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19 Oct 2005 : Column 1079W—continued

London (Population)

Mr. Laws: To ask the Chancellor of the Exchequer on what basis the level of provision for doubtful debt relating to tax credit overpayments as reported in the Department of Inland Revenue 2004–05 Accounts was determined; whether the provision is calculated on a (a) specific and (b) general basis; and if he will make a statement. [19179]

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Dawn Primarolo: The provision for doubtful debt relating to tax credits is a general provision, not a specific provision made in respect of itemised debts. The provision represents a prudent estimate of tax credit debt that might be written off in future and has been calculated taking into account the experience of recovery to date.
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Mutual Societies

Mr. Drew: To ask the Chancellor of the Exchequer what assessment he has made of the role of mutual societies in the UK economy. [19237]

Mr. Ivan Lewis: The Government welcome the contribution made by mutual societies, in competition with other providers, in providing for greater choice and diversity in the economy. For example, where credit unions serve members in particularly deprived areas, they can be vital in targeting the poorest communities and connecting people to more mainstream financial opportunities. On a larger scale, the 63 building societies in the UK have total assets approaching £250 billion and service around 18 per cent. of the mortgage market.

National Insurance

Mr. Laws: To ask the Chancellor of the Exchequer what estimate he has made of the cost of reducing the lower earnings limit by (a) £2, (b) £5, (c) £10, (d) £15, (e) £20, (f) £30 and (g) £3; and how many (i) men and (ii) women would start paying national insurance contributions as a result of each such reduction. [18645]

Dawn Primarolo: The main effect of reducing the LEL on contribution income will be on contracted-out rebates. Class 1 contributions are not paid on earnings below the primary threshold. The total effect on contribution income in 2006–07 is shown in the table.
Table 1: The effect on the national insurance fund if the LEL is reduced by stated amounts in 2006–07(34)

Reduce LEL per week by:2006–07 (£ million)

(34)Figures are for UK accruals and are in cash in terms

The effect on benefit payments would not start for at least a year after the change in the LEL (because of the form of the contributions conditions) and would build-up very slowly. Table 2 shows the cost for the first five years, assuming that the change in the LEL took place in April 2006.
Table 2: The cost of extra benefit payments if the LEL is reduced by stated amounts in 2006–07
£ million

Reduce LEL
per week by:

(35)Figures are for UK accruals and are in cash terms

The costs will continue to grow in the future as the extra entitlement to retirement pension (both basic and S2P) builds-up.

The extra number of jobs entitled to benefit is shown in Table 3.
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Table 3: The extra number of jobs entitled to benefit if the LEL is reduced by stated amounts in 2006–07(36)

Reduce LEL per week by:MalesFemales

(36)Figures are for UK
Some of the above will be second jobs, whose occupants are already entitled to benefit from their main job.

Online Tax Collection

Dr. Cable: To ask the Chancellor of the Exchequer whether he expects the April 2006 deadline for online tax collection for sub-contractors to be met; what arrangements are being made to assist operators who are unable to work the new system; and if he will make a statement. [17663]

John Healey: Reform of the Construction Industry Scheme (CIS) was announced in Budget 2003 and legislated in the Finance Act 2004. From the outset, the changes have been developed in close consultation with industry representatives, in particular through the work of the Construction Industry Reform Implementation Panel, which met again today.

The industry has agreed to strengthen cooperation with HM Revenue and Customs including in planning a full joint testing programme for the new verification services and monthly contractors' returns, promoting the use of the new employment status declaration and analysing areas of non-compliance in the industry. And the Government have also agreed with the industry to extend from April 2006 to April 2007 the period for implementation of the final elements of the new CIS.

During this period, HMRC will step up its level of advice and compliance activity with the industry, including new interactive online software and up to 70 telephone advisers to provide help with employment status from next month.

Private Pensions

Sarah Teather: To ask the Chancellor of the Exchequer what estimate he has made of the number and percentage of people living in London who have a private pension. [16911]

Mr. Timms: I have been asked to reply.

In 2003–04 the number of people contributing to a private pension in London is estimated to be 1.7 million. This represents 38 percent. of the working age population.

In addition, 0.7 million people in London are estimated to be in receipt of a private pension.

1. All figures are estimates and are taken from the Family Resources Survey (FRS). 2003–04 is the latest year for which data is available.
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Proceeds of Crime Act

Mr. Randall: To ask the Chancellor of the Exchequer what amounts have been recovered by (a) HM Revenue and Customs, (b) the Metropolitan police and (c) other relevant agencies under the provisions of the Proceeds of Crime Act 2002 at Heathrow airport or as a result of crime committed at Heathrow airport since the Act came into force. [19431]

Dawn Primarolo: The recovery of criminal proceeds by the police or other agencies is a matter for my right hon. Friend the Home Secretary or other Ministers as appropriate.

The total amount recovered under the Proceeds of Crime Act 2002 in connection with activity by HM Revenue and Customs at Heathrow airport is £4,259,000.

Search-and-rescue Organisations

David Mundell: To ask the Chancellor of the Exchequer if he will allow search-and-rescue organisations an annual grant to offset irrecoverable VAT payments made during the previous year. [19479]

Mr. Ivan Lewis: As part of the wide range of VAT reliefs for charities, charities providing rescue or first aid services can purchase VAT free the specialised telecommunications, aural, visual, light enhancing or heat detecting equipment which they use. These charities are also able to buy medicines, medical equipment, and ambulances free of VAT. In addition, charities like the RNLI which provide rescue or assistance at sea, do not pay VAT on the purchase of lifeboats and certain related equipment, or on the costs of having these lifeboats repaired or maintained. However, agreements with our European partners mean that it is not now possible to extend the scope of the zero rates available to charities.

No Government have considered the issue of irrecoverable VAT more seriously than this one. We have conducted two major reviews to see if we could find an efficient, affordable and principled solution.

Through these reviews, we came to two conclusions: first, that it would not be an affordable or efficient use of public resources to reimburse all 250,000 charitable bodies in the UK for the VAT they incur, regardless of the activities they are involved in or their financial health, and which, according to estimates from the charitable sector, would cost over £500 million per year; and second, that there was no fair and principled basis on which we could decide that some charities would be reimbursed their VAT and some would not.
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As a result of Gift Aid and other measures, we are currently providing nearly £2.5 billion worth of support to charities through the tax system each year, including over £200 million in VAT reliefs. This forms part of the total Government support for the voluntary and community sector, which stands at over £3.3 billion per year.

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