Select Committee on Social Security Minutes of Evidence



  1.  The Chancellor announced in his 1999 Budget speech, and confirmed in Budget 2000, the next steps in the Government's tax and benefit reform programme:

    —  an integrated child credit which would bring together the different strands of support for children in the Working Families' Tax Credit, Income Support/Jobseeker's allowance and the Children's Tax Credit, to create a seamless system of financial support for children which will be paid to the main carer, building upon the foundation of universal Child Benefit; and

    —  an employment tax credit, which would complement the new child credit—payable through the wage packet, and potentially available to groups without children as well.

  2.  Supporting documentation published at the time of the Budget expanded on the proposals. In particular, a key document is the HM Treasury publication entitled "Tackling Poverty and Making Work Pay—Tax Credits for the 21st Century" (HMSO 03/00 19585 495677).

Main aims of integrated child credit

  3.  The Government's stated aims for integrated child credit are:

    —  a more transparent system of support for children, helping parents understand what they can expect to receive;

    —  a portable and secure income bridge spanning welfare and work, to improve work incentives;

    —  a common framework for assessment and payment, dealing with all families within the same system regardless of whether they are on income support, in low-paid work or on higher incomes;

    —  a system where all support for children is paid to the main carer; and

    —  efficiency gains for Government and less hassle for parents—moving away from a system where support for children is delivered through four different mechanisms.

  4.  The integrated child credit is designed to be an important mechanism for channelling support to families with children as part of meeting the Government's objective to end child poverty in 20 years. Subject to the legislative timetable, the Government's aim is to introduce the new tax credits from 2003.

Implementation of ICC

  5.  The new credits will be administered by the Inland Revenue. Implementation covers both integrated child credit and employment tax credit, and is being taken forward by Inland Revenue and DSS as part of a single work programme with impacts across the range of both Departments' business. Inland Revenue have lead responsibility for the Tax Credits Programme.

  6.  Implementation of the new tax credits will involve:

    —  ensuring the right number of well-trained staff are in place at the right time to deal with tax credit inquiries, applications and awards, supported by appropriate computer systems and telephony. A key objective will be to offer applicants and potential applicants a choice of ways to ask about and apply for the tax credits;

    —  effecting a smooth transfer for existing cases; and

    —  arranging appropriate publicity and guidance for WFTC and DPTC customers, as well as for the wider population of people who will be, or may become, eligible for the new tax credits.

  7.  There will be significant implications for DSS, in particular in relation to families receiving IS/JSA. These will be managed against the background of a major drive to reorganise and improve front-end service delivery for customers who currently deal with the Benefits Agency and the Employment Service.

  8.  The Tax Credits Programme reports to a Programme Board with senior representation from IR, DSS and DFEE. The Programme Director is from the Inland Revenue. A separate DSS Steering Group provides assurance for DSS on the impact on social security business.

Role of DSS in Implementation

  9.  DSS is currently engaged with DFEE in creating a modern agency to transform the way the Government supports people of working age. It will bring together the responsibilities of the Employment Service and elements of the Benefits Agency that support working age people to provide more integrated customer services. The new agency is due to be launched in summer 2001.

  10.  The new agency will be integral to the effective delivery of ICC. DSS is working closely with the working age project (led by Richard Lapthorne) to ensure the introduction of ICC is taken into account in their development plans. Similar close links are in place with the proposed Pensions Organisation.

  11.  DSS's key responsibility in respect of integrated child credit is to ensure that its customers can access the financial support they are entitled to quickly and easily—ie both benefit and tax credits. This is particularly important for the 1.5 million poorest families on IS/JSA where integrated child credit will form a substantial component of their household income. The assumption is that families on IS/JSA can be automatically entitled to the maximum level of ICC without any additional income assessment being carried out by IR.

  12.  Tax Credits Programme activity within DSS will involve:

    —  removing the child elements in IS/JSA from IT and business systems;

    —  ensuring smooth migration of existing IS/JSA cases onto the new Tax Credits system with advice and support at the point of change;

    —  training for staff on the new tax credits; and

    —  revising forms and leaflets.

  13.  As part of the "modernising Government" agenda, a key design issue for the new credit is to ensure that people only have to provide information once to one agency to access the support they are entitled to across the whole of Government. Customers of the new Agency should be able to have their tax credits business dealt with alongside their other business—with relevant information transferred electronically to the Inland Revenue.

  14.  Delivering an integrated service covering tax credits to the new Agency's customers will be supported by the range of DSS Modernisation projects which are currently planned. Over the next two years the Department aims to roll out up-to-date IT equipment across the local office network which will be compatible with that used by IR and ES. Other projects aim to build new electronic information gathering systems for working age benefits which will support improved customer service and face-to-face and telephone contact.


  15.  The ICC will build on the foundation of universal Child Benefit which is an effective way to reach families and in recognition of its importance the Government has increased it significantly in real terms in recent years. In designing the integrated child credit, the Government will consider how to build effective links with Child Benefit to help deliver a joined-up service for families.

  16.  There are a range of issues where the new credits will impact on other DSS business—for example housing benefit, the social fund and child support. Each area will need to be reviewed and adjustments made to ensure that the system forms a coherent whole across Government and does not undermine work incentives.

October 2000

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 6 February 2001