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2.30 pm

New clauses 7 and 8 set out to probe the Government's intentions regarding entitlement to what are commonly known as the passported benefits—benefits provided by other Government Departments, for example, free school meals provided by the Department for Education and Skills, and free prescriptions and dental treatment provided by Department of Health. Those benefits, and many more besides, use entitlement to certain key social security benefits and tax credits as a peg in decisions on who should get access to them, as a way to reduce the administration and difficulties involved in making sure that benefits get through.

Passported benefits remain the responsibility of the administering Departments, not of the Treasury; it is for those Departments to set the rules for entitlement and decide what level of income brings a family into entitlement. For those reasons, it is inappropriate to legislate for other Government Departments in the Bill, even though the Bill gives powers to provide information to the other Departments to undertake passporting.

The key issues in passporting are, as the hon. Member for Arundel and South Downs mentioned, those who are floated off income support or income-based jobseeker's allowance when the child elements of those benefits are removed, and what we do to ensure that people who had passported benefits continue to receive them in the new tax credits. The latest estimates suggest that about 70,000 families, out of a total 1.3 million currently receiving income support or jobseeker's allowance, will no longer receive the benefits as a result of the changes. Naturally, we are anxious to ensure that their entitlements are protected.

The Department for Work and Pensions will make proposals on how those families will be treated in due course, once the rates, tapers and income rules have been determined. Families that are floated off will be contacted well in advance by that Department and offered an interview; they will be provided with all the details and with help to secure their position.

In previous discussions, hon. Members have asked about entitlement to free school meals and free milk for the young children—the so-called welfare foods scheme—of those floated off income support and income-based jobseeker's allowance. They are two specific issues on which I can offer more detail on the Government's thinking.

On 24 January, my hon. Friend the Minister for School Standards made it clear to the Committee considering the Education Bill that the Government intend to put in place measures to guarantee that those who are floated off income support or income-based jobseeker's allowance because of the introduction of the new tax credits will not lose their access to free school meals—they will be protected. Today, I can confirm that similar arrangements will be put in place to maintain that group's entitlements to the welfare foods category of benefits.

I am trying to reassure the House that those who are currently passported to certain benefits will continue to be passported on the same basis as now. It is necessary that

7 Feb 2002 : Column 1063

the Government Departments involved develop new regulations using the new tax credits to ensure that there is no loss. I am confident that that will be achieved.

I hope that in the light of my explanation of how the amendments are technically flawed and would make matters worse, and my reassurances about passported benefits, together with the fact that I am not persuaded to make today an announcement on rates and tapers that my right hon. Friend the Chancellor is due to make in his Budget statement, the amendments and new clauses will be withdrawn. If they are pressed to a vote, regrettably I shall have to recommend to my right hon. and hon. Friends that they oppose them in the Lobby.

Mr. Flight rose

Mr. Deputy Speaker: Order. The hon. Gentleman cannot speak again. Only the mover of the lead new clause can do so.

Mr. Webb: I am grateful to the Paymaster General for putting on the record some of the issues that we had no time to discuss in Committee, especially those relating to passporting. The hon. Member for Arundel and South Downs (Mr. Flight) can decide for himself whether or not he is satisfied with the hon. Lady's response.

Taking our new clauses in reverse order, I accept the Paymaster General's explanation of new clause 4's effect on the marginal tax rate. I would go so far as to say that I made a mistake—that is not the effect intended. However, she did not satisfy us on the principle. Her colleagues in the Department for Work and Pensions were prepared to say in respect of pension credit that they will put up housing benefit thresholds to ensure that the benefit of the credit gets through. That credit is not due to start until October 2003. That Department is prepared to assure people that it will adjust rates and thresholds to ensure that they will get the benefit 18 months or so down the line, but the Paymaster General is not prepared to assure them that what they are given with one hand through the working tax credit will not be taken away with the other through housing benefit even 12 months down the line.

Whatever the merits of the new clause, the Paymaster General might have offered us some reassurance. The issue of high housing costs can only be addressed with reference to the effects on the housing benefit system, because the only way to identify those who have the combination of low income and high housing costs is through housing benefit. The hon. Lady said that the new clause would not deal with the problem, but did not say what would. I think that she recognises there is a problem, but she gave no sense that the Government intend to deal with it, nor any indication of how they might do so. We are disappointed by the Government's response to new clause 4, which, although it would not achieve what we intended, at least raises the issue.

It is interesting to compare the Paymaster General's response on passported benefits to her response on continued entitlement to the children's tax credit. On passported benefits, she gave an assurance that there would be no losers—people getting free school meals now will get them in future—but there was no such assurance on the children's tax credit: that will be dealt with in the

7 Feb 2002 : Column 1064

Budget. What is the difference of principle between the two? [Interruption.] None—it is decent of the hon. Lady to say that. After all, I have admitted that I was wrong.

People are getting credits now and they want an assurance that they will continue to do so in future. We are delighted by the assurance that free school meals will be carried over; why can we not have a similar assurance on the children's tax credit? As the hon. Member for Arundel and South Downs said, when structural changes are made there tends to be a principle whereby attempts are made to avoid cash losers. People then work their way through the system and inflation does its bit, but people are protected when changes are made.

Whatever rates and thresholds the Chancellor chooses—we are not trying to pre-empt his decision—we seek an assurance today that those who currently receive money will be protected and that there is a principle of no cash losers at work. However, the Paymaster General has reserved the option, in effect saying that she wants to leave for the Chancellor in the Budget the discretion not merely to set the rates and thresholds that he wants to set, but to take some or all of the £520 a year that those hard-working families are getting.

My hon. Friends and I are concerned that the Chancellor wants to reserve that option. We therefore want to test the opinion of the House.

Question put, That the clause be read a Second time:—

The House divided: Ayes 165, Noes 245.

Division No. 163
[2.38 pm


Allan, Richard
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, Rt Hon James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Bacon, Richard
Baldry, Tony
Barker, Gregory
Baron, John
Barrett, John
Beggs, Roy
Beith, Rt Hon A J
Bercow, John
Blunt, Crispin
Boswell, Tim
Brady, Graham
Brake, Tom
Brazier, Julian
Brooke, Mrs Annette L
Browning, Mrs Angela
Burnett, John
Burt, Alistair
Butterfill, John
Cable, Dr Vincent
Calton, Mrs Patsy
Cameron, David
Campbell, Gregory (E Lond'y)
Campbell, Rt Hon Menzies
(NE Fife)
Carmichael, Alistair
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Collins, Tim
Conway, Derek
Cormack, Sir Patrick
Cotter, Brian
Cran, James
Davey, Edward (Kingston)
Davies, Quentin (Grantham)
Djanogly, Jonathan
Doughty, Sue
Duncan, Peter (Galloway)
Ewing, Annabelle
Fabricant, Michael
Field, Mark (Cities of London)
Flight, Howard
Flook, Adrian
Forth, Rt Hon Eric
Fox, Dr Liam
Francois, Mark
Gale, Roger
Garnier, Edward
George, Andrew (St Ives)
Gibb, Nick
Gidley, Sandra
Gillan, Mrs Cheryl
Goodman, Paul
Gray, James
Grayling, Chris
Green, Damian (Ashford)
Green, Matthew (Ludlow)
Grieve, Dominic
Gummer, Rt Hon John
Hague, Rt Hon William
Hammond, Philip
Harris, Dr Evan (Oxford W)
Harvey, Nick
Hawkins, Nick
Hayes, John
Heald, Oliver
Hoban, Mark
Holmes, Paul
Horam, John
Howard, Rt Hon Michael
Jenkin, Bernard
Key, Robert
Kirkbride, Miss Julie
Knight, Rt Hon Greg (E Yorkshire)
Laing, Mrs Eleanor
Lansley, Andrew
Laws, David
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Liddell–Grainger, Ian
Lidington, David
Loughton, Tim
Luff, Peter
McIntosh, Miss Anne
MacKay, Rt Hon Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Mates, Michael
Maude, Rt Hon Francis
Mawhinney, Rt Hon Sir Brian
May, Mrs Theresa
Mercer, Patrick
Mitchell, Andrew (Sutton Coldfield)
Moss, Malcolm
Murrison, Dr Andrew
Oaten, Mark
O'Brien, Stephen (Eddisbury)
Öpik, Lembit
Osborne, George (Tatton)
Ottaway, Richard
Page, Richard
Paice, James
Pickles, Eric
Price, Adam
Prisk, Mark
Pugh, Dr John
Randall, John
Redwood, Rt Hon John
Reid, Alan (Argyll & Bute)
Rendel, David
Robathan, Andrew
Robertson, Angus (Moray)
Robertson, Hugh (Faversham)
Robertson, Laurence (Tewk'b'ry)
Robinson, Peter (Belfast E)
Roe, Mrs Marion
Ruffley, David
Russell, Bob (Colchester)
Salmond, Alex
Sanders, Adrian
Shephard, Rt Hon Mrs Gillian
Simmonds, Mark
Smith, Sir Robert (W Ab'd'ns)
Smyth, Rev Martin (Belfast S)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Richard
Streeter, Gary
Swayne, Desmond
Swire, Hugo
Syms, Robert
Tapsell, Sir Peter
Taylor, Matthew (Truro)
Taylor, Sir Teddy
Thomas, Simon (Ceredigion)
Thurso, John
Trend, Michael
Turner, Andrew (Isle of Wight)
Tyler, Paul
Tyrie, Andrew
Walter, Robert
Waterson, Nigel
Watkinson, Angela
Webb, Steve
Weir, Michael
Whittingdale, John
Widdecombe, Rt Hon Miss Ann
Wiggin, Bill
Wilkinson, John
Willetts, David
Williams, Hywel (Caernarfon)
Willis, Phil
Wishart, Pete
Yeo, Tim
Young, Rt Hon Sir George

Tellers for the Ayes:

Mr. David Heath and
Richard Younger-Ross.


Abbott, Ms Diane
Alexander, Douglas
Anderson, Rt Hon Donald
(Swansea E)
Anderson, Janet (Rossendale)
Armstrong, Rt Hon Ms Hilary
Atherton, Ms Candy
Atkins, Charlotte
Austin, John
Bailey, Adrian
Banks, Tony
Barnes, Harry
Battle, John
Beard, Nigel
Beckett, Rt Hon Margaret
Bell, Stuart
Benn, Hilary
Bennett, Andrew
Benton, Joe
Berry, Roger
Best, Harold
Blackman, Liz
Blizzard, Bob
Boateng, Rt Hon Paul
Borrow, David
Bradley, Peter (The Wrekin)
Brennan, Kevin
Brown, Rt Hon Nicholas
(Newcastle E & Wallsend)
Brown, Russell (Dumfries)
Browne, Desmond
Burgon, Colin
Cairns, David
Campbell, Alan (Tynemouth)
Campbell, Ronnie (Blyth V)
Casale, Roger
Cawsey, Ian
Challen, Colin
Chapman, Ben (Wirral S)
Chaytor, David
Clapham, Michael
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Rt Hon Charles
(Norwich S)
Clarke, Rt Hon Tom (Coatbridge)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coffey, Ms Ann
Coleman, Iain
Connarty, Michael
Cook, Rt Hon Robin (Livingston)
Cooper, Yvette
Corbyn, Jeremy
Cruddas, Jon
Cryer, John (Hornchurch)
Cummings, John
Cunningham, Jim (Cov'try S)
Cunningham, Tony (Workington)
Dalyell, Tam
Darling, Rt Hon Alistair
Davey, Valerie (Bristol W)
David, Wayne
Davies, Rt Hon Denzil (Llanelli)
Dawson, Hilton
Dean, Mrs Janet
Dhanda, Parmjit
Dobbin, Jim
Dobson, Rt Hon Frank
Donohoe, Brian H
Doran, Frank
Drew, David
Drown, Ms Julia
Eagle, Maria (L'pool Garston)
Edwards, Huw
Efford, Clive
Ennis, Jeff
Etherington, Bill
Farrelly, Paul
Field, Rt Hon Frank (Birkenhead)
Fisher, Mark
Fitzpatrick, Jim
Fitzsimons, Mrs Lorna
Flint, Caroline
Flynn, Paul
Foster, Rt Hon Derek
Foster, Michael (Worcester)
Foster, Michael Jabez (Hastings)
Gapes, Mike
Gardiner, Barry
Gerrard, Neil
Gibson, Dr Ian
Gilroy, Linda
Godsiff, Roger
Griffiths, Jane (Reading E)
Grogan, John
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harris, Tom (Glasgow Cathcart)
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hendrick, Mark
Hepburn, Stephen
Heppell, John
Hermon, Lady
Heyes, David
Hill, Keith
Hinchliffe, David
Hopkins, Kelvin
Howarth, George (Knowsley N)
Hoyle, Lindsay
Hughes, Kevin (Doncaster N)
Hurst, Alan
Illsley, Eric
Jackson, Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Johnson, Alan (Hull W & Hessle)
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Martyn (Clwyd S)
Joyce, Eric
Kaufman, Rt Hon Gerald
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Kemp, Fraser
Khabra, Piara S
Kilfoyle, Peter
King, Ms Oona (Bethnal Green)
Kumar, Dr Ashok
Ladyman, Dr Stephen
Laxton, Bob
Lepper, David
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Linton, Martin
Lloyd, Tony
Love, Andrew
Luke, Iain
Lyons, John
McAvoy, Thomas
McCabe, Stephen
McCafferty, Chris
McCartney, Rt Hon Ian
McDonagh, Siobhain
MacDonald, Calum
McDonnell, John
MacDougall, John
McGuire, Mrs Anne
McIsaac, Shona
McKechin, Ann
Mackinlay, Andrew
McNulty, Tony
Mactaggart, Fiona
McWilliam, John
Mahon, Mrs Alice
Marsden, Gordon (Blackpool S)
Martlew, Eric
Meacher, Rt Hon Michael
Meale, Alan
Merron, Gillian
Miliband, David
Miller, Andrew
Mitchell, Austin (Gt Grimsby)
Moffatt, Laura
Mole, Chris
Moonie, Dr Lewis
Moran, Margaret
Mullin, Chris
Murphy, Jim (Eastwood)
Norris, Dan
O'Brien, Bill (Normanton)
O'Hara, Edward
O'Neill, Martin
Osborne, Sandra (Ayr)
Pearson, Ian
Perham, Linda
Pike, Peter
Plaskitt, James
Pollard, Kerry
Pond, Chris
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Primarolo, Dawn
Quin, Rt Hon Joyce
Quinn, Lawrie
Rammell, Bill
Reed, Andy (Loughborough)
Roche, Mrs Barbara
Rooney, Terry
Ruddock, Joan
Russell, Ms Christine (Chester)
Ryan, Joan
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Shaw, Jonathan
Shipley, Ms Debra
Simon, Siôn
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Geraldine (Morecambe)
Smith, Jacqui (Redditch)
Soley, Clive
Southworth, Helen
Starkey, Dr Phyllis
Steinberg, Gerry
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr Howard
Strang, Rt Hon Dr Gavin
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Taylor, Rt Hon Ann (Dewsbury)
Taylor, Ms Dari (Stockton S)
Thomas, Gareth (Clwyd W)
Thomas, Gareth R (Harrow W)
Timms, Stephen
Todd, Mark
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Tynan, Bill
Vis, Dr Rudi
Walley, Ms Joan
Ward, Ms Claire
Wareing, Robert N
White, Brian
Williams, Rt Hon Alan
(Swansea W)
Williams, Mrs Betty (Conwy)
Winnick, David
Wood, Mike
Woolas, Phil
Worthington, Tony
Wright, Anthony D (Gt Yarmouth)
Wright, David (Telford)
Wright, Tony (Cannock)
Wyatt, Derek

Tellers for the Noes:

Mr. Nick Ainger and
Angela Smith.

Question accordingly negatived.

7 Feb 2002 : Column 1067

New Clause 2

Means of payment of tax credits to recipients

'(1) Subject to subsection (2), a person to whom an award of tax credit has been made shall be entitled to receive it by means of a book of serial orders at a post office.
(2) Regulations may provide that the entitlement in subsection (1) shall end when arrangements are in place for any recipient who so wishes to receive payment into a basic account accessible at a Post Office in which case that entitlement shall be replaced by an entitlement to payment into such an account.
(3) This section applies to payments—
(a) of child tax credit and any payments of working tax credit being made directly by the Board under section 23, and
(b) of working tax credit being paid by employers by virtue of section 24.'.—[Mr. Heath.]

Brought up, and read the First time.

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