Examination of witnesses (Questions 340
TUESDAY 20 MARCH 2001
O'DONNELL and MR
340. But the criticism is not of the credits
in principle; it is with the reliefs, the clawbacks, the tapers.
Arthur Andersen told us: "The problem with so many of these
reliefs is that they are complicated to claim and difficult to
administer." Help the Aged said that it is a "massively
complex system, endless form-filling for pensioners". Why
are you sending pensioners a 43-page form that asks whether they
are pregnant or on strike?
(Mr Brown) You know that that form, which I think
existed under the last Government, is being dealt with. Equally,
on pensions I would have thought that the most difficult situation
for pensioners is the alternative policy that I have seen presented
over these last few weeks, where there is a guaranteed winter
allowance and a guaranteed free licence for the over-75s and a
guaranteed Christmas bonus to be backed up by the rise in the
basic pension. The new proposal that I have seen from your Party
is to have a choice between the two. Mr Darling at Social Security
says that would mean 3,000 additional civil servants simply to
administer that. Far from our proposals increasing complexity
and the proposals of the other side reducing them, I think it
is recognised that when you have to have 3,000 additional civil
servants simply to administer one separate policy of the Opposition,
that is where complexity arises. As far as pensions and the pension
credit system that will operate as an integrated tax and benefit
system over time as well are concerned, I believe that over time
that will come to be accepted as well.
341. Why do you think it is that 670,000 pensioners
out of two million eligible have failed to claim the minimum income
guarantee? Do they not find it too complicated?
(Mr Brown) The reason that many people have been unable
to benefit from the minimum income guarantee until now is because
of the capital rules that we inherited from the previous Government,
that where people had a limited amount of savings they were deprived
of the opportunity of getting the minimum income guarantee. We
have now changed these capital rules and over next year and the
year after these rules are being modified in such a way that more
people, even with modest savings, will be able to get the minimum
income guarantee. The fault was in the old capital rules. As far
as the claiming of these benefits is concerned, when the Social
Security Department ran a take-up campaign, they had, I think
I am right in saying, half a million people interested in taking
up this benefit. One of the problems was the capital rule and
that is now being changed.
342. But a third of those we were told were
eligible to claim have failed to do so. That is the position,
(Mr Brown) I am not sure that that is the position,
but obviously you can consult the Social Security Department about
these exact figures. What I do know is that when campaigns have
been organised for take-up there has been a very big reply. Of
two million pensioners who have been written to, and of course
the two million pensioners that we mention have been written to,
we could not know whether their savings or other attributes of
their income met the circumstances that would entitle them to
this benefit, but 846,000 did reply, which shows that there is
an interest in taking up this benefit, and 846,000 is a very high
figure compared with about two million in total who get the minimum
income guarantee at the moment.
343. Why are Help the Aged complaining about
the "massively complex system and endless form filling"?
(Mr Brown) Inevitably when you make a change in a
system people take time to adjust to it. I think that is true
of any change that has taken place, whether it is the working
families tax credit or whether it is, under previous governments,
things like decimalisation to everything else. It takes time for
people to adjust to these changes. If you agree, as you say you
do, with the principle of a credit system, in other words the
principle of integrating tax and benefits, then the teething troubles
in introducing that system are, if regrettable, worthwhile so
that we can get the end result that you say yourself you seek.
I am pleased to know that there is now all-party support for the
tax credit system that we are introducing.
344. You have told us this morning that you
have had to modify the pensioners' credit with the various capital
(Mr Brown) Sorry; on this modification the minimum
income guarantee is what we are talking about initially and the
capital rules that were depriving people of the chance to claim
the minimum income guarantee have been changes, yes. As far as
the pension credit is concerned, that will be introduced in 2003
and that will be available for pensioners who have income, including
income from savings, of less than £200 if they are a couple
and less than £135 if they are a single person, and so the
majority of pensioners will qualify for this, or the majority
345. The working families tax credit, which
people complain is very complex, you are changing that as well,
are you not?
(Mr Brown) The working families tax credit will become
the children's integrated credit and an employment credit over
time. Again, that is to deal with some of the issues that you
yourself and others of your colleagues have raised, that we want
the money by 2003 that is available in children's benefits to
be paid to the main carer, and that is what will happen in 2003.
346. It does not sound to me as if it is simplifying
it. I will leave it there.
(Mr Brown) It seems to me, Mr Fallon, that if people
support the principle of tax credits, and the principle has now
been introduced of course in the United States of America for
many years as an earned income tax credit. France is now looking
at the introduction of a tax credit. Other European countries
are now looking at it. It was the spirit of what was advocated
in 1972, what Mr Fowler wanted to do in 1986. If we support the
principle of tax credits then obviously we have to deal with the
hurdles that exist when you are moving from one system to another,
but in the long run an integration of tax and benefits will be
a fairer way of dealing with many of the problems that particularly
low income households face but generally households of middle
and more incomes also face.
347. Chancellor, have you read the highly damaging
allegations in today's Daily Mail about the conduct of
investigations into Geoffrey Robinson and of the Minister? I ask
that question because part of the hearing today covers the Treasury
remit and machinery of government questions inside the Treasury.
(Mr Brown) Mr Chairman, I am going to deal with serious
issues today. I am happy to answer all the questions about the
Budget and indeed about your previous report and your investigations
into other issues like Equitable Life, but the Treasury has already
issued a statement about this completely misleading report in
the Daily Mail and I propose to say nothing more than that.
Chairman: Not all of us believe that
the Daily Mail is necessarily a fountain of truth.
348. There are remarks in reported speech by
Sir Terence Burns who makes some highly damaging allegations.
You are not prepared to answer those today?
(Mr Brown) There are not statements made by Sir Terence
Burns. If there are statements made by Sir Terence Burns, who
is now Lord Burns, perhaps you will draw my attention to them.
349. Yes, I will, if I may. Do you remember
a telephone call you made from New York on 5 December 1997 to
Sir Terence Burns?
(Mr Brown) That is nothing to do with statements made
by Sir Terence Burns, or Lord Burns, and I am not prepared to
350. You cannot remember a telephone call
(Mr Brown) Mr Chairman, I am not prepared to diminish
this hearing on the Budget by getting into arguments about gossip.
Chairman: We do not have to follow what
the Daily Mail says.
Mr Ruffley: There are actually quotes,
Mr Chairman, and I thought the Treasury remit included in this
hearingit is written down by the Clerk about the Treasury
remit and how the Department operates.
Chairman: That has got nothing to do
with the allegations in the Daily Mail.
Mr Ruffley: But the way in which the
Chancellor has managed ministerial responsibility
Mr Beard: This is a meeting about the
Chairman: We can look at the remit and
then if you can ask questions directly on the remit, that is fine,
Mr Ruffley: I will if I may.
Chairman: Well, get on with it then.
351. You had a discussion on 5 December 1997
with Sir Terence Burns where you asked him to approve a statement
where he approves the registering of interests by Geoffrey Robinson;
is that correct?
(Mr Brown) There are no quotations from Lord Burns
352. Is that correct?
(Mr Brown) I said, if you could point to quotations
from Lord Burns that the Daily Mail had attributed to him
(Mr Brown) But you have not done that, Mr Ruffley.
354. I will do that now, Chancellor. In a conversation
he said, "I refuse to be involved"
(Mr Brown) Mr Chairman, can I say first of all
Mr Ruffley: Did he say that to you, Chancellor,
in that conversation?
Chairman: There are not any
355. The quotation is, "I refuse to be
involved . . .".
(Mr Brown) Mr Chairman, I was invited along to this
Committee to discuss the Budget and related matters. This is nothing
to do with
356. Are you denying Sir Terence Burns, as he
(Mr Brown) This is nothing to do with this. I issued
a statement saying that this is fictional nonsense. You have been
unable to point to quotations from Lord Burns that are attributed
to him directly because there was none
357. It is directly attributed to him.
(Mr Brown)because there was none in the article.
358. Saying, "I refuse to become involved"
(Mr Brown) I am not in a position to answer based
on non-quotations from Lord Burns.
Mr Beard: This is nothing to do with
Judy Mallaber: Chairman, this is not
about the Budget.
Mr Ruffley: I think the record will show
that he is not prepared to answer that question. There is a quote
about this given by Sir Terence Burns on 5 December 1997.
359. Let us get on to the remit. We have produced
a report and that was what I thought you were about to cover.
You are actually just dealing with a scurrilous article in the
(Mr Brown) Mr Chairman, I have already issued a statement
on this this morningin fact, the Treasury has issued a
statementsaying that these matters are fictional nonsense.
I am prepared and happy to deal with the very serious issues arising
from the Budget and the management of the economy. I am not prepared
without prior notice to go into issues relating to gossip and
relating to fiction that I have no knowledge of
Mr Ruffley: Did you order an independent
inquiry into Geoffrey Robinson?