Mr.
Timms: I, too, have been a member of the Public Accounts
Committee during a couple of my previous tenures as Financial
Secretary, as, I suspect, the right hon. Member for Fylde will have
been. That is a standard procedure for such Ministers, but we do not
actively take part in the Committee’s meetings. I recall turning
up on one occasion, as a largely ceremonial duty. However, I am
grateful to him for pointing that out to the
Committee.
Mr.
Gauke: I am grateful to the Minister for that
clarification. Mr.
Ian Davidson (Glasgow, South-West) (Lab/Co-op): I am a
member of the Public Accounts Committee who attends regularly, and I
would be more than happy to expound, at length, on the subject of the
report. Indeed, I did a radio interview on it this morning on
“Good Morning Scotland”, for which I got up at 6.45 am,
but perhaps I should leave those comments until later in our
discussions.
Mr.
Gauke: I am grateful to the hon. Gentleman for that. It is
an excellent and thoughtful report, and I suspect that he made a
significant contribution to it. I think that I have now said enough
about the hon. Gentleman, if not the
report.
Mr.
Davidson: Tell them
more!
Mr.
Gauke: I am conscious that we are discussing the
narrow issue of the tax credit up-rating. I have one further question
because we want to ensure that the additional money spent on tax
credits goes where it should and does not fall into the hands of
fraudsters. That is the point made by the Public Accounts Committee,
which raised the concern that compliance teams at Her Majesty’s
Revenue and Customs had identified incorrect payments worth some
£337 million from a check of 157,000 of the highest-risk claims,
and that was less than 3 per cent. of the claimant population. Given
that we want to ensure that the additional money goes to the right
place, what consideration will the Minister give to increasing the
level of checks?
Will the
Minister also consider the point made by the Public Accounts Committee
that the HMRC’s definition of fraud appears to be very narrow?
It just relates to
“risks
overstating the level of genuine error and understanding these cases
where claimants are setting out to exploit the
scheme.”
It is only fraud if
HMRC has evidence that the claimant deliberately set out to
misrepresent the circumstances. Does the Minister accept that that is
too narrow a definition and that we need to ensure that the money,
which will arise as a consequence of such regulations being
passed—I suspect that we will all support them, depending on the
Minister’s comments—will not end up in the wrong hands?
That concern was raised most forcefully by the Public Accounts
Committee.
The
Chairman: Before I call the next speaker, may I remind
hon. Members to ensure that their comments are in line with what is
before us on this
Committee? 4.52
pm Mr.
Jeremy Browne (Taunton) (LD): Thank you, Mr.
Fraser, for that guidance in anticipation of my straying off the beaten
path. Moreover, I am grateful to have the opportunity to welcome you to
the Chair for
the first time in any Committee that I have attended and participated
in. I want to make a number of fairly brief points, some of which are
related to the ones made by the Conservative spokesman.
I wish to
reiterate the hon. Gentleman’s first point. It will be a point
of great interest to Members of Parliament and to the public as a whole
as to what approach the Government will take to up-rating benefits in
line with either inflation or earnings in future years. What
calculation of inflation will be used? Today, we saw inflation going up
on one measure and going down on another. There is widely anticipated
deflation coming. Obviously that will cause problems for many people,
perhaps not in reality but in perception terms. It may well cause even
more difficulty for the Government in perception terms. Does the
Minister anticipate changing the method of calculation for these
up-ratings so that potential political pitfall is avoided in the
future? My
second point relates to cost. We are told that the total cost of these
measures will be £1.77 billion in the financial year 2009-10.
Does the Minister really think that at a time when we have a budget
deficit of £118 billion, which could be substantially
revised upwards in the Budget on 22 April, it is money well spent to be
giving tax payments to people who are earning in the region of
£50,000? When the public finances are under that sort of strain,
it seems extraordinary that the Government are still so keen to have
such a wide client state that it includes people who most
members of the public would not feel were in dire financial need of
that type of assistance. I wonder whether the Minister wishes to offer
the Committee his thoughts on whether the £1.77
billion that we are being asked to approve today offers the best value
for money for the
taxpayer.
Mr.
Timms: On a point of clarification, the increase that we
are agreeing today does not go that far up the income level, as the
hon. Gentleman knows. We discussed earlier the family element and
people in the upper part of the income range receiving the family
element only, which is not being up-rated by this
order.
Mr.
Browne: I am grateful for that. The Minister is right on
specifics. Perhaps I was over-reaching myself making a more general
point. [Interruption.] The Whip says that he is obviously right
on specifics because he is Minister. That is certainly so with this
Minister, but it is not always so with other Ministers who will remain
nameless.
Mr.
Browne: Exactly. Our time is limited, Mr.
Fraser. I cannot skip through the names of every
Minister. The
third point on my list is that the £25 increase in the child
element of the child tax credit was originally planned for 2010, but
has been brought forward by one year. I want to probe the Minister on
whether, as a result of that, its recipients can anticipate that it
will be frozen next year. Have all the goodies been brought forward, or
will that continue to be upgraded so there will be a double hit in one
year but no clawback, in effect, in the subsequent year? That is a
relevant consideration in our deliberations today.
My fourth
point has also been touched on by the Conservative spokesman, the hon.
Member for South-West Hertfordshire, but it is entirely reasonable: how
confident is the Minister that the administration by HMRC of these
credits and benefits is sufficiently robust to ensure good value for
money? The figures that have already been given by the Conservative
spokesman—they are the same figures that I have—show that
overpayments resulted in some £1 billion in 2006-07. Just
anecdotally, as a constituency MP, I think that I am being fair in
saying—the figures back this up—that this is less of a
problem than when I was first elected earlier in this Parliament, but
it remains a problem nevertheless. We are being asked to approve large
sums and the Committee may wish to be satisfied that they are being
spent in the way that the Minister
intends. My
final point is that the Minister talked about the importance of the
measures with regard to eradicating child poverty. I, too, would be
interested to know whether the Government will meet their targets on
child poverty and also whether, because their definition of child
poverty is
not— Dr.
Ian Gibson (Norwich, North) (Lab): Clearly out of
order.
The
Chairman: Order. It is for the Chairman of the Committee
to decide whether something is out of order. Having said that, I have
given enough latitude on these points already. I ask the hon. Member
for Taunton to come back, if he can, to the point that needs to be made
regarding the order and make his comments brief, without necessarily
bringing anecdotal evidence from his constituency to the
sitting.
Mr.
Browne: Thank you, Mr. Fraser. I will
make my point briefly, because I feel that it is relevant. Child
poverty is a relative, not an absolute, term. As the Government
are presiding over a shrinking economy, they may achieve their child
poverty targets merely as a result of overall wealth falling, even if
the people remain at the same level of income. I should be interested
to know whether the Minister sees that as part of his strategy on
reaching these targets by
2010. On
that note, having made all those points relevant to the order, I
conclude. 4.59
pm
Mr.
Jack: May I, too, congratulate you on being in the Chair,
Mr. Fraser? This is the first time that I have had the
pleasure of being under your guidance. I will try hard to stick to the
areas that you have outlined as appropriate and in
order. I
should just like to take the Minister back to the guardian’s
allowance, which he moved through quickly. At the beginning of the
order we learn, with great interest, that the Treasury carried out a
review and determined that the general level of prices was higher at
the end of the period under review than at the beginning, which seems
like a truism. However, we are not told what the period of review was.
I am always intrigued when I see, as I do in the second paragraph of
the order, the amount that is now deemed to be correct for the
guardian’s allowance. It is to be set at £14.10. Why?
When was the amount last reviewed to see whether it was sufficient for
the task for which the allowance was originally intended?
There is a
habit with social security simply to build on that which was there, as
opposed to examining whether the allowance is fit for purpose. I see no
explanation in the explanatory memorandum on the regulatory impact
assessment of the order to give any comfort about what is simply a
mechanical piece of up-rating. The up-rating percentage in the order is
4.8 per cent., which does not seem to tie in with any of the measures
of inflation that were deployed in the discussions that we have had on
tax
credits. Therefore,
to enlighten the guardians of this world, perhaps the Minister could
tell us to what depth he has probed the allowance, and its use. Could
he tell us how many people are currently in receipt of it, and what
proportion of their income is made up of it? What justification does he
have to decide that £14.10 is now the right amount, as opposed
to the £13.45 that it is at
present? Might
I briefly move on to a couple of issues that arise from paragraph 7.17
of the document? Other colleagues have spoken about some of the child
poverty implications of the order. The total cost of the up-rating is
£1.77 billion. I would be interested to know what assumptions
were used for the unemployment rate, because there is clearly an
interrelationship between those who are eligible to claim a tax credit
because they are in work as opposed to those who, sadly, given current
times, may fall out of work. I would like to know what assumptions were
made. Remarks
have been made on the subject of child poverty. I merely wish to remind
the Minister of the work that was undertaken by Mr. Donald
Hirsch of Loughborough university on behalf of the Joseph Rowntree
Foundation in which he alerts us to the fact that, to meet the 2010
target to which the Minister referred, the Government would have to
invest an additional £4.2 billion a year in benefits
and tax credits above their current plans. Perhaps when the Minister
sums up he might enlighten the Committee as to how the Government view
those future plans in the light of the up-rating to which they are now
committed. 5.3
pm Mr.
Ian McCartney (Makerfield) (Lab): This is the first time I
have served under your chairmanship, Mr. Fraser. I look
forward to serving with you on future Committees from this side of the
House for several years to
come. The
last time I was on an up-rating Committee, I was a shadow spokesperson.
I pointed out to the Minister at that time that the order had the
previous year’s figures in it, not the up-rating figures. The
Committee lasted for about 30 seconds and the order had to be
reorganised and reprinted
overnight. In
my constituency, the up-ratings will be extremely welcome as part of
the interlocking policies of child benefit, the minimum wage and other
Government polices to raise people out of poverty, to sustain them in
the workplace and to make work
affordable. I
would like to raise one point with my right hon. Friend the Minister.
In passing the orders, will it be possible at some early stage to
inform all Members of the House by letter of the details of the
up-ratings, to assist their staff? Secondly, will it be possible to
update staff on how to raise issues to resolve problems that still
exist with wrongful payment, particularly if the mistake
has been made by the Department and not the recipient of the tax credit,
and particularly in the area of hardship? That would be extremely
helpful to MPs’ constituency staff, who deal with such matters
daily. I
ask my right hon. Friend to give some consideration to that, if not
today, then soon, because it is very important. Will he write to
Members within the next few days so that we can publicise those
up-ratings to our constituents, because it is absolutely good
news? 5.5
pm
Mr.
Timms: I am grateful to all Members who have contributed
to the debate and echo the acknowledgment by the hon. Member for
South-West Hertfordshire of the high level of distinction on the Back
Benches on both sides of the Committee, which has certainly enriched
the debate. Responding to his points, I can tell him that we will
update costings of the measures at the time of the Budget and set out
in the Red Book a revised assessment of the costs being incurred,
including revised views of future levels of unemployment.
We do have a
target to halve child poverty by 2010. So far we have reduced relative
poverty by 600,000 and have pretty much halved absolute poverty since
that target was set, but we have not yet halved relative poverty. There
are clearly several uncertainties on exactly where we will get by the
end of the financial year 2010-11, including measures that might be
announced at the pre-Budget report later this year, in the 2010 Budget
and indeed, conceivably, in the pre-Budget report in
2010.
Mr.
Browne: Is the Minister saying that the
Government’s target for halving child poverty by 2010 stretches
to the end of the financial year in April
2011?
Mr.
Timms: The target applies to the end of the financial year
2010-11. The hon. Member for South-West Hertfordshire made several
points about overpayments. I was pleased to see the Public Accounts
Committee’s report published this morning, and I think that I
can slightly trump my hon. Friend the Member for Glasgow, South-West by
telling him that I was at GMTV at 6.40 this morning to talk
about
it.
| 
