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Earl Russell: I thank the noble Lord for a powerful reply and for an extremely generous admission. If I can be reasonably confident that officials will continue to interpret the law as they did in the noble Lord's case, I shall be satisfied.
However, I should like to leave the issue with one word of warning. That this is now the proof that we are tougher than the next party on fraud must not lead us to forget the existence of perfectly genuine cases and that each decision must be made on an individual basis. It cannot be only a matter of needing to prove that we are tough on fraud or needing to prove that we are men. One must be prepared to find whatever the evidence leads one to. With that single caveat, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 177 not moved.]
Lord Bassam of Brighton moved Amendment No. 178:
- Page 19, line 44, after "16(3)" insert ", (Decisions after final notice)(10)"
The noble Lord said: We have been over this territory before. This is a government amendment which is required as a result of earlier changes in the
Bill. I shall try that reassurance. We always say in these circumstances that it is consequential and reinforce that by drawing attention to the fact that it pulls into the fourth category of amendments that we have agreed to use as a standard point of reference—that is that it divides out the notice of the end of year statement provisions from the decision that the board makes on entitlement after the year. I shall not detain the Committee any further on that point. I beg to move.
Lord Higgins: Nor shall I detain the Committee.
On Question, amendment agreed to.
4.45 p.m.
The Earl of Northesk moved Amendment No. 179
- Page 20, line 1, leave out "£3,000" and insert "£5,000"
The noble Earl said: I shall also speak to Amendments Nos. 180 and 183. The amendments would increase the maximum penalty for people defrauding the tax credit system from £3,000 to £5,000. For the convenience of the noble Earl, Lord Russell, who regrettably is no longer in his place, I will take his antipathy to the amendment as read.
Leaving aside the problems of distinction between fraud and neglect, the position emanates from two points of principle that I have touched on earlier. First, the severity of the maximum penalty should be in keeping with the seriousness of the crime: that is, of fraud. Secondly, the penalty regime should be rigorous enough to act as a deterrent to those who are minded to commit fraud. I am, of course, aware that the current maximum penalty for the ordinary tax system is £3,000 and that therefore the Government might be minded to wish consistency with that. Albeit that this may be too simplistic a suggestion, however, there are reasons for supposing that the appropriate way forward would be to level the maximum penalty at £5,000 throughout the system rather than £3,000. I beg to move.
Lord Bassam of Brighton: When we looked at these matters in preparing the Bill we considered carefully the level at which maximum civil penalties should be set. Many penalties for fraudulent or negligent behaviour within the existing tax and tax credits systems are already set at a maximum of £3,000. Based on experience, we have no reason to believe that that amount has become inadequate, and we would not wish to provide more stringent penalties for tax credit claimants than would apply to similar behaviour in relation to tax obligations. We do not want to depart from that consistency. That is an important principle in itself and perhaps adds to the principles to which the noble Earl alluded.
An important point to recall is that the penalty is applicable in respect of each claim, so where someone has persisted in making incorrect statements over a period of time, the total maximum penalty could be much higher than £3,000. There is also still the
sanction of criminal prosecution in cases of serious and organised fraud. Clause 33 introduces the criminal offence of tax credits fraud.We have sought to get the balance right between encouraging people to take up their entitlement and having adequate safeguards against non-compliance. We believe that Clause 29 achieves that balance and provides for a realistic deterrent against those who behave fraudulently or negligently in connection with tax credit claims. We are not convinced that increasing the maximum penalty to £5,000—out of line with existing penalties for making false statements—would be justified.
It is right that we should have a system that is rigorous and measures the seriousness of these things, and we believe that, on balance, we have exactly that. If we depart from that principle of consistency, as I have enunciated, we would perhaps undermine the overall effect of seeking to be rigorous while also seeking to be fair.
The Earl of Northesk: I am grateful to the noble Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 180 to 183 not moved.]
Clause 29, as amended, agreed to.
[Amendment No. 184 not moved.]
Clause 30 [Failure to comply with requirements]:
Lord Bassam of Brighton moved Amendment No. 185:
- Page 20, line 28, after "16(3)" insert ", (Decisions after final notice)(10)"
The noble Lord said: These amendments are also consequential and are the product of changes made earlier in the Bill. They are necessary because of the changes made to the provisions of Clause 17, which has been split into two clauses. In that sense they also fit into the fourth category for splitting entitlement decisions. I do not wish to add to those points because they are now well understood by the Committee. I beg to move.
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 186:
- Page 20, line 31, leave out "or (4)(a)" and insert ", (4)(a) or (6)(a)"
On Question, amendment agreed to.
Clause 30, as amended, agreed to.
[Amendment No. 187 not moved.]
Schedule 2 [Penalties: supplementary]:
Lord Bassam of Brighton moved Amendment No. 188:
- Page 40, line 4, after "General" insert "Commissioners"
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 189:
- Page 40, line 29, leave out "an award of a tax credit" and insert "a tax credit for a person or persons for the whole or part of a tax year"
The noble Lord said: Again, noble Lords will be familiar with the fact that a number of amendments are needed as a result of the fact that a distinction between an award of a tax credit and entitlement to that credit needed to be drawn more clearly. In this instance, these amendments fall into category one. With that brief explanation, I beg to move.
Lord Higgins: I think it is the case that dividing these various amendments into different categories has proved very helpful in that it has speeded up our proceedings and has given them greater shape. The noble Baroness has been extremely helpful on a number of occasions, not only on this Bill but on others, in providing draft regulations and so on. I wonder if it might be possible—I do not ask for an immediate response—for her simply to provide us at the end of our proceedings and before Report stage a list of which amendments fall into the various categories. Otherwise we shall have to grind through Hansard ticking them off.
Baroness Hollis of Heigham: I shall be delighted to provide a list.
Lord Higgins: I thank the noble Baroness.
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 190:
- Page 40, line 31, leave out ", or commence proceedings for it,"
The noble Lord said: This amendment has already been debated outside this group. The six amendments in this group follow on consecutively; namely, Amendments Nos. 191 to 196. They all fall into category one.
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 191:
- Page 40, line 34, leave out "into the award under section 18" and insert "under section 18 into the entitlement of the person, or the joint entitlement of the persons, for the tax year"
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendments Nos. 192 to 196:
- Page 40, line 35, leave out from "if" to ", the" and insert "such an enquiry is made"
- Page 40, line 38, leave out "award" and insert "entitlement of the person, or the joint entitlement of the persons, for the tax year"
- Page 40, line 41, leave out "an award of a tax credit" and insert "a tax credit for a person or persons for the whole or part of a tax year"
- Page 40, line 44, leave out "award" and insert "entitlement of the person, or the joint entitlement of the persons, for the tax year"
- Page 41, line 2, leave out "into the award under that section"
On Question, amendments agreed to.
Schedule 2, as amended, agreed to.
Clause 33 [Offence of fraud]:
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