Mr.
Hoban: Will the Minister explain at what income somebody
ceases to be eligible for housing benefit or council tax benefit? It is
important to know where the parameters are and who we are excluding by
excluding those
benefits.
Ian
Pearson: I do not have the figures immediately to hand. If
I cannot make them available during the debate, I will happily write to
the Committee about those areas. My key point is that the amendments
are not well targeted. In the case of housing benefit, half of
recipients are not of working age. We are clear about the fact that the
intention of saving gateway is to encourage the saving habit among
people who are of working age and on low incomes. It is not possible
for us to support the
amendments. None
of this means that we do not recognise and support the role that carers
play in our society, or recognise the importance of council tax benefit
and housing benefit for those who require it. Many people are eligible
for those benefits; if they have another qualifying benefit, we will be
able to secure them. However, it remains our view that, with housing
benefit and council tax benefit in particular, the proposal is not well
targeted; it is not what we want to achieve in terms of the
Bill’s objectives. I appreciate the probing nature of the
amendment, but I invite the hon. Gentleman to withdraw
it.
12.15
pm
Mr.
Browne: That was extremely useful, and I appreciate the
contributions made by other Members. However, I still do not quite
understand the point. The Economic Secretary was on the thinnest ice
when he said that most of the people who qualify for carer’s
benefit would
probably be scooped up by other criteria in the Bill, in which case not
many people would be disadvantaged. That seems to reinforce the
argument for including them on the basis that the cost is presumably
negligible, because most of them already qualify by other means. It
would feel even more iniquitous to those who do not qualify by other
means, when they see that they are in a relatively small minority and
others who appear to be in similar circumstances to them are
qualifying.
There is a
reasonable point about how we treat carers and the impression that is
given to them. I do not know whether the Economic Secretary has made
any assumption; my impression is that many carers would not choose to
open one of these accounts. They might feel that there were other
things that they wished to do with their limited income than put it
into such a savings scheme. Even if they did, they might not put the
full amount of money to which they are entitled into the
scheme. I
imagine that the cost to the Government of including those carers who
do not qualify by other criteria and who would be inclined to use the
scheme to its maximum is fairly small—I am guessing: if the
Economic Secretary has any estimate, it would be interesting for the
Committee to hear it. The number of people involved is, I think, fairly
small, but they would regard that as a gesture of good will. Although I
do not intend to press the amendment to a vote, I think the interest
that has been expressed in it by the Liberal Democrats and by Labour
members of the Committee is well intentioned and worthy of the Economic
Secretary’s reflection. I beg to ask leave to withdraw the
amendment.
Amendment,
by leave, withdrawn.
Mr.
Browne: I beg to move amendment 6, in clause 3,
page 2, line 31, at end
insert— ‘(3A) Each person
entitled to a benefit or tax credit with another person is eligible to
hold a Saving Gateway Account regardless of whether the other person
holds an account or
not.’. This
is a probing amendment which seeks some clarity. It does not need to
detain the Committee for long. The Bill states:
“a person is
‘entitled’ to a benefit or tax credit whether the person
is entitled to the benefit or tax credit alone or with another
person.” However,
the wording does not make it clear whether two people who together
qualify for a benefit or tax credit would be eligible to do so
independently of each other. I seek the Government’s assurance
that both individuals would be allowed to open their own separate
saving gateway accounts if they both collectively met the criteria for
qualification. At present, there seems a lack of clarity between the
criteria for eligibility and whether two individuals can be assessed
separately and could, therefore, both open an
account.
Ian
Pearson: The purpose of the amendment appears to be to
ensure that, with a joint claim to one of the qualifying benefits and
tax credits, both parties are eligible for the saving gateway. That is
already the effect of clause 3(3), which says that, for the purposes of
the
Bill, “a
person is entitled to a benefit or tax credit whether the person is
entitled to the benefit or tax credit alone or with another
person.”
Our view is that that is
straightforward and really puts the matter beyond doubt. Therefore, we
do not believe that the amendment is necessary. Indeed, the effect of
the amendment would be different because it would not limit benefit or
tax credit to the qualifying benefits and tax credits listed in clause
3(2). For tax credits, there is no limit in relation to the income
threshold set out in regulations under clause 3(4). There is also no
limit in relation to connection with the UK. So, the amendment is
defective and I urge hon. Members to resist it. If it is probing, I am
happy to confirm that both individuals will be entitled to take out
saving gateway
accounts.
Mr.
Browne: I am grateful to the Minister for those comments.
I beg to ask leave to withdraw my
amendment.
The
Chairman: The hon. Member for Leeds, East wanted to
contribute, but I am afraid that he needed to catch my eye a bit
earlier. I am sure that he will find other ways to highlight his views
and concerns.
Amendment,
by leave
withdrawn.
Mr.
Hoban: I beg to move amendment 24, in
clause 3, page 2, line 34, after
‘credit’,
insert ‘where their income is below
the threshold for child tax credit
and’.
The
Chairman: With this it will be convenient to discuss
amendment 25, in
clause 3, page 2, line 36, leave
out sub-paragraph
(a).
Mr.
Hoban: Amendments 24 and 25 would include in the Bill all
the threshold points at which people cease to become eligible for
saving gateway accounts if they claim either child tax credit or
working tax credit. It relates back in a different way to the debate
about the carer’s allowance, housing benefit and council tax
benefit in that in relation to the saving gateway account there has
been a thought process in Ministers’ minds: do we go down a
route that is purely about means testing, whereby people submit an
application form and if they meet the criteria they can open a saving
gateway account? We know that means testing can be expensive,
complicated and prone to error. Alternatively, do we use the existing
architecture of the benefits and tax system to prove eligibility, so
that, in effect, a person is passported through to a saving gateway
account if they qualify for a particular benefit or tax
credit? I
can see that that thinking is probably present in some of the
Minister’s responses on carer’s allowance and is probably
part of the thought process used in designing the system. It explains
why some benefits have been excluded and how Ministers slice and dice
the population entitled to receive those
benefits. Clearly,
the regulations referred to in clause 3(4) take that a stage further.
Families with incomes of up to about £60,000 are eligible to
receive tax credits at the top end of the taper. Without the test in
regulations set out in subsection (4), people with relatively high
incomes—who will, we hope, save anyway through ISAs or other
forms of saving—would qualify for the saving gateway account. I
can therefore understand why it is important to set a
threshold—indeed, the threshold that has been
used is the one where people cease to be eligible for full child tax
credit and where a taper applies. If that is such a fundamental part of
the system’s architecture, I do not understand why it is not in
the Bill and why it has been relegated to
regulations. The
Minister will say he wants flexibility. If he does, I will understand
that, but perhaps he might explain why he
wants—
Ian
Pearson: The hon. Gentleman should want it as
well.
Mr.
Hoban: The Economic Secretary says from a sedentary
position that I should want it as well. Perhaps I should, but we will
wait for that day to come. Will he explain why the Government need that
flexibility and what factors would drive them to vary that threshold up
or down? I tabled the amendment to obtain such an explanation. I can
see the thinking that goes on in designing the system, but it would
help if we understood why the Government believe that that threshold of
around £16,000 is correct, why they need flexibility and what
might drive them to change their mind about where the threshold kicks
in. This is a probing
amendment.
Ian
Pearson: We set out in the document that we published in
December and in the draft regulations that we published ahead of the
Bill’s Second Reading the fact that we intend to set an income
threshold above which the entitlement to tax credits will not lead to
eligibility to the saving gateway. We intend to set it at the same
level as the income threshold for child tax credit, which is
£15,575 and will rise to £16,040 in the financial year
2009-10. We also intend to ensure that people who have been passported
into a maximum award of child tax credit because of their entitlement
to another benefit will in turn be passported into eligibility for the
saving
gateway. The
probing amendment moved by the hon. Member for Fareham would put into
the Bill the link between eligibility for the saving gateway and the
income threshold for child tax credit. I hope that I can assure the
Committee that it is our intention to link those two thresholds, as set
out in condition 2 of draft regulation 3(1). That is the appropriate
level at which to set the threshold; it is the same as the threshold
for receiving a higher Government contribution to a child trust fund
and for several other passporting
benefits. We
do not intend to depart from that, but there are good reasons for
wanting to make the link in secondary rather than primary legislation.
In particular, a Government may decide to alter the tax credit system,
in which case it might be necessary to set an income threshold purely
for saving gateway purposes. Primary legislation would not be an
efficient use of parliamentary time. I am not convinced that the
Conservative party is particularly keen on child tax credits, so I
cannot see why it would want to make that link explicit in the Bill, as
the Bill would become defective if a change of policy were
desired. A
future Government might simply decide that the two thresholds, which
are for different purposes, should be set at different levels. As the
Bill stands, that can be done without the need for primary legislation
and the regulations will be subjected to the affirmative procedure
to provide the appropriate parliamentary scrutiny. That is the
appropriate way to do this. I hope that the hon. Gentleman will
therefore withdraw his probing
amendment. Mr.
Hoban: I am happy to accept the Economic
Secretary’s explanation as to why secondary legislation should
be used and what the checks are, but our concern is not so much the
principle of the child tax credit as the administration of the system.
From the earlier comments about the inefficiencies of the system, I
think that Labour Members share some of our concerns about the problems
that the administration of the system brings to our constituents. It is
difficult to get the level
right. If
we are to target these measures where possible on people with a certain
income, we need to have that cut-off in place. The Economic
Secretary’s comments about being consistent with contributions
to child trust funds and with other passported benefits suggest that
this is reasonable point at which to draw that line. On the back of
that, I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Question
proposed, That the clause stand part of the
Bill. 12.30
pm
Mr.
Mudie: I wish to raise a point on the spouse’s
situation in a household, which we discussed under the previous group
of amendments. How will the Economic Secretary indicate eligibility to
a spouse in a household where the husband is on income support or
jobseeker’s allowance, but the partner or wife is at home not
receiving any of the benefits, which would be the straightforward thing
to do? I am thinking particularly of Bangladeshi women in my
constituency. The mother is often at home for language or cultural
reasons or because of children. On the question of language, the
publicity that the Economic Secretary will bombard them with might pass
them by without much recognition. Is there any intention to write to
spouses in such
households?
Dr.
Ladyman: My hon. Friend is making a good point. We all
know of households in our constituencies where that would be an issue.
Will he suggest that the Economic Secretary consider some advertising
with the family allowance? We pay that to the parent with care, so
putting the advertisements with that might be a way of getting the
information to that member of the
household.
Mr.
Mudie: That is a sensible suggestion that the Economic
Secretary will probably add to his list of sensible points that he will
make to me. Will such people be sent anything with the eligibility
form? For people in a number of households, the first time they will be
aware of this scheme is when the form falls on the mat saying that they
are eligible to participate in it by virtue of their jobseeker’s
allowance or income support. In a low-income household, the lack of
that will often mean that the individual assumes that they are not
eligible. The only people that I know in low-income households do not
make contact with Her Majesty’s Revenue and Customs without due
cause. They might leave it at that and not be aware of their
eligibility.
In addition to
the point made by my hon. Friend the Member for South Thanet, if we do
not do anything with the spouse, will there be anything in the
literature sent out with the eligibility form to alert the individual
that they should tell anyone else in the household who might be
eligible for the
scheme?
Ian
Pearson: My hon. Friend is right to raise concerns about
his constituents and to probe me on how the clause will work. When the
legislation is on the statute book, we will consider carefully how to
market and promote saving gateway accounts to individuals as part of
the implementation process. As I said earlier, MPs have a role in doing
that directly in their constituencies. There is a broader role for
those who offer saving gateway accounts in deciding how to market them,
and a role for Government in promoting the principle of the saving
gateway. On
the direct question about a spouse who is not working and is at home,
my hon. Friend will be aware from the criteria in clause 3 (1) and (2)
that the system is based on defining an eligible person who is entitled
to one or more of a number of benefits or tax credits and also passes
the test of connection to the UK. If there is a claim for one of the
qualifying benefits with two claimants, then both sets of details will
be on the claim and both will be sent a notice of eligibility. In a lot
of the instances that he is probably thinking about, low-income
households will be making joint claims. In those circumstances both
would automatically be sent a notice of eligibility.
My hon.
Friend also raised some broader questions, such as, what if somebody
got a notice and someone else did not? In that case, how would they
know whether they might have qualified, and might have been missed out?
Again, we would want to consider that when looking at how to promote
the scheme in future. Notwithstanding the amendments discussed so far
and the commitments I have made to reflect, particularly on the point
about carers, I believe that we need a scheme that carefully determines
eligible persons, and that is what clause 3
does. Question
put and agreed to.
Clause
3 accordingly ordered to stand part of the
Bill.
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