Memorandum submitted by George Wilkinson,
Realistic Regulation for Consumer Credit
I have noted with interest the comments made
by various members of the Treasury Select Committee and those
appearing before it on the above subject.
I have a great personal interest in the above
subject—as I have had to help my daughter wade through a
stressful, long-winded and most unsatisfactory treatment she has
received from those administering this system. In addition—the
ultimate insult was a demand for overpayment and heavy-handed
tactics in collecting this. As usual—and as a father—I
have had to support the resolution of this matter.
As a professional in the banking and finance
sector for over 30 years—and one who has sought to improve
systems and operations in the sector—I have been appalled
by the process. It has not been thought through—tested—refined
and more importantly the end user has not been consulted or paid
attention to. The banking sector comes under a lot of scrutiny
for its mistakes—and I trust such a fiasco as the Tax Credit
administration is—will not be repeated. Bankers made judgements
on future costs and income as part of the credit granting process.
It is not precise but can be made to work—especially if
complexity is avoided.
It is possible that in any one tax credit year
the following can happen:
— A claimant can be married, divored
and have a new partner.
— The claimant—or any spouse
or partner—can be living in the house or absent for periods.
— The claimant—or any spouse
or partner—can be unemployed, fully employed or part time
employed.
— The children of the family concerned
can increase in size—due to new birth or adoption—and
decrease in size due to coming of age. There can be additional
children from another family arriving and departing.
— The income from work can fluctuate—be
paid in arrears—be bonus related—or can even be the
subject of dispute with an employer.
— Childcare can be essential for
one or more of the children—but then the childminder—the
number of children—and whether they need to go to school
or not—can change.
All the above can have a dramatic effect on
the income and outgoings especially in a lower income family—not
on an annual basis—not on a monthly basis—but on a
weekly or even daily basis. In addition such changes as are expressed
above have in the main to be communicated to the authorities.
If but a few of the break-up situations above
occur then this is all at a time of distress as well as depending
upon a separating party to co-operate. Frankly its unworkable.
I understand that other countries—particularly
France—have tackled the problem by granting quite a high
level of child allowance. This could be done here too—with
a judicious ceiling plus making part or all of the childcare taxable.
This could be much simpler—and avoid unnecessary cost and
bureaucracy. It might even prevent those currently too distressed
to claim to get what they need and be better targeted.
Childcare is a complex but important and a smarter/easier
system should be possible. this should be seen as a subset of
the child allowance and be granted as a right based on a child's
age.
If this process and my alternative is modelled
and costed properly—and simple methods are sought, simulated
and used—then the cost of administering this problematic
system could be avoided. The thought of designing solutions to
the existing system—especially computer ones—to handle
this is frightening and would be very costly. Going back to basics
is essential—and perhaps it might cost just a little more
but work!
28 January 2006
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