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Tax Credits
7. Mr. Jeremy Hunt (South-West Surrey) (Con): What estimate he has made of the level of overpayments of tax credits reclaimed by the Government in the last three years. [111026]
10. Mr. Simon Burns (West Chelmsford) (Con): What estimate he has made of the level of overpayments of tax credits reclaimed by the Government in the last three years. [111030]
The Paymaster General (Dawn Primarolo): Her Majesty’s Revenue and Customs’ trust statement and the Comptroller and Auditor General’s standard report on its accounts for 2005-06 show that, in total, £1 billion of overpayments had been recovered by 5 April 2006.
Mr. Hunt: What would the Minister say to my constituent Mr. Roy Taylor, whose tax credit payments were stopped in August following a typing mistake by officials? He was told about the mistake but still received a repayment demand for more that £1,000. Is the system so flawed that officials send out repayment demands even when they know that they have made a mistake? That has caused enormous distress to my constituent, and to many other people in similar circumstances.
Dawn Primarolo: I am sure that the hon. Gentleman has written to me about this case, but if he has not I shall be happy to deal with any correspondence. However, I remind the House of what I have said many times—that many thousands of families in this country, including in his constituency, benefit from tax credits. They get the right money, at the right time. If that money were taken away, thousands of his constituents would find it very difficult to balance paid work and child care. It is about time that the hon. Gentleman recognised the benefits of the system, instead of concentrating on individual cases.
Mr. Burns: Does the Minister recall that I have written to her about people in my constituency being required to repay overpayments, even though HMRC has admitted that it was at fault, not my constituents? Will she think about this matter again? Is it not inherently unfair to require people to repay overpayments for which they are not responsible, but which the HMRC has admitted were caused by its own mistake?
Dawn Primarolo: As the hon. Gentleman knows, the operational rules that apply when an error is entirely the fault of the Department, and when the person involved could have had no knowledge of it, are the same as those in the tax system. He will know, too, that the system has always worked that way and that similar rules applied under the previous Conservative Government. When claimants give the details of their income, those details are played back to them in an award notice. They are asked to check that notice and confirm that the information is correct. The procedures that have been put in place have increased the accuracy of the notices enormously. The rules are perfectly fair, and they have worked for decades in the tax system.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): In my constituency, tax credits have played a vital part in taking thousands of families out of poverty, and they have enhanced the position of children in particular. However, one or two well-publicised mistakes by officials have undermined that success. Will my right hon. Friend assure me that everything is being done to refine the processes involved, so that the enormous benefit that tax credits offer is not brought into discredit?
Dawn Primarolo: Yes, I can absolutely assure my hon. Friend about that. The accuracy rates for processing have risen to 97.7 per cent., which means that the vast majority of people get their tax credits on time, and at the correct amount. He is right to point out that the system has contributed to lifting 700,000 children out of poverty and to helping families to care for their children while taking part in paid employment.
Mr. Don Touhig (Islwyn) (Lab/Co-op): In answer to an earlier question, my right hon. Friend the Chancellor said that tax credits had brought a lot of children out of poverty. Of course, they have also given women a great opportunity to get into work. However, there are issues concerning the clawback of overpayments. Can my right hon. Friend give me advice that I can pass on to my constituents on how they can appeal against an overpayment decision?
Dawn Primarolo: I am happy to advise my hon. Friend. The obligations of his constituents are to check that the information that they have given to the Department is correct and to notify the Department if their circumstances change. Where they dispute an overpayment, they can dispute it initially with the Department, then with the adjudicator and, if they are still dissatisfied, with the ombudsman.
Mr. Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD):
Like other hon. Members, many of my constituents continue to suffer because of overpayment
difficulties. I wish to raise one specific area. Does the Paymaster General agree that where a couple in an overpayment situation have separated and one has paid their share of what is due, it is invidious to pursue that person for the dues owed by their ex-partner, who has often separated in difficult circumstances?
Dawn Primarolo: The hon. Gentleman raises an important point relating to particularly difficult circumstances that can occur when there was a joint assessment of two partners and one of them continues to receive tax credits when they are not entitled to. I agree that I need to look at that and I assure the hon. Gentleman that I am doing so. However, when people make an application for tax credits, they do so jointly and accept joint responsibility for what is paid.
Mr. Jim Cunningham (Coventry, South) (Lab): Can my right hon. Friend say how she is dealing with the backlog of payment of tax credits?
Dawn Primarolo: I have to admit that I am not clear what backlog of overpayments my hon. Friend is talking about. I presume that he is referring to the arrangement made to pay out at either 10 per cent., 25 per cent. or 100 per cent. and the arrangement for the hardship test to ensure that those who would suffer serious hardship as a result receive additional payments. That is proceeding well.
Mrs. Theresa Villiers (Chipping Barnet) (Con): I must press the Paymaster General on the point raised about couples who split up. Recently, she admitted that the Treasury was pursuing 250,000 claims for tax credit overpayment against couples who have separated since the overpayments were made. That leaves thousands of women not only holding the baby, but struggling with their ex-partner’s tax credit overpayment debt as well. Are not some of the most vulnerable people in our community paying the price for the Chancellor’s chaotic tax credit system?
Dawn Primarolo: No. I am not sure what message the hon. Lady wants to send out. Is it that if a couple are overpaid and do not want to pay back their tax credits, they should split up? [Hon. Members: “No.”] There is a serious question about the application for tax credits when it is made by a couple. Some circumstances warrant further attention on policy grounds. I confirmed that I was doing my best to look at that. The hon. Lady has a cheek to raise a question on joint and several liability when her party, when in government, introduced it for the poll tax. Let us remember that two signatures go on the forms, the application is jointly made and the tax credits are jointly paid. If they are overpaid, they must be recovered.
Ms Sally Keeble (Northampton, North) (Lab): May I point out the important linkage between the tax-credit-paid child care, the higher level child trust fund and Healthy Start vouchers, which have been well received. Whatever the problems of overpayment, they are vastly outweighed by the important practical help that tax credits and their link benefits have provided to some of my most needy constituents.
Dawn Primarolo:
I agree with my hon. Friend. What the Opposition always refuse to recognise is the fact
that 20 million people—6 million families, including 10 million children—are benefiting from tax credits. Four in 10 families pay no net tax as a result of tax credits. A family with two children on a single earner salary of £21,800 would have no tax liability until their income reached £420 a week. Those are the benefits of tax credits, but the Opposition do not want to recognise them because they are not committed to eradicating child poverty.
Mr. Roger Gale (North Thanet) (Con): The Prime Minister told the House that people who had been overpaid tax credits would not have to repay them. The Revenue and Customs code of practice said that people would have to repay if it was their fault—Revenue and Customs always says it is their fault. The adjudicator says that Revenue and Customs is abiding by its code of practice, so that is all right. The ombudsman says that the adjudicator is right, so that is all right. So when the Paymaster General gets to question 9, will she just say yes?
Dawn Primarolo: When I get to question 9, I shall answer question 9. I draw to the hon. Gentleman’s notice the parliamentary ombudsman’s press release, issued on 13 July 2006, in which she commented on the
“positive way in which HM Revenue and Customs had worked constructively with her office on the issue of tax credits”.
“substantial changes to the administration system”
had been agreed. They are progressing, and she is happy with that progress.
Children with Disabilities
8. John Bercow (Buckingham) (Con): If he will make a statement on the review of services for children with disabilities. [111028]
The Economic Secretary to the Treasury (Ed Balls): The Treasury and the Department for Education and Skills are jointly reviewing how improved services can improve the life chances of disabled children and their families. We published an interim discussion paper on 9 January. The review will report in the spring, with recommendations to inform the comprehensive spending review.
John Bercow: I am grateful to the hon. Gentleman for that reply. Given that in 2002 the Audit Commission identified a shortfall of specialist provision to meet low incidence needs, which tend to be severe, complex and even multi-faceted, will he make it a priority to increase specialist provision through more units attached to mainstream schools, the use of specialist regional centres and the imposition of a new duty on local education authorities and primary care trusts to work together, so that children with disabilities receive all the help that they so desperately need?
Ed Balls:
I am very happy to give the hon. Gentleman the assurance for which he asks. In the review, we shall look hard at the issues he raises. Anybody who heard his speech in the debate on those issues on Tuesday will know that he speaks with
authority from both his personal experience and his work as head of the all-party group on speech and language difficulties. We are working hard on the review. We shall need to improve capacity and we need more early intervention and better respite care. We need better co-ordination of services and support for parents, and we need to make sure that there is greater consistency across the country. We also need to do more to help children with multiple needs and the severest disabilities, of whom there are now more in our society. I want better working between local authorities and primary care trusts across the country. In my constituency, the process works well—but there are many examples of it not working as well as it should, and I assure the hon. Gentleman that we shall do everything we can to meet the needs of children and families that he has raised today.
Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): I thank my hon. Friend for his encouragement for the all-party review of the issues, which reported in October. Given the input from parents, professionals and others, will he confirm that the recommendations of the review will be fully considered before the Government reach their conclusions? As it has been said that the review was transparent, evidence-based and ground-breaking, does he agree that it could be taken as a model for further parliamentary activity?
Ed Balls: I am happy to do that. My right hon. Friend has worked on the issues over many years, especially with our hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) on the parliamentary hearings, which were innovative and pioneering and involved Members on both sides of the House, as well as parents. Some important stories were told during those hearings and they gave rise to some important policy recommendations.
I can assure my right hon. Friend that when it comes to the final publication of the review, we will set out clearly in our document every recommendation he makes and show case by case and issue by issue how we will respond. I hope that we will able to respond to a number of recommendations made in the hearings in a way that gives hope and some certainty of improved services in the future to the families of disabled children.
Miss Julie Kirkbride (Bromsgrove) (Con): What can the Economic Secretary offer in terms of hope or advice to my constituent, Mrs. Liz Brunt, who was very encouraged by the Government’s document “Every Child Matters”, but who finds that now that her learning-disabled son has left school, there are no opportunities for meaningful activity or work because the services are not there to provide them?
Ed Balls: I understand the hon. Lady’s point. I am very proud to be associated with the “every disabled child matters” campaign. It is very important that disabled children form part of the wider work of the strategy.
The hon. Lady is also right to point to what happens on the transition to adulthood. As more children with complex disabilities survive into adulthood, it becomes an issue that we need to address. Indeed, it was raised
by families and parliamentarians in the hearings, and it is a priority for the review. Such children go suddenly from the comfort of a school environment at the age of 15 or 16 and into the adult world at the age of 18. For the children and their parents nothing has changed, but they find that the services provided have changed profoundly and often in a way that is destabilising. I know from my experiences of talking to parents that we need to do better and I assure the hon. Lady that this issue is a priority for the review.
Tax Credits
9. Julie Morgan (Cardiff, North) (Lab): Whether he plans to give tax credit claimants the right of appeal to an independent tribunal on overpayment issues. [111029]
The Paymaster General (Dawn Primarolo): Claimants can appeal to the independent tribunal if they think their entitlement was incorrect and they should have been paid more than they were awarded. HMRC’s handling of a disputed overpayment can be reviewed by the adjudicator or through the parliamentary ombudsman. HMRC is exploring with the adjudicator whether she can go further and provide a fast-track review of disputed overpayment cases. There are plans to run a pilot test, and arrangements for that are being discussed.
Julie Morgan: I thank my right hon. Friend for that reply. The tax credit system has brought huge benefits to my constituents and I support it strongly. However, does she agree that the right of appeal to an independent tribunal over the recoverability of overpaid tax credits would make the system much fairer and much more acceptable to our constituents? Does she also agree that the suggestion is supported by the recent European ruling on the adequacies of judicial review as the only recourse where the issues are simply matters of fact and the credibility of witnesses? The right of appeal would give our constituents a chance to put their case.
Dawn Primarolo: I have to tell my hon. Friend that tax credits fully satisfy article 6 of the European convention on human rights. The details of the specific case that she has raised are set out in my written statement of 24 January 2007. People can appeal to an independent tribunal if they disagree with HMRC’s decision on entitlement, and that has always been the case.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): Is it not disgraceful that, nearly two years after the ombudsman’s report, that is one of her recommendations that has still not been implemented? Will the Paymaster General explain why she has not yet implemented that recommendation? When will she implement it and all the other recommendations that are needed to give confidence to the low-income families who are suffering because of overpayments in the tax credit system?
Dawn Primarolo:
As I said earlier, the Department stays in very close contact with the parliamentary ombudsman. Indeed, in her press release of July 2006
she complimented the Department both on its close working with her and on the progress made on her recommendations. If the hon. Gentleman cares to look at that in the Library, he will see that the ombudsman has also commented on the cases that she will take in future.
Air Passenger Duty
11. Mr. Shailesh Vara (North-West Cambridgeshire) (Con): Whether he plans to offset the increase in air passenger duty in February with a reduction in revenue elsewhere in the tax system. [111031]
The Financial Secretary to the Treasury (John Healey): The changes to air passenger duty will secure resources in the coming spending round for our priorities on the environment and on transport.
Mr. Vara: I am grateful to the Financial Secretary for those comments. Given that this morning’s Treasury Select Committee report shows that there is legal uncertainty regarding the duty, will he confirm that proper legal advice was sought and obtained? In the interests of open and transparent government, will he publish that advice?
John Healey:
The announcement was made on 6 December, the duty point is take-off and the charge
increase will come into effect on 1 February. It is perfectly normal to announce such tax changes in advance, and the way in which we have done that is perfectly legal. From 1 February, the change will have the full force of the law.
Mr. Paul Goodman (Wycombe) (Con): The Treasury Committee said definitively today:
“the liability to pay Air Passenger Duty at the new higher rates will effectively be incurred before the House of Commons has authorised the increase”.
The Chancellor is evidently too busy working out whether he supports England or Scotland in the World cup to bother with the conventions of the House. Will the Minister guarantee unequivocally that the APD increase on 1 February will be lawful?
John Healey: The way in which we have announced and are implementing the rise is totally in line with the conventions of the House. It is precisely what we did when we announced in the 2005 pre-Budget report an increase in the rate of the supplementary charge on North sea oil, which was introduced with effect for accounting periods from 1 January 2006. The Budget resolutions were laid alongside the Budget that followed and that was legislated for in the Finance Bill. We are following precisely the same precedent and procedure with the proposals for the increase in air passenger duty.
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