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Social Security (Claims and Payments) Amendment (No. 2) Regulations 2010

My Lords, I start by thanking my noble friend Lord Freud for turning up to respond to this Motion. The instrument that I am praying against is not of his genesis and if I get hot under the collar I hope he will accept that I am not aiming at him in any way. The instrument first appeared before your Lordships’ Merits of Statutory Instruments Committee with a very inadequate Explanatory Memorandum. When the committee challenged them we were given more data that not only amplified what had been there before but indeed said different things. The first thing I want to say is that I very much hope that my noble friend will see the importance of making sure that Explanatory Memoranda accurately and fully reflect the intentions and details of the instruments concerned. Secondly, although this is not in my Motion, I wanted to take the opportunity to question my noble friend on whether he really thinks that the proposals in this instrument are an appropriate use of the department’s time. It seems odd to be conducting research into what is effectively how to shift money from one government pocket into another. Here we are concerned with people on benefits. Even with the generosity of the past 13 years, benefits are still pretty marginal. If we consider the list of deductions that are generally allowed, such as mortgage payments, rent arrears, fuel and water charges, child support arrears, and so on, they are pretty important and essential to life. Yes, we allow fines to be deducted too, but that is when a court pronounces that there is a serious punishment involved. I do not think that debts to the Inland Revenue rank alongside that. Given that social security payments are basically set so that a person can meet life’s essentials, how is someone supposed to find 15 per cent of their income spare to repay the Inland Revenue? They can end up only in a worse position by having to rely on the state to a greater extent. Hence my feeling that this is just shifting money from one pocket to another. There are other problems with this. We are not looking at large debts, but what will be the cost of recovery of these debts? Are we not looking at a system that actually costs more in its administrative functions than the money that it will recover? Is that an appropriate use of time when it comes to poor people? What is a tax debt anyway? If one is moving in and out of employment, a tax debt varies with the month. You can start off appearing to owe the Inland Revenue a good deal of money because you have not paid. You are then unemployed for six months and your allowances accumulate and you end the tax year with the Inland Revenue owing you money. It is not at all clear whether we are talking about debts that are in some way established or whether they just appear to be debts at a particular moment but may well not be debts six months later. It is an odd thing to be spending time on. This is persecuting poor people when the department ought to be trying to extract money in ways that are more efficient and have less of an impact on the very poorest. My reason for bringing forward this Motion is the statistical inadequacy of what is proposed even with the additional explanation that I have been provided with. I know, or at least I believe I know, that the Department for Work and Pensions has a number of good statisticians—I am assured by no less than Andrew Dilnot that this is the case—but they do not appear to have been involved in the design of this research. The first thing we get is that about 5,000 tax credit customers and 5,000 self-assessment customers will be approached to volunteer to take part in the trial. Those 10,000 will then be divided into those who agree and those who do not agree. Those two groups are fundamentally different. The group which agrees will have one set of motivations and the group which does not agree will have another set. You immediately get into deep statistical water in trying to draw any conclusions when comparing two groups with different motivations. There is an attempt in the design of this experiment to compensate for that by having a third group—a control group. Presumably one could try to work out the behaviour of the first group—those who volunteer for the trial—by subtracting the behaviour of the second group from the control group and supposedly having a control for the first group. Given the wide diversity of circumstances, we are looking at a sample that to my mind is far too small to allow that kind of second-hand approach to generating reliable results. It is a daft way of going about it when we have a perfectly good and statistically valid way of doing it, which is to double the number who agree to take part in the trial and then put only a randomised half of them through it. You would then have a matched group which will give some pretty statistically valid results. Even then the experimental design will tell you how well it works only for those who are motivated to take part in the trial. It tells you nothing about the behaviour and circumstances of those who are not motivated to take part in the trial. We are not dealing with mere mechanics; we are dealing with the effects of different methods of reclaiming money on people’s behaviour, the trouble they get into, compliance, and so forth. We are dealing with human characteristics and you cannot read those across from one group to another when you have already separated them on the basis of a fundamental characteristic such as motivation. If you wanted to find out something about the second group—those who refuse, who I suspect will be the large majority—you have to conduct a pilot that is not sample-based but area-based. The previous Government did that on several occasions. I can remember the pilots coming through the Merits Committee. A particular office would switch to a new system and would compare its results with a neighbouring, similarly placed office’s results. If you have enough other data on your claimants, you can make that reasonably statistically reliable. You could even run a randomised control through an office. But what is proposed here would not yield any useful information on the behaviour of the second group—those who refused to take part in the trial—were they to be moved to be compelled to under the new proposed system. There is no defence in the documents that I have seen of sample size, no discussion of anticipated errors, no discussion of what are the real targets, what is expected to be achieved and what are the expected problems. There is no demonstration of the validity of the methods being set out. We have here a simple case of garbage in, garbage out. A trial on those lines will not yield any useful results. If we proceed on the basis of the results that it yields, we will have no clue whether the full, scaled-up system will work. I am comforted that the Social Security Advisory Committee, at paragraph 4.16 of its report, shares my view. I welcome trials—they are an excellent way to make progress in the area of benefits and social security, to find out what works before one commits oneself to a whole system—but I ask the Minister to ensure that the people who really understand what are the same sort of statistical operation as drug trials have control over what goes on, make sure that what is designed is fit for purpose and ensure that the data that the trials produce can be relied on for policy formation. I beg to move.