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Baroness Blatch: In 1998, during the debate on the Bill which established learning and skills councils, we were suspicious that the council would be given powers over the organisation and reorganisation of sixth forms. Ministers stood where the Minister stands tonight saying, "I should like to disabuse the noble Baroness of any fears that she may have that that may come about". Here we are, a mere couple of years later, and precisely what were our fears then have come to fruition. So the noble Lord does not convince me when he says, "I should like to disabuse the noble Baroness of her fears". Much of what we fear now on sixth forms' behalf will come to fruition.
The noble Lord answered none of my questions. He did not say that sixth forms would be abolished only if their education was failing. He did not confirm that sixth forms would not be closed on the grounds of cost. He did not define the words "sufficiency of provision". He did not answer the question: if education was satisfactory or better, on what other grounds could a sixth form be abolished?
I hope that the Minister will write to me on all those points between now and the next stage. I will return to the matter, but, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 68 [Proposals relating to sixth forms]:
[Amendments Nos. 255 to 260 not moved.]
[Amendment No. 261 not moved.]
Lord Davies of Oldham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
- House adjourned at twenty-one minutes past midnight.
Official Report of the Grand Committee on the
Tax Credits Bill
Thursday, 23rd May 2002.
The Committee met at four of the clock.
[The Principal Deputy Chairman of Committees (Lord Brabazon of Tara) in the Chair.]
Lord Saatchi moved Amendment No. 66:
- Page 7, line 22, leave out subsection (2).
The noble Lord said: I beg to move Amendment No. 66, which seeks information. In moving the amendment, perhaps may I repeat the gratitude expressed by my noble friend Lord Higgins', to the Minister for succeeding in giving us the regulations together with the Bill, which has been much appreciated. Can the Minister say why the Government feel the need for regulations to prescribe what is or is not remunerative work? It appears difficult to define remunerative work and we wonder whether this is an unnecessary complication. Perhaps we have misunderstood.
We wonder whether anyone in remunerative work would not already be associated with the Inland Revenue. Therefore it would be on record who is and who is not so engaged. Perhaps the Minister could give some examples of situations where work is not to be classified as remunerative work. I beg to move.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): I am glad that the noble Lord has found the regulations helpful. This morning I re-read them with a view to reading across to our discussion. It is probably true to say that the question about qualifying remunerative work is one of the more difficult technical issues to be dealt with under the Bill. I use the term "technical" because it needs to take account of interactions with equivalent definitions used in the social security system; for example, for the purposes of income support and income-based JSA, but also to reflect people's working patterns, which may change over time.
One reason why we need to set it out in this way is that, under the terms of the Bill, we are changing the approach to remunerative work compared with the existing WFTC model. The draft regulations do not follow the current model, which states that hours of remunerative work must be calculated around a particular cycle or a period around the date of the claim. That approach works for the current tax systems, which are fixed for six months at a time, but are not suitable for the new system. We want people to benefit from the working tax credit as soon as they start to meet the specified hours test and cease to
benefit once they no longer meet that test. So the hours test as set out in the draft regulations takes into account the flexible working patterns and fluctuating hours of so many of today's workforce. The qualifying remunerative work test will be based on a person's normal or typical working hours, with the expectation that the person will continue to work enough hours per week to qualify for working tax credit for at least four weeks. The regulations will also protect people who receive statutory payments in connection with the birth of a child or on account of a temporary break in work caused by illness.Perhaps I may cite some examples which may help our discussions. The term is traditionally defined in regulations for WFTC and DPTC but there are various reasons why it needs to be redefined. For example, it must be made clear that work done without the expectation of payment does not count as remunerative work. I should like to follow this up with a little more detail. Issues may also arise where someone is working for, say, a voluntary organisation and thus we may need to protect them against putative assumptions of payment. That is where my mind was going as the noble Lord was talking. If I can enlarge on examples, I will either write to him or come back at Report stage.
Lord Saatchi: Does that mean that qualifying remunerative work would be work as defined in the regulations as being for a certain number of hours?
Baroness Hollis of Heigham: Exactly that.
Lord Saatchi: I thank the noble Baroness. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Freeman moved Amendment No. 67:
- Page 7, line 28, at end insert ", and in particular whether the disabled person is returning to work during, or following, a course of medical treatment"
The noble Lord said: It is clear that Clause 10(3) allows more flexibility than under working families' tax credit and disabled person's tax credit in drawing up regulations governing the circumstances in which a person is to be treated as engaged in remunerative work. So my amendment goes to the definition of the term "engagement". My noble friend Lord Saatchi asked about the definition of remunerative work. This new flexibility is particularly welcome. It will enable people who suffer from an illness or disability to adjust their working hours during periods of treatment or convalescence. That is the issue that the amendment seeks to address. It would give greater clarity to subsection (3), in particular to the reference to disabled people in paragraph (b).
I shall give two examples of the greater clarity that my amendment would give to the interpretation of the Bill in relation to disabled people. I am not sure that my question has yet been answered in the review of the draft regulations that I have seen. If I am in error, the Minister will correct me. First, at present, unless a person is working at least 16 hours a week, they are not entitled to claim disabled person's tax credit. That
sometimes has the effect of denying in-work support for those who need it. For example, a patient who needs renal dialysis is in hospital three times a week, leaving them with two remaining days in which to undertake remunerative work—a total of 14 hours. I am well aware that in Committee in the House of Commons, Ministers said that they were not prepared to relax the 16-hour requirement for working tax credit, but they gave the welcome assurance that, in cases such as that of a disabled person returning to work, they would consider spreading hours worked over the year and assessing entitlement to WTC on a weekly average. That is a step in the right direction, but more flexibility will be needed if the maximum benefit is to be achieved for the claimant and in terms of work incentives.A second brief example is relevant to the present rather inflexible and unwieldy rules governing the disabled person's tax credit fast track. The Minister recalls that under this procedure a person who becomes sick or disabled while in work may claim DPTC if as a result of their disability their earnings fall by more than 20 per cent—for example, if they move to less arduous duties or work for fewer hours—but in order to qualify it is necessary to be off work for 56 days, though not necessarily in a continuous period. Medical treatments have so advanced that 56 days, even if not a continuous period, may be too long and therefore too restrictive.
I am well aware that this new flexibility is much to be welcomed. I am just seeking even greater flexibility and greater clarity. I beg to move.
Baroness Hollis of Heigham: The noble Lord asked me a couple of questions. Amendment No. 67 would mean that regulations under Clause 10 could provide a different definition of qualifying remunerative work for disabled people, depending on whether they were or were not returning to work during or following a course of medical treatment. We believe that the amendment is unnecessary. Subsection (3)(d) already provides the power for regulations to have regard to other factors in determining whether a person is engaged in remunerative work. If at some stage the Government were to be persuaded to make the differential provision for which the noble Lord argues, that could be done using the powers within the Bill. If, however, he is using it to say that someone should be entitled on a regular basis to qualify for working tax credit by working less than 16 hours a week, which was an argument raised by the noble Lord, Lord Rix, on Second Reading, I would not wish to go along those lines. We are seeking to incorporate the response to disabled people not with a separate benefit labelled DPTC but in the working tax credit system. Sick and disabled people who are on incapacity benefit or SDA will be allowed to go for permitted work for 26 weeks, maybe longer, earning up to £66. If it is supported permitted work, they can continue that permitted work rule of £66 indefinitely.
In addition to that they have the earnings disregard, as the noble Lord will know. Taken together, I think that we have rightly put in place a supportive regime
for disabled people to be able to undertake work which is to their benefit, but which would not be at the expense of under-eligibility for working tax credit. I would be sorry to see us trying to tackle through the back door whether or not the 16-hour rule should be a trigger for working tax credit.I turn to the noble Lord's second point, which concerned the averaging of hours over the course of the year—he cited somebody on renal dialysis perhaps temporarily falling below the hours rule, perhaps for a month or so, and for the rest of the year being well above it. There will not be an averaging of hours over the year. If there was, a person who worked 16 hours a week for 51 weeks of the year would not qualify for any working tax credit if they did not work during the final week. It could also mean that we were taking working tax credit away retrospectively because in the last month of the year people failed to sustain the required hours. That could affect, say, a lone parent who suddenly dropped out of work over the Christmas holidays. However, we will look at people's normal working hours, so they would not necessarily be disqualified if they could not work 16 hours in a particular week for some reason.
We do have a modest discretion. We have powers to address this situation should it prove to be more of a problem than we anticipate. In addition, we have generous financial support regimes for disabled people in relation to what is disregarded. So we are well aware of the issues associated with the amendment moved by the noble Lord. Therefore I hope he will feel able to withdraw his amendment.
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