Tax Credits Bill

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Mr. Swire: The Minister asks why we should reorder a system that works ''perfectly well'', but does ''perfectly well'' mean the swindling of about £350 million a year from the tax credit system? Does she regard that as working well?

Dawn Primarolo: With respect, I would need to look at the exact figures that the hon. Gentleman is quoting, as I do not recognise them. It is true that people try to swindle the tax system. It is a very interesting issue at the moment, although I will not digress. Self-assessments are being sent in at the moment, and they give an interesting perspective on people's attitudes. Unfortunately fraud is a fact of life. The amendments are to determine whether we have proper procedures in place and whether they will improve. Somehow, the official Opposition seem to take the view that if people are at the tax office in person, they are less likely to commit an offence. I do not believe that. It is not necessary for them to do that.

We have heard about the costs, and suggestions that the proposal is totally unnecessary, utterly disproportionate and far from clear. There would be a lot of sweeping requirements and we would need to employ more staff. The staff we use to track down fraud would be too busy interviewing people about their application forms.

The hon. Member for Arundel and South Downs made another point, which we can return to during the appropriate clauses, about people being aware of their rights and proper communication. He raised questions about the form and how we ensure that the take-up is at the correct level. I will not go any further down that route, because I do not want to try hon. Members'

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patience, and I will be able to return to the issue anyway.

If the hon. Gentleman compares the take-up in the first year of family tax credit with the take-up in the first year of working families tax credit, he is not on thin ice: he is actually in the water and out of order in criticising the take-up of WFTC. On the question of applying all appointees—

Mr. Clappison: In order for the Minister to sustain the proposition she has just made, perhaps she could tell us how many people are eligible for working families tax credit.

Dawn Primarolo: Oh dear. I thought the hon. Gentleman might actually make a good point. The take-up of working families tax credit in its first year was 76 per cent. which is close to the 81 per cent. take-up of family credit in its final year and much higher than the figure for its first year, which was only around 60 per cent. We should stop flogging a dead horse and move on. Given that working families tax credit is widely celebrated and greatly appreciated by those who receive it, and it has helped endless numbers of families, perhaps we can move on.

I return to the requirement that all appointees attend an interview with a member of Inland Revenue staff. A blanket requirement of that sort would be disproportionate and ineffective. The acceptance of claims made by an appointee on behalf of other claimants is nothing new. It happens now with working families tax credit and a range of social security benefits. Our intention is to allow those arrangements to continue when the new tax credits are introduced. Clearly, they are buttressed by arrangements that are already in force. We will discuss the penalty and investigation powers later.

The most effective way of tackling fraud is not to impose indiscriminate requirements for people to attend interviews, but to use systematic risk assessment techniques to identify the cases that carry the greatest risk. We must ensure that how we pay people their entitlements is open to minimal fraud, misuse and direction to other individuals. That is covered in the Bill.

I ask the hon. Member for Arundel and South Downs to withdraw the amendment, but if he wants to vote on placing such a huge burden on the Inland Revenue, I will ask my colleagues to oppose it. I look forward to seeing his estimate of how much it would cost if Opposition Members were foolish enough to think that they could achieve what is suggested in the amendment.

Mr. Clappison: Before my hon. Friend the Member for Arundel and South Downs responds to the Minister's comments, I will take issue with some of her points. Her response was in many ways understandable and not unexpected, but I am not sure that she did justice to the principle that lies behind the amendment. I do not accept the view, which seemed implicit in her response, that a personal interview does not do any good in tackling fraud. That is not in keeping with other Government policy,

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in which they postulate the benefits of interviews. For example, the Government require applicants to have job-focused interviews, although that is in a different context and not necessarily to deal with fraud. There are benefits in seeing someone in person, and in that context, Mr. Wray—

The Chairman: Order. To be helpful to the hon. Gentleman, the Chairman's name is Mr. Hood.

Mr. Clappison: I have got off to a bad start. I beg your pardon, Mr. Hood. I will need a personal interview for that.

There would be benefits in having an interview in this context. The prospect of one may deter someone who is minded to commit fraud from setting out on that course. It may result in the person who carries out the interview having the feeling that something is not right and forming a suspicion that they would not have formed from just looking at the papers.

Dawn Primarolo: Scientific analysis.

Mr. Clappison: We will come to that in a minute.

The other benefits would be for the honest applicant. We are putting in place a system that many people believe will be more complicated on changes of income. Applicants will be required to do a great deal, including monitoring their income and changes in circumstance, and many may find it helpful to have a personal interview.

Mr. Swire: Does my hon. Friend remember that, according to a report in The Economist last year on the working families tax credit, only one in 10 tax inspectors could fill in the application form correctly?

Mr. Clappison: That is an important point, and we are now moving to a system that the Institute for Fiscal Studies has said will place more requirements on the applicants. They will have to monitor their income and changes during the year, which might be a substantial burden for many people.

The Minister spoke about clause 14 and the requirement that the board must examine and be satisfied with claims. Will she tell us whether that clause makes it possible for the board to require people to come in for personal interviews? If so, how many cases will there be and under what criteria will that apply?

Dawn Primarolo: I am not saying that personal interviews are not in order if risk assessment indicates that they are necessary for more rigorous consideration. I was rejecting the idea that we should have 5 million. We do not call in every taxpayer to claim their relief, so why should we have interviews in this context?

Mr. Clappison: Will the Minister, perhaps after receiving some advice, estimate in how many cases and in what circumstances such interviews will apply? There are benefits in seeing somebody in person. Our justice system operates on the basis of people having to give evidence in person rather than just making a written statement. We hope that the Minister will be careful about fraud. Although her response is not entirely unexpected, I hope that she understands that

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we are concerned that every possible way of combating fraud be adopted in the Bill.

Mr. Flight: The Minister will know that the institution of interviews was introduced in the fast-track winding up of people's estates, which has been a successful experience.

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It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Four o'clock.

The following Members attended the Committee:
Hood, Mr. Jimmy (Chairman)
Casale, Roger, Mr.
Clappison, Mr.
Cruddas, Jon
Flight, Mr.
Hoban, Mr.
Luff, Mr.
Mole, Mr.
Pond, Mr.
Primarolo, Dawn
Sheridan, Jim
Southworth, Helen
Sutcliffe, Mr.
Swire, Mr.
Webb, Mr.
Wright, Mr. Anthony D.
Younger-Ross, Richard

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