Letter from Secretary of State for Finance

House of Representatives of the States General 2 Meeting Year 2022—202331 066 TAX SERVICE No. 1235 LETTER FROM THE SECRETARY OF STATE FOR FINANCETo the President of the House of Representatives of States General The Hague, June 2, 2023Here you will receive the January—April 2023 Recovery Operation Benefit Progress Report, which informs the House about the recovery for parents and their children affected by the problems with the childcare allowance. The affected parents and their children have been greatly wronged. The suffering that has been done to them can never be fully compensated. The cabinet cannot undo what has happened and it is impossible to remove the pain or give back lost time. However, affected parents and their children can be helped to make a fresh start and get back to their lives. We do that by acknowledging their suffering. Through financial recovery and tackling debts. Through broad support from the municipality and with a helping hand for children. Because many parents are duped and the diversity of the problems is great, the recovery operation takes a long time. Too long for many parents. Their lives are on hold. The government believes it is important to emphasize time and time again that it is aware of this. The urgency to make the recovery operation run better and faster is great. The previous progress report1 therefore announced a package of measures to accelerate and improve important steps in the recovery operation: the comprehensive assessment, the handling of objections and the provision of files. It remains necessary to take further action. As indicated in the Prime Minister's letter dated 31 March 20232, the cabinet continues to make efforts to improve the approach to the problems caused by the childcare allowance in the short term. The touchstone here is that the measures provide real acceleration and are enforceable. This letter outlines the steps that the cabinet wants to take. In doing so, the cabinet is also following the motion by member Inge van Dijk3 c.s. and the motion by member Paul c.s.4, in which the House emphasized the importance of seeking further acceleration, asking the cabinet to be challenged by professionals, and to work unorthodox. The process of financially compensating parents for the damage caused by the problems with the childcare allowance is currently fine elaborate and comprehensive. In combination with the large number of parents who sign up, the recovery operation is time-consuming, resulting in justified frustrations for parents. In order to provide parents with clarity more quickly, the cabinet wants to use additional and innovative actions in a number of parts of the recovery operation, being careful where necessary, but above all accelerating where possible. Parents need more control over their recovery process. That requires the government to give that space. This also involves choices and dilemmas that the cabinet would like to discuss with the House. Opting for more speed and a rough approach can also mean sacrificing due care and legal protection.Below, this letter is the first to discuss a number of relevant developments in the recovery operation in the period January-April 2023, and the main progress on the acceleration and improvement actions that have already been initiated. Next, we will elaborate on the contours and ways of thinking that should lead to a better approach on issues that are important for parents where there is currently insufficient progress, with the main features: 1) an alternative way of dealing with requests for compensation for additional damage, where, unlike before, the cause of the damage (causality) is looked at less precisely and works with standard (fixed) amounts; 2) a more efficient handling of objections with fewer process steps; 3) a more unambiguous way of file provision. At the moment, both the proposed measures and the schools of thought that the cabinet is still considering are being further developed and tested for enforceability, legal sustainability and financial consequences. This is not without its challenges. For example, sufficient capacity must be able to be organized. The results of this assessment are included in the final decision making. In the run-up to the committee debate scheduled for 29 June 2023, a letter to Parliament will follow to elaborate on this review of the measures and a further elaboration of the schools of thought. The government then strives to have a further assessment of how the measures could accelerate.Progress of recovery surgery January—April 2023At the end of April, around 62,300 parents had reported as victims. For 94% of these reporters, the first test has now been completed. More than 29,000 parents have now been classified as victims. They received an apology from the cabinet and an amount of €30,000. In addition, affected parents receive a cancellation of public debts and payment arrears are settled on private debts. The implementation of the debt settlement is on track now that approximately 95% of affected parents with a public debt have been canceled and a decision has been sent to approximately 84% of the submitted private debt lists. In practice, this means that when dealing with debts, parents' applications are taken up as soon as they come in and parents are helped quickly. In addition, parents who want this receive broad support from the municipality. Last November, the child scheme started. As of April 30, 2023, 25,303 children have received compensation. The plan for the second quarter of 2023 is that the large majority of all children who are known on April 30, 2023 will receive their decision before the start of the summer vacation on July 8, 2023. Special attention is also paid to affected parents with business debts. Both the Parent Committee and the House drew attention to this when discussing the progress report for the fourth quarter of 2022. Especially in situations of high business debt, in some specific cases, questions may arise about the relationship with European state aid rules. Starting from the point of departure that business debt problems caused by problems with the childcare allowance must be resolved, the cabinet wants to come to a practical solution. In the previous progress report, the cabinet explained a package of measures for acceleration and improvement. For example, it has been announced that the personal case handler will have more room in the assessment, that some of the parents will receive an integrated assessment more quickly, and that preparations are being made to be able to carry out 2,500 mediation processes in case of objection. The introduction of a number of relevant (process) improvements concerning the comprehensive assessment and the handling of objections is on track. The progress report details the progress made on these measures. With these measures, it still seems feasible to have completed approximately 57,000 comprehensive assessments in the first quarter of 2025, which was previously expected to be 2027, which amounts to approximately 90% of the expected number of applications in the progress report for the 4th quarter of 2022 (which was 63,000 at the time). At the same time, it appears that the preconditions for achieving the forecasts are difficult in a number of parts. For example, because the inflow of applications is higher than expected and seems to amount to 68,000 parents, and because the recruitment of legal staff, in particular, is difficult. The forecast of having completed all objections to the first test and the comprehensive assessment in 2026 is therefore under pressure. This also underlines the importance of continuing to look at additional options to complete recovery for parents earlier.Proposed measuresThis section details proposed measures and additional schools of thought that the cabinet wants to develop to accelerate on important themes such as dealing with compensation for additional damage, the objection process, filing files and contact with parents. These measures are being further investigated for enforceability, legal sustainability, financial consequences, and actual acceleration.Expedited claim processingSome of the parents have a higher amount of damage than reimbursed based on the comprehensive assessment. To do so, they can report to the Actual Damage Commission (CWS). The cabinet sees that there are many parents who need a different approach to dealing with those claims. That is why, complementary to the route in which the CWS fulfills its role as independent advisor, the cabinet is focusing on an alternative damage route that is faster and more complex and gives the parent more control. The purpose of this route is final discharge, resulting in a settlement agreement (VSO). This deviates from the current administrative law route, and gives the parent more control, transparency, and speed. Because a VSO is only signed if both parties agree and ends with a final discharge, parents can complete the financial recovery with one decision and prevent intensive objection and appeal processes for parents. Thanks to concrete proposals and creative ideas from various parties, such as the parents, the Dutch Bar Association, the No. 5 Foundation, the National Ombudsman, Municipalities/VNG, practical professionals and various other organizations and companies, the cabinet is thinking of the following new elements for the design of the alternative damage route.a) Assuming causalityParents indicate that it is complicated to prove that the damage they have suffered is the direct result of the allowance problem. Demonstrating causality ensures intensive legal treatment and long treatment times. In order not to let this treatment slow down the recovery, the cabinet in principle wants to assume causality and thus focus more on the parent's story. However, it remains important to show that the damage occurred during, or after, the period in which the parent had to deal with the childcare problem. The cabinet is thus also implementing the motion by member Van der Lee and Kuiken.5b) Lump sumsThe starting point will be a claims framework with lump sums, in order to provide speed in the assessment and to further reduce the burden of proof for parents. Of course, this requires that the fixed amounts are drawn up with expertise and are appropriate for the situations of affected parents, and can also count on support.c) Parent directionParents indicate that they want more control. That is why parents can choose to handle additional damage themselves, for example via the CWS or the alternative route. They can receive advice in advance what ways there are to file damage, and which route best suits their situation. In the new VSO route, some of the parents will need good guidance and an interview when submitting a claim overview. Other parents can be helped by explaining their request for compensation via a digital portal. A combination of these two is also possible. In order to organize the necessary guidance for parents without sacrificing UHT's capacity, the use of external parties is being considered. Together with internal and external parties, we are investigating how this process can be set up thoroughly, quickly and with the right guidance for parents.d) Dilemmas and risksThese proposals are far-reaching and involve questions and risks, and it is necessary to take a good and comprehensive look at how the new VSO route relates to processing requests for compensation for additional damage by UHT after advice from the CWS. For example, easier claims handling can also become more of an administrative route and quick action, but there is less personal space for the parent than in a possible accompanying conversation. Speed and a rough approach also compromise on thoroughness. This can be a threat in terms of due care and thus of over- or undercompensation or unequal treatment. The more parties are deployed to help parents quickly, the more data sharing is required. And although an additional route is precisely intended to help parents with additional damage, the effect of a new route can also be that more parents than expected sign up, which has an effect on the speed at which everyone is helped.Actual Damage CommissionParents who have additional damage after the comprehensive assessment can currently submit an application to the CWS. The CWS reviews the applications carefully, thoroughly and individually. This organization is especially important for parents in complex situations who want a careful calculation. That is why CWS is working on improvements to increase speed and is getting to work on them. For example, by involving parents earlier and more intensively in the process, and by standardizing them more in damage assessment and interaction with UHT. The CWS is also investigating whether it is possible to deal with causality and the burden of proof for parents in a different way. In line with the motion by member Azarkan c.s. the cabinet is committed to ensuring that the CWS is adequately equipped in terms of staff, budget and other basic services. Because the knowledge and experience gained at CWS has led to increasingly developed assessment frameworks, the obligation to verify can be implemented more and more marginally, leaving as little time as possible between the advice and the final decision. In doing so, the cabinet is implementing the motion by member Van der Lee, which the cabinet previously explained by letter. Appeal processing Parents who have filed an objection currently have to wait a long time to process their objection. Earlier this year, improvement measures were drawn up to reduce waiting times. The acceleration of objections is lagging behind because the inflow is higher than expected, the necessary expertise is scarce and objections await advice from the Appeals Advisory Committee (BAC), while this committee is also struggling with backlogs. The cabinet wants to focus even more strongly on this and is therefore considering a number of additional measures.a) Decision on objection without BACThe progress report for the 4th quarter of 2022 (Parliamentary Paper 31 066, No. 1165) announced that a number of types of objections will no longer be submitted to the BAC by default, such as first-test objections. It is being investigated what type of objections it is even possible for UHT to make a decision without advice from the BAC. It is also being investigated whether an external party can provide capacity to handle (simple) first test concerns.b) Parent's view in the event of additional damageParents are currently not given the opportunity to express an opinion on the decision they receive to compensate for additional damage. This leads to many objections. The cabinet wants to give parents more control and include the parent's views before deciding on additional damage, so that it can be seen whether it still needs to be adjusted accordingly.c) Dilemmas and risksOne risk in implementing the above expedited measures is losing independent advice by the BAC. The BAC is currently advising on an important part of the objections to decisions taken under the Recovery Surgery Surcharges Act. If the BAC no longer has a role in some proceedings, there is a risk of less legal protection for parents in the objection phase.Dossier provisionMany parents or lawyers need to view the file before the recovery process. Currently, the objection and CWS files are provided when the substantive treatment takes place. At the same time, there is a backlog in providing the recovery files that are requested during the comprehensive assessment. Files often contain privacy-sensitive data from third parties, so it is necessary to remove (paint) that data from files that UHT provides. The previous progress report mentioned measures to eliminate the backlogs in providing recovery files, including the use of software that can anonymise third party data much faster than it is today. It is expected that — subject to a successful tender process and the actual rollout of the software in the third quarter of 2023 — the backlog in providing recovery files will be eliminated by the end of this year.a) Uniformizing filesIn addition, UHT, in consultation with the legal profession, is working to unify various files (recovery, objection and CWS files) into one type of file. This standardization speeds up collection and compilation, and increases predictability for lawyers and parents.b) Less controlUntil the paint software is available, the government wants to control the anonymization of personal data less intensively. Checking files currently takes place in several steps: actual painting and two checks whether this has been done correctly. Omitting the last of these second (control) steps means that a significant number of recovery files will be available more quickly. A disadvantage is a greater risk of a privacy violation because the personal data of third parties may still remain in the file.Urgency via municipalitiesThe waiting times for the comprehensive assessment are long, and there are groups of parents where this leads to extra distressing situations. Both with parents who have already received the Catshuis scheme and with parents who are “not yet affected” on the basis of the first test and are waiting for a comprehensive assessment. The cabinet urgently wants to help this group earlier, in line with the motion by member Grinwis c.s.10. That is why it has been agreed with municipalities that they can independently nominate parents for urgency. The cabinet is emphasizing trust in the municipalities and broadening the criteria for urgency.Additional schools of thoughtIn addition to the above proposed measures, the cabinet is developing a number of additional approaches to solutions. A number of them are mentioned here. These schools of thought are also associated with dilemmas. The government will review the possibility and feasibility of these schools of thought before the committee debate on 29 June and will then be happy to discuss this with the House.Expedited closureThere is no clear time when parents can opt for closure earlier, for example because it is likely that they will be adequately compensated after the first test. Options are being investigated where parents have an option to quit earlier in a way that suits their situation. This may also have a positive effect on the queue for the comprehensive assessment so that other waiting parents can be helped earlier.Regional rapid processingTo develop the alternative route in a robust way, time is needed. However, many parents have been in the queue for a long time. The cabinet wants to find out whether it is feasible for this group of parents — in preparation for the new VSO route — to arrive at a VSO as quickly as possible at locations in some regions in the country, with the plan to have a result very soon. This temporary route will be small, but similar in design and damage framework to the final alternative damage route on a large scale. This temporary approach can be very valuable, but at the same time requires great commitment and flexibility from the government, external parties and parents. In the coming weeks, in consultation with internal and external parties, it should be seen whether this school of thought is feasible and can coexist well with the other routes after the comprehensive assessment.Accelerated IB after first test objectionParents who object after the first test sometimes have to wait a long time for the full assessment. The cabinet wants to see how the treatment of objections after the first test and the comprehensive assessment can be organized closer together. This leads to a dilemma. On the one hand, the cabinet wants to deal with objections in the order of arrival. On the other hand, dealing with this specific type of objection can actually help these parents, which is often not the case when dealing with such an objection. Subsequently, other objections may then be dealt with more quickly.No (or limited) written response to BACCurrently, UHT is preparing a written response to objection cases that the BAC is considering. That takes UHT a lot of time. It is being investigated whether it is feasible to no longer prepare these responses in writing, and instead to prepare the BAC hearing based on the file, where necessary, BAC may ask UHT for additional input. In this way, the capacity in the UHT objection department would be better used. One risk in the absence of a written response by UHT is that a complete summary of additional facts and circumstances will not be shared with the BAC prior to the hearing. As a result, additional information or circumstances may only emerge during the hearing. The risk is that it takes the BAC more time to advise on objections.Contact with parentsParents' direction in their recovery process, and a listening and facilitating attitude by the government, contribute to the recovery that parents need. This is why it is important to keep parents closely involved in the various steps of the recovery process. Personal contact is important. That is why each parent has a personal conversation prior to the comprehensive assessment and prior to making a decision. The three discussions are therefore also being rolled out, where parents, UHT and the municipality sit down together around the comprehensive assessment to see what help and support a parent needs. During the comprehensive assessment, the personal case handler is then in close contact with the parent during the assessment. The previous progress report announced measures to ensure that more and earlier contact is sought with parents who object, so that a gap is prevented. By focusing much more on mediation, the goal is to work it out together in good consultation. Finally, the CWS is also committed to more intensive contact, as explained above in this letter. The (possible) additional actions announced in this letter should ensure improvement, focusing even more than before on the parent and his or her story. In order to also relieve parents practically and emotionally, in line with member Inge van Dijk11's motion, we are working on a method where parents who wish only have to tell their story once. And in line with the commitment to member Leijten in the debate on March 7, 2023, we are working on a regional approach that also literally takes the step to the parent to hear the parent's story. Litigation In letters dated 9 May 202312 and 17 May 202313, your House was informed about four court decisions and the considerations for filing an appeal. The desire not to face parents is a central starting point for the entire recovery operation. Where there is a choice whether or not to (continue) litigating, the answer is therefore “no”, with an exception only for specific situations. The recent statements illustrate this starting point: in the (civil law) ruling of the Overijssel District Court, the State cannot agree with parts of this ruling. Nevertheless, it is decided not to appeal because this is not considered in the interests of the parents concerned and there are insufficient compelling legal reasons to appeal. The (administrative) rulings in Rotterdam and the Central Netherlands illustrate that an appeal may sometimes be necessary, to provide clarity for parents and the implementation that would otherwise be confronted with two very different legal situations. In addition, it was promised to take a critical look at the State's legal position. That is why a number of new elements are being added to the starting point mentioned above. First, in future cases, the State will limit itself to defending important points of principle, avoiding unnecessary formal positions. After all, starting a lawsuit often has a major impact on parents, even if they decide to do so themselves. This impact is only greater when it is a lawsuit against the State. That is why the commitment remains to work it out jointly outside the courtroom, for example through mediation. Secondly, in the event of a possible appeal, possible adverse (financial) consequences for the parents are limited. For example, the State will in principle not proceed with recovery, even if the parent is unsuccessful on appeal. For example, if at any time a judge in a ruling reaches a compensation amount that differs significantly from the applicable recovery law, it may be necessary to appeal against it. Even if the original ruling is reversed in this appeal, the intention is not to recover the higher amount awarded, in order to limit the uncertainty and unpredictability for the parents concerned. Thirdly, the State will reimburse the parents for the costs of proceedings, even if the parent is proven wrong. This applies to both civil and administrative proceedings. Finally, the use of the State Attorney will be further limited. With the motion by member Leijten, the House has asked to investigate how, in a broader sense, the use of the State Attorney in benefit recovery cases can be stopped, including in current cases. The use of the State Attorney will be limited to mandatory legal representation in civil proceedings. The litigation in administrative proceedings will be done by our own officials. However, it may still be desirable for the State Attorney to act as legal advisor to the State based on expertise — in the background.LastlyWe are working hard to help parents and children get a fresh start and do justice. But much remains to be done. There is continuous focus on actions to provide parents with clarity more quickly, in a way that allows parents to also work to emotionally process the damage suffered. As mentioned, the cabinet intends to send the House another letter before the committee debate on the January-April 2023 Progress Report scheduled for 29 June 2023. This provides an update on the possible measures to provide parents with accelerated clarity, and on the associated financial, legal and implementation implications. The results of this assessment are included in the final decision making. In the meantime, the cabinet will continue to work on the concrete effects of the improvement measures and on more insight into the actual acceleration of parts of the recovery operation to which they will lead. This will be explained more concretely in a subsequent letter. At the beginning of October, the House will then be informed again via the periodic progress report about the broad progress of the recovery operation in the period May to August 2023.The Secretary of State for Finance, A. de Vries