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Mr. Howard Flight (Arundel and South Downs): The Bill seems to have been dogged by incorrect definitions and references. As the Paymaster General said, the Government are seeking to substitute their own prescription for an annual report in lieu of a rather broader if less specifically defined annual report prescription passed on an Opposition amendment in the other place.

The purpose of the annual report as introduced by Conservative Peers is to ensure the submission of data giving an account of the care and management of tax

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credits. In particular, the report would contain estimates of the total take-up of each tax credit, the statistical and other assumptions on which such estimates were made, and the actual take-up of each tax credit. The Opposition amendment prescribed that the board's reports should be published by the Treasury. As the Paymaster General said, it is correct that the report should be made by the Board of Inland Revenue to the Treasury.

The key point is that Parliament should know when the take-up of any tax credit is less than the forecast level, and the report would set out the estimate of the amount of moneys not spent by reason of the deficiency of take-up to which that estimate related. It would also include the Government's proposals for increasing take-up to the forecast level. It would deal with fraud, and with other issues on the Government's list.

The report is considered necessary because of the vastness and complexity of the Bill and the fact that the new arrangements are untested. We still fear that there could be major administrative difficulties in their implementation. Unless the legislation is monitored, what is actually happening will be inscrutable for some time.

Lady Hollis described collecting the information from existing sources as a simple cut-and-paste task. Perhaps I am a little slow-witted, but I do not think collating such information is at all easy, and I think it is right to require it to be presented in a digestible form. Conservative Members are pleased that the Government have accepted the case for a single, clearly understandable—I will not say "easily understandable"—report.

The Government's alternative raises certain issues. The Paymaster General has commented on the differences between the two proposals, but I should like to extract a little more information before agreeing to the Government's version. Take-up is a key issue on which the Paymaster General did not comment. If the measure is about what it is supposed to be about—helping the needy—a crucial aspect will not have been covered if we do not know whether it is being effective, what the targets are, and so forth.

The reference to numbers in what I think is subsection (1)(c), not subsection (2)(c), could be interpreted to cover the process of reporting on the estimated and actual take-up and the reason for the difference, if any, and on what the Government are doing to improve take-up. I should be grateful if the Minister could elucidate a little further.

The Government seem to think it fairly impractical to report on costs to business. There is an argument to that effect, but if the Bill encounters administrative problems, it will be to employers that the Revenue will be forced to go to find information it may be seeking in order to check that awards have not been made that are materially in excess of entitlements. The Government, MPs and indeed businesses should want to know whether costs to businesses are turning out to be significantly greater than was estimated. I ask the Paymaster General to consider, at least, avoiding a meaningless exercise and requiring the report to include any comment on whether there is evidence on administrative costs to business are proving larger, or indeed smaller, than expected.

Take-up is crucial to whether this complex machinery helps those who are most in need. In Committee and on Third Reading, I observed that it was somewhat ironic that when in 1974 the outgoing Conservative Government

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proposed similar arrangements for tax credits, then called negative income, it was the leaders of the Labour party who produced a minority report warning that such mechanisms might be rather blunt and unsuccessful in helping those most in need. Despite all the wonders of modern computers—which invariably go wrong or break down—the basic issue remains of whether the tax credits will do their first duty of helping those who are in real need. We believe that an analysis of, and report on, take-up is important and we hope that the Government will confirm that their reference to numbers will cover that point.

The second area of concern, to which the Paymaster General has already referred, is the investigations into fraud and what I call fiddling, because most of the problems will not be of sufficient magnitude to deserve the label of fraud. It is important that we know what is happening, including how many prosecutions and convictions have occurred. My hon. Friend the Member for Hertsmere (Mr. Clappison) will talk in more detail on that issue later, but new subsection (1)(c), (d) and (e) appear to cover that territory and we are happy with that.

On the issue of cost to business, the history of the Bill shows a little obfuscation. If the Government expected costs to decline or be less than forecast, they might have been keen to boast about that. If they are unwilling to say anything, we infer that they think that the news could be bad. In the other place, the Government responded that their initial estimate was that the new working tax credit and child tax credit arrangements would cost business £11 million per annum less than the WFTC. We are pleased to hear that, but it was only after being pressed that the Government came clean that the cost to business had been £100 million a year. Therefore, it will still be £89 million a year. [Interruption.] The Paymaster General will find that Baroness Hollis gave that figure in the debate in the Lords.

Dawn Primarolo: There is no secret about that figure. The regulatory impact assessment clearly details the figure and I have given it repeatedly in the Chamber. Baroness Hollis was not imparting any new information, because I even gave that information on Second Reading.

Mr. Flight: I am delighted to be corrected, because that means that the Government will have no problem keeping tabs on the future cost to business. If there is any significant increase, they will be able to tell us about it.

Problems could arise because the Inland Revenue will have a demanding task when it comes to check awards paid against entitlements at the end of the year. One key area will be whether people have met the requirements for number of hours worked. Presumably, except for the self-employed, that check can be done—if the Revenue wishes to go further than what people report to them—only by making inquiries of employers of the number of hours worked. If the administrative difficulties that I fear arise, employers could have to deal with large numbers of inquiries from the Revenue to check information, and that could add considerably to costs.

The overall background to the need for a report is that the complex new arrangements must be monitored to determine whether those in need are getting the help that they need. I confess that our concern is that the general drift of policy, and especially the contents of the Bill,

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is that the Government should be seen to be giving money to large numbers of people. Some 6.5 million families—38 per cent. of the total—will be eligible for the means-tested benefits. The Government seem more concerned with that than with focused efforts to help those in need.

4.45 pm

There are widespread concerns about fraud and fiddling, and the House will be familiar with the much quoted fears of the right hon. Member for Birkenhead (Mr. Field), who is worried that

It is crucial for the House, the Government and the community to know, when the system is up and running, whether those fears prove justified. We are pleased to note that the Government have covered that.

Dawn Primarolo: The hon. Gentleman has alluded to some points made by my right hon. Friend the Member for Birkenhead (Mr. Field). I refer especially to the point about depressing wages. Will the hon. Gentleman explain why the previous Conservative Government would not support the introduction of the minimum wage? If he is so concerned about depressing wages, why did the previous Government allow that to happen in the absence of a minimum wage?

Mr. Flight: I do not think that we are really discussing minimum wages today, but their very existence is a tacit admission by the Government of the need for legal protection in a situation where too many factors are driving wages down. As I have noted before, I have to my regret encountered in my dealings with businesses a feeling among many of them that the provision is to be greatly welcomed, as it can be considered to be a big subsidisation of wages.

Dawn Primarolo: Okay, let us try this another way, as I do not think that the hon. Gentleman has answered the point. The former Select Committee on Social Security conducted an investigation specifically into the use of tax credits in the United States, to see whether their existence depressed wages. Tax credits have been in use for much longer in the US, but the Select Committee found no evidence that they depressed wages there. Is the hon. Gentleman disagreeing with that assessment? The Conservative party supported neither tax credits nor the minimum wage, yet there is no evidence that they depress wages.

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