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Lord Higgins: I fear that we are—at least I am— again suffering a little from the speed of delivery of the Minister. I am not at all sure that I now understand this particular section. That may be compounded by the constant use of initials rather than referring to the individual benefits involved.

I am particularly puzzled—I look with increasing suspicion at the drafting of this Bill—as where the regulations referred to in this section appear in the Bill. The Minister has been extremely generous in providing us with regulations on a number of other aspects of the Bill and I pay tribute to her for that. I cannot recall any previous occasion where a Government Minister has provided regulations in such a way. It will be of great help not only to us, but also to those in another place when they come to look at how the Bill has been drafted. It is remarkable that the noble Baroness has been so helpful in this. She attempted to do so on previous Bills, but she has never actually succeeded in providing us with the regulations before the Bill had completed its passage through this House. Nevertheless, she has succeeded in this case.

Despite that, however, I still do not understand where the regulations which govern Clause 7 appear. In the subsection we seek to amend it states that persons,

"entitled to any social security benefit prescribed for the purposes of this subsection".

However, I am not clear where the power to prescribe arises in the Bill or, more particularly, in this clause. It is of course true that in the previous clause endless regulations may be used either for this purpose or another, but this clause does not seem to include regulation-making powers. Perhaps the Minister could clarify that and then I shall come back to the point of substance, which concerns what is to be prescribed.

Earl Russell: Before we go any further, perhaps I may associate myself with the thanks that the noble Lord, Lord Higgins, has offered the noble Baroness for making these regulations available. It is very welcome indeed. I must confess that I have not yet finished reading them but, on the progress that I have made so far, I am encouraged and grateful for the content as well as for their availability. In either case, it is a very welcome precedent indeed.

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Baroness Hollis of Heigham: I am not sure whether I can respond precisely to the noble Lord. I turn to Clause 60, entitled "Regulations, orders and schemes", in Part 3. Subsection (1) states that:

"Any power to make regulations under sections 3, 7 to 13, 38 and 39, and any power to make regulations under this Act prescribing a rate of interest, is exercisable by the Treasury".

That is where the power to make regulations comes from. In Clause 62, on page 34, line 5 states,

'prescribed' means prescribed by regulations".

Those two provisions are put together and brought to bear on Clause 7(6), (7) and (8).

Lord Higgins: I still do not understand what the draftsman is playing at. In Clause 6, for example, it states that, "Regulations may provide" and so forth, but when we come to Clause 7, it is buried in Clause 60, stating that powers,

"to make regulations under sections 3, 7 to 13, 38 and 39",

may be this, that or the other. Why is a totally different drafting technique applied in the case of Clause 6 as against Clause 7?

Baroness Hollis of Heigham: I have not taken advice on this, but my immediate response would almost certainly be that, at the moment, we are moving from DWP to Inland Revenue and the powers therefore need to be exercised by the Treasury. At the moment, the Secretary of State at the Department for Work and Pensions has powers to make regulations affecting social security benefits and we would not need to change that, whereas if we were making those the responsibility of the Inland Revenue, we would. Thus power to make the regulations the noble Lord is inquiring about is informed by Clause 7(2) itself because it says,

"prescribed for the purposes of the subsection".

Thus the power resides with the Treasury in Clause 60(2), and it affects Clause 7(2) which states:

"prescribed for the purposes of this subsection".

It then goes on to say what it does. I am not sure what the noble Lord is worried about.

Lord Higgins: It is a simple point. The way in which regulations are introduced into the Bill is quite different in Clause 6 than it is in Clause 7. The department which makes the regulations simply says, "regulations may provide", and so on. Then, when we come to Clause 7, it is covered by Clause 60. I do not understand why that is so. We shall need to give some further thought to it.

Having said that, let me come back to the point of substance. Subsection (2), which we are now discussing, says that,

"Subsection (1) does not apply in relation to the entitlement of a person or persons to a tax credit for so long as the person, or either of the persons, is entitled to any social security benefit prescribed".

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The noble Baroness has not provided us with those regulations. We do not know what social security benefits are going to be prescribed for this section.

Baroness Hollis of Heigham: I provided them in my reply to the noble Lord.

Lord Higgins: I am not clear why these particular benefits are prescribed. Perhaps I can deal with this on a simple basis. Are we saying that the entitlement of persons of any description to a tax credit is dependent on the relevant income? But are we also saying that none of the social security benefits to which the noble Baroness, Lady Hollis of Heigham, referred are relevant income? Is that what we are saying?

Earl Russell: There are moments when the noble Lord, Lord Higgins, reminds me of the literal Vicar of Hurst, who said that,

"St Luke says the last shall be first.

I've therefore a mind

to linger behind

to be first to be last to be first".

Lord Higgins: What social security benefits are going to continue to be paid even though someone is getting a tax credit?

Baroness Hollis of Heigham: The purpose of the subsection is to ensure that those who are in receipt of one of those weekly means-tested benefits—at the moment the ones we are contemplating are income support and income-based JSA, but those could be re-labelled in some future Utopia—continue to receive support. That is why they are not listed as such on the face of the Bill.

The importance of the subsection is to ensure that those in receipt of one of those benefits continue to receive maximum support for their children. Suspending the income test, which is what the amendment would do, while the claimant is entitled to IS or JSAIB, means that the claimant can get maximum CTC for that period regardless of their annual income. If the annual income was relied on at all times, it may be possible for a person on IS or JSAIB to receive less than the full CTC due to the amount of annual income they had, possibly because they earned extra money in a different period. It is to try to ensure that when they fall back on to IS or JSA, the fact that they have so far had income possibly in work or through other forms of saving does not destroy their capacity to obtain support for their children while on the basic benefit.

We suspend the income tax as a key feature as an adult on income support or JSA automatically gets full CTC for their children without a further income test.

I do not believe that I can help the noble Lord any further. It seems fairly straightforward.

Lord Higgins: I will study what the noble Baroness has said when it is apparent in writing. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 46 not moved.]

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6.30 p.m.

Baroness Hollis of Heigham moved Amendment No. 47:

Page 5, line 29, at beginning insert "In this Part"

The noble Baroness said: Amendments Nos. 47 and 48 are needed as a consequence of government amendments to later clauses, in particular to Clause 17 and the arrangements for finalising claimants' entitlements to tax credits after the end of the year when details of current year incomes will be known. I do not want to go too deeply now into an explanation of Clause 17 and I shall write to the Committee on that because I recognise that it is not easy receiving quite detailed, technical information at some speed. However, I hope that you will allow me to look forward to that clause for a moment.

Clause 17 provides for the Inland Revenue to issue a statement of information to claimants at the end of the year, setting out the basis on which an award was (or awards were) made during the year. Claimants will either then confirm that their circumstances and income were as set out by the board on that notice or correct that information. They will also provide details of the income for the year just ended. The Inland Revenue will use that information to finalise their entitlement for that year on the correct basis and make any necessary adjustments. It will also use that information to establish the correct amount of their award for the coming year.

At the moment, Clause 17 requires the board to ask claimants—

Lord Higgins: Why are we discussing Clause 17? I am not clear.

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