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Earl Russell: My Lords, if the law stated that the Secretary of State is entitled to prescribe support for children according to other criteria identifying children who may be in a particular need, would that not meet the case and be a good deal more precise?
Baroness Hollis of Heigham: No, my Lords. One of the elements of the Bill is the working tax credit, which obviously goes to adults. At the moment there is an over-25s rule. The noble Earl, Lord Russell, has pressed me on many occasions that it might apply to people below that age. I could conceive of circumstances in which we might wish to develop policy in that way. We could not do that if we follow the path of the noble Earl, Lord Russell.
With the experience that we have had with tax credits, and before that with family credit, we need such powers. Such powers have been exercised benevolently because they add to what we are already doing. And they are subject, through regulations, to the full scrutiny of this House. I hope that the noble Lord, Lord Higgins, will feel able to withdraw his amendment and that the noble Earl will accept that this is a benevolent power to meet unspecified circumstances, but which in the past have certainly been to the benefit of the families that we most want to help.
Lord Higgins: My Lords, the noble Baroness is in her most persuasive mode and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Russell moved Amendment No. 2:
- After Clause 14, insert the following new clause—
The noble Earl said: My Lords, in moving Amendment No. 2, I shall speak also to Amendment No. 27, which is grouped with it. It is one of the disadvantages of proceeding orally that one cannot indicate the presence or absence of capital letters. If I were to say that Rooker-Wise was wise, I would not wish to emulate the limerick about Liddell and Scott's Greek dictionary:
We have experience of things which have been included within the regular uprating formula for social security and of things which have happened. Where something is included within the regular formula for uprating, it is no bar to the Secretary of State uprating if he or she chooses by a greater amount than that formula. But it is a bar to doing so by a lesser amount.
I remind the Minister of the capital limits, which fall outside the Rooker-Wise formula and were not uprated from 1988 until recently. The Minister and I have had a lot of exchanges on that subject, which she has brought to a triumphant conclusion—on which I congratulate her. Would not it be nice to have a formula on the statute book whereby we would not have to do all this work to achieve uprating? When something falls outside the formula, there is a risk of a political battle, of which only a tiny part will be visible in this House—much more will happen at the Treasury—when uprating is wanted in difficult circumstances.
The Minister may want to be more generous than the Rooker-Wise formula in some respects, which I honour and welcome. The amendment would do nothing to prevent her. Can the Minister indicate that the formula will be updated, and regularly, and that she is prepared to accept a legal obligation to that effect? Going to the Treasury without a legal framework for protection is a case of going naked into the conference chamber, if ever I heard one. I beg to move.
Lord Higgins: My Lords, this matter was debated in Committee on 23rd May and subsequent amendments cover some of the same points. I shall defer my remarks until we reach them, depending on the Minister's response now.
Baroness Hollis of Heigham: My Lords, the noble Earl seeks to apply the provisions of the 1992 Act but that is not the right approach because the new tax
When a similar amendment was tabled in another place, the Government made it clear that they did not intend to apply the provisions of social security law to deal with uprating but undertook to consider whether it would be appropriate to introduce arrangements for uprating the new tax credits similar to those that currently apply for WFTC and DPTC. In Committee, we brought forward a package of changes intended to respond to some of the noble Earl's points.
Clause 41 requires the Treasury to review each year against prices the amounts for the various elements of child tax credit and working tax credit. That applies also to income thresholds, including the £2,500 responsiveness band, and the like. The Treasury is required by Clause 41 to prepare and lay before Parliament a report of its review, which must include a statement of the amount that would have been if the credit had fully retained its value against prices.
The existing arrangements for uprating WFTC and DPTC ensure that an order changing the rates of those tax credits will be subject to the affirmative procedure. We amended Clause 66 accordingly.
The concerns expressed by the noble Earl and by the noble Lord, Lord Higgins, in his later amendment are proper in seeking to protect the value of tax credits and to avoid a fight each and every year, but there is no way that the Government can make a commitment beyond the life of the current Parliament.
The childcare element of child tax credit would not be included in any automatic uprating. At present, we reimburse 70 per cent of a sum of £200-plus for children. I could conceive that without altering the upper figure, we might prefer to go from 70 per cent to 75 per cent, choose to look at regional premiums or consider the option of helping to fund informal childcare.
Leaving the childcare element aside, I am happy to confirm that the children's element in CTC—the basic building block of support for children—will be raised in line with earnings during the life of this Parliament. That is one of the most generous commitments to child well-being that I can recall.
I have discussed the issues with my right honourable friend the Paymaster General. In another place, she has already expressed sympathy with the proposal that the working tax credit should be regularly uprated in line with prices. I am happy today to give the undertaking to the House that WTC—the adult element—will also be uprated in line with prices during the life of this Parliament. That is a new commitment—an undertaking that goes beyond the sympathy that my right honourable friend has so far felt able to extend. I am sure that your Lordships welcome it. I am delighted that there is consent on this issue in all parts
Earl Russell: My Lords, I thank the Minister warmly. Her reply does not give me everything for which I asked but it is significantly more than half a loaf. I understand her arguments about childcare. I am familiar with a number of debates and am aware that they could go in a number of different directions. If the Minister wants flexibility, she has a right to it.
The commitment to uprate the child element in line with prices is remarkably generous and a great achievement, on which the Government are to be congratulated. I warmly welcome also the further undertaking—I particularly welcome the word "undertaking"—to uprate the ordinary working element in line with prices. Even granted all the Minister's comments about this not being pure social security law, if the result of the move to the Treasury were to be that a lot of things that are significantly good in social security law were to disappear, one might think twice. But if such provisions are preserved for the life of this Parliament, any questions can be dealt with at the next general election and the electorate can form their own opinion.
This House has achieved that which the Bryce commission envisaged, in allowing a delay sufficient for the opinion of the people to be expressed. I can ask no more. I thank the Minister warmly and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 [Initial decisions]:
Lord Higgins moved Amendment No. 3:
The noble Lord said: My Lords, with this it may be convenient to discuss Amendments Nos. 4, 5, 6 and 7, which together seek to alter the Bill in such a way that the period within which action can be taken in response to a decision by the board—effectively to appeal against it—is lengthened. It seems eminently reasonable that small businesses preoccupied with everyday affairs should have an appropriate length of time in which to respond to the Inland Revenue. I beg to move.
"REVIEW AND ALTERATION OF RATES OF TAX CREDITS
Section 150 of the Social Security Administration Act 1992 (c. 5) (annual up-rating of benefits) 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."
"Oh, Mr Liddell, will you answer a riddle, was it not mainly Scott?"
I would never have so treated the noble Lord, Lord Rooker. Having met and having done business with him, I would never have dreamed of doing so. "Wise" in my sentence was in lower case. It was meant to say that it was a good idea.
5.15 p.m.
Page 10, line 30, at end insert ", provided that the date specified is not less than thirty working days from the date of receipt of the notice"
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