We must tackle the unfairness of debt caused by DWP mistakes
3 min read
‘People who work hard and play by the rules, and people who depend on our public services and vital benefits, deserve to have trust and faith in the system.’
This assurance from the Secretary of State for Work and Pensions when speaking to the Public Authorities (Fraud, Error and Recovery) Bill suggested a commitment to fairness, reflective of a government intent on having integrity at its core.
I thought about this when hearing about the harm caused to Sarah, a client of Citizen’s Advice, following a DWP mistake. Although Sarah provided accurate and timely information, the DWP incorrectly calculated her benefits entitlement, and assured her everything was correct. Years later, Sarah was informed she had been overpaid almost £11,000.
Despite the overpayment being the DWP’s mistake, the DWP continued to seek recovery through deductions from Sarah’s benefits until Citizen’s Advice commenced legal action.
Sarah played by the rules. She fulfilled her responsibilities, promptly providing all the relevant information. She deserved to trust the Government to apply its own rules correctly – and take responsibility if things went wrong. Instead, a Government mistake landed her in a significant amount of unexpected debt.
Cases like Sarah’s are familiar to MPs' postbags and the Independent Case Examiner, the independent complaints review service for the DWP, who in her Annual Report highlighted examples of ‘Official Error’ overpayment cases as amongst the ‘most concerning’ she has seen.
It is also a growing issue. The DWP recently published its annual estimate of fraud and error levels in the benefit system in Great Britain. ‘Official Error’ overpayments had increased from £0.8 billion to £1 billion - over half relating to Universal Credit (UC).
The cost of those mistakes is borne not by the DWP, but by the people it is meant to support. This was not the case for most benefits before UC was introduced and is not the case for many other benefits now. It stems from the Welfare Reform Act 2012, when the Coalition Government gave the DWP the power to recover all UC overpayments however caused.
This is a system and an injustice that the current Labour Government has inherited – but now has an opportunity to put right by using this bill to demonstrate that our commitment to trust and fairness is about more than words.
This is why I have tabled an amendment to bring the test for recovering UC overpayments into line with the current Housing Benefit test. It would ensure that official error UC overpayments could only be recovered where individuals could reasonably be expected to realise they had been overpaid.
When UC was first introduced, the then Labour Shadow Minister for Employment considered this a ‘just and fair test.’ This test would also place a clear incentive on DWP to prevent mistakes in the first place – a step towards a better-functioning social security system that gets things right first time.
And it would contribute to another key Labour objective. Labour’s 2024 Manifesto identified the importance of tackling economic insecurity, as the ‘golden thread that runs through all of Labour’s missions,’ and ending ‘mass dependence on emergency food parcels.’
Trussell’s State of Hunger report found that nearly half of people referred to its food banks faced deductions from their or their partner’s benefits - a fifth of which related to Official Error overpayments debt.
Debt is a key driver of economic instability – but it is particularly egregious when that debt is government-driven.
We can and must do better – that is why I hope Peers will support my amendment. We need actions to demonstrate our commitment to placing trust and fairness at the heart of our social security system.
