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6.26 pm
Mr. Archy Kirkwood (Roxburgh and Berwickshire): It is a pleasure to follow the hon. Member for Gravesham (Mr. Pond), who is my hon. Friend on the Select Committee on Social Security. His expertise on this subject is a great advantage to the House.
I believe that the Government are trying to approach these matters holistically through a strategy composed of many elements, of which the Bill is one. Certainly,
the Bill makes more sense viewed in that context, but I wonder whether there is more to the tax credit philosophy than is contained in the Bill. If the Chancellor has gone to the trouble of making a measure so complex, I wonder whether he may not have it in mind to develop the philosophy in other directions.
I appreciate that the Chancellor wants to smash down hurdles between benefit and work; we all agree with that objective. However, if he sees tax credits as a philosophy to be introduced to other parts of the benefit regime, we must proceed slowly and carefully to ensure that we do not kill that objective by contriving a bureaucratic and administrative edifice with which to achieve it.
Changing the culture is important, and the Government are trying to do that through all their reforms. Perhaps a tax credit approach is better than a benefit approach. The Government may wish to comment later on whether providing money by tax credit routes is better than doing so by benefit routes. Those matters are important, but I should like to be confident that the Bill is the end of the story and that there is no more to that story. I do not mean it pejoratively when I hint at there being an ulterior motive, but if the Government are thinking about developing tax credits in the round as a future means of reforming the benefits system, it would be better for us all to know that now rather than coming at the matter piecemeal in future.
The Social Security Committee--I am lucky enough to chair it--has considered the WFTC for more than a year, completing three reports. The most recent reports are referred to in the Order Paper, and I hope that that has informed the House of the body of work on which people may draw for information. There have been signs during the debate that some have already done so. Our reports will come into their own in the Standing Committee.
I am pleased that my hon. Friend the Member for Northavon (Mr. Webb) spoke for much longer than I intend to take, and I hope that the Committee of Selection will take that into account when it decides which of us will sit on the Standing Committee: I understand how these things work, and I am keeping my fingers crossed.
I have two concerns that flow from what I have just said. The timing of the Bill is a little precipitate; I would have liked to take longer over the process. I perfectly understand that there is a political agenda and that the Government want to get the scheme up and running for the next election so that they can put it in the shop window, but I hope that, in trying to achieve everything as soon as possible--even by means of one phase in October and one next April--they are not being too ambitious.
The hon. Member for Gravesham mentioned that the Chancellor's reply to our most recent Select Committee report was helpful. It suggests to me that some areas still need to be worked on and that consultation is proceeding. However, with the best will in the world, we may not have enough time properly to sort out the issues. My hon. Friend the Member for Northavon eloquently adverted to some of them.
The hon. Member for Brentwood and Ongar (Mr. Pickles) rightly said that there was some concern among Committee members--I felt it myself--that relying on affirmative or, indeed, negative procedure to
pass secondary legislation dealing with extra elements connected with the Bill is inadequate. The Committee adverted to the fact that the Procedure Committee has been considering so-called super-affirmative orders, which need the House's special attention and could be amended. Nothing has happened to that recommendation. I should like to enlist the support of those on the Treasury Bench in trying to get the House authorities to look again at the matter.
I confess that I have changed my mind on the issue. Early in my career, when I was the social security spokesman for my party, I always argued that Departments should enshrine everything in primary legislation. The system is now so complicated that it is impossible to do so meaningfully, and there is a case for skeletal enabling Bills. To be fair to the House, even an affirmative, take-it-or-leave-it statutory instrument debate of an hour and a half, sometimes late at night, ending in a vote, is often inadequate. If the Departments involved can put pressure on the Modernisation Committee, the Leader of the House, and the Government Chief Whip, I would be encouraged. If the Government could say that such secondary legislation procedure will be given better consideration, I would have more confidence in this Bill turning out correctly.
Mr. Oliver Letwin (West Dorset):
I have been listening to the hon. Gentleman's recent remarks with the greatest possible interest. Will be speculate on the possibility of pre-legislative scrutiny by his Select Committee of cases as complicated as the one we are debating? Would he favour that?
Mr. Kirkwood:
In principle, I am in favour of more pre-legislative scrutiny. In three sections over the past year, the Select Committee produced a report. We took a bird's eye view of all the evidence in the public domain, took evidence from interested parties, which took a long time, considered the commission headed by Martin Taylor that the Government set up following the pre-Budget statement, and produced a report on implementation of tax credits. I accept that that is not pre-legislative scrutiny, but it comes as close as possible to it in the circumstances.
I would not like to begin experiments with pre-legislative scrutiny on such a politically contentious Bill. We have a way to go before Select Committee procedures are adapted so that they may conduct pre-legislative scrutiny maturely. In principle, however, such a prospect would certainly have been interesting.
I should like to point to a few of the Select Committee's recommendations, which I think are particularly important if we are to make the best of administrative difficulties. In order to try to smooth out peak demand, we recommended that
Secondly, administration costs of the scheme will impose a financial penalty on small employers if we are not careful. I understand what the Government have said. My hon. Friend the Member for Northavon was eloquent on this point. The Minister will know of reimbursement schemes in the statutory maternity pay system. I tabled a written question on the matter on 5 November. The system entitles small employers to an additional 7 per cent. of the payment of statutory maternity pay. Even if we restrict such a scheme to small employers, there is certainly a prima facie case for considering some reimbursement for the administrative costs that will inevitably fall on some small businesses, which are not able to consider such costs with equanimity. The Government should look to that.
Thirdly, the integrated benefit information system of providing better-off advice--IBIS--is not yet reliable enough. The Inland Revenue will have to do much work so that it may more expeditiously provide better-off calculations for people who are contemplating moving into work and off benefit. The Committee recommends
If we change the tapers to take the benefit further up the income strata, we are likely to make more people eligible to tiny amounts of money. That is a disincentive to take-up. If people are eligible only for 50p or less than £1, they will say, "What is the point of the hassle?" The Minister must recognise that the Government might find low take-up rates because people will not be bothered to claim a few pennies.
Martin Taylor was very honest and open when giving evidence to the Select Committee. He spoke of the importance of culture changes, to which I have referred. He said:
"during the first three months of WFTC only, provision should be made for new awards of Family Credit to last seven months"
--a full 30-week period--
"so that, in future, work can be distributed more evenly throughout the year".
We visited the family credit unit in Preston, where some very fine work was being done. I was impressed, as were other Committee members, by the staff's commitment to make the proposed system work. They are confident that they can get through much of it. It was clear, from the nature of family credit, that there are two
big peaks in work load. If some steps can be taken to smooth out the incidence of work as it falls on staff, there would be a better chance of dealing with some tricky administrative problems. At no extra cost to the Government, that could be considered and resolved.
"the provision of accessible points of contact in local areas where such advice is readily available".
That can and should be done. Indeed, it is in the Government's interests to do so in order that they maximise the benefit take-up.
"the drivers in these cases are not purely financial."
He also said that, when it comes to the incentive effect,
"we are dealing with intuition rather than any scientific proof".
For my money, I will watch this piece of legislation very carefully. I am prepared to be persuaded that it can be successful. It will be successful for me only if it succeeds in getting people off benefit and into work in big numbers. I would feel a little more comfortable if the Government had an idea of what measure of success they will apply. What test, what scales of justice, will they use to measure the effectiveness of the legislation? That important question will take time to resolve, but hon. Members on both sides of the House will be very interested in the answer.
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