MEMORANDUM SUBMITTED BY THE DEPARTMENT
OF SOCIAL SECURITY (ICC 14)
INTRODUCTION
1. The Chancellor announced in his 1999
Budget speech, and confirmed in Budget 2000, the next steps in
the Government's tax and benefit reform programme:
— an integrated child credit which
would bring together the different strands of support for children
in the Working Families' Tax Credit, Income Support/Jobseeker's
allowance and the Children's Tax Credit, to create a seamless
system of financial support for children which will be paid to
the main carer, building upon the foundation of universal Child
Benefit; and
— an employment tax credit, which would
complement the new child credit—payable through the wage
packet, and potentially available to groups without children as
well.
2. Supporting documentation published at
the time of the Budget expanded on the proposals. In particular,
a key document is the HM Treasury publication entitled "Tackling
Poverty and Making Work Pay—Tax Credits for the 21st Century"
(HMSO 03/00 19585 495677).
Main aims of integrated child credit
3. The Government's stated aims for integrated
child credit are:
— a more transparent system of support
for children, helping parents understand what they can expect
to receive;
— a portable and secure income bridge
spanning welfare and work, to improve work incentives;
— a common framework for assessment
and payment, dealing with all families within the same system
regardless of whether they are on income support, in low-paid
work or on higher incomes;
— a system where all support for
children is paid to the main carer; and
— efficiency gains for Government
and less hassle for parents—moving away from a system
where support for children is delivered through four different
mechanisms.
4. The integrated child credit is designed
to be an important mechanism for channelling support to families
with children as part of meeting the Government's objective to
end child poverty in 20 years. Subject to the legislative timetable,
the Government's aim is to introduce the new tax credits from
2003.
Implementation of ICC
5. The new credits will be administered
by the Inland Revenue. Implementation covers both integrated child
credit and employment tax credit, and is being taken forward by
Inland Revenue and DSS as part of a single work programme with
impacts across the range of both Departments' business. Inland
Revenue have lead responsibility for the Tax Credits Programme.
6. Implementation of the new tax credits
will involve:
— ensuring the right number of well-trained
staff are in place at the right time to deal with tax credit inquiries,
applications and awards, supported by appropriate computer systems
and telephony. A key objective will be to offer applicants and
potential applicants a choice of ways to ask about and apply for
the tax credits;
— effecting a smooth transfer for existing
cases; and
— arranging appropriate publicity and
guidance for WFTC and DPTC customers, as well as for the wider
population of people who will be, or may become, eligible for
the new tax credits.
7. There will be significant implications
for DSS, in particular in relation to families receiving IS/JSA.
These will be managed against the background of a major drive
to reorganise and improve front-end service delivery for customers
who currently deal with the Benefits Agency and the Employment
Service.
8. The Tax Credits Programme reports to
a Programme Board with senior representation from IR, DSS and
DFEE. The Programme Director is from the Inland Revenue. A separate
DSS Steering Group provides assurance for DSS on the impact on
social security business.
Role of DSS in Implementation
9. DSS is currently engaged with DFEE in
creating a modern agency to transform the way the Government supports
people of working age. It will bring together the responsibilities
of the Employment Service and elements of the Benefits Agency
that support working age people to provide more integrated customer
services. The new agency is due to be launched in summer 2001.
10. The new agency will be integral to the
effective delivery of ICC. DSS is working closely with the working
age project (led by Richard Lapthorne) to ensure the introduction
of ICC is taken into account in their development plans. Similar
close links are in place with the proposed Pensions Organisation.
11. DSS's key responsibility in respect
of integrated child credit is to ensure that its customers can
access the financial support they are entitled to quickly and
easily—ie both benefit and tax credits. This is particularly
important for the 1.5 million poorest families on IS/JSA where
integrated child credit will form a substantial component of their
household income. The assumption is that families on IS/JSA can
be automatically entitled to the maximum level of ICC without
any additional income assessment being carried out by IR.
12. Tax Credits Programme activity within
DSS will involve:
— removing the child elements in IS/JSA
from IT and business systems;
— ensuring smooth migration of existing
IS/JSA cases onto the new Tax Credits system with advice and support
at the point of change;
— training for staff on the new tax
credits; and
— revising forms and leaflets.
13. As part of the "modernising Government"
agenda, a key design issue for the new credit is to ensure that
people only have to provide information once to one agency to
access the support they are entitled to across the whole of Government.
Customers of the new Agency should be able to have their tax credits
business dealt with alongside their other business—with
relevant information transferred electronically to the Inland
Revenue.
14. Delivering an integrated service covering
tax credits to the new Agency's customers will be supported by
the range of DSS Modernisation projects which are currently planned.
Over the next two years the Department aims to roll out up-to-date
IT equipment across the local office network which will be compatible
with that used by IR and ES. Other projects aim to build new electronic
information gathering systems for working age benefits which will
support improved customer service and face-to-face and telephone
contact.
IMPACT
ON OTHER
BENEFITS
15. The ICC will build on the foundation
of universal Child Benefit which is an effective way to reach
families and in recognition of its importance the Government has
increased it significantly in real terms in recent years. In designing
the integrated child credit, the Government will consider how
to build effective links with Child Benefit to help deliver a
joined-up service for families.
16. There are a range of issues where the
new credits will impact on other DSS business—for example
housing benefit, the social fund and child support. Each area
will need to be reviewed and adjustments made to ensure that the
system forms a coherent whole across Government and does not undermine
work incentives.
October 2000
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