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Lord Higgins moved Amendment No. 268:

"( ) Payments made under this section shall be made by the Treasury and not from the vote of the Department of Work and Pensions."

The noble Lord said: My Lords, we have already stressed very strongly that the decision by the Government to allocate the sum of £400 million spread over 40 years, which in reality is a much smaller sum in present value terms, was made very much in a panic reaction to the danger of defeat in the House of Commons. One cannot help but feel that the Chancellor of the Exchequer, having decided by some process of osmosis that £400 million was the right amount and having bought off the threat of a revolt, may seek to reduce the cost to the Exchequer. For that reason, we are rather concerned about where the money is coming from. Therefore, I have a simple, straightforward question for the Minister—whose
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attention I hope I have—namely: is this new money? Is it money that was not previously going to be spent by the Government either this year or later? Is it new money?

One suspects that there may be a certain amount of spare money around—to be found, strangely enough, in the Department for Work and Pensions, the reason being that the Chancellor is fond of increasing amounts which are to be paid under various benefits, a high percentage of which are never claimed because people do not understand what it is all about. That is particularly so with regard to a vast array of tax credits. So there appears to be a massive underspend by the Department for Work and Pensions.

Can the Minister tell us what the level of underspend is expected to be in the current year and what it was last year? It is no good the Minister shaking her head. It clearly was not a positive number in the sense that it was totally spent. Exactly how much has been underspent, and how much is likely to be underspent given the nature of a department which constantly announces benefits which people do not claim? Our rather sordid suspicion is that the Chancellor may suddenly discover that the best way of spending the £400 million which he was obliged to spend over 40 years is out of the budget of the Department for Work and Pensions, where there has been an underspend.

The other part of the amendment is concerned with who will pay it. It may be that this was a drafting mistake on my part. I have written "the Treasury". Perhaps I should have said "the Chancellor" or perhaps, curiously, "the Inland Revenue". Oddly, under the present Government, the Inland Revenue, which has long spent its time collecting money from people, suddenly finds, under the Chancellor's various tax credits, that it is repaying money to people. That strikes at the very ethos of the Inland Revenue and it really is not very keen on it.

The result has been that the Inland Revenue has collected money that it should not have collected and then did not want to refund it. None the less, it has now had some experience of disbursing money as well as collecting it. It would therefore seem appropriate that if the money is not going to come from the vote of the Department for Work and Pensions, it should be new money, and it should perhaps be administered by the Treasury rather than the Department for Work and Pensions.

On the second point, I am not totally committed to the idea. So long as it is new money, I am not terribly worried whether it is the Department for Work and Pensions that disburses it, since it is certainly better at disbursing money than the Inland Revenue, except in the circumstances where the Inland Revenue collected money that it should not have collected.

The purpose of the amendment is to ensure that the commitment that the Chancellor gave for obviously political reasons actually benefits those whom the financial assistance scheme is designed to help, rather than be removed from the department's underspend and therefore not be available should anyone by any
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chance suddenly understand some of the tax credits which they previously had not understood. I beg to move.

Baroness Hollis of Heigham: My Lords, as the noble Lord will know, I have to deal with the amendment as it is on the Marshalled List. Given that the noble Lord has greater experience of the Treasury than I have, I was surprised to be somewhat confused by the amendment. Perhaps it will help if we first see whether we have a shared understanding of the principles behind the government funding arrangements.

All government departments are voted funds so that they can implement the policies for which they bear responsibility. That includes the Treasury, which is voted funds singularly for its own policies, just like any other department. The Treasury does not have privileged access to public funds in this sense.

If colleagues in the other place agree to vote funds for the FAS, as the Government are expecting them to do, these funds will be voted to the Secretary of State for Work and Pensions. That is because the Secretary of State for Work and Pensions, my right honourable friend Alan Johnson, is responsible under the DWP Delivery Plan 2003–06 for delivering policy to,

and because the department is responsible for meeting the costs of the programme which it adopts from within the resource made available to it for this purpose.

It is only by following this procedure, whereby Parliament votes specific funds to each Secretary of State, that we can ensure transparency for the public accountability of each respective Secretary of State. I therefore do not see how FAS payments could be made from the vote of the Treasury. That is not my understanding of how public finances work.

The noble Lord expressed the idea that because less is being spent on benefits—perhaps because unemployment is decreasing—the Government could use that, so to speak, spare money. It would not work like that. The noble Lord will know the difference between DEL and AME better than I do. AME is the annually managed expenditure of the department, which is responsible for benefits. That is an open-ended commitment because benefits are a right. If unemployment increases, that money will have to be paid. The Chancellor of the Exchequer or the Treasury will not then say, "You can have only 90 per cent of your benefit moneys for unemployment because we have rather more unemployed people than we first thought". Unemployment benefit is an entitlement and has to be met fully.

DEL, on the other hand, is the departmental expenditure limits which are cash-controlled within, for example, a three-yearly spending plan, within which the Government and the departments must manage their resources. As that sum is fixed and is not an open-ended commitment, it is included in DEL rather than AME. Therefore, the noble Lord's concern that this might be a
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type of virement of underspent benefit money is not founded because of where the budget would fall. In other words, it is a capped commitment.

I hope that I have answered the noble Lord's questions and that he will feel able to withdraw his amendment.

Lord Higgins: My Lords, before the Minister sits down, can she say whether it is new money? Will it come from money that is not already in the Chancellor's overall expenditure plans?

Baroness Hollis of Heigham: My Lords, the Department for Work and Pensions has a substantial budget. Within the spending review cycle, it is not unusual for the department to reallocate resources internally in response to changing policy priorities or the emergence of a new priority. That is what the DWP has chosen to do to accommodate FAS in the 2004 spending review. In future spending reviews, the DWP will take account of the Government's promise that a total of £400 million will be made available for FAS from public funds. FAS is being designed to offer a worthwhile package of assistance to those who have suffered the most significant losses from within those funds. In that sense, the noble Lord's question cannot be answered in the way that he has posed it, but I have given the answer as best I can.

Lord Higgins: My Lords, that was a fascinating discourse for which I thank the Minister. I fear that, ultimately, the answer to the question of whether it is new money is probably, "No", but that it will be shuffled from some other part of the budget of the Department for Work and Pensions. In all events, it has been an illuminating discussion. I need to consider a little more carefully what the Minister has said and be a little more precise in my wording on the next occasion. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale moved Amendment No. 269:

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