SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
(a) We value the role
of universal Child Benefit and believe it should continue to play
a substantial role in supporting the children of this country.
We welcome the commitment from the Chancellor to Child Benefit.
We recommend that the Government takes steps to ensure that, as
integration develops a separately identifiable universal element,
presently Child Benefit, is preserved. (Paragraph 19)
(b) We believe that
the introduction of Integrated Child Credit provides an opportunity
for a long overdue review of the level and structure of financial
support for children in Britain which should not be missed. (Paragraph
22)
(c) We recommend that
the Government should establish a specific budget to fund a variety
of research by different social scientists into the levels of
income which are sufficient to keep families with children out
of poverty. (Paragraph 24)
(d) We also recommend
that the Government convenes an ongoing working party involving
policy makers, academics and other interested parties to assist
it to devise publicly acceptable measures of the levels of income
needed to avoid poverty. (Paragraph 25)
(e) Given that ICC
is creating a framework where all families will be part of the
same system, we believe there is a case for working towards a
maximum award of ICC, paid to families on the lowest incomes,
which reflects what parents on average need to spend on their
children, an amount which is then tapered away as income rises.
(Paragraph 30)
(f) We recommend that
the disabled child premium within IS/JA and the disabled child
credit within WFTC/DPTC be incorporated within Integrated Child
Credit. (Paragraph 31)
(g) We recommend that
ICC rates do not distinguish between first and subsequent children,
and that levels of Child Benefit between first and subsequent
children be equalised. (Paragraph 35)
(h) We recommend that
there should be no age-related element in the rate of child credit
per child. (Paragraph 37)
(i) We welcome the
'portability' of ICC for families moving into work, whereby the
maximum rate of ICC will be retained across the no work/work divide.
It will enable resources to go to children in the poorest families
whilst providing their parents with certainty of income if they
move into low paid work. (Paragraph 40)
(j) We have concluded
that in order to reduce child poverty, assist the transition into
work, and aid administrative simplicity there are strong arguments
for maintaining a wide band of income across which maximum ICC
is paid, before it starts to be withdrawn. (Paragraph 41)
(k) We are pleased
that the Government is looking at the interaction of ICC and Housing
Benefit, but consider that the aim should be to improve marginal
deduction rates rather than simply not make them worse than they
are at present. (Paragraph 45)
(l) We repeat the
recommendation made in our report on Housing Benefit that consideration
should be given to removing as many people as possible from the
necessity of making claims for Housing Benefit alongside ICC,
either by increasing the earnings disregard or examining the possibility
of including a housing credit as part of the reforms of tax credits
in 2003. (Paragraph 46)
(m) We have concluded
that the best model for ICC is likely to be a relatively unresponsive
structure, with fixed awards of at least six months duration,
but with a safety net of 100 per cent ICC when income drops to
ICC/JSA level. Otherwise there should be adjustment only for major
changes in family circumstances such as the birth of a child;
a child leaving the household; a new partner; or loss of a partner.
Our conclusion that there should be a relatively unresponsive
structure reinforces our earlier recommendation that there should
be a wide band of income across which maximum ICC is paid. (Paragraph
52)
(n) We have concluded
that abolition of the current capital rules which apply to benefits
and tax credits in favour of rules which take into account income
from capital may not produce all the simplifications that could
be achieved. (Paragraph 57)
(o) Whatever changes
are made to the treatment of capital for ICC, we recommend that
the same changes are applied to adult benefits and tax credits.
(Paragraph 58)
(p) We recommend that,
in designing the next generation of tax credits, the Government
moves closer to aligning definitions of income for tax credit
purposes with those used for income tax. (Paragraph 60)
(q) We recommend that
child support payments are ignored for ICC purposes. (Paragraph
61)
(r) We repeat a recommendation
made in our earlier report on the Child Support reforms that all
parents with care in receipt of Income Support or income-based
Jobseeker's Allowance should be permitted to benefit from the
£10 child maintenance premium from the date of commencement
of the reforms. (Paragraph 62)
(s) We consider there
is a case for ignoring payments of statutory maternity pay and
maternity allowance for ICC purposes. (Paragraph 63)
(t) We favour the
WFTC and DPTC model for the treatment of Child Benefit, not least
because we know from direct experience that the reduction of benefit
to take account of Child Benefit is a perpetual source of complaint
among poor families. (Paragraph 64)
(u) There is little
doubt that support for the introduction of ICC would be badly
affected if means-tested benefits for children went down at the
point of change. We therefore urge the Chancellor to make sufficient
funds available to ensure that this does not happen. (Paragraph
64)
(v) We recommend that
a component for school dinners be separately identified within
the ICC calculation and that the Government should give consideration
to extending entitlement to other 'passported' health and education
benefits, Social Fund payments and 'Sure Start' Maternity Grant
to families in receipt of maximum ICC. (Paragraph 65)
(w) In addressing
the question of the interaction of ICC with Housing Benefit and
Council Tax Benefit, the effect of ICC on entitlement to maximum
benefit is a matter to which urgent and careful thought must be
given to avoid creating large numbers of 'losers', thus undermining
the credibility of ICC. (Paragraph 66)
(x) Since much of
the detail has yet to be announced, we believe it would be sensible
to provide a further period of public consultation on the details
of ICC once they have been finalised. (Paragraph 68)
(y) The Committee
welcomes the potential offered by ICC for the development of a
more seamless approach to the collection and transmission of information
between agencies. (Paragraph 69)
(z) The Committee
agrees with the logic of the Secretary of State's argument that
it makes sense for the different components of money that go to
children to be paid in one income stream, and therefore believes
that different elements such as Child Benefit and ICC should not
be paid by different Departments. It is very worrying that plans
to move Child Benefit administration to sit alongside ICC appear
to be so uncertain and ill-defined at this stage. (Paragraph 71)
(aa) We recommend
that the introduction of ICC should only take place once computer
systems at the Inland Revenue, the Child Benefit Centre and the
new Working Age Agency are fully compatible and operational. (Paragraph
74)
(bb) We recommend
that the new rules for tax credits should not consist merely of
multiple amendments to social security benefit legislation. Rather,
both the primary and secondary legislation relating to tax credits
should be drafted, as far as possible, as stand alone legislation.
(Paragraph 76)
(cc) We recommend
that, in planning the legislative timetable for ICC and ETC, sufficient
time is allowed to enable careful drafting of both primary and
secondary legislation in plain English. (Paragraph 77)
(dd) We invite the
Government to give an unequivocal undertaking that ICC will not
be implemented unless and until the administrative framework and
IT systems to support it are fully operational. (Paragraph 79)
(ee) We believe that
the introduction of a simple annual tax form to complement existing
information held by the Inland Revenue would enable people to
report unearned income; the presence of children and if appropriate,
the existence of a partner. It would provide the required balance
between simplicity and eliciting the basic information and we
recommend the consideration of such a system. (Paragraph 82)
(ff) We welcome the
proposal that ICC should be paid to the main carer. (Paragraph
83)
(gg) We recommend
that recipients be given a choice concerning the intervals at
which they are paid: (for example fortnightly, monthly, annually),
and that the main carer be given the option of payment otherwise
than electronically, if he or she does not have a bank account.
(Paragraph 84)
(hh) We conclude that
although ICC is a welcome step towards a simpler system, there
is still a considerable way to go to create a tax credit and benefit
system which is easy to understand and easy to use from the recipient's
perspective. (Paragraph 85)
(ii) It is important
to know the characteristics of those people who are not claiming
ICC, to establish whether there are trends in family structure;
income or regions, so as to enable the more accurate targeting
of take-up campaigns. We recommend that these patterns of lack
of take-up are analysed by the Government. (Paragraph 87)
(jj) We agree that
the take-up of ICC will be vital to its success and that active
encouragement to claim should begin as soon as a child is born.
We therefore recommend that Integrated Child Credit application
forms be sent to parents of newly-born children alongside those
for Child Benefit and that data matching between Child Benefit
and Income Tax records should be regularly used, as in Australia,
to identify likely claimants and to encourage them to claim. (Paragraph
90)
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