Official Report: Minutes of Evidence

The Chairperson (Mr Maskey): Gerry, are you and your colleagues happy enough to pick up on some of what you have just heard?

Mr Gerry McCann (Department for Social Development): Yes, we will do our best. I think that I made a note of most of the issues.

We will start with the option for the benefit to be spread over a three-year period as opposed to one year. I was having some difficulty working out how someone could end up better off at the end of that. The first issue is tax. At the moment, the benefit will not be taxed. We understand that that is on the basis that it is payable for only one year and, therefore, is not looked upon as a longer-term benefit. Our understanding is that, if we were to decide that we wanted the benefit to run on for a three-year period, it would have to be taxed. If all we are saying is that recipients will get the same amount over three years but pay tax on that, it is hard to see how they will end up better off.

The other issue is that, if we were to move to a three-year period, it would mean paying everybody a smaller rate per month. Widows who are poor and entitled to universal credit would end up getting less money simply because, at the moment, this payment is not to be taken into account. Therefore, the full amount of £150 a month or £400 a month will not be taken into account. If we were to cut that and spread it over three years, that smaller amount would still not be taken into account, but people would get less money. So, the poorer widows would lose under the proposal.

Mr Wilson: No, Gerry, they would not. They are on low income, so it probably would not push them into the tax bracket. So, they would not be taxed on it, but they would lose out on benefit.

Mr G McCann: They would lose out on the amount —

Mr Wilson: Better-off ones would lose out because of the tax. Poorer ones would lose out on the benefit. Is that what you are saying?

Mr G McCann: Yes. I am just saying that I am not sure that I can fully see how we can do this and, at the end of it, people will end up with more money in their pocket.

Mr Allister: Who says that it has to be taxed?

Mr G McCann: We heard from HMRC that it opted not to tax it simply because it would be payable for only one year.

Mr Allister: Is there something magical about one year?

Mr G McCann: If it is payable for one year, it is deemed not to be a long-term benefit. There is a general rule that most long-term benefits end up being taxable.

Mr Allister: If the Government were going to tax it, they could afford to make the benefit more generous. It would still be cost-neutral because they would get some of it back.

Mr G McCann: I am just pointing out what we are doing in our Bill. All that has been settled in England, Scotland and Wales, and they know that the benefit will be payable for only one year and will not be taxable. My point is that, if we were to opt to make it into a benefit over three years, although I cannot speak for HMRC, I think that there is every chance that it would say that we had made it into a long-term benefit.

Mr Wilson: Administratively, would that become a difficulty insofar as not everybody might be taxed on it, given that some people are on low income? So you would almost need to have a variable benefit to compensate the people who will have tax levied on the payment.

Ms Anne McCleary (Department for Social Development): There would be IT issues as well.

Mr G McCann: There is a third issue in what was proposed, if I picked it up correctly. Maybe I did not pick it up correctly, because I was just listening in. One option put forward was to pay a smaller lump sum to a person who does not have a child. Then again, the point was made that, if you are paying someone £5,000, that could well be eaten up by the cost of a funeral. I am not sure that the cost of a funeral differs for somebody who has a child and somebody who does not. The same upfront costs have to be met. I hope that I am not being unfair, but that is what I picked up from what was being said. I am just saying that I cannot fully sort out in my mind how that ends up being a better deal.

The Chairperson (Mr Maskey): Gerry, I know that you are going to work through these issues, but I want to go back to whether it is taxable. It is your understanding that it is a policy. Most people think that you can change a policy. I am not saying that you can — you cannot. However, the policy can be changed. If the Government considered it as a bereavement payment as opposed to a benefit — the term "survivor's benefit" was used earlier — they could decide that three years or two years was reasonable for a bereavement payment as opposed to it being a long-term benefit. It is a policy issue that could be changed tomorrow morning.

Mr G McCann: I take your point entirely, but our problem is that we do not have any authority or control over HMRC.

The Chairperson (Mr Maskey): I appreciate that.

Ms McCleary: It is a Westminster issue.

Mr G McCann: They have already made up their mind that this is how it works and that it should be only one year and, therefore, it will not be taxable. If we opted to do something different, there is a big risk that these people might end up getting less money. That is my only point on that.

The Chairperson (Mr Maskey): I appreciate that.

Mr G McCann: If you are happy enough with that, I will move on.

The Chairperson (Mr Maskey): Yes.

Mr G McCann: I will move on to the issue that the benefit will be paid for one year only, which we touched on in reference to the point about tax. The benefit is meant to help with the costs associated with the death of a spouse or civil partner. It is not meant to help with the everyday living costs as such, and that is why the benefit is to be paid for only one year. One of the big things in its favour is that, if you are a poor person, you will be able to claim universal credit (UC), or, if you are in work and not earning very much, you will be able to claim UC, and this payment will not be taken into account. That is a big change from what is there at the moment, which is that, if you get any of these benefits, they will be taken into account for any of the income-related benefits.

Mr Wilson: Would that be likely to change, the tax rule, if it were spread over a longer period?

Mr G McCann: The whole policy rationale for it not being taken into account for UC was that it would be paid for only a short period and was meant to cover the costs associated with having been bereaved as opposed to helping with everyday living costs. If you spread it over the three years, it looks much more like a benefit to give people help for a long period, and it becomes a long-term benefit. Under the old policy rationale for UC, it makes sense that it would have to be taken into account.

Mr Wilson: We do not know that for sure.

Mr G McCann: No. All of these issues would have to be looked at. At the moment, it is what is in the Bill. The only thing in the Bill is the provision for new payments. The UC issues are all outside the Bill. They fall under the other Bill, which deals with welfare reform. I am here to help you to understand the situation.

I think that we all accept that each person is different. The period of grief is longer for some than for others. I could not say that a period of grief lasts for only one year, five years or even 10 years. Therefore, the benefit is in no way meant to link to a period of grief. That is why it comes back to one year. It is purely to help people with the costs associated. It is not meant to help with the period of grief, as that can differ from person to person. There is no magic rule.

During the earlier briefing, the question of why EU law might be an issue was raised. The benefit is payable for only one year, so, in EU law, it will be classed as a death grant.

That means that it is not exportable, so only people living in the UK would be able to claim it. If we made it available over a longer period, it would probably cease to be deemed a death grant and would be classified as a survivor benefit. If it is a survivor benefit, it would be exportable and could bring people into rights for other benefits. For example, if they had a child, they could claim child benefit even though they were not inside the country. Somebody in, say, eastern Europe could claim child benefit if they had been able to establish UK entitlement to it. That explains the point about the EU and how that could interlink.

I am not in any way trying to suggest that having a death is not very difficult, but we have in the system other family units that break down quickly. You can have a couple, and one spouse walks out the door or ends up in jail. That can happen overnight, and, all of a sudden, people have to cope with their whole family unit breaking down. As such, some of the things we are doing here for people who are bereaved are far more generous than what we do for people who find themselves on their own through no choice of their own. Again, that is not meant in any way to take away from the grief or hurt that people feel.

Mr Wilson: There is a big issue with the unfairness of this. Someone who has been bereaved with no children could benefit more than someone who has been bereaved and who has children. If that is not right, maybe you could correct me.

If there was a family breakdown because of divorce, imprisonment or whatever, the benefits system would be more generous to people who have children than to those who do not. Yet the evidence we have received this morning indicates that the 25% with no children will do better under this system.

Mr G McCann: I think the point that was being made was about what is in the system at the moment. For example, if you have a child, the benefit could end up being payable for up to 18 or 19 years. I think that was the comparison.

Under this new benefit, somebody who does not have a child will get a lump sum of about £2,500, then £150 each month. Someone who has a child will get up to £5,000 and up to £400 per month. Therefore, people who have children shall be paid more under the system. I think that all they were saying was that, under the existing system, that could go on for 18 or 19 years. I think that was the point they were aiming to get across.

We talk almost as though there is a line to be drawn between people who have children and those who do not. I am not sure that is quite the case. Having a child is a child for whom you are able to get child benefit. You could have a child aged up to 16 who has opted out of school and, therefore, for whom child benefit is not payable. We could be speaking about couples as though they do not have children, whereas they might have a child who is 16 or 17 years old.

It is not as simple as there being a line and that all people who do not have children will end up better off under this, because they will not.

Are you happy enough?

The Chairperson (Mr Maskey): Yes.

Mr G McCann: I think that that has covered the bit about the one year.

The other issue is that this shall be payable only to a spouse or a civil partner, and the question is whether we should extend it to such partners who are not married. That brings us back to the whole basis of the National Insurance system. It is based on the fact that a person has been a member of the system and has paid contributions. Under the National Insurance system, as, indeed, is the case under the tax system, there always has to be a legal arrangement in place, either a marriage or a civil partnership, for somebody to be able to inherit rights as such. That is in line with the long-standing rules.

In terms of the actual practicalities —

Mr F McCann: On that, it seems totally unfair that, if two people have cohabited for 10, 15 or 20 years, they are treated differently from married people or people in civil partnerships. I know that you are not the people who drew up the policy, but it seems so unfair that two people who have paid their taxes and paid into the system for so many years are treated so differently at the end of one of their lives.

Mr G McCann: I will explain the rationale for it. You might not agree with it but I will explain it. With a marriage or a civil partnership, you at least have a bit of paper, and a legal contract exists that, from our point of view, makes it all very simple to work out whether or not a person is entitled to benefit. Our issue with an unmarried partner is that you could have a situation where a spouse and an unmarried partner both exist at the same time. How, then, would we decide which of the two should get the benefit? We looked at whether having children could be a way to work it out, but there could be children from various partners. That makes it all very difficult for us to work out who is entitled to the benefit.

Mr F McCann: That is only one element of it. There are tens of thousands of people out there in a first long-term relationship who are also being excluded from this.

Mr G McCann: I accept your point, but the issue is about how we would actually do this. Given the large numbers of people involved, verifying those cases would be very challenging. That also brings us into the issue of costs, which is always the elephant in the room.

Mr Allister: A couple could still be married but have not seen each other, not spoken, not been living together for 10 years and are each living with someone else. Is the spouse the beneficiary?

Mr G McCann: Yes, but that applies to a whole range of law, not just benefit law. If you are still married and have not made a will that excludes your ex-partner, they will still be entitled under law. All I am saying is that this area of law is not very different from the way the law operates in general. It is not that we are not doing something different from the way the law currently operates.

The other point is that there are support mechanisms out there for couples who are not married. If the partner who is left behind does not have money or is not working long enough hours, they can claim through the benefits systems that we have running at the moment, such as jobseeker's allowance (JSA). Indeed, as we move into the new world, UC shall be available. It is not that those people will be left without money; it is just that they will not get that one-off payment.

Mrs D Kelly: If the rationale behind the lump sum is to help with funeral expenses, why would it not be paid to the person who produces the invoice for the funeral expenses?

Mr G McCann: No. Again, it is meant to assist with the extra costs that are linked to the death. It is not necessarily to pay for a funeral.

I say that only because the point was made this morning that that money could be eaten up by funeral costs. Funeral costs in Northern Ireland are the second lowest in the UK, so the fact that our amounts are linked to those in Britain means that people here will end up with more money than somebody living in England, for example, who has to pay for a funeral. Although funerals are dear and we all expect them to be dear, people in Northern Ireland will have more money left over after they pay those costs. In addition, though, help is —

Mr F McCann: Sorry, Gerry, but that seems to be a clear contradiction of the evidence that we had this morning, which said that funerals are more expensive here.

Mrs D Kelly: They said it was 6% above inflation.

Mr G McCann: I think I tracked down the figure from the survey that they used, and I found that Northern Ireland was the second lowest in the UK. We also did a wee bit of our own work, just phoning around, to see what average funeral costs were.

Ms Rosemary Hughes (Department for Social Development): We did a bit of a ring round just yesterday afternoon, although I will mention no names, obviously.

Mr G McCann: In Belfast, we were quoted £2,300 for the least expensive funeral.

Mrs D Kelly: But you did not cover the costs of a grave or crematorium.

Mr G McCann: If I could come on to that. If you are not as well off, for example, if you are on universal credit, you are able to get help with a funeral payment to cover the full cost of a grave. Up to £700 could also be paid to help with the cost of a coffin and a funeral director. It is not just that this benefit alone will help with funeral costs for a poor person; help will be available via UC, which will cover the full grave costs.

The Chairperson (Mr Maskey): A married couple could be separated long-term for 10 years and one of the partners has been with another long-term partner for nine or 10 years. If that partner dies, are you saying that it is the spouse who gets the money, even though he or she had nothing to do with the current family situation?

Mr G McCann: Yes.

The Chairperson (Mr Maskey): How can that be?

Mr G McCann: It is because this benefit is payable to a spouse. If that couple do not opt to end their marriage formally, under law, they are still married.

The Chairperson (Mr Maskey): Is that the case even though there might be a serious estrangement and that person has no responsibility for the family?

Mr G McCann: It is the fact that they opted not to put an end to that marriage, so that marriage still exists in law. If we wanted to do anything on that, we would have to go out in each case and ask the person whether they were still together when the partner died or to prove to us that they were still together. That would be very difficult.

It is how the system operates. The fact that the couple are still, in law, married makes it a simple rule to enforce.

Mr Allister: But you did say that they can be written out in the will.

Mr G McCann: Not where rights to benefits are concerned. I was speaking about other elements of the law; for example, if you own property.

Mr Allister: That is what I wondered.

Mr G McCann: You cannot assign benefit rights under the law. I just meant other areas of the law where they would be entitled.

The Chairperson (Mr Maskey): OK, Gerry, thanks for that.

Mr G McCann: I think that covers most of the issues. Are you happy enough with that?

The Chairperson (Mr Maskey): Something might have been missed. I appreciate that you are just here and that you were taking only contemporaneous notes earlier. We will go back to the Hansard report and the earlier submissions, as well as the written submissions, and compare notes with what was said this morning.

Mr G McCann: The other main issue that was raised was conditionality and the fact that it would be for only six months. No conditionality is attached to the bereavement support payment. However, it would kick in if a person were to put in a claim for UC. The six-month period would run from the date that the person made the claim. For example, if after the death the person is still fairly well off and has assets, they might not claim UC, but they might, at some further point, have to claim it. It starts only from the date of the claim. There is no conditionality attached to the payment at all.

Another point was that it would be six months for this, whereas, for kinship care, it would be for one year. It was thought that those two did not marry. It could be that the person involved in kinship care has not had any kind of link to the child, or the person who is going to be a kinship carer may have never looked after a child before. Therefore, that is why the kinship payment is for a longer period. The person might not have had any real link to the child until that point, or they themselves might never have looked after a child until that point. Therefore, I do not think that they were looking at the same situation when they said that for kinship it is one year, whereas for the parental situation it is six months.

The other point is that, when they get caught by this, each person's circumstances will be looked at. It is not that one overall blanket rule applies. They will also take into account that you have a child. When the child reaches, I think, three, the person has to go for an interview, purely to think about work. It is only when the child reaches five that the person has to think about looking for work. Those are the two broad areas of conditionality. It is not really onerous, and they do not have to seek work until the child is five.

They were quite keen to treat people who are on benefits the same way as someone who is in work. It is very unlikely that an employer would be happy to give somebody any longer than six months off after a death, for example. Therefore, these two things were seen to link in. After six months, is it time to help people to think about going to work?

When the policy was being worked out, it was felt that there are other single parents out there who will not get the six months, again not through their own choice. I made the point that you could have a couple who were married and one just upped and walked out, or one party ended up going to jail or being arrested. Suddenly, in that instant, your whole world has been turned upside down. Those are the reasons why the conditionality rule has been set at six months, as opposed to being the same for kinship carers of one year.

Mr Wilson asked about the widowed parent's allowance (WPA). About 56% of our caseload is in the period up to year 4. After that, it drops. So, about 56% stay on to year 4.

Is there anything that I have not covered that you want me to address?

The Chairperson (Mr Maskey): I cannot think of anything offhand. I appreciate that you took notes contemporaneously and that you are doing your best to respond to all the points. For the benefit of everybody in the room, including Anne and Alison, who presented evidence earlier, we will obviously confer —

Mr G McCann: Sorry, may I just address a point made by Rosemary? Tell Us Once is a cross-governmental service in GB that we do not have in Northern Ireland. However, we operate a specialised service in our Department for people who are bereaved. When they get in touch through the number and tell us, we will make sure that all other benefits are covered etc.

We also advise and help people to put in a claim for things like a funeral payment. If you want more on that, we have a colleague here who could speak on it. He is saying that he is very keen to do that. The Committee may have an interest in the issue, or you might be happy enough with that brief.

The Chairperson (Mr Maskey): That is fair enough. We can get that. We do not need to get it this morning. Is that what you are suggesting?

Mr G McCann: He is sitting here if you want him.

The Chairperson (Mr Maskey): If he can do it in two or three minutes, that is no problem. Come on ahead.

Mr Mickey Kelly (Social Security Agency): We thought that today's hearing was a good opportunity, given that Tell Us Once was mentioned, to outline the service delivery and approach in Northern Ireland through the Social Security Agency. To be clear at the outset, Tell Us Once is a cross-cutting government service. DWP is involved in that. I am not sure whether it accepted or was appointed to take responsibility across government. DSD and the Social Security Agency do not have that singularly cross-cutting responsibility for Tell Us Once, simply because it involves the General Register Office, which is part of the Department of Finance and Personnel, and other issues.

The Minister launched our service in September 2012, and, interestingly, as part of their preparation for handling the calls, some of the staff who deliver it did awareness training that Cruse delivered. The date of the launch is etched on my mind because it happened on the Monday following the weekend of the Spence family tragedy. It was quite a poignant occasion. The service has dealt with close to 20,000 death notifications since it came into place. It provides a service for people who are — this was well acknowledged this morning — coping with a very difficult and stressful situation. If they have a number of benefits and payments, it allows them to give us the information once, and we share it with the various benefit sections. It also allows us to take them through a benefit eligibility check and to complete any bereavement benefit forms and any social fund funeral payment application forms, and there is an electronic process of signature, whereby no signature is required. We are quite proud of the service and of how we deliver it.

People say to me, "How is it doing, and how is it regarded?". I tell them that we have a leaflet that tells people about it. After the first year, we put at the back of the leaflet a couple of testimonials that we got from people, and those are very powerful evidence of how they perceive the service. I will take the opportunity to read one of them:

Another said:

So, while we may not have the Tell Us Once service that is envisaged elsewhere, I think that what we have delivered through the bereavement service by managing the social security situation for people is well regarded in the wider community.

While the late David McClarty was chair of the all-party group on funerals and bereavement, we did a presentation about the service, and we have been working with the National Association of Funeral Directors and those people to make them aware, as a point of contact, that the service is there. For many people, the first contact that they have following a bereavement is with the funeral director. That is the immediate point of contact. That should set the Tell Us Once service and what we deliver in Northern Ireland in context.

Mr F McCann: Mickey, where Cruse and organisations like that are concerned, I understand and accept that there are probably many testimonies about people who work in the Social Security Agency and many other agencies, but not everybody gets to speak to the same people all the time. Do you sit down with Cruse and other organisations and ask them what their response is to the difficulties that they face and how the system can be more flexible to deal with some of the issues that they raise?

Mr M Kelly: You are right, Fra. The bereavement service team is a small, discrete team of about six people. That has been quite consistent since we launched the service in 2012. I was having a conversation with Anne outside the room about how we could do some refresher training and different sorts of things going forward. It is a small, discrete team that captures the initial data and then farms it out.

The Chairperson (Mr Maskey): Mickey, thank you. Mickey Brady will be disappointed that he was not here to do some battle with you at least.

Mr G McCann: Can I ask Seamus to come in on the EU? Seamus is my expert on these matters, and I think that he wants to come in.

Mr Seamus Cassidy (Department for Social Development): The bereavement support payment, as a death grant, would be payable across borders. The difference that would occur should the period be extended is that the benefit might change nature under European law. The Commission could quite easily see it as a survivor's pension, and that would bring with it the family benefits rights. It would also make the UK liable for health-care costs, where the person is living abroad, for them and their family members. As a grant, it is simply paid within the EU, but as a benefit or a pension, other difficulties may be associated with it.

Mr Allister: It is nothing like a pension as we know pensions.

Mr Cassidy: It would be down to the Commission. Again, under EU law, something like the old incapacity benefit would be seen as a pension for workers. It is a broad category.

Mr Allister: Chairman, at some point, can we get the benefit of the Department's opinion on the letter about Ballylumford, which is in the pack? Maybe not now, but it is raising an issue about the Bill.

Mr G McCann: Do you want me to speak briefly about it?

Mr Allister: Do you know about it?

Mr G McCann: Yes, it is on my desk as well.

The Chairperson (Mr Maskey): We have already written to the Department seeking some information on it.

Mr G McCann: Yes, I was going to say that this is being looked at. What has been said is not absolutely clear, and we have got in touch with the person to try to clarify the point. We are still not absolutely clear on it, but we are working on it. We will be coming back to you, hopefully before Tuesday.

Mr Wilson: The person who wrote the letter came to see me because he is a constituent. I advised him to write the letter in the first place. I was not quite clear of the issue when he spoke to me because it seemed a bit technical. It might be worth bringing him along at some stage.

Mr G McCann: The person who wrote this letter is from England.

Mr Wilson: It was the local representative I spoke to.

Mr G McCann: I think that the letter has come from a guy who works for the unions in England. He referred to something that has been done in GB under an order, and we have asked him what that was. Neither we nor our colleagues in DWP are aware of what this is. We have not been able to nail down what this is.

Mr Wilson: I did not understand.

Mr G McCann: It is about the broad areas of the law. This was done under the Pensions Act 2012, and, as far as we and our colleagues in Britain are aware, our law and that in GB are exactly the same. So, we are still trying to drill down into it to get to exactly what he thinks is the issue. Our aim is to come back before Tuesday if we can.

The Chairperson (Mr Maskey): I think that the letter relates to CPI.

Mr G McCann: I am sure that you remember this, having gone through this in 2012. We put law in place at that time to cover this, and our law here and that in Britain are the same, as far as we are aware. As I said, we are still trying to drill down into it to get exactly what his point is.

The Chairperson (Mr Maskey): I appreciate that. We will come back to that later.

Thank you very much. As I said, if we have missed anything, we will come back specifically to ask those questions next week. Clearly, we have a lot to explore.

We will resume on Tuesday morning, members, to review the evidence that we have received so far, so we need to be prepared for that. Gerry and his team will be here again to assist us in our deliberations. Thanks very much to you for coming this morning.