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Michael Jabez Foster (Hastings and Rye) (Lab): Is the Minister aware that people are frequently phoning the Department and being told to leave it until the end of the year? That is one of the problems. It is an administrative problem and I have considerable evidence of people being told not to supply their information, but to wait until the end of the year so that it can be sorted out then.
Mr. Browne: In some circumstances, that is appropriate advice, but only when the increase comes in underneath the £2,500 disregard; otherwise, it would not be appropriate advice. I say to my hon. Friend as I have said to other hon. Members that if he can bring the details of the individual calls to our attention, we will look into them and ensure that the training for the helpline takes such problems into account.
Mr. George Mudie (Leeds, East) (Lab): I wonder if I am alone in listening to this debate without knowing which of the ombudsman's 12 recommendations are not being accepted. The hon. Member for Yeovil (Mr. Laws) asked a specific question and the Minister said that he accepted that particular recommendation from the ombudsman, so will he tell us which of the recommendations are not being accepted?
Mr. Browne:
We have already explained the position on complete write-off and, as I have already told the House, there is an ongoing discussion between the Paymaster General and the authors of the report. My right hon. Friend met Citizens Advice and the ombudsman separately on 5 July to discuss the recent reports. I have already referred to her statement of
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26 May and said that the Revenue and Customs were taking matters forward. The Paymaster has agreed to provide a formal response to the ombudsman's recommendations and that will be issued in due course. I am not in a position to provide the House with that information today. However, the matter of complete write-off, which I understood the hon. Member for Yeovil to be raising, has already been explained.
Mr. Laws: I am grateful to the Chief Secretary for giving way again, because I do not want to conduct debate on the basis of an undertaking that proves not to be accurate. Will he confirm again whether the Government have now accepted the ombudsman's second recommendation on page 8 of the report?
Mr. Browne: If the hon. Gentleman will allow me, all the ombudsman's recommendations are currently under discussion. In due course—[Interruption.] I thought that I had already indicated to the shadow Chancellor that I was not presently minded to concede the issue.
Mr. Laws: Will the Chief Secretary give way?
Mr. Browne: I want to make some progress and take the opportunity to announce plans for providing child support through child tax credits for claimants on income support or jobseeker's allowance.
On 22 June, my right hon. Friend the Paymaster General told the House that, following her statement of 21 October 2004, she continued to keep under review the planned migration to child tax credit of those families still receiving support for children through income support and jobseeker's allowance. Since then, she has considered very carefully the reports from the ombudsman and NACAB. She has also considered the views expressed by many hon. Members, for which we are grateful.
I confirm that it remains the Government's firm intention to migrate all income-based support for children into a single, seamless stream of support, delivered through child tax credit. However, after consultation with my right hon. Friend the Secretary of State for Work and Pensions, my right hon. Friend the Paymaster General has decided that, subject to further review and consideration over coming months, the migration of the remaining families will begin during 2006. That will safeguard continuity of payment, and provide reassurance to that particular vulnerable group. Meanwhile, I again confirm that families will continue to receive the same level of financial support through their benefits as they would have received from child tax credit.
As I have already told the House, nearly 10,000 families in each constituency now benefit from tax credits. Let no one have any doubt: tax credits have brought real progress in delivering key priorities for welfare reform. They direct more help to those who need it most, they respond to significant changes in circumstances and income, and they give fairer results. We acknowledge that there have been administrative problems, but the policy is the right approach, which is aimed at tackling poverty and unemployment and helping out hard-working families.
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Tax credits have made a real difference to people. That difference demands the respect of this House, and of Opposition Members.
4.56 pm
Mr. David Laws (Yeovil) (LD): This important debate has so far not been very enlightening or useful. I hope that the Government's policy on tax credits will be a little clearer at the end of the debate than has been the case over the last 10 minutes. This debate is vital in holding the Government to account in respect of a policy area where there have been serious problems, and also because the administrative problems in the tax credit system have hit people on the lowest incomes in the country—the very people whom the Government's policies are intended to help.
The hon. Member for Normanton (Ed Balls) has been a big contributor in this policy area and many others. Given the problems of the last couple of years, I can quite understand why he would prefer to concentrate on the big picture rather than on the smaller one. He is entitled to raise some of the matters that he has raised, and I shall touch on some of them at the end of my remarks.
The hon. Gentleman and the Chancellor introduced tax credits to help people on low incomes, so they must be worried about the problems that have been created. The book by Robert Peston—in which I believe the hon. Gentleman played a part—contains a passage from an interview with the Chancellor on tax credits. The thrust of the Chancellor's remarks is very similar to what the hon. Gentleman said earlier. The right hon. Gentleman said:
"I think tax credits have been misunderstood. People have focused on the mechanism, a bureaucratic issue, when it is in the end about citizenship, integrating tax and benefits. In the long term, these will come to be accepted as part of the economic and social framework of the country."
The Chancellor and the hon. Gentleman may well be right, but meanwhile people suffering from the system's endemic problems of overpayment and underpayment turn up at advice centres in every hon. Member's constituency. If the hon. Gentleman intends to give that answer to those who come to see him, I assure him that he will receive pretty short shrift.
Ministers have been aware of the problems for many months, at least, and have made several statements in an attempt to resolve them, and I acknowledge that the Chief Secretary helpfully accepted a lot of interventions. However, he was depressingly unclear about which recommendations in the ombudsman's report have been accepted and which have not. When the Paymaster General winds up, I hope she will give a clear answer to that. In her 22 June statement, she gave the impression that she accepted the ombudsman's report in total. However, when we look at the detail we find that what she actually said was that she accepted the administrative changes proposed by the ombudsman. She did not say that she accepted all the recommendations, and it is of course the non-administrative changes that are the most significant. I thought we were making progress when the Chief Secretary indicated about 10 minutes ago that the Government accepted the ombudsman's second recommendation. I am happy to take an intervention from the right hon. Gentleman if he wants to clarify that
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point. The recommendation is crucial and touches on whether the recovery mechanism for tax credit is lawful or whether it constitutes maladministration.
The Chief Secretary clearly indicated that the Government would accept the ombudsman's second recommendation not to claw back overpayments until an assessment had been made, under the code of practice, of whether they should be clawed back. Now, under pressure, and with notes flying in various directions, the Chief Secretary has gone back on the commitment he made 10 minutes ago. I think all he was saying was that the Paymaster General visited the ombudsman recently and has indicated that she will publish a response to the ombudsman's report. The ombudsman has told me that she hopes to receive that response shortly. When the Paymaster General winds up the debate, will she confirm that that is the situation and, following the questions from Labour Back Benchers, may we have a clear statement about which of the ombudsman's recommendations have been accepted? The Government do not seem to have clearly accepted recommendations 2, 6, 10 and 11, yet they are the most important ones, so I hope the Paymaster General will make the situation clear.
I want to focus on the administrative problems in the tax credit system first and then to make some more general comments in my conclusion. I began by expressing frustration that Ministers are taking so long to resolve the problem. There is frustration not just among Opposition Members, but among groups such as the citizens advice bureaux, which have a deep commitment to tackling child poverty and poverty in the working population. Before the debate, Citizens Advice published a briefing note, which is a good and powerful critique of the existing problems in the tax credit system. I am sorry that the Chief Secretary has not seen it. I shall certainly make sure that he does so after the debate. I shall read from the beginning of the document, which states:
Citizens Advice picks out three points, and if the Paymaster General can give us any enlightenment about those it would be most welcome. Citizens Advice states:
"There has been no commitment to place an absolute limit on the amount that can be recovered from families who have been overpaid."
We need clarification about that. Citizens Advice continues:
which has certainly been confirmed by the exchanges in our debate today—
"as the onus remains on individual families to challenge the decision to recover, leaving unknown numbers of people repaying overpaid tax credits which may have resulted from Revenue errors."
That was a problem that the ombudsman thought might mean that the recovery mechanisms were in breach of the law. She made it clear that at the very least she considered that it constituted maladministration, which alone is a serious enough assertion.
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The final point about which Citizens Advice was unhappy was this:
I think we heard confirmation in the exchanges between the Chief Secretary and the shadow Chancellor that the Government would not accept that particular recommendation, but given the uncertainty over the ombudsman's other recommendations, I shall not be surprised if the Paymaster General tells us that she has not actually reached a settled decision on any of the issues and that she intends to publish a letter responding to the ombudsman's report at some unknown stage over the next few weeks. However, if we could have some clarification I should be grateful—[Interruption.] As the hon. Member for Buckingham (John Bercow) indicates, I am always willing to give way at any moment on such points.
I said earlier that these issues are important to Members on both sides of the House and, in the debate in Westminster Hall on 7 June, we heard contributions not only from Opposition Members but from the hon. Members for Nottingham, North (Mr. Allen), for Stroud (Mr. Drew), for Selby (Mr. Grogan), for North Durham (Mr. Jones) and for South Derbyshire (Mr. Todd), all of whom were concerned about the impact on their constituents of the problems with the tax credit system. Several of them said that they wanted to see not only administrative changes but fundamental change to the tax credit system of the type that the shadow Chancellor mentioned at the end of his speech.
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