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Lord Goodhart: My Lords, I am grateful to the noble and learned Lord for giving way. Would not the Hollinshead example of something manufactured with a view to being used by other people to abstract electricity now be covered by Clause 7, so that that problem would no longer arise?

Lord Goldsmith: My Lords, I am absolutely conscious of that. The question, which we will want to debate when we return to this topic, will be whether that is an adequate response in the circumstances where that is the only aspect on which one would be proceeding against those people. That creates difficulties, because we would not necessarily then be able to include in the same proceedings the people who were abstracting the electricity—the severing of indictments and issues of that sort. But I do not want to go further than that; I just want to indicate the sort of areas that we will need to consider.

The point that I wanted to make was that the Law Commission is publishing a report on participation in crime and any reform of the law that flows from that work would inform this area of law as well. Secondly, we do not yet know how effectively the provisions on multiple offending in the Domestic Violence, Crime and Victims Act 2004 will work. Obviously, we hope that they will work. If they are in force, I am not aware that they have yet been operated in any case. Thirdly, in congratulating the Law Commission, noble Lords have assumed that it must have got it right: that these offences cover everything. Again, we do not yet know that that optimism will turn out to be correct.

Lord Lloyd of Berwick: My Lords, with respect, how will we ever know that? The answer is that we cannot. That is one point made by the commission. Now is the time to do it. If necessary, we could postpone bringing the abolition or repeal into force, but please let us do it now.

Lord Goldsmith: My Lords, the difficulty is that we are dealing with an offence—conspiracy to defraud—that is at present quite regularly indicted. Therefore, the question that we must ask ourselves as we legislate responsibly, as I know we will, is whether we can be sufficiently confident that we will not be leaving outside the area of conduct that ought to be prosecuted in the public interest conduct of that sort.

I will come back to this, but we can take the view that it is unnecessary to abolish conspiracy to defraud now in the Bill. We can look to see how the Act operates in practice; we can look to see what the Law Commission has to say about the law of conspiracy
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and participation more generally; and we can look to see how the multiple offending provisions operate. We can always return to it in future if it appears clear that it is no longer necessary. I know that noble Lords will wish to return to the issue.

I welcome the support for the Bill and look forward to the discussion that we will have. To any noble Lord who would find it helpful, I offer at all stages, before Committee and thereafter, the opportunity informally to discuss these matters or to receive any further information. I will announce an open meeting to provide further information before the Committee stage so that all can participate. In commending the Bill to the House, I invite noble Lords to accept that it should have a Second Reading.

On Question, Bill read a second time.

Tax Credits

5 pm

Lord McKenzie of Luton: My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Paymaster General in another place:

"With permission, Mr Speaker, I want to make a Statement on the reforms that we have made and are making in the operation of the tax credit system, and to answer point by point the reports from the Parliamentary Ombudsman and the Citizens Advice Bureaux, published today, which deal mainly with the operation of the system in its first year of introduction.

"Last month, on 26 May, I announced to this House a series of measures to build upon the reforms that we have already made to the tax credit system. Those included measures to streamline procedures for recipients to inform the HMRC of changes in their income during the year and measures to simplify the information provided to families in award notices. I also announced a review so that we could make changes in the procedures for dealing with disputed awards.

"We are improving the helpline so that families receiving tax credits can have all their queries dealt with in one go and all their changes processed with one call to the helpline. I have asked HMRC where there is a dispute to consider suspending recovery of excess payments until the dispute is resolved, and where there is hardship I have asked them to ensure that additional payments are made. In other words, I have already taken measures to act upon each of the major administrative issues raised by the Parliamentary Ombudsman and the Citizens Advice Bureaux.

"Two weeks ago, when we held a debate in the House on those issues, I offered to, and have agreed to, meet a group of MPs to discuss the issues in detail. I have written to the ombudsman and the Citizens Advice Bureaux today about the changes that we have already made, offering to meet them to discuss the detail of the reforms now being introduced.
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"I come to the issues of policy. As the report of the Citizens Advice Bureaux states, tax credits are the best way to deal with society's responsibility to help with the costs of bringing up children and tackling child poverty. The background to both the introduction of tax credits and the reports out today is that more people than ever before are receiving tax credits to help with the costs of bringing up their children.

"In total, more than 6 million families—around 20 million people, including 10 million children—benefit from tax credits. Four in 10 families pay no net tax as a result of tax credits. The take-up in the first year exceeds 80 per cent, so in each of our constituencies nearly 10,000 families on average benefit.

"As a result of an economy where people move between jobs more often and their circumstances change more quickly, the challenge is to adjust child tax credits to changing income patterns as quickly as possible. In fact, 3 million people now change jobs every year and often their income changes substantially.

"Seven hundred thousand children are born every year and receive different rates of child tax credit according to their family's circumstances.

"The fast-changing nature of the economy is such that around 300,000 receiving tax credits experience very large changes in their family income of more than £10,000 during one year.

"In introducing the child tax credit, the big change that we made was to move from a fixed payment based on past income not on actual income, which was recognised to be unresponsive to families' changing circumstances and therefore unfair. When the new system was introduced we decided that during the course of a year we would be prepared to adjust tax credits to changes in family circumstances.

"So the issue for the Government and all parties wishing to comment on those issues, in this House and beyond, is whether we return to a fixed system, which is clearly unfair and does not adjust for changes in family income during the year, whether we operate a system where we compensate people where their income falls but do not adjust credits downwards when their income rises, even when it rises substantially by £10,000 a year, or whether we retain the principle of getting the balance right between taxpayers and the individual family.

"I am happy to listen to the views of all parties on those issues now, but I must tell the House that when we consulted widely before the implementation of the tax credit, the overwhelming consensus was that to balance the needs of the taxpayer and those of the family claiming, the system should adjust to any drop in income and therefore compensate the claimant in full, and respond to an increased family income during the course of the year only when the family's income increased by £2,000 or more.
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"I also have to tell the House that when these issues were voted on in the House there was a clear majority in favour of the proposals that we put forward.

"I will continue to keep the House fully updated on developments within the tax credit system, as I have endeavoured to do in debates and Statements in the past.

"The ombudsman, in her report, makes reference to a small part of one sentence of one Written Answer and suggests that it offers an incomplete picture. Repeatedly I have answered questions on the issue. Indeed, in a debate on 26 January, I told the House that there had been problems going back to the introduction of the computer system. More recently, I issued a Statement on 26 May setting out the situation, the action that has been taken and what more we will do to improve the system. There was an Adjournment debate on 7 June at which I responded to many of the issues raised by honourable Members.

"I will, of course, keep the House updated on the reforms that we are putting in place to improve the system, and report back on my discussions with voluntary and community organisations".

My Lords, that concludes the Statement.

5.6 pm

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