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Mr. Ivan Lewis: The first Saving Gateway ran from August 2002 to November 2004 and was piloted in five parts of the country, alongside the Department for Education and Skills Community Finance and Learning Initiative. In the pre-Budget report the Government announced the second Saving Gateway pilot to build on the evidence base. This pilot is being run in the same areas as the first, with one additional area to link in with educational support.
The second Saving Gateway pilot will test alternative match rates, different monthly contribution limits, the effect of an initial endowment, and the support of a wider range of community financial education bodies. It will also be made available to a wider range of income groups than the first pilot and will inform the development of matching as a central pillar in Government strategy for promoting saving and asset ownership for all.
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Mr. MacNeil: To ask the Chancellor of the Exchequer (1) on what dates (a) he and (b) his Department discussed with the Scottish Executive the EU rules governing the tendering process for Scottish Fisheries Protection vessels; and what (i) information and (ii) advice he has given to the Scottish Executive on the application of these rules in relation to the requirement to award contracts competitively, with particular reference to whether it is possible to award such contracts solely to British shipyards; 
(2) what representations he has made to the European Commission on behalf of the Scottish Executive in relation to the rules governing the tendering process for Scottish Fisheries Protection vessels; and what (a) information and (b) advice he has received from the European Commission on the application of the European Union procurement rules in this case. 
Mr. Des Browne: Neither I, nor my Department, have had discussions with the Scottish Executive or the European Commission regarding the tendering process for the Scottish Fisheries Protection Vessels. Responsibility for the application of the EU procurement rules rests in this case with the contracting authority, the Scottish Fisheries Protection Agency. Since devolution, the Scottish Executive has overall policy responsibility for public procurement in Scotland in devolved areas.
Danny Alexander: To ask the Chancellor of the Exchequer (1) under what circumstances from April 2006 funds from a self-invested personal pension can be invested in properties already owned by the fund holder prior to April 2006, or prior to the fund being setup; 
(4) if he will estimate the net effect on revenues to his Department of the changes to self invested personal pension funds due to be implemented in April 2006 for each of the next five financial years; 
Mr. Ivan Lewis:
Pension tax simplification replaces the numerous existing tax regimes with a universal regime for tax-privileged pension savings providing greater flexibility to some 15 million pension savers. Currently most pension funds may invest in property, and many do. Under the new simplified regime self-invested personal pensions (SIPPs) and small self-administered schemes (SSASs) may invest in all types of property including residential property from 6 April 2006. Around 200,000 people, compared to over 15 million pension scheme
12 Sept 2005 : Column 2401W
members, hold these specialist pension vehicles. Creating a single set of allowable investments across all pension schemes fits the requirement to create a single regime for tax privileged pension saving and corrects an existing distortion by giving investors greater choice.
if the property is made available to a member of the scheme or members of their family it will give rise to a benefits in kind tax charge if a market rent is not paid (even if they choose not to use it);
although any rental income or capital gains from the disposal of the property will be tax free in the pension fund when the money is extracted it will be taxed at 30 per cent. (higher rate tax at 40 per cent. on 75 per cent. of the gain assuming 25 per cent. is taken as a tax free lump sum) which is higher than the rate under the CGT regime payable after the property has been held for seven years;
maximum tax relief on contributions made in any year is 100 per cent. of UK chargeable earnings, subject to an annual allowance set initially at £215,000. Tax relieved pension savingsare also subject to a lifetime allowance initially set at £1.5 million.
Therefore, although the measure will increase the number of pension funds that can invest in residential property, these factors will mean that for most people(including the relatively few affected by the liberalisation) residential property will not be an appropriate investment.
The regulatory impact assessment (RIA) Simplifying the Taxation of Pensions" published in April 2004, which can be found at http://www.hmrc.gov.uk/ria/simplifying-pensions.pdf set out an assessment of the potential impact of the whole pensions simplification package, including the changes to the lifetime allowance and ages at which pensions can be taken, together with allowing residential property into SIPPs and SSASs. These elements cannot easily be separated and therefore the RIA estimates the overall cost of the pensions simplification package to the Exchequer at around £¼billion within four years. Paragraphs 55 and 56 deal specifically with the potential consequences of allowing residential property into SIPPs and SSASs.
Bob Spink: To ask the Chancellor of the Exchequer if he will list (a) the special advisers in his Department, (b) their specific areas of expertise and (c) the total cost of employing them in the latest year for which figures are available. 
John Hemming: To ask the Chancellor of the Exchequer what formula is used for calculating the rate at which tax credit overpayments are recovered from recipients; how many and what proportion of recipients making repayments are doing so using direct debit; and what proportion of overpayments were recovered by direct debit on the latest date for which figures are available. 
Dawn Primarolo: I refer the hon. Member to HMRC's Code of Practice 26, What happens if we have paid you too much tax credit?", a copy of which is in the Library. HMRC have set up 59,718 direct debit arrangements since December 2004. The rest of the information requested is not available.
Dawn Primarolo: I refer the hon. Member to my statement of 26 May 2005, Official Report, columns 2223WS. This confirmed that I had asked HMRC to review the operation of the code of practice on over-payments. Meeting the commitment made by HMRC's chairman to the Public Accounts Committee in January 2005, the Department will ensure that in cases of genuine hardship where the recovery of an over-payment is disputed, recovery can be suspended while the dispute is resolved.
Dawn Primarolo: Claimants can contact HM Revenue and Customs to appeal if they think that their tax credits award is wrong. The Department will seek to agree the amount of the award with the claimant and make the correct payment. Information concerning appeals can be found in the HMRC leaflet WTC/AP How to appeal against a tax credits decision or award" which is available on the internet athttp://www.hmrc.gov.uk/leaflets/wtc_ap.pdf.
|Month||Number of appeals received (Great Britain)|
|Month||Number of appeals received (UK)|
The costs for 19992000 relate to the costs of sending information to working families' tax credit (WFTC) and disabled person's tax credit (DPTC) applicants. This was a much smaller population that for child tax credit (CTC) and working tax credit (WTC) and the fixed nature of WFTC and DPTC awards meant that fewer communications were necessary.
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During 200203 recipients of WFTC, DPTC and children's tax credit were sent claim packs in readiness for the introduction for CTC and WTC in April 2003. From 200405 renewals packs were sent to all CTC and WTC claimants, then each claimant would have received award notice as the previous year's award was finalised and the new award set up. So, the number of items each claimant needed to receive in the second year was more than in the first year.
Mr. Laws: To ask the Chancellor of the Exchequer pursuant to the oral statement of 12 July 2005, Official Report, column 720, on tax credits, how many staff will be dedicated to the pilot scheme for contacting customers to encourage them to report changes to their tax credit award; whether these will be (a) new members of staff and (b) staff already working on the tax credit helpline or dealing with complaints; how long he expects the pilots to run for; what he estimates the cost of the scheme will be; and how he will evaluate the success of the pilot scheme. 
Dawn Primarolo: The pilot exercises have begun and are expected to run throughout 200506. It is not expected that significant numbers of HMRC staff will be re-deployed from their day to day work to support the pilots nor is it expected that additional staff will be recruited. The cost of the exercise is expected to be modest.
Mr. Laws: To ask the Chancellor of the Exchequer pursuant to the oral statement of 12 July 2005, Official Report, column 722, on tax credits, how many tax credit overpayments for 200304 were the result of (a) rises in income from (i) £2,500 to £2,999, (ii) £3,000 to £3,999, (iii) £4,000 to £4,999, (iv) £5,000 to £5,999, (v) £6,000 to £6,999, (vi) £7,000 to £7,999, (vii) £8,000 to £8,999, (viii) £9,000 to £9,999, (ix) over £10,000, (b) changes in circumstances and (c) official error. 
Dawn Primarolo: Reductions in tax credits awards can result from a combination of changes in circumstances and incomes, which can also be reported at different times. It is not always possible to say whether any particular change caused or contributed to an eventual overpayment.
On (a) to (i), Table 6 of Child and Working Tax Credits Statistics. Finalised awards 200304. Supplement on payments in 200304" analyses by income bands the 1,879 thousand awards where payments in 200304, as recorded on the computer record for each case, exceeded the finalised entitlement for 200304 by more than £10. This publication can be found at www.hmrc.gov.uk/stats/personal-tax-credits/menu.htm. The following table shows the number in each specified band of rise in income where this is at least £2,500.
Increase in family's income between 200102 and 200304
|Number of awards overpaid at 5 April 2004, based on finalised incomes(92)(Thousand)|
|(a) 2,500 to 2,999||77|
|(b) 3,000 to 3,999||144|
|(c) 4,000 to 4,999||119|
|(d) 5,000 to 5,999||96|
|(e) 6,000 to 6,999||79|
|(f) 7,000 to 7,999||67|
|(g) 8,000 to 8,999||59|
|(h) 9,000 to 9,999||49|
|(i) 10,000 and over||313|
|Total 2,500 and over||1,003|
Mr. Frank Field: To ask the Chancellor of the Exchequer how many claimants had (a) in-year and (b) end-of year adjustments made to their tax credits awards in each year since 200304; and in how many in-year adjustments the tax credit award was reduced to zero. 
Dawn Primarolo [holding answer 21 July 2005]: Tax credit awards can be adjusted during the year to take account of changes in circumstances or income reported at that time. In-year adjustments are therefore part of the normal operation of the tax credit system and their numbers are not monitored.
For 2.1 million 200304 tax credits awards the finalised entitlement differed from that based on the family's circumstances and incomes as reported by 5 April 2004. No figure for 200405 awards will be available until all such awards are finalised.
Greg Clark: To ask the Chancellor of the Exchequer how many tax credit claimants in the Tunbridge Wells constituency there were in each year since the scheme began; and how many have been (a) underpaid and (b) overpaid. 
Dawn Primarolo: I refer the hon. Member to my reply to the hon. Member for Peterborough (Mr. Jackson) on 4 July 2005, Official Report, column 95W. Estimates of numbers of overpayments or underpayments for 200405 awards will not be available until spring 2006, after final 200405 incomes and family circumstances have been reported.
Mr. Denis Murphy: To ask the Chancellor of the Exchequer how many families in the Wansbeck constituency have been advised by the Inland Revenue that they have been overpaid tax credits; and how many families have had their overpayments written off. 
To ask the Chancellor of the Exchequer how many people have had their tax credit payments suspended due to overpayments in each year since the
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tax credit system was introduced in (a) each county in England and Wales and (b) Wellingborough constituency. 
Dawn Primarolo: Overpayments of tax credits are not identified until final incomes and family circumstances for the year are reported. Details of how overpayments are recovered are provided in the Department's Code of Practice 26 What happens if we have paid you too much tax credit?", which is available on the HMRC website at:
Tax credit awards can also be adjusted during the year to take account of a change in circumstances or income. Where this leads to a change in entitlement, payments will be adjusted with the aim of paying out the right amount for the year as whole. This is also explained in the Code of Practice 26 What happens if we have paid you too much tax credit?" This is part of the normal operation of the tax credit system and no count of such occurrences is maintained.
Stewart Hosie: To ask the Chancellor of the Exchequer (1) how many working tax credit overpayments there were in each parliamentary constituency in each of the last two years; and what the total value was of overpayments in each year; 
Dawn Primarolo: The number and value of 200304 tax credit awards that were underpaid and overpaid after finalisation, by region, parliamentary constituency and local authority can be found in the publication Child and Working Tax Credit Statistics. Finalised Awards 200304. Supplement on Payments in 200304. Geographical Analyses". This is available on the HMRC website at http://www.hmrc.gov.uk/stats/personal-tax-credits/menu.htm.
Mr. Laws: To ask the Chancellor of the Exchequer pursuant to the statement of 22 June 2005 by the Paymaster General, Official Report, columns 80114, on tax credits, (1) what plans he has to review the right of appeal within the tax credit system; and what assessment he has made of the merits of the adoption of a statutory test for the recovery of excess payments and overpayments of tax credits; 
Mr. Frank Field: To ask the Chancellor of the Exchequer if HM Revenue and Customs will permit a right of appeal to an independent tribunal to persons from whom the recovery of overpayment of tax credits is sought. 
Mr. Laws: To ask the Chancellor of the Exchequer pursuant to the statement of 12th July 2005, Official Report, column 720, how long it takes on average to identify tax credit IT system problems; what actions will be taken to speed up their identification; and whether he will set internal targets for identifying and resolving IT system problems. 
Dawn Primarolo: Tax credit IT system problems are managed according to industry best practice as set out in the Office of Government Commerce's IT Infrastructure Library. HMRC uses the mechanisms that are recommended for the identification and subsequent resolution of any problem. The Department is also working with its IT partner to test additional diagnostic tools.
Mr. Laws: To ask the Chancellor of the Exchequer (1)how many telephone calls were made each month to the (a) tax credits helpline and (b) hon. Members' tax credit helpline from January 2003 to June 2005; how many of these calls were not answered; and if he will make a statement; 
(2) how many telephone calls were made to the tax credits helpline in each month in 200304 and 200405, broken down by (a) calls answered and (b) calls not answered; and if he will make a statement; 
(b) The MPs' hotline in HM Revenue & Customs' Tax Credit Office deals with calls from hon. Members about their constituents' tax credits claims. Figures are not available for the period January 2003 to March 2003. For the number of calls answered by the MPs' hotline in 200304 and for April to December 2004, Irefer the hon. Gentleman to the answer I gave the hon. Member for Northavon (Steve Webb), 21 February 2005, Official Report, columns 7576W. The figures for 1 January 2005 to 31 May 2005 are given in the following table. The telephony equipment does not record the number of calls not answered.
|Number of calls to Tax Credit Office MPs' Hotline|
Mr. Laws: To ask the Chancellor of the Exchequer what representations were made by EDS to the Inland Revenue in (a) 2002 and (b) 2003 in relation to the timetable for testing the tax credit system; and if he will make a statement. 
The representations made by EDS about the timetable for testing the tax credits system were covered by the Public Accounts Committee at its hearing of 3 December 2003.
12 Sept 2005 : Column 2409W
As EDS made clear in that PAC hearing they advised the Department at the time that there was no material reason not to go live with the tax credits system, and had no evidence at that time that the problems that did occur would do so.
Mr. George Osborne: To ask the Chancellor of the Exchequer (1) how many of the tax credit awards involving underpayments of £5,000 or more in 200304 involved underpayments of (a) £6,000 or more, (b) £7,000 or more, (c) £8,000 or more, (d) £9,000 or more and (e) £10,000 or more; and if he will make a statement; 
(2) how many of the tax credit awards involving overpayments of £5,000 or more in 200304 involved overpayments of (a) £6,000 or more, (b) £7,000 or more, (c) £8,000 or more, (d) £9,000 or more and (e) £10,000 or more; and if he will make a statement. 
Dawn Primarolo: Information on the number and sizes of 200304 tax credit awards overpaid and underpaid at the 5 April 2004 with an overpayment or underpayment of more than £5,000 based on final family circumstances and income is available in the HMRC publication Child and Working Tax Credits Statistics. Finalised awards 200304. Supplement on payments in 200304" This publication can be found on the HMRC website at http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-quarterly-stats.htm.
|Size of underpayment or overpayment||Underpaid awards||Overpaid awards|
|Greater or equal to £5,000 but less than £6,000||3||22|
|Greater or equal to £6,000 but less than £7,000||1||11|
|Greater or equal to £7,000 but less than £8,000||||4|
|Greater or equal to £8,000 but less than £9,000||||2|
|Greater or equal to £9,000 but less than £10,000||||1|
|Greater or equal to £10,000||||1|
The main reasons that manual payments were made in May were to prevent hardship (a) where there had been delays in processing changes in circumstances; (b) where claims had been terminated because the award notice had not been signed and the claim was subsequently reinstated; (c) where an error resulted in a child or children no longer being shown on the award notice.
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Dawn Primarolo: HMRC may charge penalties where a claim has been made fraudulently or negligently. A claim may be withdrawn before it is processed, although not afterwards. If the information provided by the claimant is incorrect a penalty can be charged even if the claim is withdrawn. It would be possible only to ascertain the number of penalties charged in respect of claims that had been withdrawn at disproportionate cost.
Mr. Dorrell: To ask the Chancellor of the Exchequer pursuant to the statement by the Chief Secretary to the Treasury on 12 July 2005, Official Report, column 713, what the precedents are to which he refers. 
Dawn Primarolo [holding answer 19 July 2005]: The term Official Error" has a long history of use to describe serious administrative mistakes. It has been used for many years by the Inland Revenue (now HMRC) where the Department has made serious mistakes in handling a person's tax affairs.
Since 1971, this has developed into Extra Statutory Concession (A19) under which tax can be waived where arrears arise because of the Department's failure to make proper and timely use of information supplied by the taxpayer, so that they could reasonably have believed their tax affairs were in order.
Mr. George Osborne: To ask the Chancellor of the Exchequer how many families received an annual tax credit award of (a) £10 or less, (b) £20 or less, (c) £50 or less and (d) £100 or less in the latest year for which figures are available. 
Dawn Primarolo: Estimates of the average number of tax credit awards broken down by the size of awards in 200304 are available in the HMRC publication, Child and Working Tax Credits Statistics. Finalised Annual Awards 200304." This publication can be found on the HMRC website at: http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-quarterly-stats.htm
The minimum tax credits award payable is £26 per year. Cumulative figures for the average number of in-work families that received tax credit awards in 200304 of less than £50 and less than £100 are shown in the following table:
Level of annualised entitlement
|Average number of in-work families benefiting (thousand)|
|Less than £50 per annum||4.9|
|Less than £100 per annum||14.5|
Estimates of numbers and values of overpayments or underpayments for 200405 awards at 5 April 2005 will be published in spring 2006, after all the awards are finalised.
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Dawn Primarolo: Where underpaid awards of 200304 were identified, HM Revenue and Customs' policy is that they should be repaid as lump sums as soon as possible. Of the 713,000 awards that were underpaid at 5 April 2004, almost all have been recompensed.
Mr. George Osborne: To ask the Chancellor of the Exchequer what the cost of (a) management consultants and (b) IT consultants in relation to tax credits was in each year from 19992000 to 200405. 
Dawn Primarolo: The cost of IT consultants for 19992000 was around £150,000; for 200001 around £250,000; for 200102 around £4.4 million; for 200203 around £7.3 million; for 200304 around £8 million and for 200405 around £4.4 million.
Mr. George Osborne: To ask the Chancellor of the Exchequer what estimate he has made of the minimum number of overpayments, expressed as a percentage of caseload, which could be achieved without making changes to the structure of the tax credit system. 
Dawn Primarolo: In a system, which is designed to be flexible to respond to changes in families' incomes and circumstances, there will inevitably be adjustments at the end of the year and in some cases these will involve overpayments. HMRC are working to reduce the number of overpayments by reminding claimants of the need to ensure that HMRC have up to date information about their circumstances. It is not possible to say what the minimum number of overpayments would be.
Mr. George Osborne: To ask the Chancellor of the Exchequer (1) how many households saw their tax credit awards reduced by (a) 5 per cent. or more, (b) 10 per cent. or more, (c) 25 per cent. or more, (d) 50 per cent. or more and (e) 75 per cent. of more, as a result of the recovery of earlier overpayments in 200405; 
Dawn Primarolo: The information requested is not available and could be provided only at disproportionate cost. There are limits to the extent to which payments are reduced to recover overpayments in previous years, and families for whom such reductions would cause them hardship can discuss their cases with the Departmentsee HMRC Code of Practice 26What happens if we have paid you too much tax credit?"
Mr. George Osborne:
To ask the Chancellor of the Exchequer if he will make a statement on the assumptions about the scale of tax credit underpayments and overpayments in each year from 200304, together
12 Sept 2005 : Column 2412W
withthe extent and timing of their subsequent recovery or rectification, which underpin his public finance projections. 
Dawn Primarolo: Estimates of underpayments and overpayments are based upon administrative data of outturn to date. It is assumed that recovery will be made in accordance with the Code of Practice 26 (available online at http://www.hmrc.gov.uk/leaflets/cop26.pdf)
Mr. George Osborne: To ask the Chancellor of the Exchequer whether the recovery in 200405 of a tax credit overpayment made in 200304 would serve to reduce his estimate of Government borrowing in (a) 200304 and (b) 200405. 
Dawn Primarolo: There are no targets for the take-up of working tax credit and child tax credit. Initial analysis suggests that in its first year, child tax credit achieved an estimated take-up rate of 80 per cent. by caseload, considerably higher than the take-up rate in the first full year of working families' tax credit (62 to 65 per cent.) and the first year take-up rate for family credit (57 per cent.).
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