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Social Security, Housing Benefit and Council Tax Benefit (Miscellaneous Amendments) Regulations 2007

My Lords, I welcome the opportunity of this debate and the chance to explain, from the Government’s perspective, the need to remove the habitual residence test from the scope of the advance claims regulations. As the noble Lord, Lord Kirkwood, said, this is an important debate. I agree that it is right that we should be subject to parliamentary challenge on these matters. I accept that the change in the regulations is made in a way that is contrary to the advice of the Social Security Advisory Committee and the Court of Appeal decision. I should perhaps stress up-front that the regulations do not change the rules for eligibility at all; nor do they change the effective date from which a claim can properly operate. They concern a denial of administrative easement in circumstances where we would argue that that opportunity creates more administrative problems than it solves. Therefore, they do not fundamentally change the eligibility rules or the date from which a claim can operate. The regulations before noble Lords affect the treatment of people from abroad when they claim an income-related benefit such as income support or state pension credit. They particularly concern the requirement that such claimants must be habitually resident in this country before they can become eligible for the benefits. As the noble Lord, Lord Kirkwood, outlined, the key factor in deciding whether a person is habitually resident is whether he has demonstrated that he has a settled intention to reside and whether he has been resident for an appreciable period of time. What amounts to a settled intention and an appreciable period of time depends on the circumstances of each case. The regulations are needed to restore the manner in which this test operated before a Court of Appeal judgment last year, which ruled that these cases could benefit from a separate provision concerning advance claims. The provision in question was introduced to allow decision-makers to decide benefit entitlement in advance of a predictable future event. The advance claims provisions are a very useful administrative tool. They operate to the benefit of both customers and staff and avoid claims being disallowed and the claimant having to submit another claim when entitlement arises. The noble Lord, Lord Kirkwood, suggested that advance claims are uncommon. In fact, they go back to at least 1987, although an extension to the provisions was made in 1992. They are more common than the noble Lord may think: nearly every claim for state retirement pension, for example, is made in advance. The noble Lord asked about expenditure. We agree that small amounts of expenditure are involved in this matter, but they relate to administrative costs rather than entitlement and the quantum of benefit. These provisions are among several which provide that particular benefits may be claimed in advance of the beginning of entitlement. A good example is when a person claims state pension four months before reaching pension age. It would be absurd to require him to reclaim on the date that he reached pension age when the date was already fixed and certain at the time of the first claim. Another example is where an expectant mother is allowed to claim maternity allowance 14 weeks before the expected week of confinement. Both those are predictable events. By contrast, deciding whether a person is habitually resident requires the decision-maker to weigh a variety of less certain factors in determining the degree to which the claimant has put down roots. The decision-maker would frequently have to speculate to an unreasonable degree as to whether the claimant’s intention to remain had been sustained long enough to constitute habitual residence. Again, I should clarify a point made by the noble Lord, Lord Kirkwood, about the specialist units involved in this matter. A specialist unit looks at the right-to-reside requirement, which is one of the prerequisites of entitlement, but the second stage of the test—the habitual residence test—is dealt with by decision-makers generally. Moreover, the claimant’s circumstances could change between the date of the decision and the date by which the test had been predicted to be met. People change their minds: they may have grown homesick and want to return to their country of origin, or their family circumstances may have changed, requiring them to cut short their stay here. To prevent abuse, we would have to review their circumstances again just before benefit was paid. This review would not always be a simple matter of checking a few straightforward facts; in many instances, it would entail a thorough check that the claimant really had maintained a settled intention to live in this country. In practice, that would cover the same ground as the decision-making arrangements we want, but with added complexity because of the doubtful speculation added through the use of the advance claim provisions. I grant that the habitual residence test is complex. It is complex because habitual residence is not a simple concept. It would be wrong to predict the future existence of this complex state of affairs with the aid of a regulatory easement designed to anticipate something as predictable as the attainment of pension age or the birth of a child. The Government’s intention is quite clear: a person from abroad who claims an income-related benefit should demonstrate that they have a settled intention to live in the UK and that that settled intention has been sustained over an appreciable period of time. Only then can the person be said to be habitually resident. While a person can demonstrate an intention to settle in the UK, they have not at that point made any ties or lasting connections with the UK and are not habitually resident here. Use of the advance claims procedures to decide a future date when a person could be habitually resident is contrary to that policy intention. As noble Lords are aware, the Government consulted on these regulations and have given very careful consideration to the Social Security Advisory Committee’s recommendation not to proceed with the regulations. However, for the reasons I have set out, we believe that, to continue to protect the integrity of the benefit system, it is reasonable to expect a person who fails the test for whatever reason to make a fresh claim to benefit. We believe that the advance claim provisions relating to income-related benefits should be applied on the basis of predictable events. The amendment restored that intention by removing the habitual residence test from the scope of the advance claims provisions. However, the Government are concerned that some claimants who initially fail the test are not informed to make a fresh claim to benefit. We intend to carry out a review of customer information and communications to ensure that claimants are made aware of the implications of failing the test. It is against that background and the Court of Appeal decision that these regulations have been laid before Parliament. I shall try to pick up some of the points raised by noble Lords. The noble Lord, Lord Kirkwood, raised the issue of the mere passage of time and whether that is a change of circumstances. The Bhakta case says that it is theoretically possible that a future date of entitlement is predictable. However, given the complexity of the habitual residence test, we think it unlikely that that would apply in many cases. The noble Lord also asked why a decision-maker would speculate on such decisions and said that there is no difference from other advance claims. Habitual residence decisions are subjective in nature and require decision-makers to make a judgment about a person’s circumstances since arriving in the UK. The Government believe that decision-makers would have to move into the realm of unacceptable speculation to establish a future date when someone would be habitually resident, particularly when they might have the opportunity of seeing what had actually happened to someone who had been resident for a period of time, which is another leg of the test. The noble Lord, Lord Kirkwood, said that one result of that is that people will encourage claimants to make weekly claims until one is accepted. It would be incredibly irresponsible for people to suggest they should do that. I do not honestly believe that people advising claimants would act in that way. The noble Lord also said that there is no difference between these decisions and, say, a decision on DLA. Of course, DLA cases require the disability criteria to be satisfied for three months before entitlement can begin. So if it is satisfied for one month, for example, the decision-maker can say, ““I’ll treat the claim as beginning in two months’ time””. We are dealing here with objective facts. The noble Lords, Lord Kirkwood and Lord Taylor, raised the issue of fraud. Although there are built-in protections, there are other factors that the Government believe will, without amendment of the legislation, lead to more instances of fraud and overpayment. In practice, a person who is receiving benefit at regular intervals is often more aware of his or her responsibility to report a relevant change of circumstances than a person not yet receiving any benefit. Where a person arrives in the UK, claims benefit and then leaves within a short period, it is not uncommon for there to be scope for overpayments to accrue, and they do not report the fact that they have left the UK. There is a difference between people in receipt of benefit who recognise that a change of circumstances has to be reported and where there is a prospective receipt of benefit—a decision made in advance of when that benefit will become payable. Changes of circumstances in the interim are less likely to be routinely reported by the would-be claimant. The noble Lord, Lord Kirkwood, pressed me on the role of Ministers in all this. The person who has primary policy responsibility in the area is my honourable friend James Plaskitt. This was a government decision taken in the light of sound advice, giving due account to the facts and opinions put before us. I hope that I have dealt with each point that noble Lords raised. This has been an important opportunity to debate the matter. I reject any assertion that anything to do with this is meant to be discriminatory to people coming from abroad, because the provisions apply equally to UK nationals who return to the UK. I stress again that they affect neither entitlement to benefit one iota, nor the effective date from which that entitlement can run. They are to do with administrative procedures, and we are changing them because of the difficulties of requiring an advance look at a test on which one has to draw conclusions and make predictions when looking at one’s current circumstances. The habitual residence test depends on a range of things—an individual’s engagement with the labour market, their circumstances, their family circumstances in the UK, their connections elsewhere, the basis on which they came to the UK, their accommodation, what has happened to the accommodation that they left abroad and so on. To try to predict in advance the point at which one could say that there was a settled intention to remain in the UK is difficult and unnecessary. I conclude by reminding the House of the purpose of the regulations. They will preserve the safe operation of the habitual residence test by excluding it from the advance claim provisions. I hope that that satisfies noble Lords, but I am happy to try to answer further questions.