GLC presentation to CPAG SSC

Scottish Social Security Consortium

Minutes of meeting 25 September 2003

1. Present:

Hazel Kennedy: Scottish FIAC

Craig MacKenzie: One Plus

David McNeish: Citizens Advice Scotland

Leah McKend: Drumchapel Law and Money Advice Centre

Judith Paterson: Child Poverty Action Group in Scotland

Danny Philips: Child Poverty Action Group in Scotland

Susan Rew: One Parent Families Scotland

Jo Whitfield: The Action Group

Anne Douglas: Shelter Scotland

2. Apologies

Susan Drew: Highland Advice and Information Network

Alice Jarvie: Help The Aged

Chris White: Scottish Association for Mental Health

Marie Burns: Glasgow Association for Mental Health

David Johnson: Waverley Care

Abigail Bremner: Citizens Advice Scotland

Jim Pearson: Alzheimer Scotland

3. INTRODUCTIONS

Danny Philips welcomed everyone to the meeting and outlined the remit of the consortium to share information on social security benefits issues.

4. BENEFITS AND BANK ARRESTMENTS

Mike Dailly, solicitor at Govan Law Centre, gave a presentation outlining developments in debt recovery and explaining the law around benefits and bank arrestments.

With direct payments intended to become almost universal, most people will have their benefit paid directly into a bank account. Bank arrestments are a very common method of debt recovery used by local authorities and government departments in particular.

Under s187 Social Security Administration Act 1992, benefits cannot be assigned. The theory is that benefits should not be subject to ordinary forms of arrestment. The principles underpinning the theory are in the Crown Proceedings Act 1947, in common law and in the case of Woods.

The caselaw – Woods v Royal Bank of Scotland

In the case of Woods v Royal Bank of Scotland 1913 SLT 1 Reports 499, a worker got compensation under the Workmen's Compensation Act 1906 (an early form of benefit) and paid it into a bank account. This case held that the benefit itself could not be assigned to another person. If benefit was plainly identified in a bank account, it should also have statutory protection from arrestment. The money did not change character because it was paid into an account.

The Scottish Law Commission's opinion

In the Scottish Executive's consultation document, Enforcement of Civil Obligations in Scotland, para 5.245, the Scottish Law Commission take a different view to Woods. They accept that most social security benefits are themselves exempt from arrestment, but believe that the statutory protection afforded by s187 Social Security Administration Act 1987 is lost once benefit is paid into a bank account.

Mike disagreed with this opinion. Although there is no recent test case on the point, there are very strong grounds to argue that benefits paid into a bank account are exempt if very easily identifiable. In the new Post Office Card accounts, only benefits are paid into the accounts, therefore benefit is immediately identifiable as such. It would be more difficult to argue if, as well as benefit payments, there were lots of other credits and debits in an account.

Best advice

Mike suggested that the best advice to give clients is to have a separate account for benefits.

What happens if benefits are caught in a bank arrestment

In practice bank accounts with benefits are often arrested. Legal remedies differ depending on the status of the creditor.

An ordinary creditor gets a decree for payment and serves a charge giving 14 days notice of pursuing diligence (eg, arresting a bank account). A remedy is to ask for a Time to Pay Direction to recall the arrestment.

The most frequent creditors are council tax authorities and water authorities. The local authority sends a number of cases to the sheriff who grants a 'summary warrant' giving the authority the power to recover money through diligence, eg bank arrestment. In these cases, you cannot use a Time to Pay Direction. Instead a remedy is to raise an action for wrongful diligence, citing the arguments outlined above for why benefits are exempt from arrestment. Most solicitors would not be aware of this remedy. Advisers can ask Govan Law Centre for help if they have such a case.

Scottish Executive's policy

The Scottish Executive has said they will legislate to deal with the problem of bank arrestments and benefits. At present it is not known how they will do this but there are a number of likely options including:

protecting a minimum sum of money;

exemption based on the source of the funds;

simplified recall procedure.

A Bankruptcy Bill is expected to be introduced next year.

Debt arrangement scheme

Mike outlined provisions under the new Debt Arrangement Scheme (DAS), already enacted and due to be brought into force when regulations are in place. The regulations are currently in draft form and subject to consultation.

The Act provides for a time to pay mechanism for multiple debts. This acts as a diligence stopper where people keep to the payment plan. However it does not prevent bank arrestments.

Secure debts are included in the DAS. But this does not prevent creditors taking repossession action because such action does not count as diligence. Another potential problem is creditors of secure debts withholding consent to debt arrangements. Such creditors often have 60% or more of the total debt. In such cases, it is proposed that creditors can withhold consent. Below 60%, creditors are not permitted to withhold consent.

David McNeish commented that bank arrestments are becoming more common. One tactic, short of legal action, is to ask the bank to release benefits that have been arrested in bank accounts, quoting the case of Woods.

Mike said Govan Law Centre would be willing to run a test case on benefits arrested in bank accounts. The ideal case would be someone who had benefits and nothing else in the account that had been arrested. Clients could be assured that an interim interdict could be obtained within a day so they will not be left without benefit, if successful, pending the result of the action.

5. STUDENTS AND BENEFITS

Danny Phillips told the group that CPAG in Scotland has put together a project, Financial Barriers to Further and Higher Education. This has two parts to it: a research project and a handbook project.

CPAG in Scotland, funded by the Scottish Executive and Drumchapel Community Forum, has commissioned research from Scottish Poverty Information Unit, Glasgow Caledonian University, to explore the difficulties experienced by student parents in accessing further and higher education. Research is now complete and shows that the main issues are

housing costs;

unmanageable debt;

level of debt.

Childcare was also identified as an issue but was less insurmountable than the main problem of managing housing costs while studying. The findings are summarised in a publication Making Ends Meet: An Exploration of Parent Student Poverty.

CPAG in Scotland, funded by Glasgow City Council and others, has written a guide, Benefits for Students in Scotland Handbook. Aimed at advisers, this is intended as a comprehensive guide to benefits for students.

Both the research and the handbook will be launched on 1 October at Strathclyde University.

6. MINUTES OF PREVIOUS MEETING

The minutes of the previous meeting were agreed.

7. INFORMATION EXCHANGE

Student grants

Susan Rew noted that the Scottish Executive have announced their intention to scrap student grants for dependent children from next academic year, 2004-05. This is to avoid duplication with child tax credit.

Citizens Advice Scotland Disability Benefits Report

CAS has produced a report based on incapacity and disability benefit issues reported by a specially constituted focus group of bureau advisers and CAS's usual case feedback system. The report details a range of problems experienced by claimants in relation to personal capability assessment medicals, examining medical practioner reports and problems with the claims and decision making process.

The group agreed to ask Abi Bremner if she would give a presentation to the group on the findings of this report.

Citizens Advice Scotland debt research

David reported that CAS were conducting debt research across Scotland.

Pension credit

Jo Whitfield reported that The Action Group had a case of someone with a dependent child who was transferring from income support to pension credit. She had had no child tax credit awarded although the pension credit had started. This was a problem because pension credit contained no support for children. Officially this was not supposed to happen.

Hazel Kennedy reported that she had had several cases where the transfer to pension credit/child tax credit had happened automatically without any trouble. It was suggested that TAG contact the Inland Revenue directly.

Hazel commented that there were problems with Dundee Pension Service. They refuse to send claim forms to people wanting to make postal claims, insisting instead on phone claims. They have said that they will send claim forms out 'later'. Leah McKend noted that Motherwell Pension Service were already sending claim forms out promptly to clients on request.

Tax credits

CPAG had produced the first quarterly update from the tax credits monitoring network. This showed that the main issues were:

delays in payment

helpline problems

difficulty notifying changes of circumstances via the helpline

conflicting awards

difficulty notifying the Inland Revenue via the helpline of a new bank account for direct payments

decision letters not including the leaflet on passported benefits.

It was noted that the helpline does not accept faxed mandates allowing advisers to deal with a case. David said that the Inland Revenue were drawing up a standard form to allow advisers to fax mandates.

If any groups wish to participate in the tax credits monitoring network, please complete the online form on the CPAG website, http://www.cpag.org.uk

8. FUTURE ISSUES

It was agreed to ask for a speaker on housing benefit reforms now that local housing allowances are to be piloted in Edinburgh from February 2004.

Other issues:

Citizens Advice Scotland Disability Benefits Report - ask Abi to present the report's findings

Fuel direct – The number of people having fuel arrears deducted directly from benefit is 10% what it was 10 years ago. CAS are considering a campaign, involving Ofgen and fuel companies, to persuade the DWP to simplify administration of fuel direct helping to promote this as an alternative to a prepayment meter. CAS could report back about campaign.

DATE OF NEXT MEETING

The next meeting will take place on Monday 24 November at 1 pm at the Citizens Advice Scotland offices in Edinburgh..

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Back to the Scottish Social Security Consortium main page

For more information contact:

Judith Paterson

Child Poverty Action Group in Scotland,

Unit 9, Ladywell

94 Duke Street,

Glasgow G4 0UW

0141 552 3303

email jpaterson@cpagscotland.org.uk

Abigail Bremner

Citizens Advice Scotland

Spectrum House

2 Powderhall Road

Edinburgh EH7 4GB

0131 550 1000

email bremnera@cas.org.uk