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Baroness Hollis of Heigham: Because Amendments Nos. 47 and 48 have implications or are a consequence of the changes in Clause 17. They are part of the refining of the notion of relevant income and splitting it between current year income and previous year income, which has a meaning beyond Clause 7, to which they are currently confined.
Lord Higgins: I am under the impression—I may be quite wrong—that we are actually discussing Clause 7,
- "Page 5, line 29, at beginning insert 'In this Part'",
Baroness Hollis of Heigham: Originally, in this part, Amendments Nos. 47 and 48, were a large group of government amendments which I understand were degrouped presumably in part as a result of discussions. There was a large group of government amendments so they were ungrouped. The current year income and previous year income are defined in Clause 7 but currently they are defined only for the purposes of that clause. The proposed changes to Clause 17 mean that those terms will also now be used in Clause 17. For this reason, Amendments Nos. 47
and 48 make clear that the definition of those terms is applied for the purposes of Part 1, rather than being confined to Clause 7. I beg to move.
Lord Higgins: Clause 7 is in this part.
Baroness Hollis of Heigham: Perhaps I can help the noble Lord. At the moment Clause 17 relates to relevant income. Relevant income is confusing because, for the claimant, it could mean either the current year income or the previous year income. We are disentangling the two. Therefore we have to make consequential adjustments and this is part of those adjustments. I beg to move.
Lord Higgins: So in other parts, does "current income" mean something else?
Baroness Hollis of Heigham: No. I am trying to refine the words "relevant income" as opposed to "current year income". At the moment, relevant income can be used in situations where it can appear to imply both current year and previous year.
Let us step back a little. Each year there will be an assumption that the previous year's income will be the base as notified for the forthcoming year—that is, the current year that people are going into—although there will obviously be a few weeks of overlap time. Therefore, the words "relevant income" appear to cover both those sets of information: a person's previous year's income, on which they expect to claim in the future year, and their expectation of what their current year's income may be. Separating that out makes it easier for the claimant.
The terms "current year income" and "previous year income" need to be defined for the purposes of Part 1 because of the changes to Clause 17. Hence, in this part, as inserted, at the moment these terms are defined only in Clause 7. We need to be able to extend it to Clause 17. The reason is to split the words "relevant income" and make it clearer so that people understand whether we are talking about current year or previous year's income. At the moment we use "relevant income" to cover both those, which can be confusing for the claimant.
Lord Higgins: The amendment would insert "In this Part" at the beginning of line 29 on page 5. Subsection (4) would then read:
- "In this Part the "current year income" means—
- (a) in relation to persons",
Baroness Hollis of Heigham: No, there is not. Part 1 is bigger than Clause 7. Without "In this Part" the definitions refer only to Clause 7. By saying "In this Part", we refer to Part 1 of the Bill. In answer to the noble Lord's query, there is not.
Lord Higgins: I begin to understand what the draftsman is seeking to do. He is seeking to say that this definition will apply in the whole of Part 1 and there is no corresponding definition in Part 2.
Baroness Hollis of Heigham: No, not quite. To go back a step, we are seeking to insert two main drafting amendments, with the consent of your Lordships. The first, which we discussed earlier, makes a distinction between awards and entitlements. The second disaggregates the concept of relevant income into current year and previous year's income. That is required by the changes in Clause 17. At the moment we have that distinction in Clause 7, but it does not apply to the rest of Part 1. Inserting "In this Part" ensures that the definitions in Clause 7 apply to the whole of Part 1. That is needed in order to make sense of the amendments to Clause 17.
Lord Higgins: We will have to return to this on Report. I hesitate to think how we are going to try and sort the matter out on the Floor of the House. Having said that, I suppose we must go along with what the Government propose. We will try and work it out when we can read it.
Baroness Hollis of Heigham: I think I understand what is going on here, but if my explanations are not sufficiently clear and if any further information is needed, I shall be very happy to write an extended letter explaining the implications of Clause 17. I thought that sending out speaking notes might be helpful, but I warned your Lordships that this was devilish, with complicated technical cross-readings going on. This is one such that the noble Lord, Lord Higgins, has picked up.
On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendment No. 48:
- Page 5, line 35, at beginning insert "In this Part"
On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendment No. 49:
- Page 5, line 41, leave out "Circumstances may be prescribed in which" and insert "Regulations may provide that, for the purposes of this Part,"
The noble Baroness said: We are still on the same theme. Clause 7 is an important part of the Bill. It provides that entitlement to tax credits will depend on the income of the claimant or claimants. In particular, entitlement will be based on the income of a tax year. This group of amendments—Amendments Nos. 49, 50, 52, 53, 54 and Amendment No. 158, which concerns Clause 24—is concerned with Clause 7(6), (7) and (8), and relates to the computation of income: the period in which income is taken into account, what counts as income and when the Inland Revenue can treat a person as having income or not, as the case may be.
Amendments Nos. 49 and 50 are short technical amendments which are intended to clarify the scope of the Inland Revenue's regulation-making powers under
Clause 7(6) and (7). These subsections allow regulations to be made about how income is to be allocated between particular tax years. The regulations may provide that income of a particular type from the last year but one is to be treated as previous year income of that type instead of actual income of that description for that year.Subsections (6) and (7) both refer to "prescribed circumstances". However, regulations under these provisions are more likely to be concerned with the calculation of income and an allocation between years. As such, the references to "prescribed circumstances" are inappropriate and should be removed. This is achieved by these amendments, which I commend to the Committee.
Amendment No. 52 has not yet been moved. Perhaps I should stay for the moment with Amendments Nos. 49 and 50 and allow the noble Lord, Lord Higgins, to move his amendment No. 52. I beg to move.
Earl Russell: This group includes Amendment No. 158, which stands in my name. That amendment provides that for the purposes of the Bill student loans should not be counted as income. The case for that is perfectly simple—they are not. You have to pay them back again. When Tennyson was once introduced to the Fellows of King's Cambridge, he was introduced to Oscar Browning, who came forward and said, "I'm Browning". Tennyson, knowing another Browning, looked at him and said, "You're not". That is the case for that amendment. It is a simple one.
I would rather not be led into a discussion of student finance as a whole. It is a subject on which I find it increasingly difficult to express myself with that moderation appropriate to parliamentary debate and I would rather not spoil the atmosphere of the day. I shall therefore let the case stand as it is, in isolation.
Lord Higgins: The noble Baroness invites me to move Amendment No. 52. I am happy to speak to it but I may or may not move it at a later stage.
Amendment No. 52 suggests that we should leave out subsection (8). Any views I may have had on the draftsmen up to now are not greatly improved by subsection (8), which states:
- "For the purposes of this Part income is to be calculated in a prescribed manner"—
- "and circumstances may be prescribed in which a person is to be treated—
- "(a) as having income which he does not in fact have, or
- "(b) as not having income which he does in fact have".
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