SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
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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