83. We welcome the proposal that ICC should be
paid to the main carer. This mirrors the situation in Canada,
where benefit is paid to the "primary carer"
and in Australia where benefits for children have been made separately
payable to the mother.
A question arises as to intervals of payment. In the United States,
payment of a tax credit similar to the UK's Working Families Tax
Credit is made on an annual basis. In Canada payments of Child
Tax Benefit are made monthly by cheque or direct deposit.
In Australia, families have a choice as to how payments will be
made. They can choose to receive Family Tax Benefit as a direct
payment each fortnight (paid into a bank or credit union) or through
the tax system. Ninety per cent of families in Australia currently
choose to be paid through the benefits rather than the tax system.
If paid through the tax system, payment can be made either directly
through the tax office in the form of a lump sum, or through employers
in the form of periodic reductions in tax instalment liabilities.
During the course of the year, families are able to change their
method of payment at any time.
In the UK, decisions relating to the intervals of payment for
ICC will be taken in the context of the Prime Minister's commitment
that benefit and tax credit payments will continue to be available
on a weekly basis at the Post Office.
Traditionally, as the IFS pointed out, a considerable emphasis
has always been put in this country on getting money to people
when they really need it, and getting it there regularly.
On the other hand, families on middle incomes may prefer payments
monthly or even annually. Payment of ICC will be made electronically
into bank accounts, although the Government has said that "Any
developments will take into account the needs of those who do
not have a bank account."
The acknowledgement of the need for arrangements to take account
of those who do not have a bank account is important, given the
commitment to pay ICC to the main carer. If the main carer does
not have a bank account, the option must be available to receive
ICC in another form.
84. We therefore 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.
Perceptions of a simpler system
85. At grassroots level will ICC paid by the Inland
Revenue really make things simpler? It will be sitting alongside
IS/JSA for people out of work paid by the Working Age Agency and
the Employment Tax Credit, also paid by the Inland Revenue, for
those in work. There will also be Housing Benefit and Council
Tax Benefit, paid by the local authority. Whilst it is unclear
whether Child Benefit will still be paid by DSS, Disability Living
Allowance will be. Other payments for children will include various
children's allowances paid with Incapacity Benefit, Invalid Care
Allowance, and Bereavement Allowance, available from the Working
Age Agency. Although unusual, children's allowances paid with
Retirement Pension (paid by the new Pensions organisation) might
even enter the equation. Where parents have separated, the Child
Support Agency may also be involved. In this complex web of benefits
and credits, the introduction of ICC may not produce much simplification
from the recipients' point of view. For example, Jobseeker's Allowance
for a family is currently paid as one payment. After the introduction
of ICC, that payment will come in two income streams: one from
the Working Age Agency and the other from the Inland Revenue.
Where a parent suffers a sudden drop in income through loss of
a job, the government agencies will have to co-ordinate their
activities to ensure that the two income streams (ICC adjusted
to the maximum rate) are paid at the same time . The Government's
aim for the new tax and benefits system is to enable people to
provide information about their circumstances once, which is then
shared among the different agencies and offices administering
benefits. This is very important. A change of circumstances, such
as a child moving to live with one parent rather than another,
can have knock on consequences across a range of benefits and
tax credits. 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.
146 Appendix 1, para 21. Back
Q 235. Back
Q 234. Back
Q 222. Back
Q 86. Back
Q 185. Back
Q 23. Back
Ev. p. 5, para 6. Back
See Peter Whiteford, Ev. p. 27. Back
See Jane Millar, Ev. p. 5. Back
Q 55. Back
Peter Whiteford, Ev. p. 28. Back
Q 275. Back
Q 188. Back
HMT 2000, 4.19. Back