Contribution
My Lords, this amendment follows on from a previous amendment tabled by the noble Baroness, Lady Lister, in Committee. It also has support from the right reverend Prelate the Bishop of Leicester and the noble Baroness, Lady Finn. I am very grateful to both of them. Since Committee, the noble Baroness, Lady Lister, and I have engaged with the Minister, who has been very helpful and constructive. I also thank the Public Law Project for its assistance, not least in navigating a complex area of law and public policy.
The amendment seeks to ensure that the recovery of overpayments by deductions from universal credit payments, which is the DWP’s preferred method for recovering overpayments from people still in receipt of universal credit, is fair and affordable. It seeks to achieve this objective by adding a new subsection to Section 71ZB of the Social Security Administration Act 1992. The new subsection would have two effects.
First, it would require DWP to consult claimants before deductions are applied and to ensure that the rate of recovery is affordable to that individual. The version of this amendment that we debated in Committee would essentially have written off official error overpayments. The version that we have brought on Report is wider in scope, in that it applies to all overpayments, not just those due to official error, but it is also less ambitious in that it does not require any write-off of overpayments.
The second effect of the amendment is that it would limit the powers of recovery to overpayments that are less than six years old, in line with the limitation period that applies to the recovery of debts through the courts. In Committee, the Minister stated that the department’s preference was,
“always to agree an affordable and sustainable repayment plan”.—[Official Report, 25/6/25; col. GC 16.]
This is not currently the approach applied to the recovery of overpayments from individuals still in receipt of benefits. Instead, in these circumstances, DWP has the power to deduct 15% of an individual’s monthly universal credit payments directly, with limited notice and without the individual’s consent. For a single adult aged 25 and over, this amounts to a sudden, unanticipated loss of £60 a month.
The current approach to the recovery of overpayments stands in stark contrast to the requirements that apply to commercial lenders, such as banks and utilities companies, which are required by regulation to engage with customers extensively if they owe them money. That approach also contrasts with the provision of new powers to recover deductions from the bank accounts of individuals no longer in receipt of benefits and who are not engaging with the system. In these cases, the legislation would provide for an opportunity to make representations on affordability and hardship, before the deductions begin.
By requiring the Secretary of State to give notice and invite affected persons to make representations on affordability, the amendment seeks to ensure that equivalent protections are put in place for the recovery mechanism that applies to those who continue to be in receipt of benefits. As far as the limitation period is concerned, the new subsection would require that a recovery must commence before the expiration of a six-year period from the date on which the recoverable amount was paid. Currently, no such restriction applies, which means that individuals can face recovery action for overpayments that are many years old—and of course, in those cases, people will often not be able to locate records.
I understand that the Government are sympathetic towards the objectives of our amendment but still have concerns. We have addressed at least one of those concerns in the version of the amendment that has been tabled; that concern related to the way in which we had formulated the subsection on limitation. But I understand that the Government have a wider concern: the Minister explained in particular that, in a complex system such as welfare, there is a risk of unintended consequences once any new statutory provision is put into operational effect. I know that she speaks from depths of experience and from a sincere commitment to make the system fair and efficient.
Given that we have agreement on first principles, if in her reply the Minister is not inclined to support this amendment in its current terms, I hope that she might consider a Third Reading amendment that reflects the Government’s concerns—although I echo the concern of the noble Lord, Lord Vaux, about the very limited time we have before Third Reading. If the Government are not inclined to bring back a Third Reading amendment, can the Minister reassure us in two critical respects: first, that the Government agree with the objective of giving people in receipt of benefits a fair chance to discuss an affordable repayment plan rather than applying the automatic deduction of 15%? Secondly, can the Minister outline concrete alternatives to the statutory provision that we have proposed whereby this objective might be achieved? One solution might be the setting up of a task and finish group within the governance structure of the current review of universal credit to work through the technicalities.
Again, I am very thankful to the Minister for her exemplary engagement with us on this amendment. With that, I beg to move.