Devolved Social Security benefits - debt recovery - transfer of jurisdiction: consultation

Annex A

Partial Business and Regulatory Impact Assessment

1. Title of Proposal

This Partial Business Regulatory Impact Assessment relates to the transfer of some or all of the competence and jurisdiction of debt recovery from the sheriff court to the First-tier Tribunal.

2. Purpose and intended effect

2.1 Background

The proposal is about the recovery of devolved social security benefits, paid in error and whether the jurisdiction of some or all of the competence over the debt recovery should be transferred from the sheriff court to the Social Security Chamber of the First-tier Tribunal (FtT).

Chapter 5 of the 2018 Act sets out the powers of Social Security Scotland to recover overpaid assistance under the Act. The overpayment may have arisen due to an official error, client error, or through fraud. Social Security Scotland will not recover overpayments if it is a result of official error except where it was an overpayment that the client could have reasonably noticed. Social Security Scotland will also ensure that no individual is placed into hardship as a result of a repayment plan.

There will be different approaches to recovery of overpayments depending on the type of devolved benefits.

For those individuals who only receive a one-off benefit (such as Best Start Grant Pregnancy and Baby Payment, Best Start Early Learning Payment and Best Start Grant School Age Payment, Funeral Support Payment, Young Carer Grant, Job Start Payment, Winter Heating Assistance and Cold Spell Heating Assistance) and a mutually acceptable repayment plan cannot be agreed, the only recourse that Social Security Scotland has to recover debt is through civil litigation in the sheriff court.

For those receiving a recurring benefit such as Disability Assistance for Children and Young People, Disability Assistance for Older People, Disability Assistance for Working Age People, Scottish Carer's Allowance, Severe Disablement Allowance, Industrial Injuries Benefits and Scottish Child Payment, overpayments can be recovered through deductions from future payments.

If deductions are to be made from future benefits the client has the opportunity to request a re-determination of that decision and if they are dissatisfied with the subsequent decision they can appeal the decision to the First-tier Tribunal. The First-tier Tribunal will consider the case and determine whether Social Security Scotland's decision is reasonable considering all of the facts of the case.

For those individuals who receive a one-off benefit and a recurring benefit then a debt arising from the one-off benefit can be deducted from the individuals recurring benefit to recover the debt. Individuals would have the opportunity to request a re-determination of that decision and if they are still not satisfied can choose to appeal to the First-tier Tribunal before deductions are taken.

However, for those who received recurring benefits where it is subsequently determined that they are no longer entitled to them and a debt remains, deductions from future payments will not be possible. If a payment agreement cannot be reached the debt can only be recovered through the sheriff court process.

During the passage of the Social Security (Scotland) Bill 2018 through the Scottish Parliament, concerns were raised by stakeholders that there were no means to 'challenge the liability for a debt' other than through a sheriff court procedure. This could result in many individuals choosing to make the repayment rather than attend a hearing at the sheriff court, which is not a rights based approach. Concerns were also raised that the sheriff court was not an appropriate environment for recovery of debt from vulnerable individuals in receipt of social security benefits. As a result an amendment was made to allow the Scottish Ministers to transfer some or all of the competence regarding debt recovery from the sheriff court to the First-tier Tribunal through regulations.

2.2 Objective

The policy objective is to transfer to the First-tier Tribunal some or all of the competence and jurisdiction that a sheriff has in relation to the recovery of money owed. This would address the concerns by stakeholders that the sheriff court is not the appropriate place for recovery of debt in the social security system.

2.3 Rationale for Government intervention

There were concerns raised by stakeholders during the passage of the Social Security (Scotland) Bill 2018 that the sheriff court was not the appropriate environment for determining debt in the social security system. Stakeholders subsequently raised this same issue at consultation events on fraud policy and Scottish Government Error and Overpayment Workshops.

The rationale for intervention is to allow stakeholders the ability to scrutinise and input into any proposal to transfer the competence and jurisdiction that a sheriff has over debt recovery in the social security system to the First-tier Tribunal. This would allow for the development of a system which is most appropriate for debt recovery of devolved social security benefits.

The proposals will contribute to the better achievement of the national outcomes:

• we tackle poverty by sharing opportunities, wealth and power more equally;
• we respect, protect and fulfil human rights and live free from discrimination.

by:

• ensuring that stakeholders have a rights based approach to challenging debt in the social security system.

3. Consultation

3.1 Within Government

The Legislation and Operational Policy Unit has engaged with the following divisions and agencies during the development phase of the policy.

• Officials responsible for transfer of jurisdiction of disputes within the housing sector from the sheriff court to the FtT (Housing and Property Chamber);
• DWP regarding debt within the social security system;
• Officials within Courts and Tribunals Policy;
• Officials within the Debt Management Team;
• Officials in Accountancy in Bankruptcy;
• Officials within Legal Aid Policy;
• The Scottish Courts and Tribunal Service (SCTS).
• HM Courts and Tribunal Service (HMCTS)

In considering the transfer of jurisdiction of debt recovery of social security benefits the SG considered the views of stakeholders attending the error and overpayment workshops, experience panels, the sheriff court and the Scottish Courts and Tribunal Service.

• Stakeholders attending the error and overpayment workshops between 2018 and 2020 made it very clear that they did not believe that it was appropriate for debt recovery appeals to be heard in the sheriff court and were supportive of the transfer of jurisdiction to the First-tier Tribunal.
• The SG consulted with 'The Lord President of the Court of Session', 'The President of the Scottish Tribunals' and the sheriffs principal to seek their views on the proposals as required under section 14 of the 'Social Security Administration and Tribunal Membership (Scotland) Act 2020 and they were broadly content with the proposal to transfer the jurisdiction to the First-tier Tribunal.

3.2 Public Consultation

A consultation on proposals to transfer the jurisdiction of debt recovery from the sheriff court to the First tier Tribunal will run for 12 weeks from September 2021. As well as directly contacting stakeholders with a known interest, the consultation will also be promoted on the SG website.

In addition, informal consultation via letter and in some cases through meetings have been held with:

• Scottish Association of Mental Health
• Citizen's Advice Scotland
• Child Poverty Action Group
• Inclusion Scotland
• Enable Scotland
• Age Scotland
• National Deaf Children's Society
• Low Income Tax Reform Group
• People First Scotland
• Royal National Institute for the Blind
• Scottish Commission for Learning Disability
• Scottish Council on Deafness
• Scottish Woman's Convention
• Scottish Commission on Social Security
• Disability and Carers Benefits Expert Advisory Group

3.3 Business Consultation

Scottish Government engaged with and sought the views of the groups set out in section 3.2

There were no commercial enterprises recognised as having an interest in debt recovery of social security benefits.

4. Options

4.1 The following options were considered:

1. Do not transfer jurisdiction from sheriff court to the First-tier Tribunal.

2. All social security debt recovery cases currently within the jurisdiction of the sheriff court to transfer from the sheriff court to the First-tier Tribunal.

3. All social security debt recovery cases currently within the jurisdiction of the sheriff court which would fall within the simple procedure to transfer from the sheriff court to the First-tier Tribunal.

Option 2 is the preferred option. The transfer of all debt recovery cases currently within the jurisdiction of the sheriff court should be transferred from the sheriff court to the First-tier tribunal. This would ensure that all debt recovery social security decisions are made by only one judicial body and would avoid divergent case law. It would also address concerns raised during Stage 3 of the Social Security Bill that the sheriff court is not the correct environment for determining debt in the social security system.

4.2 Sectors and groups affected

Sectors and groups affected include:

a) devolved social security benefit clients - they will need to be made aware of the process for defending an action for debt recovery.

b) Social Security Scotland – they will be responsible for assessing whether there is an overpayment and agreeing with clients how it should be recovered. They would need to inform the client of the process for debt recovery and the action taken if no agreement to recovery is reached.

c) Sheriff Court – while there has been no challenge to the right of recovery of social security benefits as of 1 September 2021 in the sheriff court, discussions will be required to ensure that any transfer to the FtT is effective.

d) First-tier Tribunal (Social Security Chamber) – if debt recovery is to be transferred, the FtT will need to develop guidance on the process for hearing appeals on the recovery of overpayments in the social security system where there is no mechanism for deduction from recurring benefits. They will also need to recruit sufficient qualified panel members and may require additional administrative staff.

e) Scottish Legal Aid Board (SLAB) – for debt recovery cases above £3,000 in the sheriff court, clients may be eligible for legal aid in the form of representation. There is no legal aid in the form of representation for appeals within the social security chamber of the FtT. Therefore if these cases are to be heard in the FtT under the 'no detriment' rule the legal aid in the form of representation would need to be available in these limited circumstances i.e. clients with debts over £3,000 with no recurring benefit. Discussions with SLAB will be required to identify the most appropriate delivery method for this right.

f) Advocacy – clients are entitled to advocacy within the FtT system. Those delivering advocacy would need to be aware of the rights of clients with regards to debt recovery.

4.3 Benefits

The Scottish Government is committed to address the concerns from stakeholders that the sheriff court is not the appropriate place for the liability of a debt to be determined in the social security system.

Option 1: Do not transfer jurisdiction from the sheriff court to the First-tier Tribunal. This option would not assist in addressing the concerns raised by clients that the sheriff court is not the appropriate place for debt recovery appeals to be heard in the social security system.

Option 2: All social security debt recovery cases currently within the jurisdiction of the sheriff court to transfer from the sheriff court to the First-tier Tribunal. This would be the preferred option as it would ensure that all debt recovery social security decisions are made by only one judicial body and would avoid divergent case law. It would also address concerns raised during Stage 3 of the Social Security Bill that the sheriff court is not the correct environment for determining debt in the social security system.

Option 3: All social security debt recovery cases currently within the jurisdiction of the sheriff court which would fall within the simple procedure to transfer from the sheriff court to the First-tier Tribunal. This would mean that debts of over £5,000 would remain within the sheriff court and heard through the ordinary procedure. However, this would mean that there still would be two judicial bodies determining debt in the devolved social security system which could lead to divergent case law. It would also lead to some individuals attending a hearing at the sheriff court while others attend a hearing at a First-tier Tribunal.

4.4 Costs and savings

Option 1: As this is the current option the costs involved include the Social Security Scotland administrative costs in debt recovery. This includes the letters to individuals, discussions on re-payment plans and then if debt recovery is pursued the administrative costs of informing the individual of the next steps and preparation for the claim. If the case is not settled prior to submission to the sheriff court there are then the costs associated with a court case, usually through the simple procedure. A registration fee has to be paid for all cases submitted to the sheriff court. Court costs will vary with the least costs where the matter is settled before a hearing. The experience from the Courts is that cases are normally settled without the need for a hearing. There is also the potential of cost to the Legal Aid Fund, for related advice and assistance.

Option 2: This is the preferred option. The administrative costs incurred by Social Security Scotland would largely remain the same. However, as the action for recovery would be heard by the FtT there would be no court registration fee. Instead the individual could challenge the recovery of the debt through the FtT. As all cases would be likely to be heard in the FtT unlike the sheriff court system where many cases will be settled before a hearing, there would be more costs associated with the FtT. There would be further legal aid costs for representation for those with debts over £3,000 with no recurring benefit.

Option 3: This option would incur similar costs as option 1 for those cases heard in the sheriff court under ordinary procedure and similar costs to option 2 for those cases under simple procedure which would transfer to the FtT. As there would be two different approaches this could lead to extra administrative costs. There would also be the potential for a hearing in both the FtT and the sheriff court which could lead to divergent case law for the same case e.g. hearing an appeal in the FtT regarding the assistance being stopped and then recovering the debt through the sheriff court.

Scottish Firms Impact Test

5. Scottish Government officials have consulted with a range of third sector organisations affected by the transfer of jurisdiction, including on any concerns or benefits to their organisations. The transfer of jurisdiction would mainly impact on the sheriff court and the FtT and advocacy service. The responses to the consultation will influence the proposal and the completion at the post-consultation stage of the Final Stage BRIA.

5.1 Competition Assessment

Assessment has been based on Options 2 and 3 as Option 1 proposes no change and therefore imposes no actions that may incur additional costs.

The four competition filter questions provided for policy makers on competition assessment were applied and it is considered that the transfer of jurisdiction would not impact on competition within the market place.

i.e.

• The transfer of jurisdiction would not directly or indirectly limit the number or range of suppliers as these are dictated by the court processes.
• The transfer of jurisdiction would not limit the ability of suppliers to compete e.g. advocacy providers.
• The transfer of jurisdiction would not limit suppliers' incentives to compete vigorously.
• The transfer of jurisdiction would not limit the choices and information available to consumers.

5.2 Test run of business forms

No new forms associated with this proposal are expected.

6. Legal Aid Impact Test

The preferred Option 2 would result in the transfer of jurisdiction from the sheriff court to the FtT for debt recovery in the social security system. Individuals would have the same right to legal aid advice and assistance within the FtT as they did within the sheriff court. However, some individuals may have been entitled to legal aid in the form of representation within the sheriff court system and this same right would need to be available in the FtT in those limited circumstances e.g. debt over £3,000 with no recurring benefit that deductions can be taken from.

Enforcement, sanctions and monitoring

7.1 Background

Chapter 5 of the 2018 Act 'Recovery of Value of Assistance' sets out the powers of Social Security Scotland to deal with the recovery of overpaid benefits as a result of an error. Social Security Scotland will take into account the individual's financial and other circumstances through an 'affordability assessment' based on the Common Financial Tool. This will ensure that money will only be recovered in a manner that does not result in hardship for the individual. Social Security Scotland has developed guidance for staff on the procedures to follow when recovering overpayments.

7.2 Enforcement and sanctions

Social Security Scotland will only pursue recovery of debt through the court system as a last resort and after consideration of the debtors circumstances. The preferred Option 2 ensures that individuals would have the opportunity to defend the action for recovery of a debt in the FtT. If the FtT reached a decision that the debt had to be repaid then a repayment plan would be sought. However, if individuals did not agree to a repayment plan then the FtT would have the same kind of binding orders available to a sheriff court. These orders may be enforced via a sheriff officer.

7.3 Monitoring

Social Security Scotland will review the implementation of debt recovery to ensure that overpayments are being recovered effectively and that individuals are treated in line with the Social Security Charter. Performance against the charter will be reviewed regularly and an Annual Report will be submitted to the Scottish Parliament each year on the performance of the Scottish social security system in that year.

8. Implementation and delivery plan

8.1 Implementation

The outcome of the consultation will determine the required implementation. If the preferred Option 2 is taken forward, then new Regulations which give additional responsibilities to the Social Security Chamber of the FtT would be required. The FtT would also be required to develop guidance on the process for determining a debt for individuals affected and the process for debt recovery where necessary. The FtT would also require sufficient resources in members to hear the additional cases.

8.2 Implementation Period

It is hoped that the legislation that would enable the transfer of jurisdiction from the sheriff court to the FtT would be laid in the Scottish Parliament in 2022.

8.3 Post-Implementation Review

The Scottish Government will continue to engage with the tribunal service during the phased introduction of the devolved benefits and will provide feedback on the efficiency of the regulations. Audit Scotland will monitor and report on the delivery of the social security system, including Social Security Scotland.

Summary and recommendation

Option 2 is the recommended option, as it would ensure that all debt recovery social security decisions were made by only one judicial body and would avoid divergent case law. It would also address concerns raised during Stage Three of the Social Security bill that the sheriff court is not the correct environment for determining debt in the social security system.

• Summary costs and benefits table

Option

1

Total benefit per annum:
- economic, environmental, social

Current System
No benefits

Total cost per annum:
- economic, environmental, social
- policy and administrative

Cost Neutral

Current costs – administrative costs; court registration costs; court costs; legal aid costs.

Option

2

Total benefit per annum:
- economic, environmental, social

This is the preferred option as it would ensure that all debt recovery social security decisions are made by only one judicial body and would avoid divergent case law. It would also address concerns raised during Stage 3 of the Social Security Bill that the sheriff court is not the correct environment for determining debt in the social security system.

Total cost per annum:
- economic, environmental, social
- policy and administrative

Administrative costs largely remain the same.

However, there would be savings with no administrative costs of pursuing debt prior to court action; no court registration costs, no court costs.

However, extra administrative costs as more individuals are likely take the opportunity to appeal the decision in the FtT and there will be the additional advocacy costs. There will also be the legal aid costs in the form of representation in some limited circumstances.

Option

3

Total benefit per annum:
- economic, environmental, social

This would not be a practical option as two judicial bodies would still be involved in determining debt in the social security system which could result in divergent case law. It would also mean that some social security clients would have their case heard in a sheriff court while others in a FtT. This would not address the concerns that the sheriff court is not an appropriate environment for debt recovery in the social security system.

Total cost per annum:
- economic, environmental, social
- policy and administrative

There would be costs similar to 1 and 2 for the different approaches. Administrative costs are likely to be higher managing two systems with different approaches.

Declaration and publication

The Cabinet Secretary or Minister responsible for the policy (or the Chief Executive of non departmental public bodies and other agencies if appropriate) is required to sign off all BRIAs prior to publication.

• Sign-off for Partial BRIAs:

I have read the Business and Regulatory Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options. I am satisfied that business impact will be assessed during the public consultation with the support of businesses in Scotland.

Signed: Ben Macpherson

Date: 16 September 2021

Ben Macpherson , Member of Scottish Parliament

Minister for Social Security and Local Government

Scottish Government Contact point:

Email: ssplegislationandoperationalpolicy@gov.scot