Examination of Witnesses (Questions 200-219)
MR DAVE
RAMSDEN, MR
MIKE WILLIAMS,
MR EDWARD
TROUP, MS
SARAH MULLEN,
MR CHRIS
MARTIN AND
MR SIMON
GALLAGHER
18 MARCH 2008
Q200 Mr Mudie: I accept that. If
someone perchance managed to go into paying tax are they going
to be tax-free like ISAs, specifically tax-free like ISAs, or
does it depend on their income whether they are too low?
Mr Williams: It will depend on
their income.
Q201 Mr Mudie: Has any discussion
taken place before the document was put out for consultation or
was that point not specifically addressed?
Mr Williams: A key point that
was addressed was whether the account should be interest bearing
or not and we decided that, like other accounts for savings, it
was important that they should be interest bearing.
Q202 Ms Keeble: I want to ask in
particular about the third of the main measures for dealing with
child poverty, which is the disregard of child benefit for purposes
of housing benefit and council tax benefit. Both the women I spoke
to at the school gates on Friday and the experts yesterday said
that there already is a disregard and I just wonder if you could
explain exactly what this disregard amounts to.
Mr Williams: What there is in
the current system, which is admittedly rather complex to explain,
is that child benefit is taken into account but then there is
also a credit. What this does—
Q203 Ms Keeble: Can you just talk
it through because it might be complicated but clearly all the
women that I spoke to understood it perfectly well?
Mr Williams: As things stand at
the moment, although there is what is called a disregard, it is
also the case at the moment that if you get child benefit when
you are on housing benefit or council tax benefit the amount of
the child benefit is taken into account.
Q204 Mr Mudie: What is the disregard
though? Clearly people are under the impression that they already
have a disregard, so what is the disregard?
Mr Williams: What there is at
the moment is a form of credit that some people call a disregard.
What this will do—
Q205 Ms Keeble: Can you just say
what it is? What I am trying to work out is how much better off
people actually are and how it is going to work, because for the
people who are on benefits it is crucial and they will understand
the fine print of it perfectly well.
Mr Williams: The amount that people
will benefit by is the amount—
Q206 Ms Keeble: No; what I want to
know is how much is the current disregard or the credit and then
how this one will operate, presumably to supersede that credit
and replace it with a simpler system.
Mr Williams: All this does is
that at the moment if you receive child benefit that is included
in the calculation of your income.
Q207 Ms Keeble: But then you get
a credit. What is a credit?
Mr Williams: That then adjusts
for that.
Q208 Ms Keeble: What adjusts for
that?
Mr Williams: The computation—
Q209 Ms Keeble: Is this how it works?
Mr Williams: In terms of how the
credit works it would be best, I think, if I sent the Committee
a paper, but the absolutely key point is that at the moment if
you receive child benefit then that amount of child benefit is
taken into account.
Q210 Ms Keeble: All of it?
Mr Williams: As at present. Under
this new system it will be disregarded for the purpose of the—
Q211 Ms Keeble: Completely?
Mr Williams: Yes, and I think
that is absolutely the key point and why it is effective as a
means of lifting people out of poverty.
Q212 Ms Keeble: How much is this
credit worth? You said that it is taken into account but then
it is a credit. How much is the credit currently?
Mr Williams: That reflects the
existing level of child benefit, and, given the difficulty over
the credit and how that fits with the disregard, it will be best
if we cover that in the paper. [3]
Q213 Ms Keeble: There are three strands
to helping families who are poor to overcome child poverty. Everyone
can understand the increase in child benefit and the increase
in child tax credit, but in terms of this third one the women
who are in this situation say, "That is not going to make
any difference because we already get it", so unless there
is a very clear explanation of how this works and how it is more
effective than the disregard they have already got they think
that they are not getting anything and that is quite a major issue
in terms of them calculating their income and also in working
out whether it is better to apply for housing benefit or how you
would manage your housing.
Mr Williams: I very much agree
that it is important that this disregard is properly explained
to the people who benefit from it. In Jobcentre Plus they have
calculations of Better Off in Work which will factor this in,
for example. The key reason for adopting this third measure, which
I agree is less straightforward than the first two, is that—
Q214 Ms Keeble: It is very straightforward.
Mr Williams:— it is particularly
well focused on families with children living in poverty and on
that basis it does help to lift a significant number of children
out of poverty.
Ms Keeble: I am not quite clear whether
you cannot explain it or if there is some other catch, but certainly
these women understood it perfectly well and were very clear that
it was not all it was cracked up to be.
Q215 Chairman: Could you write to
us again on that and try and get it to us before tomorrow?
Mr Williams: Yes, certainly, but
I can assure you it is as it is described: it does create a disregard
and I hope that will be clear from the paper.
Q216 Nick Ainger: In the last four
years domestic electricity prices have gone up about 60%, gas
has gone up about 50%, domestic heating oil has gone up over 100%,
and that has had a direct influence on the increase of the number
of people in fuel poverty. The Budget announced the additional
£50 for the over-sixties and £100 for the over-eighties
in the winter fuel allowance. It is a one-off payment. Is that
intended to allow you the time to negotiate with the energy suppliers
to address the social tariff issues or is it likely to be renewed
and what will be the cost of that?
Mr Ramsden: Chairman, if it is
okay I will pass that question on to Mr Martin.
Mr Martin: On the discussions
with the energy companies, we certainly hope that we will be able
to bring something forward for the winter following the winter
coming. I would not want to anticipate those discussions or anticipate
what the Chancellor's decisions might be in the event that we
do not conclude the discussions, but we have been very clear that
we are willing, if necessary, to take statutory powers to conclude
those discussions. We hope and expect that we will be able to
reach an agreement on a voluntary basis. It may be necessary to
have some kind of statutory underpinning to ensure a fair distribution
of the contributions from the energy companies but it is something
we would anticipate coming forward from winter 2009-10 and going
onwards.
Q217 Nick Ainger: So in terms of
this additional £50 for the over-sixties and £100 for
the over-eighties, how much is that costing, because the Chancellor
announced that he wanted to see an extra £100 million going
into the social tariff? I would estimate that for the over-sixties
and the over-eighties their additional £50 and £100
is far more than an extra £100 million, is it not?
Mr Martin: I might just have to
get one of my colleagues to come in on the actual costing of the
payments. Just while they are doing that, the social tariff, of
course, is not the only element of the package we are looking
to negotiate. The other important thing is that we are looking
for further action on bringing down the price differential between
pre-payment meters, which a lot of people who fall into the fuel
poor category have, and those people on direct debits or standard
tariffs, and that will also obviously contribute. In addition
to that we have a range of measures, both government-funded and
company-funded, to improve insulation and energy efficiency in
homes, and from this April coming this new SERT arrangement starts
which will approximately double the amount of spending over the
next four to five years, and all that will contribute to fuel
poverty alleviation as well. The cost of the payments for this
coming year is £575 million on an index basis.
Q218 Nick Ainger: That is for the
additional £50 and £100 payment?
Mr Martin: That is right, yes.
Q219 Nick Ainger: £575 million?
Mr Martin: Yes.
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