Question proposed, That the clause stand part of the Bill.

Clause 90 inserts proposed new section 80B into the Social Security Administration Act 1992, adding the direct deduction order power to recover public money owed to the DWP directly from a debtor’s bank account. Direct deduction orders are vital to recovering funds owed by debtors who have the means to repay a debt but refuse to do so. This is essential to bolster the DWP’s ability to recover more of the public money owed by those who persistently evade repayment, to minimise losses to the taxpayer and to redirect the funds recovered to essential public services.

The powers also make DWP debt recovery fairer. At present, the DWP can recover debt directly from people on benefits by making deductions from benefits; it can also recover debt directly from those on PAYE through a direct earning attachment, but for those who are neither on benefits nor on PAYE, the DWP has limited options for recovery if they refuse to pay. That cannot be fair. For those not on benefits or PAYE, where all attempts to agree an affordable and sustainable repayment plan have failed, the option available to the DWP is to seek a third-party debt order via the court. Such action is restricted to lump-sum recoveries and can lead to debtors facing challenges securing credit due to the court judgment. Introducing the new power will allow the DWP to return taxpayers’ money to the public purse more effectively through affordable and regular deductions, without using court time.

There are important safeguards. First, the powers are to be used only as the last resort; multiple attempts at contact must be made, and those must be of different types—for example by letter and telephone. Secondly, all direct deduction orders will be subject to an affordability assessment based on the three months’ bank statements obtained. Thirdly, before any recoveries are made, individuals must be notified of the proposed action; they will have the right to present information to the DWP about their circumstances and the proposed terms of the order, in response to which the DWP may vary or revoke the order. Fourthly, if an order is still upheld after a review or consideration of information presented, the individual has a right of appeal to the first-tier tribunal. These are important safeguards to ensure deductions do not cause undue hardship. In addition, the Department will always signpost to debt management advice. In the oral evidence session, we heard from the Money and Pensions Service about how well that partnership is operating.

Direct deduction orders are essential to increasing the amount of debt that the DWP can recover. They are balanced measures, with robust safeguards to protect those who are vulnerable or experiencing financial hardship. Having outlined the main provisions in clause 90, I commend it to the Committee.

Clause 90 makes provision for recovery of social security debts directly from the liable person’s bank account. That power is broadly similar to powers contained in the Child Support Act 1991 and the Finance (No. 2) Act 2015, which enable deductions to be made directly from the liable person’s bank account without a court order. We support the inclusion of the power in the Bill, but further to our debates on part 1, I should be interested to know whether any other measures beyond bank account recovery and disqualification from driving were considered. Reference was made earlier to the ability to seize assets, particularly in relation to part 1 and the Public Sector Fraud Authority, but as that is not on the face of the Bill I would be grateful for further details about if and where that is allowed for within part 2.

It is a pleasure to serve under your chairmanship again, Sir Jeremy. I am again raising concerns about a serious power to make direct deductions from people’s bank accounts.

Life does not always come in neat paragraphs; it is messy. I have had a number of letters from constituents in Horsham setting out the kind of errors that can happen. A lady called Marianne, who is a universal credit recipient, received a small inheritance, which she tried to report by phone and email, but that still resulted in her wrongly losing her UC for a period. Another constituent, Hannah, said:

“I have zero hours contract and work between 9-11 hours a week at just over minimum wage. At times I have had a back dated pay rise which pushed me over the allowance limit (I wasn’t informed in advance this was happening). I’m also at the mercy of someone else submitting my hours, so if they aren’t submitted on time they roll over to the next pay period causing me to exceed the allowance limit.”

At no time did she ever come anywhere near the allowance limit in real earnings; nevertheless, she was caught up in the rules.

Does the Minister feel that we have sufficient safeguards to avoid that kind of inadvertent administrative error? Mistakes have happened in the past and will continue to happen, but this is a very strong power that could cause real distress.

We have not considered the seizure of assets under this Bill; nor are we are looking at forcing the sale of a home. We want to ensure that the powers we take are proportionate. We are not seeking to cause further hardship, and clearly the loss of their home would likely move a person into that category. Those decisions would ultimately remain with the court were we to take particularly serious case through the courts.

The hon. Member for Horsham raised some examples from his casework of people in receipt of universal credit who found they were inadvertently in receipt of overpayments. If they are still in receipt of universal credit—I think they are, going by what the hon. Gentleman said—they would be out of scope for the debt recovery powers that we are considering, so this provision would not apply in those specific examples.

If someone tells us of a change of circumstances, we always seek to action that as swiftly as possible. In cases such as the second example that the hon. Gentleman cited, where the mistake was the employer’s, there is not a tremendous amount that the Department can do. I have sympathy with his constituent, but it does not sound like that case would fall under the umbrella of departmental error. I assure him, however, that as both his constituents were still in receipt of benefits, they would not face a deduction from their bank accounts. That does not mean that an overpayment would not be recovered through other means, but recovery would be out of scope of this power. The treatment of overpayments from universal credit as recoverable was determined by Parliament a long time ago—I believe in 2012.

Question put and agreed to.

Clause 90 accordingly ordered to stand part of the Bill..