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Baroness Carnegy of Lour: Perhaps I may add a further point which looks forward to later clauses in the Bill. I ask Members of the Committee to forgive me for mentioning this now, but I shall not be able to be present for the second day of Committee because I shall be taking part in the last stages of the election campaign for the Scots Parliament.
This is a ferocious way to be treating employers. I know that we have not yet reached that stage, but it seems to me that it is a consequence of conducting the whole operation through the Revenue. In fact, it is rather an unfortunate consequence from the point of view of employers.
Lord Swinfen: Up until now it has been the Department of Social Security which has worked out what benefits should be paid to people; indeed, it has fought their corner against the Treasury. However, with all this being passed over to the Treasury, which is used to cutting every payment, who will work out the correct level of the tax credits? It will be the Treasury. The Treasury will be fighting itself--in other words, left hand against right hand. As I understand it, the Secretary of State for Social Security will not be fighting on people's behalf: it will be someone from the Treasury trying to justify it within the Treasury, but the Treasury is used to cutting down every single outgoing government penny.
Baroness Hollis of Heigham: I was not expecting a full-blown Second Reading debate. Nevertheless, I shall try to respond. The thrust of the speech made by the noble Lord, Lord Goodhart, which was supported by the noble Lord, Lord Higgins, and others, appears to be that because the working families' tax credit is, after all, a benefit it should therefore continue to be run by the DSS. That seems to me to be the argument.
Secondly, family credit has a relatively low take-up compared to other benefits--for example, 69 per cent. per couple and 79 per cent. for lone parents. Through a pay packet we expect a much higher rate of take-up by definition. Thirdly, family credit remains vulnerable to fraud, as do income support and other benefits. However, I believe that most people will accept that the Inland Revenue has a more effective track record in tackling fraud.
Fourthly, the current family credit has a system of a childcare disregard, which means that those who have the greatest need of it--that is, those who are on maximum family credit--are unable to get any access to it. However, by virtue of having a tax credit, we can produce, if you like, an additional credit for childcare. That brings us back to some of our debates earlier as regards how far that goes up the income scale.
Finally, and most importantly, family credit is part of an extension of DSS measures. But the future will see the greater integration of taxation and the former benefits system. We have already referred to things like children's tax credits which are envisaged in the future. So we expect these measures to develop. It is therefore appropriate that this, which is the very first benefit to become a credit and which is therefore being built on the existing benefits structure, should nonetheless be the first to go over to the Inland Revenue.
I was asked who drafted the regulations. I can tell the Committee that they were drafted by the Solicitor for the Inland Revenue. I was also asked whether computers would be affected. I can tell noble Lords that the answer is no, and that computers will remain the same. I should emphasise that staff in the current family credit and DWA units will go over to the Inland Revenue. Therefore, the fear expressed by the noble Lord, Lord Swinfen, that there will no longer be a champion to fight people's corner, should not arise. I give way to the noble Lord.
Lord Swinfen: I am grateful to the Minister for giving way. Can the noble Baroness tell us whether there will be a Minister to champion these people? In other words, will there be a Minister in Cabinet to fight the corner for those people who need tax credits when the Budget is being prepared? As I understand it, there will only be the Chancellor of the Exchequer and he will not do it because his task is to spend as little money as possible.
Some years ago I asked about the experience outside the Treasury of those in the top half dozen layers of the Treasury. I found out that very few had served anywhere but the Treasury; they had no experience outside the Treasury. Some had had experience in one or two other ministries but very few had any experience of the big wide world outside. It seems to me that the Treasury is a big white tower, and those within it never go outside.
Baroness Hollis of Heigham: I find this all very odd. The noble Lord, Lord Swinfen, addressed his remarks in the context of the Chancellor of the Exchequer's Budgets. The latter have raised child benefit to levels unprecedented in terms of the real increase for children--for example, from next April it will be £15 for the first child and £10 for the second child. We are also speaking about a Chancellor of the Exchequer who has underwritten a minimum income guarantee for pensioners and disabled people alike which, again, is unprecedented.
Lord Swinfen: The Minister will realise that Chancellors of the Exchequer come and go, as, indeed, do governments. We are trying to put legislation in place which may well be there for many years and for many parliaments.
Baroness Hollis of Heigham: It is perfectly true that in the foreseeable future--indeed, I hope that it will be a long-distant future--there may be a Conservative government who do not protect the interests of disabled people or poor people in work. I would regret that very much. From what he said, I am sure that the noble Lord would also regret such a catastrophe. However, in the meantime we have a Labour Government and a Labour Chancellor of the Exchequer who are committed to ensuring that public expenditure is used appropriately to encourage people into work and bring them out of isolation into the mainstream of life.
We are committed to tackling deprived communities; and, indeed, to investing in health and education. We do not want to spend on economic and social failure, as was the case over the past 20 years, whereby we would spend more and more on social security but people would remain poor and inequality would widen. Instead, we are determined that money should be spent on investing in people as regards their talent, skills and opportunities. We want to help them into work and to ensure that the public services they need, like education and health, are there to sustain them.
If the noble Lord wishes to take the matter further, I suggest he studies the interviews that the Chancellor of the Exchequer gave to the Guardian newspaper over the weekend. He made it very clear that the commitment of this Government is to use public expenditure wisely so as to invest in people, their talents and opportunities and to ensure that the necessary public services are there to support them. I am delighted to say that, rather belatedly, Mr. Peter Lilley seems to be coming round to something of the same position.
In conclusion, the point pressed by the noble Lords, Lord Goodhart and Lord Higgins, was whether there would be a difference in culture as a result of going across to the Inland Revenue. In other words, they thought that there would be no one in the Revenue to fight the corner of those most in need. I repeat: the same skilled and experienced staff of the family credit and the DWA units will be moving across to the Inland
Lord Higgins: Before the noble Lord, Lord Goodhart, replies, I hope I may make two quick points. First, as regards the point about culture, I believe the noble Baroness is being rather optimistic in thinking that if DSS staff suddenly transfer to the Treasury they will not be affected by the Treasury culture, however open-minded they may be. I remember a government conference centre at Ditchley Park where the food was terrible and the heating was non-existent. I believe that I was the Minister of State at the Treasury at the time. When the estimate was presented to me I wrote on it that we should spend more money on Wilton Park-- I am sorry; I did not mean to refer to Ditchley Park--and within almost 30 seconds (this was absolutely pure "Yes, Minister") my private secretary told me that the Permanent Secretary wished to have a word with me. He told me that no Treasury Minister had ever proposed an increase in public expenditure. Therefore I believe there is a difference in culture in the Treasury.
On a more serious note, the noble Baroness has said that the computer records will be switched from one department to another. However, a quite different method of working will need to be employed in this regard unless the amounts due to each individual are paid directly to employers who pass that money on. However, that is a matter we can discuss later.
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