Select Committee on Treasury Minutes of Evidence

Examination of witnesses (Questions 340 - 359)



  340. But the criticism is not of the credits in principle; it is with the reliefs, the clawbacks, the tapers. Arthur Andersen told us: "The problem with so many of these reliefs is that they are complicated to claim and difficult to administer." Help the Aged said that it is a "massively complex system, endless form-filling for pensioners". Why are you sending pensioners a 43-page form that asks whether they are pregnant or on strike?
  (Mr Brown) You know that that form, which I think existed under the last Government, is being dealt with. Equally, on pensions I would have thought that the most difficult situation for pensioners is the alternative policy that I have seen presented over these last few weeks, where there is a guaranteed winter allowance and a guaranteed free licence for the over-75s and a guaranteed Christmas bonus to be backed up by the rise in the basic pension. The new proposal that I have seen from your Party is to have a choice between the two. Mr Darling at Social Security says that would mean 3,000 additional civil servants simply to administer that. Far from our proposals increasing complexity and the proposals of the other side reducing them, I think it is recognised that when you have to have 3,000 additional civil servants simply to administer one separate policy of the Opposition, that is where complexity arises. As far as pensions and the pension credit system that will operate as an integrated tax and benefit system over time as well are concerned, I believe that over time that will come to be accepted as well.

  341. Why do you think it is that 670,000 pensioners out of two million eligible have failed to claim the minimum income guarantee? Do they not find it too complicated?
  (Mr Brown) The reason that many people have been unable to benefit from the minimum income guarantee until now is because of the capital rules that we inherited from the previous Government, that where people had a limited amount of savings they were deprived of the opportunity of getting the minimum income guarantee. We have now changed these capital rules and over next year and the year after these rules are being modified in such a way that more people, even with modest savings, will be able to get the minimum income guarantee. The fault was in the old capital rules. As far as the claiming of these benefits is concerned, when the Social Security Department ran a take-up campaign, they had, I think I am right in saying, half a million people interested in taking up this benefit. One of the problems was the capital rule and that is now being changed.

  342. But a third of those we were told were eligible to claim have failed to do so. That is the position, isn't it?
  (Mr Brown) I am not sure that that is the position, but obviously you can consult the Social Security Department about these exact figures. What I do know is that when campaigns have been organised for take-up there has been a very big reply. Of two million pensioners who have been written to, and of course the two million pensioners that we mention have been written to, we could not know whether their savings or other attributes of their income met the circumstances that would entitle them to this benefit, but 846,000 did reply, which shows that there is an interest in taking up this benefit, and 846,000 is a very high figure compared with about two million in total who get the minimum income guarantee at the moment.

  343. Why are Help the Aged complaining about the "massively complex system and endless form filling"?
  (Mr Brown) Inevitably when you make a change in a system people take time to adjust to it. I think that is true of any change that has taken place, whether it is the working families tax credit or whether it is, under previous governments, things like decimalisation to everything else. It takes time for people to adjust to these changes. If you agree, as you say you do, with the principle of a credit system, in other words the principle of integrating tax and benefits, then the teething troubles in introducing that system are, if regrettable, worthwhile so that we can get the end result that you say yourself you seek. I am pleased to know that there is now all-party support for the tax credit system that we are introducing.

  344. You have told us this morning that you have had to modify the pensioners' credit with the various capital rules.
  (Mr Brown) Sorry; on this modification the minimum income guarantee is what we are talking about initially and the capital rules that were depriving people of the chance to claim the minimum income guarantee have been changes, yes. As far as the pension credit is concerned, that will be introduced in 2003 and that will be available for pensioners who have income, including income from savings, of less than £200 if they are a couple and less than £135 if they are a single person, and so the majority of pensioners will qualify for this, or the majority will.

  345. The working families tax credit, which people complain is very complex, you are changing that as well, are you not?
  (Mr Brown) The working families tax credit will become the children's integrated credit and an employment credit over time. Again, that is to deal with some of the issues that you yourself and others of your colleagues have raised, that we want the money by 2003 that is available in children's benefits to be paid to the main carer, and that is what will happen in 2003.

  346. It does not sound to me as if it is simplifying it. I will leave it there.
  (Mr Brown) It seems to me, Mr Fallon, that if people support the principle of tax credits, and the principle has now been introduced of course in the United States of America for many years as an earned income tax credit. France is now looking at the introduction of a tax credit. Other European countries are now looking at it. It was the spirit of what was advocated in 1972, what Mr Fowler wanted to do in 1986. If we support the principle of tax credits then obviously we have to deal with the hurdles that exist when you are moving from one system to another, but in the long run an integration of tax and benefits will be a fairer way of dealing with many of the problems that particularly low income households face but generally households of middle and more incomes also face.

Mr Ruffley

  347. Chancellor, have you read the highly damaging allegations in today's Daily Mail about the conduct of investigations into Geoffrey Robinson and of the Minister? I ask that question because part of the hearing today covers the Treasury remit and machinery of government questions inside the Treasury.
  (Mr Brown) Mr Chairman, I am going to deal with serious issues today. I am happy to answer all the questions about the Budget and indeed about your previous report and your investigations into other issues like Equitable Life, but the Treasury has already issued a statement about this completely misleading report in the Daily Mail and I propose to say nothing more than that.

  Chairman: Not all of us believe that the Daily Mail is necessarily a fountain of truth.

Mr Ruffley

  348. There are remarks in reported speech by Sir Terence Burns who makes some highly damaging allegations. You are not prepared to answer those today?
  (Mr Brown) There are not statements made by Sir Terence Burns. If there are statements made by Sir Terence Burns, who is now Lord Burns, perhaps you will draw my attention to them.

  349. Yes, I will, if I may. Do you remember a telephone call you made from New York on 5 December 1997 to Sir Terence Burns?
  (Mr Brown) That is nothing to do with statements made by Sir Terence Burns, or Lord Burns, and I am not prepared to diminish this—

  350. You cannot remember a telephone call—
  (Mr Brown) Mr Chairman, I am not prepared to diminish this hearing on the Budget by getting into arguments about gossip.

  Chairman: We do not have to follow what the Daily Mail says.

  Mr Ruffley: There are actually quotes, Mr Chairman, and I thought the Treasury remit included in this hearing—it is written down by the Clerk about the Treasury remit and how the Department operates.

  Chairman: That has got nothing to do with the allegations in the Daily Mail.

  Mr Ruffley: But the way in which the Chancellor has managed ministerial responsibility—

  Mr Beard: This is a meeting about the Budget.

  Chairman: We can look at the remit and then if you can ask questions directly on the remit, that is fine, but—

  Mr Ruffley: I will if I may.

  Chairman: Well, get on with it then.

Mr Ruffley

  351. You had a discussion on 5 December 1997 with Sir Terence Burns where you asked him to approve a statement where he approves the registering of interests by Geoffrey Robinson; is that correct?
  (Mr Brown) There are no quotations from Lord Burns among—

  352. Is that correct?
  (Mr Brown) I said, if you could point to quotations from Lord Burns that the Daily Mail had attributed to him correctly,—

  353. Yes.
  (Mr Brown) But you have not done that, Mr Ruffley.

  354. I will do that now, Chancellor. In a conversation he said, "I refuse to be involved—"
  (Mr Brown) Mr Chairman, can I say first of all—

  Mr Ruffley: Did he say that to you, Chancellor, in that conversation?

  Chairman: There are not any—

Mr Ruffley

  355. The quotation is, "I refuse to be involved . . .".
  (Mr Brown) Mr Chairman, I was invited along to this Committee to discuss the Budget and related matters. This is nothing to do with—

  356. Are you denying Sir Terence Burns, as he then was,—
  (Mr Brown) This is nothing to do with this. I issued a statement saying that this is fictional nonsense. You have been unable to point to quotations from Lord Burns that are attributed to him directly because there was none—

  357. It is directly attributed to him.
  (Mr Brown)—because there was none in the article.

  358. Saying, "I refuse to become involved—"
  (Mr Brown) I am not in a position to answer based on non-quotations from Lord Burns.

  Mr Beard: This is nothing to do with the Budget.

  Judy Mallaber: Chairman, this is not about the Budget.

  Mr Ruffley: I think the record will show that he is not prepared to answer that question. There is a quote about this given by Sir Terence Burns on 5 December 1997.


  359. Let us get on to the remit. We have produced a report and that was what I thought you were about to cover. You are actually just dealing with a scurrilous article in the Daily Mail.
  (Mr Brown) Mr Chairman, I have already issued a statement on this this morning—in fact, the Treasury has issued a statement—saying that these matters are fictional nonsense. I am prepared and happy to deal with the very serious issues arising from the Budget and the management of the economy. I am not prepared without prior notice to go into issues relating to gossip and relating to fiction that I have no knowledge of—

  Mr Ruffley: Did you order an independent inquiry into Geoffrey Robinson?

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