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6.55 pm

Mr. Mark Hoban (Fareham): This Bill was represented earlier as a simplifying measure that would make life easier for businesses, claimants and other people. Clause 1 refers to


That sounds straightforward. The clause goes on to list the existing benefits that will be abolished by the Bill, including the children's tax credit, the working families tax credit and the disabled person's tax credit. It will also abolish the family premium in respect of income support and income-based jobseeker's allowance and

It will abolish the relevant sections of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 and the employment credit for older people known as new deal 50-plus. It sounds like a great simplifying measure yet, as with a number of such measures, simplicity is an illusion. In the clauses on child tax credit and the working tax credit, there are 14 different elements or calculations, which specify that entitlement is dependent on the age of children, the number of children in the family, whether someone is disabled or severely disabled, whether they are above a certain age and the number of hours that they work.

Regrettably, therefore, the Bill is not the simplifying measure that it was described to us as, and still includes many aspects of the previous benefits regime, which will cause much dissatisfaction among my constituents, whose biggest complaint about navigating the benefits system is its complexity. They feel that they cannot be certain how benefits have been, are being or will be calculated. Indeed, one of the biggest items on benefits in my postbag is what happens when benefits change, which causes many problems for my constituents. They would welcome a simplifying Bill because it is hard for them to predict what will happen if their circumstances change. In that respect, the Bill is disappointing.

The Bill is also disappointing because it does not include the detail that we need to scrutinise it effectively in the House and in Committee. The lack of detail affects three important areas: the cost to the Exchequer, the people who will benefit, and businesses. Regrettably, in the pre-Budget report, the Chancellor did not see fit to comply with the provisions of the Finance Act 1998, which requires Ministers to adhere to the code of fiscal stability. The code requires the Government to assess the fiscal impact of policy changes and disclose that in a note in the pre-Budget report. It is disappointing that the

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Government have not done so because it is difficult to discuss the Bill without knowing how much they intend to spend on tax credits as a consequence of introducing it.

The reason why the Government have not done that may lie in the continuing disputes between the Prime Minister and the Chancellor about how much money should be spent and where. Should money be spent on education or the health service, or should more be spent on tax credits? When we get the answer to those questions, we will be able to engage in a necessary debate in the House to discuss how the Bill will affect my constituency and constituencies throughout the country.

We need to know the rates of the tax credits, the tapers and the thresholds, for without that, how are we to judge whether the framework Bill will help those who need help most? The Bill is vague and unsatisfactory in that respect. It is not surprising that external commentators such as the Institute for Fiscal Studies have been forced to rely on sophisticated guesswork as the basis for the assumptions that they use to model the impact on ordinary families of the changes that will be brought about by the Bill. That will minimise the scrutiny that the Bill will receive in this place.

The lack of detail in the Bill will affect the assessment of its impact on businesses. The Paymaster General was upbeat about the regulatory impact assessment and spoke about a £10 million reduction in the costs that businesses face, but until we know how many people will benefit and how many will lose from the Bill, it is difficult to assess the benefit to business, if indeed there is one. The Government trumpet the virtues of the annual assessment, but the obligation to look at the change in circumstances of people who benefit from the Bill will lead to a great number of changes in the money that people receive, either directly from the Inland Revenue or through their pay packet, and each of those changes will have an impact on business. Until the Government produce the detailed figures, we will not know what the impact on British business will be.

Phil Hope: The hon. Gentleman may not have seen the research paper produced by the House of Commons Library on the Bill. On page 42 there is an excellent breakdown of the Bill's impact on businesses. I will not bore him by reading it out—you would not let me, Madam Deputy Speaker—but suffice it to say that the reduced burden on businesses is estimated to be £10 million a year. That directly contradicts almost everything that he said.

Mr. Hoban: No, it does not. I said that the Minister identified a £10 million saving, but because the Bill does not deal with the number of people who will claim benefit and at what rate, we cannot be certain how many people will be covered by the Bill. We do not know.

Phil Hope: I shall not quote it at length, but the Library research paper states that the regulatory impact assessment

Again, the hon. Gentleman is wrong on that point.

Mr. Hoban: I am not wrong. Until the Government publish the details of who will qualify for the tax credits,

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it is impossible to determine how many people will benefit from them. The Government have made some assumptions that handily cancel each other out, but until we have the full details—the regulatory impact assessment does not take into account the extent of the Government's changes, and we have not been told what the impact of those changes will be—we do not know how many people will receive the tax credits. The Government have not told us. Any assessment of the regulatory impact is based on assumptions that will be proved valid only when the rates and the tapers are announced by the Chancellor in the Budget. The estimates to date are based on assumptions, not reality.

We know from what the Minister said earlier that at the time of the changeover there will be winners and losers from the reforms, and a great deal of disruption to business. The Government have rightly recognised that there is a risk of people not being paid their benefit during that period. That is why I welcome the Government's suggestion that in the run-up to the changeover, the payment of working families tax credit and other tax credits should be made directly by the Government and not by employers.

The lack of detail in the Bill masks its likely effects on the Exchequer, on people who receive the benefits and, in spite of the comments of the hon. Member for Corby (Phil Hope), on business.

Specific aspects of the Bill cause me concern. Historically, benefits have been calculated on the basis of people's needs at that time. The Bill moves away from that to an annual assessment, taking account of changes in their circumstances over the course of the year. I am not clear what parameters will be used to assess whether a claim should be submitted for reassessment.

In some circumstances, that is clearly necessary—for example, if a child is born, if a couple breaks up or if a couple gets married—but what happens to someone who works more than 30 hours a week, and receives an additional credit, as at present? At what point will he have to register a reassessment of his tax credit if he works fewer hours? Will a reassessment be necessary if he works 29 hours, 29 hours 55 minutes or 28 hours a week?

We need to know such details. We are asking people to keep a record of their hours and make an assessment of future hours. I hope that in Committee the Minister will present the draft regulations, so that we can see what parameters will be used in such situations. We must reduce the burden of keeping detailed records for people, while recognising that we need to target help where it is most needed. By disregarding a change in hours, we may be giving help to people who do not require it.

Hywel Williams (Caernarfon): Does the hon. Gentleman recognise that that is a particular problem in seasonal employment such as tourism, which is a major employer in my constituency? The problems may not be lessened by the Government's proposals.

Mr. Hoban: The hon. Gentleman makes a valid point about people who do seasonal work or whose hours vary significantly, depending on other factors. I am worried that we are placing a great burden on those who need help most and who may have difficulty in predicting the number of hours that they will work in the course of the year. We need to think carefully about the people who are subject to the regulations and claim credits for certain aspects of their work or their family life.

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We should be equally mindful of the fact that when people's circumstances change, it can have a significant impact on the benefit that they receive. It may not be clear to people that they need to apply for reassessment. They may forget that a change in their circumstances leads to a change in their assessment for tax credits. I recently dealt with a case in my constituency in which a constituent was landed with a large bill as a consequence of a change in circumstances that she had not realised would lead to a change in the assessment of her benefit.

The Bill sets out penalties where information is supplied to the Inland Revenue fraudulently or negligently. Some people may supply information incorrectly, through no fault of their own. I hope that the provision will not apply to them and that they will not receive fines.

A further aspect of the Bill that concerns me is the treatment of children. My hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) and the hon. Member for Northavon (Mr. Webb) raised the treatment of child tax credit in two-earner and single-earner families. I shall not go down that route, but another concern is the child care tax credit. It is important to encourage parents to decide how best their children should be cared for. The Bill perpetuates the mistake that was made in the previous legislation on child care tax credits by placing financial value only on formal child care. Many parents would prefer sisters, aunts, mothers, fathers or grandparents to look after their children, rather than sending their children to a nursery or a child minder. Of course, they will not receive tax credit in respect of child care because informal child care arrangements are not covered by the Bill. Baby-sitters who are required to come into the home to look after children while parents are working on a night shift are not covered either. I ask the Paymaster General to reconsider the issue, because I believe that we need to recognise the value of child care even if we are not required to pay for it.

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