Flac submission on the social welfare and pensions bill 2011 june 2011 final

FLAC Submission on the Social Welfare and Pensions Bill 2011 FLAC

June 2011 FLAC, 13 Lower Dorset Street, Dublin 1 T: 1890 350250 / 01 874 5690 | E: info@flac.ie | W: www.flac.ie

FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) FLAC, the Free Legal Advice Centres is an independent human rights organisation dedicated to the realisation of equal access to justice for all.

1. Introduction The Social Welfare and Pensions Bill 2011 introduces changes to primary legislation1 which FLAC is concerned are in need of further clarification to ensure that they will not impact negatively on people in receipt of social welfare payments. This submission relates specifically to ss.12 and 18 of the Bill.

Section 12 refers to “information to be supplied by claimants and beneficiaries” and s.12(2) of the Bill would amend s.244 of the Principal Act 2005 by inserting the following: 244A.—(1) The Minister may prescribe information and the nature and form of such information to be furnished by a claimant or beneficiary where the Minister forms the opinion that the furnishing of that information would assist— (a) a deciding officer, bureau officer, the Executive or any other person who makes a decision in relation to a claim for, or the payment of, benefit in deciding whether— (i) a claimant is entitled to make a claim for benefit or to receive any benefit, or (ii) a beneficiary is entitled to continue to receive any benefit, or (b) in assessing the training, education or development needs appropriate to the circumstances of the claimant or beneficiary.

(2) For the purposes of the information to be furnished by a claimant or beneficiary under subsection (1), different types and forms of information may be prescribed in relation to— (a) different classes of claimants or beneficiaries, or (b) different benefits.”.

Section 18 of the Bill concerns the “repayment of amounts due arising from false or misleading statements or wilful concealment of facts” and would amend s.342 of the Principal Act of 2005. If enacted it would insert the following: 342A.—Where a person is required to repay an amount of any payment referred to in paragraphs (a) to (g) of section 342(1) by virtue of— (a) a revised decision given by a deciding officer under section 302(a), 1

The Social Welfare (Consolidation) Act 2005 otherwise referred to as the Principal Act available at http://www.welfare.ie/EN/Policy/Legislation/Acts/Documents/swcact_05.pdf FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) (b) a revised decision given by an appeals officer under section 319(a), or (c) a revised determination given under section 325(a), the amount to be repaid in such circumstances shall not be reduced by the amount of any other payment referred to in paragraphs (a) to (g) of 5 section 342 to which the person would otherwise have been entitled in the period to which the overpayment relates had he or she not been in receipt of the payment which gave rise to the overpayment.”

The submission also refers to matters which are not included in the Bill but could usefully be added for the protection of some of the most disadvantaged people in our society. These matters include Mortgage Interest Supplement (MIS) and the Habitual Residence Condition (HRC).

2. Section 12(2): Classes of Claimants Section 12(2) of the Social Welfare and Pensions Bill 2011 introduces s.244A into the Principal Act of 2005. This provision confers the Minister with the power to prescribe information required to be furnished by a claimant or beneficiary. While this provision does not seem untoward at first glance, s.244A(2) states: (2) For the purposes of the information to be furnished by a claimant or beneficiary under subsection (1), different types and forms of information may be prescribed in relation to— (a) different classes of claimants or beneficiaries...

The reference to “different classes of claimants or beneficiaries” is not sufficiently clear to assure the reader that this will not involve discriminatory profiling of different categories of claimants or social groups. Currently a decision-maker can ask a claimant or beneficiary to provide information relevant to the claim which is a reasonable requirement. However, if different groups of people have to provide different “types and forms of information” than other claimants, then this may lead to discriminatory practices.

Recommendation: In light of its capacity to be applied in a discriminatory fashion, and given that sufficient powers to collect information already exist, FLAC respectfully submits that this provision should be deleted.

3. Section 18: Overpayments Section 18 of the Social Welfare and Pensions Bill 2011 provides for the repayment of amounts of money due to the Department of Social Protection from payments made based on false or misleading statements or wilful concealment of facts. The new provision states: “The Principal Act is amended by inserting the following section after section 342 (amended by section 17):

FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) 342A.—Where a person is required to repay an amount of any payment referred to in paragraphs (a) to (g) of section 342(1) by virtue of— (a) a revised decision given by a deciding officer under section 302(a), (b) a revised decision given by an appeals officer under section 319(a), or (c) a revised determination given under section 325(a), the amount to be repaid in such circumstances shall not be reduced by the amount of any other payment referred to in paragraphs (a) to (g) of section 342 to which the person would otherwise have been entitled in the period to which the overpayment relates had he or she not been in receipt of the payment which gave rise to the overpayment.”

Currently, social welfare regulations provide for the situation where one payment may be offset against another in order to repay an amount which was paid in error due to alleged fraud. Article 246(3) of the Social Welfare (Consolidated Claims, Payments and Control) Regulations 2007 (SI 142/2007)2 affords an element of discretion in assessing whether a payment should be offset against another in terms of repayment having regard to the particular circumstances of the individual case. Article 246(4) specifically states that “account shall be taken of any omission made by or on behalf of the person concerned” in the case of an overpayment in whole or in part, but allows the authorising officer discretion to reduce or cancel the repayment. The new provision allows no such exercise of discretion as it states that the amount to be repaid “shall not be reduced by the amount of any other payment”.

FLAC’s main concern is that there may be circumstances where a person accused of receiving a payment on the basis of false or misleading information, or due to the wilful concealment of facts, may be unfairly penalised. This means that while a person may have been entitled to another payment this entitlement will not be implemented as the legislation will now prevent an authorised officer from offsetting the genuine entitlement against the payment wrongly received. This situation is at odds with the Department’s own operational guidelines, issued in 2008 which state that: “Generally, where an overpayment is identified and there is clear evidence that the person had entitlement to a payment under another scheme during the period paid, the other payment would be awarded and then all or part of the payment would be withheld to recover the overpayment.”3 It is important that a correct decision is made at first instance to ensure that fair procedures are followed. While the claimant is given a right of appeal it is not enough that the mistake will be rectified afterwards as the current delays in the appeals process mean that a person may wait months or even more than a year for a decision to rectify a wrong decision. Currently, documents outlining the method 2

Available at http://www.attorneygeneral.ie/esi/2007/B25135.pdf Overpayment Recovery – Guidelines on the Recovery of Debt by Department of Social Protection available at http://www.welfare.ie/EN/OperationalGuidelines/Pages/codm.aspx 3

FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) of recovery are included with the letter from the Department of Social Protection claiming the overpayment. It is essential that people are informed of their right of appeal in detail and encouraged to exercise this right in order to ensure that fair procedures are followed.

Furthermore, a person in this situation will not receive the payment to which he or she is entitled which could be used to repay or offset the other sum. The denial of this person’s entitlement by a Deciding Officer amounts to effectively fining the claimant without any judicial process which could set a dangerous precedent if this amendment is introduced without a thorough and considered debate of the implications of such an amendment. The refusal to credit to the claimant the payment to which he or she is lawfully entitled may cause undue hardship given that the person must be in need of a social welfare payment otherwise he or she would not qualify for the payment in question. Thus a person with no means could be required to repay a greater amount than was actually lost to the exchequer.

Recommendation: Section 18 should be deleted as it has the potential to impose a punishment tantamount to a fine on the basis of a decision by a Deciding Officer rather than by due judicial process.

4. Mortgage Interest Supplement FLAC notes the absence of any reference to the Mortgage Interest Supplement (MIS), changes to which have already been recommended by the Expert Group on Mortgage Arrears and Personal Debt. Given that the Programme for Government recognises the important role of MIS in supporting families in mortgage arrears and that it is a “better and cheaper option than paying rent supplement after a family loses their home”4, FLAC regrets that the Government has not taken the opportunity of the current Bill to implement the changes to the MIS scheme recommended by the Expert Group on Mortgage Arrears and Personal Debt in its interim report published in July 20105 and reiterated in its final report in November 2010.6 The recommendations by the Group could alleviate some of the pressure placed on people who find themselves under financial strain due to mortgage payments. One suggestion was to remove the exclusion on paying the supplement to a couple where one of the partners works more than 29 hours per week. This change could easily be incorporated into the current Bill and would demonstrate a common sense approach to a problem which is causing difficulties for a number of families where one partner has been made redundant or there has been a reduction in salary.

The Expert Group also recommended the removal of the rule that the owner of a house which is for sale cannot avail of MIS. In the current economic climate where houses remain on the market for a

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See page 14 of the Programme for Government 2011 available at http://www.taoiseach.gov.ie/eng/Publications/Publications_2011/Programme_for_Government_2011.pdf 5 Interim report of the Expert Group on Mortgage Arrears and Personal Debt available at http://www.finance.gov.ie/documents/publications/reports/2010/mortgagearrearsjul.pdf 6 Final report of the Expert Group on Mortgage Arrears and Personal Debt available at http://www.finance.gov.ie/documents/publications/reports/2010/mortgagearrrepfin.pdf.

FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) prolonged period of time and often are not sold, a person should be able to access MIS where he or she otherwise meets the qualifying criteria.

The recommendations of the Expert Group on Mortgage Arrears and Personal Debt should be implemented immediately and the appropriate provisions put in place to ensure that MIS is accessible to people clearly in need of the payment to protect their primary residence and are set out here in full: “The Department of Social Protection should introduce an alternative and more equitable approach to achieving the MIS objectives and maintaining its sustainability in light of changes in the economic climate and the mortgage market. This should cover issues such as: No legal action should be taken by the lender while MIS is being paid and the borrower is cooperating with the lender.

The ban on paying MIS to a couple where one person is in full-time employment should be removed and a revised means test developed.

The current rule which excludes the payment of MIS when a house is for sale should be suspended.

The State should not provide MIS where the lender is charging interest above the market rate.

MIS should only be payable where no capital is being repaid.

MIS should be paid directly into the mortgage account of the borrower.

Lenders should agree forbearance options with borrowers for a period of six months and ensure the SFS is completed before the State shares the responsibility by providing MIS support to the borrower.

An overall time limit for MIS should be considered to ensure that the scheme does not act as a disincentive to seeking or retaining work.

The scheme should remain as a short term income support.

Where a borrower’s situation is or becomes unsustainable, they should be facilitated, if necessary, in applying for social housing appropriate to their needs.”7 Both coalition partners committed to using Mortgage Interest Supplement to “adequately cover families in need” (Fine Gael election manifesto 20118) and “support families who cannot make their mortgage repayments” (Labour election manifesto 20119). In particular, Labour stated in its election manifesto that the 30 hour rule for MIS would be amended.

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See p.8 of the final report See p. 18 of Fine Gael manifesto available at http://www.finegael2011.com/pdf/Fine%20Gael%20Manifesto%20low-res.pdf 8

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See p.69 of Labour manifesto available at http://www.labour.ie/download/pdf/labour_election_manifesto_2011.pdf FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) Recommendation: The recommendations of the Expert Group on Mortgage Arrears and Personal Debt should be implemented as a matter of urgency.

5. Habitual Residence Condition FLAC would also like to take this opportunity to call for a review of s.246 of the Principal Act of 2005 relating to the Habitual Residence Condition, introduced as an extra qualifying criterion for social welfare payments in May 2004.

As outlined in FLAC’s Guide to the Habitual Residence Condition10, European Union case-law has made it clear that a State cannot specify a fixed period of time to determine habitual residence. Instead the social welfare legislation was amended in 2007 to include five factors from a European Court of Justice decision called Swaddling11 which should now be used to assess a person’s habitual residence.

Furthermore Ireland is a signatory to the European Code of Social Security. In relation to the two-year habitual residence requirement, in its 32nd Report (covering the period 2004-5) to the Council of Europe on Ireland’s compliance with the European Code of Social Security, the Government stated at page 9: “Ireland is aware that the relevant jurisprudence of the European Court of Justice precludes reliance on any specific duration of residence (e.g. two years) for the purposes of establishing habitual residence and has ensured that no such specific period is the determining factor in any HRC decision”.

While this provision is now obsolete the continuing reference to a two-year rule in the Principal Act causes confusion for both applicants and decision-makers as it is not applicable to any person making an application for a payment and should therefore be removed.

The negative impact of the HRC on a number of particularly vulnerable groups has led FLAC to believe that the Condition should be reviewed as a matter of urgency. Travellers, victims of domestic violence, EU migrant workers made redundant, asylum seekers and returning Irish emigrants have all been denied payments which are subject to the HRC. The range of individuals adversely affected by the Condition indicates how far-reaching the implications of this policy are, therefore it is essential that it is applied fairly.

Recommendations: Remove the reference to a two-year rule in the primary legislation.

In instances where the Condition causes hardship or inequity then the application of it to certain groups should be reconsidered as many individuals are already at risk of poverty and social exclusion by the very nature of their social status. In particular, s.246(7) of the Principal Act of 2005 as amended by s.15 of the Social Welfare and Pensions (No. 2) Act 2009 should be repealed.

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Available to download at http://www.flac.ie/download/pdf/habitual_residence_condition_guide_final.pdf Case C-90/97, Robin Swaddling v Adjudication Officer FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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FLAC: Submission on Social Welfare and Pensions Bill 2011 (June 2011) 6. Conclusion The economic crisis has led to an increase in the number of people reliant on different social welfare payments so it is paramount that they are afforded fair and efficient decision-making and are protected from provisions which will cause undue hardship and discrimination.

FLAC recommends: In light of its capacity to be applied in a discriminatory fashion, and given that sufficient powers to collect information already exist, FLAC respectfully submits that s.12(2) be deleted.

Section 18 should be deleted as it has the potential to impose a punishment tantamount to a fine on the basis of a decision by a Deciding Officer rather than by due process and it requires claimants to repay sums greater than the loss to the exchequer regardless of the circumstances of the case.

The recommendations of the Expert Group on Mortgage Arrears and Personal Debt, in particular those relating to Mortgage Interest Supplement, should be implemented as a matter of urgency.

The reference to a two-year rule to determine habitual residence should be removed from primary legislation as it no longer applies.

A review of the HRC and its negative impact on vulnerable groups should be carried out. In particular s.246(7) of the Social Welfare Social Welfare and Pensions (No. 2) Act 2009, which excludes anyone in the asylum process or seeking leave to remain from being able to satisfy the Habitual Residence Condition in any circumstances, should be repealed.

FLAC, 13 Lower Dorset St, Dublin 1| T: 01-8745690 | W: www.flac.ie | E: info@flac.ie

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