| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Lord Higgins: My Lords, as always, the noble Baroness has been helpful. We on this side of the House, like the Government, are against fraud. The noble Baroness and I spent many long hours improving the Social Security Fraud Act. It was certainly a great deal better when it went back to the Commons.
As she rightly points out, these proposals are essentially technical in nature and cover three main areas. I was puzzled at first as to why, since it was the Social Security Fraud Act 2001, we had not taken into account the changes which took place in the Financial Services and Markets Act 2000. There is no reason why one should not proceed by regulation but I was surprised that the same sdituation existed in relation to the Utilities Act 2000 and the electricity and gas distribution companies. The blame, if there is any, for what appears to be a failure to act, lies as much on this side of the House as on the other. We certainly need to tidy up the matter now.
With regard to banks and insurers, extension is clearly appropriate. As the noble Baroness has pointed out, this concerns a series of organisations where
authorised persons—I gather about 175 of them—are able to obtain information on individuals, which may seek to confirm the firmly held belief by the department that someone is guilty of fraud. I have no points to make at all about banks.So far as the electricity and gas distribution companies are concerned, the noble Baroness pointed out that the change in the structure means that the distribution companies would not be available, if that is the right expression, for inquiries to be made appropriately. Again, I see no problem with that; similarly as far as the Director of National Savings is concerned. The prospect of someone engaging in fraudulent activity by investing heavily in national savings seems to me a little unlikely. I suppose so far as premium bonds are concerned, to the extent that any gains are outwith the tax system altogether, that may prevent them from falling into the clutches of the Chancellor of the Exchequer and the Inland Revenue.
I have only two other points to make. The boundary between the Department of Social Security and the Treasury gets more and more obscure—
Baroness Hollis of Heigham: Because we no longer have a Department of Social Security.
Lord Higgins: But, my Lords, as the noble Baroness knows, it seems to me much better title than "Work and Pensions" which sounds rather sordid. Anyway, all of this refers to the Social Security Administration Act which, if the department has disappeared totally, seems a little strange, but I leave that on one side.
I was saying that I have only two points to make. As the boundary gets more and more confused, am I right in thinking—I believe I am—that, for example, working families' tax credit is not caught by the provisions of the Social Security Fraud Act? Perhaps the noble Baroness can tell us how it is to be dealt with.
In our debates on what became the Social Security Fraud Act we gave attention to the issue of credit rating agencies. I have become increasingly concerned about the way they operate. The noble Baroness will recall that it was agreed, rightly in my view on reflection, that the Government would not give information which it had to the credit rating agencies but would use credit rating agencies in the kind of inquiry we are discussing on the order.
My concern, reinforced by a recent article in Which? magazine, relates to the inaccuracy of the information which credit rating agencies provide and, more particularly, the delay in ensuring they give information only on the individual about whom the inquiry is made. At the moment they are still giving information on everyone else at the same address and all the other family members.
To the extent that both the noble Baroness and I were anxious to avoid fishing expeditions, we need to look carefully at the way in which these agencies operate and the action which is taken under the Social Security Fraud Act in making use of their services, no doubt paid for by the taxpayer.
The noble Baroness is absolutely right. These are largely technical measures. We believe they will make the Act more effective and to that extent we support them.
Lord Addington: My Lords, I thank the Minister for her clear introduction to the order. Seeing all the regulations worried me at first. Reading through them, I discovered that it is merely a tidying up exercise and what the Minister said has certainly allayed any fears I had.
We have one or two slight moans about basic principles. The idea of needing more tax credits may make more fraud possible overall, but that is probably not a matter best discussed at this point. I am content with the explanation given by the Minister.
Baroness Hollis of Heigham: My Lords, I am grateful to your Lordships for the response. In reply to the noble Lord, Lord Higgins, about the Financial Services and Markets Act, I am not sure that I have an entirely persuasive answer but, with the help of my noble friend on my right, reinforced by help from my left, naturally on my left, I am told,—
Lord McIntosh of Haringey: I am much more naturally on your right.
Baroness Hollis of Heigham: My Lords, I carefully did not gloss that statement when I talked about my noble friend. The Financial Services and Markets Act 2000 did not come into force until after the Social Security Fraud Act was passed. It came into force fully on 1st December 2001. That is not an explanation about the drafting but the fact that they were running coterminously was, I suspect, part of the problem.
Obviously, tax credits are not benefits; they are credits. Therefore they do not come under the social security legislation. I realise that the noble Lord, Lord Higgins, has a different view about nomenclature here but, as a temporary member of the nomenklatura, I continue to insist that we are dealing with benefits here, not credits.
The noble Lord talked about credit rating agencies. He is right. He will know, I am sure, that in the last 18 months or so the regulation of these bodies has passed to what was the Data Protection Commissioner, now the Information Commissioner. I find that she herself has produced leaflets on complaints about credit reference file information and what should be done about it.
I do not know whether this is familiar to the noble Lord, Lord Higgins. She says that the most common complaints about credit reference files relate— it seems that the noble Lord, Lord Higgins, is the recipient of all the complaints in that sense—to the amount of data which appears and particularly the fact that there may be information about a person other than the applicant for credit, the accuracy of the entry and the length of time for which the record appears to continue on the file. Therefore, the noble Lord's concerns are absolutely right.
She goes on to specify there what must be done. She has already taken some enforcement action, and she shows how people may complain about the agency and not merely correct their information. I am very happy, if the noble Lord thinks this helpful, to make sure that such a leaflet is put into the Library of the House for general information. I think it is important to draw this to people's attention. I agree that it is a very serious matter.
Lord Higgins: My Lords, I am most grateful to the noble Baroness. Yes, I have been in telephone conversation with the office of the commissioner. It has been immensely helpful. If the Government are making use of this information, they should take it with a very considerable pinch of salt. My own experience recently, not necessarily personal but otherwise, is that much of the data is very poor indeed.
Baroness Hollis of Heigham: My Lords, I accept that entirely. The noble Lord will recall our discussions during the passage of the fraud legislation. I said then that we would go to those agencies not only when we had found a discrepancy but also when we had strong grounds to believe that there was an irregularity that we wished, possibly, to clear up with the individual concerned—if he or she were the right person to give us the information. If not, we would consult other legitimate information providers. Therefore, we would only consult Experian, Equifax, or the like, in certain appropriate circumstances. That is only part of the range of materials we might need. Given the known unreliability in some cases of information received, I should be surprised if that was sufficient basis to do anything other than contribute to a jig-saw puzzle, if you like, of information.
The noble Lord is right to give us warnings in that respect. On the basis of what he said, I shall telephone the office tomorrow to see what information is held about me. We shall see whether my experience is the same as that of the noble Lord. Given those points, I hope that noble Lords will be content to pass the order tonight and thereby allow us to proceed on our way. I commend the order to the House.
On Question, Motion agreed to.
Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2002
7.52 p.m.
Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 6th February be approved [19th Report from the Joint Committee].
The noble Lord said: My Lords, with the leave of the House, it has been suggested from the Opposition Front Bench that both this and the next order on the Order Paper should be debated at the same time. I am happy to agree to that proposal, if noble Lords are similarly content. I shall speak to both orders now. When debate on the first order is concluded, I propose to move the second order formally.
I should, first, affirm that the provisions in the first order are compatible with the European Convention on Human Rights.
First, the order will reduce, from 11.9 to 11.8 per cent, the rate of secondary Class 1 contributions payable by all employers from April 2002 to recycle revenues arising from the introduction of the aggregates levy. It will thereby help to protect UK competitiveness.
Secondly, for the self-employed, it raises the small earnings exception below which, depending on the level of profits, they may claim exemption from Class 2 contributions. The exception will rise next April broadly in line with prices, from £3,955 to £4,025 a year. Given that the rate of Class 2 contributions for 2002-03 will remain at £2 a week, which is a reduction in real terms, it may be that many people will choose to pay the contributions in order to protect their benefit entitlement.
Staying with the self-employed, the draft order also sets the profits limits between which Class 4 contributions are paid. The lower limit at which contributions become due, and the upper limit, will increase broadly in line with inflation. The lower limit will rise in line with the income tax personal allowance, from £4,535 to £4,615 a year. At the other end of the scale, the upper profits limit will continue to match the upper earnings limit for employees, at £30,420 for 2002-03. This ensures that the self-employed pay Class 4 contributions on much the same range of earnings as employees liable to Class 1 contributions, and is an essential element in making the national insurance system fair for everyone.
Thirdly, the draft order deals with the weekly rate of voluntary Class 3 contributions, which help those with insufficient contribution records in any given tax year to make up a "qualifying year" for benefit purposes. The rate of Class 3 will rise next April by 10 pence to £6.85 a week, a standard re-rating in line with prices.
The review of contribution rates is accompanied by a report from the Government Actuary detailing the effects of the draft order, and the draft order up-rating benefits, laid by my right honourable friend the Secretary of State for Work and Pensions, on the National Insurance Fund. I am pleased to say that, for the fifth year in a row, there is no expectation that the fund will need a Treasury grant. Nevertheless, a prudent minimal provision is made in line with advice from the Government Actuary.
As happened last year, there is a single draft order for both Great Britain and Northern Ireland. Northern Ireland has a separate national insurance scheme from Great Britain, but the two schemes are closely co-ordinated and maintain parity of contribution rates. Following the transfer of policy, Northern Ireland's social security legislation was amended to enable the draft re-rating order to include corresponding measures for the Province.
I move now to the Tax Credits Up-rating Order 2002. Again, I confirm that the provisions in this order are compatible with the European Convention on
Human Rights. The order increases the main rates and thresholds of working families' tax credit and disabled person's tax credit from 9th April this year by 1.71 per cent, in line with the increase in the Rossi index. In addition, as part of a package of more help for families with children with disabilities, it increases the disabled child tax credit and the enhanced disability tax credit for children within working families' tax credit and disabled person's tax credit by an extra £5 a week above indexation. These increases will boost the incomes of 1.3 million low income working families and disabled people who work.Perhaps I may explain the provisions in a little more detail. The order increases the amount of credits for an adult, child, or young person, including the extra "30 hour" tax credit that a family receives when one earner works at least 30 hours a week, and the disabled and enhanced disability credits. These credits determine the maximum working families' tax credit or maximum disabled person's tax credit that the family or disabled person may receive.
The order also increases the income threshold for working families' tax credit and the thresholds for disabled person's tax credit. The thresholds—or "applicable amounts"—are the levels over and above which income begins to taper away the maximum award of the tax credits. The increases will provide a minimum income guarantee of £227 a week for a family with one child in receipt of working families' tax credit, £172 a week for a single person on disabled person's tax credit and £260 a week for a couple with one child on disabled person's tax credit. These figures are based on one earner in full-time work, working 35 hours a week and earning the national minimum wage.
The order ensures that the differentials between in-work tax credits and out-of-work benefits are maintained. It provides extra help, over and above indexation, for families with children with disabilities. It reflects this Government's commitment to encourage people into work, to make work pay, and to target extra support to those who need it. I beg to move.
Moved, That the draft order laid before the House on 6th February be approved [19th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
Next Section
Back to Table of Contents
Lords Hansard Home Page