Select Committee on Social Security First Report


1. The Committee welcomes the Government's intention to improve the rewards of work for relatively low paid workers (paragraph 3).

2. We recommend that the main draft regulations on WFTC and DPTC should be published and made publicly available so that all interested parties have the opportunity to comment on the detail of the measures proposed (paragraph 7).

3. We regret that officials were not more forthcoming in discussing the range of options being considered in areas where no final decision had been made (paragraph 12).

4. We recommend that the Inland Revenue should work with employers' organisations to ensure that employers are fully aware of the practical implications for them as the details of the WFTC and DPTC are finalised (paragraph 13).

5. The concerns of employers, coupled with the difficult questions which still have to be resolved, lead us to propose that the Inland Revenue should address with some urgency the practical difficulties of implementation within the currently proposed timetable (paragraph 14).

6. We recommend that during the first three months of WFTC only, provision should be made for new awards of Family Credit to last seven months (or 30 weeks) so that, in the future, work can be distributed more evenly throughout the year (paragraph 18).

7. We recommend that employers should have a legal responsibility to inform the Inland Revenue when an employee in receipt of benefits leaves their employment (paragraph 19).

8. We recommend that the performance of the Inland Revenue in making prompt payments of advance WFTC or DPTC to employers should be measured against clear targets, and that details should be recorded of the number of employers who request such funds and the sums paid out by the Inland Revenue as a result (paragraph 26).

9. We recommend that the new payroll service for new small businesses being developed by the Inland Revenue should incorporate systems which take account of WFTC and DPTC (paragraph 26.

10. We recommend that small employers who administer WFTC should be awarded reimbursement of their costs similar to that which currently applies in relation to Statutory Maternity Pay, whereby small employers are entitled to an additional payment of 7 per cent of the payment of SMP (paragraph 26).

11. We recommend that, in cases of multiple employment, the Inland Revenue should decide with some urgency the method of payment which is to be pursued (paragraph 27).

12. We recommend that the Inland Revenue should combine its enforcement functions in relation to the National Minimum Wage legislation with the obligation to pay WFTC and DPTC (paragraph 29).

13. We recommend that active steps should be taken by the Inland Revenue in the coming year to increase employers' awareness of their obligations to pay WFTC and DPTC and the benefits of compliance (paragraph 30).

14. We recommend that the Inland Revenue should be given powers to levy 'compensation orders' on employers who consistently fail to cooperate in the payment of WFTC or DPTC (paragraph 31).

15. We recommend that the statutory obligation which requires employers to provide an itemised payslip should be extended to require the specific inclusion of information relating to the gross income tax due and the total tax credit payable (paragraph 32).

16. We repeat the recommendation made in our previous Report that the Government should place a high priority on reform of Housing Benefit as part of its strategy of welfare to work and reform of social security. We further urge the Government to consider ways of assisting home-owners in low paid work (paragraph 41).

17. We recommend that the 'passported' benefits which can be accessed at present through receipt of Family Credit or Disability Working Allowance should also be made available to recipients of WFTC and DPTC (paragraph 42).

18. We recommend that eligibility for free school meals should be extended to families who are awarded WFTC or DPTC, who have been in receipt of Income Support or Jobseeker's Allowance in the period immediately preceding the award (paragraph 43).

19. We recommend that the current child support disregard for Family Credit should at least be maintained within WFTC and DPTC in real terms. We also recommend that consideration be given to disregarding Child Support payments up to the level of the anticipated average maintenance payment of £29 per week (paragraph 44).

20. We recommend that a duty be placed on the Inland Revenue to take all reasonable steps to ensure that people who are eligible to claim WFTC and DPTC (including the childcare tax credit) are made aware of their entitlement and encouraged to claim (paragraph 46).

21. We recommend that the Government should give greater priority to detailed back-to-work 'better-off' advice for individual families through the allocation of specific resources for this task and the provision of accessible points of contact in local areas where such advice is readily available (paragraph 50).

22. We recommend that the Government should consider the use of data matching between Government Departments and between Central and Local Government to identify families who appear to be eligible for WFTC and to encourage them to claim (paragraph 51).

23. We recommend that where a person can show a pattern of intermittent work in the previous six months they should have the option of choosing to receive payment of WFTC or DPTC direct from the Inland Revenue rather than through the wage packet. We further recommend that the entitlement to WFTC or DPTC should continue during periods of leave or sickness, as is the case with Family Credit (paragraph 55).

24. We welcome the Government's decision to allow couples to choose which partner can receive the WFTC (paragraph 57).

25. We recommend that the claim form for WFTC should indicate that payment will normally be to the partner at home in recognition of their responsibility for meeting the everyday needs of the children; but that, if both partners prefer, payment can be made through the earner's pay packet by ticking a special box (paragraph 58).

26. We recommend that where WFTC is paid through the wage packet to a partner in a couple, notification of the award should also be sent by the Inland Revenue to the non-working partner (paragraph 59).

27. We recommend that the option of payment by order book at the Post Office should be made available by the Inland Revenue when making direct payments of WFTC (paragraph 60).

28. We recommend that the impact of the proposed measures within DPTC to encourage job retention by people who become disabled when in work should be carefully monitored to ensure that they are effective in reaching the target group (paragraph 63).

29. We recommend that the Government should implement an active take-up strategy for DPTC, publishing annual targets for take-up and reporting annually to Parliament on progress in meeting those targets and the methods used to achieve them (paragraph 65).

30. We welcome the Chancellor's announcement in his 1998 Pre-Budget Report that the childcare credit will be extended to children up to the age of 14 in line with the National Childcare Strategy; and that, in the case of children with a disability, the age limit will be raised to 16 (paragraph 66).

31. We recommend that the definition of eligible childcare for WFTC and DPTC purposes should be broadened to include the childcare arrangements made by parents working unsocial hours and parents of children with special needs, provided these arrangements are verifiable (paragraph 68).

32. We regret the fact that work on the main Benefit Review of Family Credit was dropped by the Benefits Agency following the decision to transfer the benefit to the Inland Revenue, when the lessons to be learned from such a review would have been of particular importance in assisting the Inland Revenue to minimise the scope for fraud in the design of the new tax credit system. We recommend that the Inland Revenue should take over and complete the investigation started by the Benefits Agency (paragraph 71).

33. We recommend that the Government should give consideration to extending payment of Income Support or Jobseeker's Allowance to people who have claimed WFTC or DPTC for up to 14 days after commencement of employment in order that claims for in-work financial support can be properly verified before payment is made (paragraph 74).

34. We welcome the Government's decision that, in order to improve transparency, the Treasury will for future projections of public finances include an additional line in the table showing Total Receipts, indicating the cost of WFTC separately from other income tax credits (paragraph 77).

35. We recommend that separate lines of figures be given for WFTC and DPTC in any Tables in either the Pre-Budget Report or the Financial Statement and Budget Report on Total Receipts (as percentages of GDP) or Public Sector Current Receipts (in £ billion) (paragraph 77).

36. We welcome the changes to NICs and agree with the Institute for Fiscal Studies that they are a "substantial step towards rationalisation of the National Insurance system" (paragraph 79).

37. The relationship between payment of NICs and entitlement to contributory benefits is absolutely fundamental to the wider debate about social security reform and is a subject to which the Committee should return (paragraph 81).

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