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Lord Northbrook: This amendment is worthwhile because, according to the Office for National Statistics, the take-up of means-tested benefit has been declining. Looking at the figures produced between 1998–99 and 1999–2000, the total of unclaimed means-tested benefits was £2.5 billion. As I understand it, that has increased to £3 billion. The amendment would help people's understanding of the system and encourage them to take up benefits of which they may currently not be aware.

5.45 p.m.

Baroness Hollis of Heigham: We cannot turn the Inland Revenue into a welfare rights organisation taking legal responsibility for the advice that it gives when those benefits—free school dinners and so on—are run and handled by other departments. That seems inadvisable. Providing power to disclose information on passported benefits adds nothing to what is already in the Bill. I have made it clear that the Revenue is working with other departments on the mechanics of passporting. It will also provide basic information and direct people to the source of more detailed information. It would not be reasonable to expect the Inland Revenue to express a view on entitlement to passported benefits. That is a matter for the departments responsible for them.

Lord Higgins: The amendment does not say "entitlement".

Baroness Hollis of Heigham: The amendment states:

"any other information which is relevant to any entitlement to tax credits pursuant to the claim."

Lord Higgins: I am sorry. I misunderstood.

Baroness Hollis of Heigham: Am I not right?

Lord Higgins: Yes. I am sorry.

Baroness Hollis of Heigham: Thank you. I hope that the noble Lord, Lord Freeman, will accept that the Inland Revenue cannot take responsibility for determining or giving information about an entitlement to a benefit which is run by another department. It can try to make sure that people have the relevant information through an advice line and a referral-on, where appropriate, and obviously this will be backed by relevant literature, but, ultimately, it is a question of functional responsibility.

Lord Freeman: I am disappointed but not surprised by the response, which is more in keeping with the

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language and attitude of the Inland Revenue than of the Minister's distinguished self, and perhaps even of the Department for Work and Pensions.

My noble friend Lord Higgins put his finger on the point. This is not about the determination of entitlement or even the payment of other benefits. The amendment seeks to provide that the board may distribute information about other passported benefits. A mere telephone number—which I think the Minister suggested might be available—does not seem to be in the spirit of joined-up government.

This relates to an amendment to which I spoke earlier. I did not move it because it was not in sequence. I will have an opportunity to move it later in the proceedings. That amendment concerned better-off calculations, which is the obverse of what I am suggesting here because you may lose some passported benefits and certain other payments through being entitled to claim, and receiving, tax credits.

It is a very modest amendment. I hope that we will return to it, although not necessarily in this form.

Lord Saatchi: Before my noble friend withdraws the amendment, the Minister said earlier that she did not have to hand the figure for none take-up of tax credits. Can the Minister confirm that the correct figures for none take-up of income support, housing benefit, council tax benefit and jobseeker's allowance are as shown in the ONS document—in other words, that the correct figure for the money saved by the none take-up of those four benefits is £3.015 billion in 2000.

Baroness Hollis of Heigham: I do not want to be unhelpful but I do not think that it is appropriate to go back and revisit an amendment that has already been disposed of. I am very happy to respond in writing to any queries the noble Lord may have, but we have moved on from that group of amendments to the current one, which is about passported benefits and the Inland Revenue.

Lord Northbrook: The noble Baroness said that the amendment placed a legal obligation on the Inland Revenue, but it did not seem to me to be couched in such direct terms. It was about passing on information, but not creating legal obligations.

Lord Freeman: Technically, it is my duty to ask leave to withdraw, bearing in mind that I would like to return to the issue at a later stage. I beg leave to withdraw.

Amendment, by leave, withdrawn.

The Earl of Northesk moved Amendment No. 39:

Page 3, line 40, at end insert—

"(3) Notwithstanding the generality of subsection (2), the Board may supply to a person in receipt of a tax credit (whether or not jointly with another)—
(a) any information relating to the claim, to an award made on the claim or to any change of circumstances relevant to the claim or such an award,
(b) any communication made or received relating to such an award or any such change of circumstances, and

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(c) any other information which is relevant to any entitlement to tax credits pursuant to the claim or any such change of circumstances,
in the form of an annual statement to the relevant claimant at the end of each tax year."

The noble Earl said: I hope that the purpose of the amendment is straightforward. It would empower the Revenue to issue annual statements of tax credit entitlement, changes of circumstance and payment to individual claimants, if it so wished. Of course, this returns us to territory covered in previous amendments, in particular the duty of the Revenue to secure people's rights to benefits and tax credits.

I begin with what I hope is an obvious point. It is likely that a number of individuals who operate under self-assessment of their tax liability could also be entitled to tax credits. The Revenue already issues annual statements to these individuals. It should follow that their annual statements will include, whenever relevant, the effect of tax credits. This is an inevitable consequence of the integration of the benefit and tax systems. To this extent, it is reasonable to suppose that the purpose of the amendment would be achieved quite naturally within the system.

However, there are more telling reasons as to why the issuing of annual tax credit statements would be useful. Once again, this relates to issues of take-up, fraud and the complexity of the system.

The Paymaster General commented on Third Reading in another place:

"The annual nature of the credits will simplify the income assessment process".—[Official Report, Commons, 7/2/02; col. 1115]

Would that it were that easy. There is a contrary view, expressed by, among others, Andrew Dilnot of the Institute for Fiscal Studies, who has said that year-end adjustment

"reduces certainty and increases complexity for all".

It may make it somewhat easier administratively for the Revenue, but particularly insofar as we may be moving towards a system of self-assessment for tax credit entitlement, there are serious doubts that it will make life easier for claimants. There are a host of potential problems here. As my honourable friend Howard Flight observed,

"at the heart of the issues are our concerns about the complexities of the arrangements and our anxiety that the need for claimants to keep detailed records and monitor the number of hours worked, the amount of income earned and child care costs will lead to a much-increased risk of non-compliance".—[Official Report, Commons, 7/2/02; col. 1119.]

That leaves aside Liberal Democrat concerns—and our own—in respect of over-payment problems. In other words, it is reasonable to suppose that the end of any given tax year is likely to prove a particular sticking-point, even in a period of anxiety and worry, for many claimants.

Surely it makes sense to use the occasion to inform claimants of the immediate history of their entitlement and those sets of circumstances that may impact on the levels of their entitlement. Based on the dual assumptions that the system of reporting envisaged in the Bill works and that the Revenue is intending to use

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data analysis tools actively, it should be possible to target specific categories of claimant. In turn, this should make it possible, via the expedient of selective use of annual statements, to impact beneficially on the accuracy of claims in the interests of claimants and the Revenue. Claimants would be in a position to assess whether their past entitlement had been accurate and what their likely entitlement would be for the coming year, as well as, if necessary, volunteering information about over-payment or changes in circumstances that might have had an effect on their previous entitlement. They would also be able to assess what sort of future changes in their circumstances would have an effect.

The Revenue for its part would be assured that all claimants in the client group had received a statement of account—a baseline from which the legitimacy of claims could be measured and against which future claims could be error-checked. Moreover, insofar as the Revenue would be able to use them to demonstrate detailed knowledge of the entitlement of individual claimants, such annual statements could potentially have a deterrent effect on those seeking to defraud the system.

There is also the issue of record-keeping. As a generality, for reasons of which we are all painfully aware, those in receipt of tax credits will tend not to be too focused on the management of their finances. Accordingly, the service the revenue could provide by issuing annual statements should not be underestimated. It would afford claimants a simple and straightforward means of having access to some measure of financial record of their circumstances. I beg to move.

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