Lord
Commissioner of Her Majesty's Treasury (Kevin Brennan):
That was
brilliant.
Mr.
Francois: Thank you—a bit louder for
Hansard. 3.13
pm
Mr.
Timms: I start by going back to the point that I made at
the beginning of the debate, by underlining the substantial reduction
in the incidence of child poverty that has resulted from the
introduction of tax credits. That is the reason the Government
introduced tax credits; alongside the other factors to which I have
referred, they have made a huge contribution to reducing child poverty.
I am pleased that the Conservative party has started to acknowledge
that there is such a thing as child poverty, which it frequently
refused to do in government. That is progress, but there is still a
long way to go.
Mr.
Francois: As the Chief Secretary is makinga point
about poverty, can he explain why the Government’s former
welfare reform Minister, the
right hon. Member for Birkenhead (Mr. Field), has said that
trying to alleviate poverty by using tax credits is equivalent
to “attempting ...
keyhole surgery with a
hacksaw”?
Mr.
Timms: Let me refer the hon. Gentleman to the document
published by his party’s social justice policy group,
“Breakdown Britain”, which I read with interest earlier
this week. It makes the point that 700,000 children were lifted out of
poverty, and I welcome that acknowledgement of the facts on behalf of
the hon. Gentleman’s
party. Let
me respond to the questions that the hon. Gentleman asked. First, I do
not agree that the changes will have an adverse impact on agency
workers and others in the position that he described. It is worth
underlining the point that there is nothing new in the requirement for
people to state whether they are working more than 16 hours or 30
hours. The only change here is having to notify when the position
changes. As far as I am aware, agency workers and others have not had
any great difficulty applying for tax credits. Most people work regular
hours. Nevertheless, it is possible in a small number of cases that
there could be some difficulty. I urge hon. Members to look at the tax
credits manual, which is on the Revenue and Customs website and which
sets out the approach that Revenue and Customs will take in more
complex situations, based on case law. There is also some additional
guidance being placed on the Revenue and Customs website to cover more
complicated situations. I do not think that there should be undue
difficulty for those groups; of course, it is important there is
not. Secondly,
the hon. Gentleman asked about the computer system. It is true that
there have been some difficulties in making changes to the system, and
that they have not happened as quickly as we would have liked. That is
why the package of measures announced in the pre-Budget report last
year is being implemented gradually. I am pleased to be able to tell
him that the computer system is now stable and delivering a good
service for claimants. As long as we continue with that careful
approach, I am hopeful that that will
continue. Mr.
Francois: If, as the Chief Secretary claims, the computer
system is now stable, why did his colleague the Paymaster General issue
a written statement to the House last week saying that the anticipated
changes that should have gone ahead, including migration of
jobseeker’s allowance cases involving child tax credit on to the
tax credit system, have been delayed yet
again? Mr.
Timms: For precisely the reason that I just gave, which is
that we are having to tread quite carefully here not to make changes
that would cause problems but to ensure that the current stable
condition of the system is maintained.
The hon.
Gentleman asked me about the fall-off in successful appeals. The key
factor is the substantial improvement in accuracy in processing and
calculating awards. I gave the numbers at the beginning: in 2003-04,
accuracy ran at about 78 per cent. In 2005-06, it was about 98 per
cent. Because the question of
whether the Revenue made a mistake is a key consideration, that dramatic
reduction from about22 per cent. to about 2 per cent. in the
number of cases in which there is inaccuracy is the main factor behind
the reduction in the incidence of successful
appeals. Mr.
Francois: I heard and understood what the Chief Secretary
said, but he knows that complaints—appeals—are running at
over 25,000 a month, or at least they were in April 2006. Given that we
have 25,000 or more people a month appealing against the
system—we do not have more up-to-date figures—how many of
those appeals are now being judged to be successful? That is a
straightforward question; what is the
answer? Mr.
Timms: The hon. Gentleman gave some numbers, and I have no
reason to query them. The point that I am making is that the proportion
of cases in which there is an HMRC error, which was significant to
begin with, is now very much lower. That is the reason for the fall-off
in the number of appeals. I also make the point that if claimants are
unhappy with a determination about an overpayment, they can complain to
the adjudicator, who is—contrary to the point that he
made—independent of Revenue and
Customs.
Mr.
David Gauke (South-West Hertfordshire) (Con): Does the
Chief Secretary accept that, for people who are on low incomes, going
through the whole complaints and appeals procedure is extremely
difficult? The right hon. Member for Sheffield, Brightside
(Mr. Blunkett) made that clear in his memoirs when he talked
about having to help out a constituent financially himself because, in
his words, the tax credit system is “such a shambles”.
Does the Chief Secretary recognise that just beginning the appeals and
complaints process causes enormous difficulties for
people?
Mr.
Timms: Yes, I accept that too many people had difficulties
in the past, and that is precisely the reason for these regulations.
They are to ensure that people provide the information quickly so that
overpayments do not occur in the first place and people will not get
into the difficulties that he describes. Everyone across the House
recognises the importance of doing
that.
Mr.
Timms: I will make a little more headway before I give way
again. The hon. Member for Rayleigh asked for some cost information. He
knows that we have provided information about the costs of the overall
package, and he was kind enough to credit me with understanding his
question about the entitlement basis for those costs. All I can tell
him is that the change in entitlement in the year as a result of the
disregard is not the same as the cost of the disregard on top of what
the Government would otherwise have paid out. When overpaid tax credits
are recovered, there is a yield—money comes into the Treasury.
The cost of the
disregard is the amount of overpayments that no longer have to be
recovered due to the disregard. The higher disregard does not
necessarily affect the amount of money paid out to claimants in any one
year. Reducing the amount of overpayments will mean that the higher
disregard will mean that there is less money to be recovered in future
years. I hope that that is crystal clear to
him. The hon.
Gentleman will also know that information has been provided to the
Select Committee on Public Accounts on the costs of the increase in
disregard from £2,500 to
£25,000.
Mr.
Francois: First, on appeals, it is true that after
appealing to the tax credit office, people can appeal to the
adjudicator, but the adjudicator has ruled that if Members of
Parliament have referred cases back tothe Department by
writing to the Paymaster General, the adjudicator will no longer rule
on those cases. So the system is not as independent as the Chief
Secretary makes out. In those cases, people’s last resort is the
parliamentary ombudsman, but that is a bit worrying because the
Government have shown that they will just ignore the ombudsman when
they do not like a decision.
Secondly, on the figures, there
are two bases for calculating the cost: the one that the Chief
Secretary has given and what is called the entitlement method. If he
does not believe me, he can speak to the acting chairman of HMRC,
because he had a dialogue with the Public Accounts Committee about
that, which knows one or two things about these matters. I would like
to know what the cost is under the entitlement method. The Chief
Secretary knows exactly what I am talking about, so why is he so
reluctant to tell the House of Commons what the number
is?
Mr.
Timms: The hon. Gentleman kindly tells me that I know
exactly what he is talking about. If he puts his inquiry in writing, I
will do what I can to provide the numbers that he seeks. However, the
information about the costs of the package has been put in the public
domain. They are correct and I stand by
them.
Danny
Alexander: The Chief Secretary blithely swept away many of
the complaints about overpayments being recovered on the ground that
the HMRC is making fewer mistakes and that there are therefore fewer
overpayments to recover. In my experience, the category of mistakes for
which the HMRC is willing to accept responsibility has also narrowed.
It seems to take the view that even if it has made a
mistake—perhaps in failing to listen properly to what someone
says on the telephone, or with transcription—and it then writes
to the claimant and the mistake is contained in the letter, if the
claimant does not immediately call back, that is enough to allow their
appeal to be turned down.
Mr.
Timms: I make no bones about the fact that some people
have faced serious difficulties because of the way in which the system
has worked in the past few years. I make the point again: that is
precisely why the changes we are considering are so important. We want
to ensure that people do not have an overpayment problem in the first
place. The hon. Gentleman earlier made the point, rightly, that people
need to understand what is required. A lot of effort is being made to
ensure that they do understand, and evidence shows that that effort has
been effective. However, if people notify HMRC promptly about changes
in their circumstances, the overpayment problems will not occur in the
first place. The hon.
Member for Rayleigh said that even after these proposals, the scale of
the problem will be reduced by only a third. It has already been
reduced by a fifth; we expect the package to reduce it by a further
third and we will continue to improve the systems and the
responsiveness of HMRC to minimise the problems so that these incidents
do not arise in the first place.
Question put and agreed
to. Resolved, That
the Committee has considered the Tax Credits (Claims and Notifications)
(Amendment) Regulations 2006 (S.I., 2006, No.
2689). Committee
rose at twenty-six minutes past Three
o’clock.
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