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Lord Higgins: I do not propose to criticise the noble Earl, Lord Russell, for proposing an amendment which would cost £1.4 billion and still involve marginal withdrawal rates for 125 per cent. It is a rather useful amendment on which to examine the question of housing benefit.
Before the noble Earl replies, could the Minister clarify one point? Am I right in thinking that in the light of what she says, there is no information flow from the local authority to the Treasury? Is it simply that the information on tax credits will be conveyed by the individual to the local authority?
Baroness Hollis of Heigham: That is my understanding.
4.30 p.m.
Earl Russell: I am grateful to the noble Lord, Lord Higgins, for recognising that the purpose of the amendment was to generate a debate. I did not expect the Minister to be particularly happy with the
wording. But if one is a seasoned parliamentarian and one sees an open goal, one cannot resist putting the ball in the net. I express no surprise at that.However, do I understand correctly that the Minister is not proposing any further change in housing benefit taper as a result of the Bill? Was that in fact the purport of what she was saying? That would not satisfy either my colleagues in this place or my colleagues in another place. My honourable friend Mr Webb expressed his feelings on the matter strongly during debates in another place.
The Minister said dismissively that only 5 or 6 per cent of those claiming working families' tax credit would be affected. That is a classic maid's baby argument. It may look like a small proportion, but it is in fact rather a large amount of people. It is a bit like the chap in Ruthless Rhymes who collided with a goatherd and by the time his car got through they were all defunct but two. The fact that two were not defunct is not an awfully good excuse.
There is a considerable problem here. We will have to address it a good deal more thoroughly than we have done at present. We will have to come back to it at the next stage of the Bill, but, I assure the Minister, not with this particular amendment. I listened to her criticisms of it. However, it has elicited that the Minister is not intending any further change.
The Minister mentioned ISMI. Do the Government have any intention of changing the practice of the previous government, under which ISMI is not available for the first nine months? That is quite a long period of time and it severely limits the usefulness of ISMI. If she wants to quote that as a mitigating factor she might think of changing that while she is about it.
I should also like the Minister to look again at the operation of the system of RATS. I do not mean the ones in cellars; I mean the remote access terminal system for exchanging information between the Department of Social Security as it then was—the Department for Work and Pensions as it is now—and local authorities. I have a lot of evidence that that system is not working nearly as well as the Minister believes it to be. Perhaps she could look again and check her sources on that. If she has anything to say on that or the point about ISMI, I shall give way to her.
Baroness Hollis of Heigham: I should like to intervene before the noble Earl decides what he wants to do with his amendment. He asks for an assurance that we are not changing the taper rates for housing benefit. No, indeed, we are not. We are changing the applicable amount, because it reflects the new structure of support for children. We are separating out the children's element from IS and JSA, because that is going to be the new child tax credit.
The noble Earl asked whether there were any plans to change ISMI. I am not aware of any current proposals to change ISMI. On the point about the small numbers, I was not trying to suggest for a moment that a third of a million is a small number. In terms of the additional work load for local authorities, I was trying to put this into proportion by saying that
it represented 5 to 6 per cent of those on tax credits. My judgment is that almost all of them would currently already be receiving housing benefit under the existing WFTC scheme. Therefore, the argument about new complexity and new workload for local authorities—I was not talking about the significance for individuals—should not be overstated.
Earl Russell: I thank the Minister. We have not heard the last of this subject. We need more thought on it, but, for the time being, I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Earl Russell moved Amendment No. 80:
- After Clause 13, insert the following new clause—
The noble Lord said: I have never been more pleased in my life to be overtaken. I move Amendment No. 80 in order to give the Minister an opportunity to speak to Amendment No. 214, which I am very glad to see in its place in the Marshalled List. I imagine the Minister would prefer to speak to it now rather than taking that debate very late in our proceedings. I beg to move.
Baroness Hollis of Heigham: As the noble Earl says, we are essentially doing the uprating that he is calling for. I do not know how specific he needs me to be. It is not right to apply the provisions in Part X of the Social Security Administration Act 1992 to the new tax credit, as the amendment would do, because they are not part of the social security system. However, he may be concerned with the principle that there will be regular uprating. The Bill is designed to strike the balance between parliamentary scrutiny and flexibility. We believe that Amendment No. 214 is more appropriate than attaching tax credits to the provisions of Section 150 of the Social Security Administration Act. Under the proposed new clause the process of setting and reviewing the rates of the new tax credit will be highly transparent and visible. This year the rates and thresholds of the new tax credits were properly a matter for the Chancellor's Budget and the Budget process is already the subject of an enormous amount of scrutiny. This will be true year after year. The new clause on annual review takes the Government's commitments further. It requires the Treasury annually to review the monetary amounts in the Bill against appropriate measures of prices, to prepare a report on that review and to lay that report before the House. I hope that that will meet the noble Earl's concerns.
Earl Russell: I expected to find the Minister's reasons for thinking her amendment better drafted than mine persuasive. I have found them persuasive. It is therefore with great pleasure—
Lord Higgins: May I ask a question?
Earl Russell: I give way to the noble Lord, Lord Higgins.
Lord Higgins: Does the noble Baroness intend to speak to Amendment No. 214, which is related to this? My list has Amendments Nos. 214 and 222 in the same group as Amendment No. 80. Amendment No. 214 is a rather massive new clause on annual reviews.
Baroness Hollis of Heigham: I thought I had spoken to that point. Amendment No. 214 is in this group. I believe the annual review gives the assurances that the noble Earl, Lord Russell, is seeking.
Lord Higgins: The noble Baroness dealt with it so briefly that I did not even see it going past me. I have one point to raise on Amendment No. 214. It is effectively an annual uprating and refers to each tax year, but it is in relation to prices. It is not—and I imagine that this is not what the noble Earl was hoping for—guaranteed to retain its value, but there will be a report if it does not fully maintain its value in relation to prices. That would leave a slightly strange position. It is like neither the minimum income guarantee, which is uprated in relation to earnings, nor the basic state pension, which is uprated in relation to prices. Apparently, as far as tax credits are concerned, it will be uprated in relation to various considerations that are set out here, but not necessarily fully uprated in relation to prices. Will the Minister say if that is so?
Baroness Hollis of Heigham: It is slightly more complicated than that. We are dealing with three elements in tax credits. First the expectation is the basic working tax credit will be reviewed annually in line with prices. The Chancellor of the Exchequer has already made a commitment that the uprating of children's tax credit, to my delight, will be in line with earnings, which is better than prices. However, the situation is slightly more complicated because we do not want automatically to link the third element, which is the childcare element, to price inflation, because childcare costs do not necessarily follow those same trends. That is the reason for the form of wording.
Earl Russell: That is a very good reason for that wording and I am glad to hear it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 [Provisional decisions]:
Baroness Hollis of Heigham moved Amendment No. 81
The noble Baroness said: We have already engaged with your Lordships the package of what I call the technical amendments that came in that rather large
"REVIEW AND ALTERATION OF RATES OF TAX CREDITS
Section 150 of the Social Security Administration Act 1992 (c. 5) shall apply with like effect to tax credits and paragraph 28(2) and (3) of Schedule 3 to this Act shall amend section 150 accordingly."
Page 9, line 32, leave out "it is to be awarded" and insert "to award it"
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