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Baroness Hollis of Heigham: My Lords, I have described the substantive amendments on entitlement. The amendments concerning overpayments and underpayments are Amendments Nos. 107, 108, 120 and 155. Apart from those making changes to Clause 14, the other amendments are primarily consequential. I am happy to follow up the matter in correspondence.
If the noble Lord wants me to pursue any of this, he is welcome to hear my 16-page speech, but he may prefer not to.
Lord Higgins: My Lords, I agree with the noble Baroness that we do not want to get too deeply into the whole—mess, I was going to say. Will she just explain what the amendments concerning overpayments and underpayments do?
Baroness Hollis of Heigham: My Lords, the improvements were designed to enable the board to recover overpayments before the end of the year when an award was initially made to a person who, in fact, never met the basic qualifying criteria for the tax credit. They also allow interest to be charged in such cases from the point at which the award is terminated—although only if the overpayment arose as a result of fraudulent or negligent conduct on the part of the claimant. They also make clear that the board is under an obligation to pay any extra tax credits to claimants in cases where there has been an underpayment.
Lord Higgins: My Lords, I am most grateful to the noble Baroness. I am not sure whether there is any more convenient way of not moving the following 55 amendments. If not, we shall not move them at the appropriate moment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 18 and 19 not moved.]
The Earl of Northesk moved Amendment No. 20:
- Page 3, line 18, leave out paragraph (b).
The noble Earl said: My Lords, this is a probing amendment by which we seek clarification from the Government of how they intend to define a separation as permanent or otherwise. We feel that the drafting as it as stands leaves the interpretation wide open. Accordingly, we should like more information on how permanence of separation is to be defined.
No doubt the Minister will maintain that the principles of the definition are well established in social security law and practice. That may be so, but it would be helpful if she would enumerate them. I have in mind the equation of that practice in Grand Committee by the noble Earl, Lord Russell, with the uncertain art of weather forecasting. The point at issue for us is how the relevant information about the separated couple, or the couple deemed to be permanently separated, is to be elicited from them. I beg to move.
Baroness Hollis of Heigham: My Lords, I shall try the short answer and if that is not good enough I shall try the longer one. The short answer is that we ask them. As the noble Earl rightly said, there are established tests for cohabiting couples, such as whether people share financial arrangements and cohabit sexually and whether the relationship appears to be stable, under social security arrangements. But
ultimately, the test of whether separation is permanent depends on the facts of the particular case. In most cases, it is obvious. Where it is not, we tend to ask the claimant.That is not to say that people must not get together with an ex-spouse in perpetuity, but they must consider that there is a degree of permanence in the separation. That covers situations such as those in which a couple have a perfectly stable marriage but may be working at different ends of the country and see each other only once a month. That is not a separation. We know what constitutes cohabitation in terms of shared financial arrangements, permanent relationships and the like. We also have well-established arrangements for permanent separation. If we are in doubt and have no reason to believe that there is fraud, we will ask them and take their word for it.
The Earl of Northesk: My Lords, I think that I am content with that reply from the noble Baroness. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 [Claims: supplementary]:
The Earl of Northesk moved Amendment No. 21:
- Page 3, line 42, at end insert ", provided that such a person has satisfied an official of the Board as to the identity of such a person and of the claimant, and that such a person acts genuinely for the claimant".
The noble Earl said: My Lords, I hope that the amendment is self-explanatory. The Minister will be aware that we debated something similar in Grand Committee. Indeed, she gave us a gracious and helpful response then to the effect that the number of individuals involved in making claims on behalf of others is relatively small in the scheme of things. Moreover—I hope that I have understood this correctly—they are either appointed by the Secretary of State or the Board of the Inland Revenue or are court order appointments.
None the less, while acknowledging those points, we continue to be concerned that a potential loophole for abuse remains. In the context of establishing the legitimacy of a claim on public funds, it is neither onerous nor bureaucratic to require that the Revenue satisfies itself as to the identity of the appointee and the claimant and to ensure that the appointee is acting genuinely on behalf of the claimant. That is all that the amendment would provide. Surely that is just common sense and good practice. It is an entirely reasonable requirement. At the end of the day, we are all in the business of ensuring that tax credits reach those who are entitled to them and minimising the potential for fraud through this provision would be an effective means of doing so. I beg to move.
Baroness Hollis of Heigham: My Lords, I am sorry that, if the noble Earl thought that my response in Committee was helpful, he did not at the same time think it persuasive. Obviously, the lesson from that is that I could read the telephone directory and it would make no difference; the amendments reappear.
Bluntly, I am not sure why the noble Earl is concerned about the matter. As he rightly said, repeating the information that I gave in Committee, there are only about 1,000 appointee cases, which usually involve people with severe learning difficulties. Three-quarters of those appointee cases are appointments made by the Secretary of State or by the Board of the Inland Revenue. The remaining quarter consist of court order appointments. Only about 200 of those are cases in which spouses have appointed their partners and we consider that all of those cases are genuine.
The point is that because the appointment process is already rigorous, the amendment is entirely unnecessary. We have no evidence of any compliance problems at all—not one. I have asked about that. The process is rigorous. People are visited by specially trained members of staff who meet both the appointee and the claimant. They must assess whether it is in the best interests of the claimant to grant appointee status. They will consider what measures the appointee is putting in place to ensure the arrangements—for example, whether they are currently looking after their affairs and managing their finances, whether the claimant can act on his own and what kind of work the claimant is doing. If necessary, they will make follow up visits, and so on. None of the staff in the disabled persons tax credit unit can recall a case in which a spouse was appointed when the other spouse could have acted on his or her own behalf. Given that fact and the fact that the appointment process is so rigorous, I cannot conceive of any reason why we need any further activity.
The noble Earl asked why the Revenue should not identify appointees. Appointees will be subject to an interview with an experienced member of staff. That is current practice, and it will continue. There are abundant safeguards in the system, and, as far as we know, it has never been subject, in any sense, to abuse. I hope that the noble Earl will allow that to continue.
The Earl of Northesk: My Lords, I am grateful to the Minister for that response. I should say in passing that I never dreamed of asking her to read out the telephone directory—perish the thought—although it might be more interesting than some of the drafting of the Tax Credits Bill. I shall leave that by the side.
Lord Higgins: It might make more sense.
The Earl of Northesk: My Lords, that may also be true. The substantive reason why we were unpersuaded in Grand Committee remains. We were concerned at the potential for abuse of the system. However, the Minister has given a more persuasive response to that point today. This time, I am persuaded, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Freeman moved Amendment No. 22:
- Page 4, line 11, at end insert ", including any signposting information about benefits and services provided by government departments to which the claimant or claimants have access by virtue of their entitlement to tax credits"
The noble Lord said: My Lords, the amendment probes further the issue of passporting benefits. The matter was discussed in Grand Committee, but it merits a little further clarification. The amendment would clarify the suggested requirement that the Inland Revenue should have responsibility for signposting the rights of tax credit claimants to other benefits. It is a signpost; it is not designed to imply, in any way, that the Inland Revenue should be under a duty or obligation to calculate what the other benefits might be or to assess whether there is an absolute right to the benefits.
A few moments ago, the noble Lord, Lord Newby, rightly described the Bill as extremely complex. If it is complex for your Lordships' House and for another place, it will be extremely complex for those who will have to administer it and those who should benefit from it. Therefore, we on these Benches share with the Government the aim of ensuring that there is the highest possible take-up not only of the working tax credit and the child tax credit but of other benefits that are passported by the award of those tax credits. The amendment proposed earlier by my noble friend on the Front Bench and carried by the House will go some way to identify, through an annual report, where there is low take-up.
The Minister was most helpful. I shall study what she said in the record, but I understood her to say that it should be possible to compare performance targets on a quarterly basis for the working tax credit and the child tax credit, as administered by the Inland Revenue, with actual take-up and expenditure. That was what the Minister implied. I shall read Hansard, and, if that is the case, it would be helpful.
I hope that I have assured the Minister that my intention is to signpost, not to place additional burdens on the Revenue, which already has a substantial burden. I am grateful for the earlier clarification about the helpline and about the literature that would be available. All of that is part of signposting to passported benefits. It was helpful of the Minister to say in Grand Committee that those who wanted a face-to-face interview with officials at the Inland Revenue would be able to have one if they asked. I hope that I report the Minister's intentions correctly. There will, of course, be an extensive IT system to support the dissemination of information among officials and between departments, the Inland Revenue and local authorities on the nature of the benefits.
The minimum that many claimants will wish to see is the Inland Revenue providing information on available passported benefits in an up-to-date list and, most importantly, details of names, addresses, telephone numbers, fax numbers and website addresses for the departments to whom people may make a valid claim. That is a simple request. The system is immensely complicated and burdensome.
It is designed to be beneficial to those on low incomes, and I hope that the Minister will embrace the purpose, if not the text, of the amendment. I beg to move.5.45 p.m.
Lord Higgins: My Lords, I support my noble friend's amendment. It seems eminently reasonable. We debate it against the background of a fundamental shift in the role of the Inland Revenue.
It emerged in debate on earlier amendments that the Inland Revenue would go from being an institution that only collected money to being one that also disbursed it in the form of tax credits of one sort or another. There has been an institutional change, and I suspect that it will come as a shock to some in the Inland Revenue to find themselves dealing with tax credits. In that context, the relationship between the Inland Revenue and—I was going to say—what remains of the Department for Work and Pensions will be important, particularly as the tax credits must have some relationship with what my noble friend Lord Freeman rightly calls passported benefits, which are still administered by the department. It will involve a fundamental effort to change the co-ordination between the two bodies.
Can the Minister tell us which benefits will be administered by the Inland Revenue and which by the Department for Work and Pensions, so that we can get some idea of the scale of the problem? Are we right in thinking that the tax credits covered by the Bill are the only benefit that will be dealt with by the Inland Revenue? Can the Minister enumerate the benefits to be administered by the Department for Work and Pensions to which people in receipt of tax credits will be entitled?
The other thing that I would like clarified relates to the so-called passported benefits. Generally, that has tended to relate to benefits covered by the contributory system. I am not sure that that is true. In short, we do not have a clear definition of what is meant by passported benefits. We must be clear about the so-called passported benefits to which tax credit recipients will be entitled. Secondly, will any of those be of the kind that is restricted to contributory benefit recipients? To put it another way, will some of the passported benefits not be those which would be received by tax credit recipients, but only by those who receive contributory benefits.
I hope that I have put that clearly. I apologise for my sentence structure and syntax, which went totally awry. I was short of a word to describe a person entitled to a benefit. Using the word "entitlee" provides the only way of getting around the problem. However, I shall not attempt to repeat the point; I rely on the noble Baroness to understand what I was saying.
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