council tax benefit expenditure. They are expected to have proper controls and checks in place in order to ensure that the contractors are doing the work to an acceptable standard. In addition, authorities will remain subject to an independent check by external audit and by the Benefit Fraud Inspectorate. We see an increased role for the BFI to ensure that that is done.

I believe that the order will enable local authorities which use or want to use contractors or agency staff to have less of an administrative burden. We shall issue guidance to local authorities to ensure that they have strong contract management in place when coming to such arrangements. There may be other issues we want to include in guidance. However, this is a discretionary and permissive power for local authorities which already contract out their work to be able no longer to have to do the same work twice over. There are proper sample quality controls in place. There will be codes of guidance to local authorities after consultation with them. I hope that, as a result of that, your Lordships will accept the order. I commend the order to the House. I beg to move.

Moved, That the draft order laid before the House on 26th June be approved [34th Report from the Joint Committee].—(Baroness Hollis of Heigham.)

Lord Higgins

My Lords, having heard the explanation from the Minister, I have doubts about the order. The noble Baroness will know that I have always been somewhat concerned about the way in which housing benefit is administered by local authorities. However, as I understand it, the order will now enable them to contract out some of the responsibility for administering housing benefit, other housing payments, and so forth. Apparently, the way in which the contractor carries out the work will be checked by taking a random sample of 10 per cent of cases. Why do the local authorities need to contract out? Why should not the local authority carry out the responsibilities Parliament has given to them.

Perhaps I may make another point. We know that such work involves confidential information. However, is that information, which presumably may be relevant to some of the decisions to be made by the contractors, to be passed on to them? That issue has been raised on previous occasions and gives cause for concern. Overall I am not clear as to whether this is a complete innovation or whether it has been done before. If it is an innovation, have we given sufficient consideration to the problems which may arise?

Finally, the noble Baroness stated that the sampling does not apply to people who do not have someone else working for them. That is not the same as the council having an employee, with all the usual requirements as regards national insurance contributions, and so forth. Should not an individual sub-contractor be subject to the same somewhat inadequate provisions for random sampling?

Earl Russell

My Lords, it seems to me that the order is a necessary consequence of the introduction of best value. The noble Lord, Lord Higgins, would not have great difficulty in persuading me that we might perhaps have given more thought to the concept of best value. However, that is now with us, and while it is with us, the order must be with us also. The debate on best value has taken place. The time to have it again has not yet come. In the mean time, I am happy to accept the order.

Baroness Hollis of Heigham

My Lords, I am grateful to the noble Lord, Lord Higgins, for his response. He will know that at present something like 25 local authorities contract out their housing benefit administration to such companies as CSL, Capita, EDS, IT Net, and so on. The noble Lord will recall that there have indeed been problems with Hackney, and so forth, where administration has had to come back in-house.

At present, local authorities do not have the discretion to contract out all aspects of housing benefit administration—only some aspects. We are giving them a permissive power to contract out. However, as local authorities they still remain legally responsible for the work done for them. In housing benefit administration, nothing in the order jeopardises the rights of an individual to a tribunal procedure recently introduced for housing benefit circumstances.

As regards sample, agency staff are in the same position as a local authority. They are under the direct control of the local authority. Therefore, contracting out in that sense does not apply. By contracting out we mean an independent company as opposed to an individual coming in to cover sickness, maternity, and so forth. However, if I have misunderstood the point made by the noble Lord, perhaps he will come back to me.

Lord Higgins

My Lords, I do not see why a so-called individual sub-contractor should riot be employed by the council. Why should we suddenly give local authorities that additional discretion?

Baroness Hollis of Heigham

My Lords, individual agency staff are effectively employed by the local authority for those purposes and are subject to local authority control and supervision. That perhaps meets the point. The noble Lord pressed me on confidentiality. Local authorities will be told that adequate safeguards must be put in place to meet data protection requirements. The situation is no different from that of banks, building societies and the like. In dealing with the Social Security Fraud Act we discussed fully the security which applies riot just to local authority staff but to contracting out. The same duty of care applies. Obviously, there will be circumstances within a local authority or outside where that slips up. I have no reason to think that that difference will occur between contracting out and non-contracting out because the Data. Protection Act applies in both cases.

Finally, I assure the House that in my view the provisions of the order are compatible with the European Convention on Human Rights.

On Question, Motion agreed to.