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Lord Davies of Oldham: My Lords, as I emphasised in my opening Answer, Nolan principles will apply. The selection panel will consist of a DCMS director, the chairman, Michael Grade, and an independent assessor.
Baroness Bonham-Carter of Yarnbury: My Lords, in her evidence to the Select Committee on the BBC charter review, the Secretary of State said:
"I think what is important is that those who are appointed to the Trust reflect the new nature of the BBC Trust, the fact that it is different from the Board of Governors".
Yet three existing governors are being transferred to the trust. Can the Minister explain how those appointments can possibly be described as reflecting anything new?
Lord Davies of Oldham: My Lords, three existing members and the chairman are continuing. There are eight new members; that is twice as many new members as those continuing. The House will recognise that with an organisation as significant as the BBC some element of continuity is advisable, but eight new members will be expected to apply against the widely published criteria.
Viscount Astor: My Lords, is the Minister aware that there is some concern that the interview panel is chaired by a DCMS official—and, of course, at the end appointments are made by the Secretary of State? However, leaving that aside, will the Minister join me in congratulating the noble Lord, Lord Puttnam, on his appointment by the Secretary of State as deputy chairman of Channel 4—an appointment that of course we approve of? Does that not prove that the process of appointment is open, transparent and rigorous?
Lord Davies of Oldham: My Lords, it gives me untold joy to agree with the opposition Front Bench on the second part of the question. On the first, it is clear that the responsibility eventually is for the Secretary of State to make a recommendation to Her
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Majesty the Queen. The process followed by the Government was, let me say, pursued in similar terms by the previous one.
Lord Barnett: My Lords, I declare an interest as a former vice-chairman of the BBC, appointed on the recommendation of the then Government. I recognise what my noble friend has in his brief, but what does he see as the practical difference between governors and trustees?
Lord Davies of Oldham: My Lords, everything that I have in my brief I firmly believe. The practical difference is clear: for the first time in statute the objectives of the BBC and its obligations will be laid out. Those applying to become members of the trust know what those obligations are; they will be expected to fulfil those obligations by the licence fee payer; and of course they will be selected because of the contribution that they can make to the interests of the licence fee payer.
Lord Roberts of Llandudno: My Lords, at present, BBC Northern Ireland, BBC Wales and BBC Scotland are represented on the board of governors. Can the Minister give an assurance that when the new trustees are appointed Scotland, Wales and Northern Ireland will have their own representation?
Lord Davies of Oldham: My Lords, one of the members continuing over to the trust from the previous board of governors is in fact the Scottish member. I can give the noble Lord an assurance that Wales and Northern Ireland will be represented—and England.
Lord Tebbit: My Lords, will the trust cost any more or any less than the previous board of governors?
Lord Davies of Oldham: My Lords, I am sure the noble Lord will agree that the only criterion is value for money. On cost, if he means remuneration to the trustees, it is being increased. It is being increased to a level comparable with Ofcom, which noble Lords, especially on the Opposition Benches, often argue has a very close parallel to the functions of the BBC Trust. So there is an increase for the chairman, the vice-chairman and trust members. It is of course for them to fulfil their remit to justify the increase.
Lord Fowler: My Lords, the trust is one of the most controversial proposals in the White Paper on the charter. Do I understand that the vacancies are being advertised prior to any consideration by either House of Parliament?
Lord Davies of Oldham: My Lords, the vacancies are being advertised because it is not considered that Parliament will repudiate the concept of a trust, as the noble Lord will recognise. We have had debates in the other place and in this House, and the Government have indicated commitment to those terms. However, the appointments will not be concluded until there has
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been an additional debate in this House, which is to take place in less than a fortnight, and further deliberations in the other place.
Lord Kilclooney: My Lords, what precautions will be taken to ensure that people are not appointed as trustees who would be in favour of using licence fees to undermine private newspaper and radio companies throughout the United Kingdom? I declare an interest.
Lord Davies of Oldham: My Lords, the obligation of the trustees is to the general interest of licence payers. That will be in the context of what is good for the nation. After all, the BBC serves the nation.
Tax Credits
3.22 pm
Baroness Noakes asked Her Majesty's Government:
What measures they intend to take with respect to the administration of tax credits by HM Revenue and Customs.
Lord McKenzie of Luton: My Lords, HM Revenue and Customs has made good progress in response to the plan announced last year by my right honourable friend the Paymaster-General in another place to improve the administration of tax credits. The Government will respond to the report published by the Treasury Select Committee yesterday in due course. HMRC will continue to work to deliver the best possible service for tax credit claimants.
Baroness Noakes: My Lords, I thank the Minister for that reply. However, the past two years' statistics show that HM Revenue and Customs got payments right in only 55 per cent of cases; that, every year, it overpaid 2 million families their tax credits; and that, in the past year, 2004–05, underpayments increased by 20 per cent. Does the Minister agree with the Treasury Select Committee in another place that the Pre-Budget Report changes will reduce overpayments by only one third and will do nothing to address the issue of underpayments, which affects more than 1 million families? Can the Minister assure the House that the Government will put an end to that shambles in this financial year?
Lord McKenzie of Luton: My Lords, I do not agree with the points made by the noble Baroness. On her comments about the outcome of payments being right or wrong, she misunderstands the system. It is a flexible, responsive system that inevitably leads at the end of the year to both underpayments and overpayments. That does not mean that they are errors.
Lord McKenzie of Luton : It does not, my Lords. The figure of 30 per cent is one that the Government themselves put forward. Other measures announced in
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the Pre-Budget Report will help to deal with other problems that the system has undoubtedly encountered. However, I remind the House that this has been an ambitious system that has delivered three key achievements. It has improved incentives to work; it has reduced the tax burden on low- to middle-income families; and it has helped dramatically to reduce child poverty.
Lord Lamont of Lerwick: My Lords, if a system had an inherent design flaw so that a programme of £16 billion resulted in an overspend first of £2.7 billion and then of £1.7 billion, would that not be rather serious? Secondly, does the Minister recollect that Her Majesty's Revenue and Customs originally estimated that the disregard—that is, the amount by which a person's income can increase without his benefit being refunded, even if he would not have qualified for that benefit in the first place—would be £800 million? Since then, the disregard has been increased from £2,500 to an astonishing £25,000 per person. Does that not show that the scheme is not targeted, is burning money and ought to be radically reconsidered? You do not get around the problem by saying that overpayments are not overpayments.
Lord McKenzie of Luton: My Lords, I did not say that overpayments were not overpayments; I said that they were not inevitably errors. If you seek to adjust people's income in the course of the year by changes that happen in the course of that year, you have to bear it in mind that some of that can happen in the course of the year, but some of it will inevitably happen at the end of the year. It is not a design fault; it was recognised when the system was put into place.
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