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Lord Higgins: I thought initially that the noble Baroness was going to accept the amendment. Will she clarify one point as regards passport provisions for the disabled?
Baroness Hollis of Heigham: Which passported benefits does the noble Lord have in mind?
Lord Higgins: Prescription charges, if that is appropriate.
Baroness Hollis of Heigham: At present, one is entitled to free prescriptions if one is in receipt of DWA, and the same situation applies to family credit. Both of those issues are being considered in the light of the much more generous financial terms of DPTC and WFTC.
Lord Rix: I welcome the Minister's assurance that the scheme will be adequately monitored in terms of its effectiveness. I welcome too the possibility of looking forward to a government amendment on Report. I am glad that the Minister mentioned the pilot schemes in relation to RADAR and the possible involvement of the Disability Rights Commission.
Before I withdraw the amendment, will the Minister clarify whether the operation of the means test will be re-evaluated, in particular in view of the take-up of the credit?
Baroness Hollis of Heigham: Is the noble Lord asking that if the DPTC does not have the take-up we hope and expect we should review the basic income-related element within it? Is it on that which the noble Lord is pressing me?
Lord Rix: In truth, I am asking whether the means test, which includes the family income, will be re-evaluated?
Baroness Hollis of Heigham: I believe that the noble Lord is asking me whether we shall assess the eligibility for DPTC solely on the income of the disabled person and disregard that of the spouse or other income coming into the household.
I know that that has been pressed by the disability organisations. In the past, benefit entitlement has been household-based. Obviously, we keep such issues under review but at present I should not expect income of other members of the household to be disregarded when looking at eligibility for disability benefit. It is clear that it can go to a single person and is not affected by other income. But where disabled people receive the higher benefit by virtue of the fact that they have a partner and a higher benefit still by virtue of the fact that they have children it would be unreasonable to disregard that on the income side. That is the position at present.
However, experience will show us whether there are problems with this disability benefit, as there was with DWA. We shall continue to look at it because we want to make this benefit a success. The previous well-intentioned efforts by government in relation to DWA, which we all supported, have failed. We hope that we are meeting the problems of DWA but if there are new problems we must return to the matter and consider those problems.
Lord Rix: With the assurance that the means test will be re-evaluated from time to time in the future, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [General functions of Board]:
[Amendments Nos. 16 to 18 not moved.]
Lord Higgins moved Amendment No 19:
The noble Lord said: It may for the convenience of the Committee if I speak also to Amendments Nos. 22 and 25. This is a fairly narrow and technical point. I am simply slightly puzzled. This clause is, of course, concerned with the care and management of the board, which was referred to earlier by the noble Lord, Lord Goodhart. Subsection (2) of that clause, to which Amendment No. 19 refers, is concerned with the payment of the revenues received by the department to the Exchequer. I am not clear as to why that is necessary; nor indeed am I clear as to why the department is apparently receiving tax credit, which is dealt with in Amendment No. 22, rather than giving it up.
As I understand it, the whole thrust of the Bill is that the Inland Revenue will be disbursing money, not collecting it. More particularly so far as subsection (2) is concerned, I am a little puzzled as to why it refers to the gross revenues of the department. One would expect it to refer to the net revenues. Perhaps the Minister could clarify that point.
Lord McIntosh of Haringey: I am slightly taken aback to hear the noble Lord describe this as a narrow and technical amendment. I thought that he was going to open up the whole range of issues debated with Amendment No. 1 regarding the accounting procedures of the Government, which might have been debated in Opposition time at the last budget debate. As it turned out, they were not. I suppose that means that I should
I have to take the three amendments as a whole and look at their total effect. I understood that the intention of the amendments was to criticise the accounting treatment of the two tax credits and to require them to be treated as if they were benefits. On that, there is clearly a philosophical disagreement between the Government and the Opposition which was aired at some length in the discussion on Amendment No. 1.
These amendments, practically, would not work. Amendment No. 19 would prevent the Revenue from paying tax credits out of the money they take in. Amendment No. 25 would require the Revenue to apply to Parliament for the necessary money by way of a vote. However, Amendment No. 22 would not require it; in other words it would remove the requirement that it reflects all of the money in its accounts.
I do not know whether that was the intention of the three amendments but we have to have doubts about whether they would work in practice. I always laugh at counter aphorisms. My favourite has always been Wittgenstein's, "That's all very well in practice but we ought to see how it works in theory". These amendments make clear, as has the debate this afternoon and that in another place, that our difference is a philosophical one of considerable importance. We take the view that these are tax credits administered by the Revenue. They are paid through the wage packet, where their effect will be to reduce or eliminate the tax burden, and, having done that, to augment wages so that those who get it see more clearly that it pays.
There may be more specific concerns about the implication of the treatment we are adopting. I understand that there are concerns about how the Government present their figures compared with how they need to be presented in the national accounts. However, as this has not been drawn into question, all of my defence of net taxes and social security contributions in table B9 of the Red Book is no longer appropriate.
Suffice it to say that the way in which we treat this in the Red Book is not wrong; it is just different from the national accounts. As the Treasury Select Committee made clear in its report, what is important is that we should be transparent about the way we produce our accounts. That is, indeed, as Andrew Dilnot recognised in his evidence to the Select Committee, what happens in the Green Book.
The issue of accountability still arises. If we are netting the tax credits from tax receipts rather than coming before Parliament specifically to ask for money, it is argued that the Government are less accountable for what they do. That is simply not the case. The board of revenue will be paying out tax credits, but there will be occasions when it will have to collect--that is, receive--amounts of tax credits which have been wrongly paid perhaps because of fraud. So the Bill has to provide for paying and receiving tax credits. The difference does not have any philosophical significance.
The Bill amends the Inland Revenue Regulation Act in subsection (5) of this clause to require the board of Inland Revenue to separate out the tax credits and present them separately. That is a rigorous requirement. In fact, one might express surprise that it has not been done before. At the moment, benefits are grouped together and estimates put forward for the purposes of the "vote" by the Department of Social Security or any other department. But the Inland Revenue does not just have to produce a reconciliation on a sample basis; it has to ensure that nothing has gone wrong and that the accounting systems are more thorough, because, unlike a vote, the Inland Revenue needs to track payments to and from employers.
If there are concerns about whether there is enough control and parliamentary scrutiny, I hope it will be seen that this is a good deal more effective in the separate report which the Inland Revenue will have to produce than the Consolidated Fund Bill, which is never debated properly in another place and, by tradition, is not debated at all in this Chamber.
I claim that the procedure we have adopted and which would be removed by these amendments is sensible, fair and transparent. It is also the practical way to proceed because it fits in with the way in which employers deal with tax credits and their payment obligations. Employers withhold PAYE tax from their employees and from that pool of money will pay some of their employees the right amount of tax credit. That handling of tax credit on the basis that they are fungible with the employee's tax is fundamental to the administration of employer payments.
Separate records will be kept and each payment will be capable of being accounted for. But in practice the tax credits will be paid out of tax receipts and it is only sensible to follow that through in the way we propose in the Bill.
Page 3, line 1, leave out subsection (2)
10.15 p.m.
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