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Indirect Taxes (Disclosure) Bill

Mr. Mark Hoban accordingly presented a Bill to require retailers to include on receipts the amount of VAT and excise duties paid on goods and services purchased: And the same was read the First time; and ordered to be read a Second time on Friday 19 July, and to be printed [Bill 155].

Tax Credits Bill (Programme) (No. 2)

Motion made, and Question put forthwith, pursuant to Order [28 June 2002],

Question agreed to.

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Orders of the Day

Tax Credits Bill

Lords amendments considered.

4.20 pm

Mr. Speaker: I draw the House's attention to the fact that privilege is involved in Lords amendments Nos. 2 to 6, 11, 15 to 17, 19, 22 to 27, 32, 35 to 37, 39, 52, 53, 66, 71, 75, 76, 78, 80, 81, 85 and 102, which are to be considered today. If the House agrees to the Lords amendments, I shall ensure that an appropriate entry is made in the Journal.

New Clause

Lords amendment: No. 1, after clause 2, to insert the following new clause—Annual report to Parliament

The Paymaster General (Dawn Primarolo): I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Speaker: With this we may take the Government amendment in lieu, a new clause—Annual reports.

Dawn Primarolo: Noble Lords introduced the new clause in a desire to ensure that Parliament was furnished with sufficient information about the operation of tax credits properly to scrutinise that operation. That is undoubtedly a wholly desirable intention and the Government wish to ensure that there is maximum transparency in providing information on the operation of tax credits and in enabling proper scrutiny.

As Baroness Hollis explained in another place, the sort of information sought by the proposed report will be available through existing channels, primarily the board of the Inland Revenue's annual report, which is laid before the House each year. Nevertheless, we are sympathetic to the Lords' view that it would be useful for the relevant information to be contained in a single document, and I am therefore pleased to move a Government new clause in lieu of the Lords amendment.

The Government new clause covers much the same ground as the amendment made in another place. There are some changes in the drafting, and it would be helpful if I explained them in more detail.

First, it is properly up to the board of the Inland Revenue, rather than my right hon. Friend the Chancellor, to produce such a report and present it to the Treasury. As hon. Members know, the Inland Revenue reports to Treasury Ministers. That is why subsection (3) of the new clause imposes on Treasury the requirement to lay the report before both Houses.

Secondly, the Lords amendment intended that the report should include the amount of tax credits paid out each year as reported in the Inland Revenue's departmental accounts. That was not clear in the Lords amendment and subsection (2)(a) of the Government new clause sets it out in detail.

Let me consider the other items that we propose to cover in the annual report. Subsection (2)(b) makes it clear that the report will set out the number of awards of each tax credit in the year. The Inland Revenue currently publishes detailed statistical reports on the number of awards of

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working families tax credit and disabled person's tax credit on a quarterly basis. However, the Government understand the value of including information about awards in an annual report on tax credits. That matter is therefore now covered.

Subsections (2)(c), (d) and (e) cover information relating to compliance inquiries, penalties and prosecutions. Of course, there must be the utmost transparency in reporting the Inland Revenue's compliance activity. This was a matter of considerable concern to hon. Members during our debates on the Floor of the House and in Committee. Much of this information is already provided in relation to the working families tax credit and the disabled person's tax credit, as part of the Inland Revenue's annual report, but the Government acknowledge the convenience of bringing all the information together in a single report.

Mr. Steve Webb (Northavon): On a point of clarification, I am following the Paymaster General's references to subsection 2(b), 2(c), 2(d), and so on, in the Government's amendment in lieu. However, these provisions are numbered 1(b), 1(c), 1(d), and so on, on the Order Paper, and I wonder whether I have a different version to the one that the right hon. Lady is looking at. It is on page 2341 of the Order Paper. I just want to be sure that we are looking at the same amendment.

Dawn Primarolo: I most certainly hope that we are looking at the same amendment, otherwise I would be moving something that was not before the House, which would be even more difficult. I know that the House fully appreciates that I always try to be as helpful as I possibly can, but anticipating the views of the House on a matter that is not yet before it would be beyond even my ability to ensure that Members are properly advised. Perhaps the hon. Gentleman will allow me to finish making these points, because I want to make it clear that the amendment before the House today is the Government's amendment to replace the Lords amendment. It provides for the same information, but in a form that is readily translatable into our legislation. I will return as quickly as I can to the hon. Gentleman's question about whether we should be referring to subsection 1(c), (d), (e) and (f); certainly, in terms of how the amendment is drafted, it should read "1(a), 1(b), 1(c), 1(d)". I can only say that perhaps when I was putting my notes together, I transposed numbers that I should not have done.

Subsections (c), (d) and (e)—I shall stick to calling them that—cover compliance inquiries, penalties and prosecutions. As I was saying, there was much discussion in the House and in Committee about this. Much of this information is already provided in relation to the working families tax credit and the disabled person's tax credit, as part of the Inland Revenue's annual report, but hon. Members and noble Lords made the point that they would prefer it to be brought together in one publication. To be perfectly honest, I do not think that the House would expect us to disagree on this point about duplication, in such an important piece of legislation, for the sake of an argument about whether the information has already been published in one report, or whether it should be published in another.

Finally, the House will no doubt be aware that the new clause does not include reference to the cost to employers of operating tax credits. The Government continue to take

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the view that it would not be appropriate to provide an estimate of employers' costs in an annual report. That matter is properly and comprehensively addressed by the regulatory impact assessment of the Bill. That assessment is being revised in the light of announcements made in the Budget, and the revised assessment will be made available to Members of both Houses.

Regulatory impact assessments are the right place to deal with the impact of tax credits on employers. That is the process that the House now uses to assess all its legislation, in terms of its likely impact on employers. The Board of Inland Revenue cannot be responsible for accounting formally for costs other than its own. More important, the assessment of employers' costs does not need to be taken on an annual basis. The assessment of the impact on employers is based on the provisions of the Bill. Such an assessment will not fluctuate significantly year on year, because there is a constant set of legal obligations. As the obligations of employers do not change, the assessment of the impact on employers is not likely to change.

4.30 pm

I remind the House that the Government produce comprehensive impact assessments whenever legislation that contains a significant regulatory impact is introduced or amended. The Government take the regulatory impact of legislation seriously. We introduced the concept of a regulatory impact assessment, and we intend to be nothing less than transparent on this issue.

I do not want to revisit the debates that we had in Committee about the changes in the Bill, such as the lessening of the requirement on employers and the £1 million a year saving that is expected as a result of these changes, which has been widely welcomed by employer groups. I hope from what I have said about the importance of regulatory impact assessments that the House will appreciate that we keep a close eye on these matters.

The Government have listened sympathetically to the arguments put in the other place, as we did on many issues when the Bill was considered in Committee in this House. We have considered the arguments put in the other place for an annual report, and we want to be helpful to their lordships and to hon. Members in this House. I urge the House to accept the Government's amendment in lieu of their lordships' amendment. The only issue that the Government's amendment does not deal with is the annual assessment of the impact on employers. To all other intents and purposes, the Government amendment is the same and is correctly drafted to fit into our legislation.

I am grateful to the hon. Member for Northavon (Mr. Webb) for correcting my references to subsection 2: I should have said subsection 1. I am sure that the record will ensure that that correction is made.

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