Tax Credits Bill

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Mr. Webb: I beg to move amendment No. 118, in page 46, line 4, at end insert—

    '28B In sections 170 and 172174 (except section 172(5)) of the Social Security Administration Act 1992 (c.5), at all places where they appear replace references to the 'Secretary of State' and 'his functions' with 'Secretary of State or Treasury' and 'their functions' respectively, and in section 170(5) of the same Act after sub-paragraph (b) add:

    ''(bb) the provisions of the Tax Credits Act 2002''.'

.

The Chairman: With this, is will be convenient to take new clause 12—Advisory bodies and consultation—

    ''The Social Security Advisory Committee (constituted under section 9 of the Social Security Act 1980 and Part XIII of the Social Security Administration Act 1992) and its functions shall apply to tax credits and paragraph 28B of Schedule 3 to this Act shall apply to Part XIII of the Social Security Administration Act 1992 accordingly.''.

Mr. Webb: The amendment and the new clause are about the scrutiny, and to some extent the pre-legislative scrutiny, of the regulations that will govern tax credits. Quite a profound point is involved here. In recent years, the blurring of the distinction between social security, tax and tax credits has meant that some of the established mechanisms for ensuring that the system works properly—in the interests both of the Government's aims and of claimants—have started to go a bit fuzzy round the edges, for want of a better phrase.

A specific example is that social security changes are subject to the expert scrutiny of the Social Security Advisory Committee. The people on that independent body have a wide range of backgrounds and experiences. The danger is that although the tax credit legislation has many of the properties of social security legislation in terms of the client group and the sorts of issues raised, which are meat and drink, bread

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and butter to the Social Security Advisory Committee, as far as I can see, there is no provision in the Bill for regulations that will allow the tax credit system to be scrutinised independently. The actual act of scrutiny might not change the regulation, but the knowledge that scrutiny is going to happen might mean that the regulation is better before it becomes public. If regulations are going be pored over by experts, it might ensure that they are more rigorous and better thought through before they are publicly introduced.

We are already some way down a dangerous track, and have established a system whereby tax credits, which are increasingly important, are not as well scrutinised as we would wish. The Bill, which increases the scope of tax credits, appears to take more things outside the domain of the SSAC.

There is a related issue: whether and how tax credit legislation and policy will be scrutinised in Parliament. Will that be done by the Work and Pensions Committee or by the Treasury Sub-Committee? It will probably not be the Work and Pensions Committee as these are now all matters for the Inland Revenue, but the Treasury Sub-Committee has not, historically, got into that role and got used to that client group.

The purpose of the amendment is to get some proper scrutiny. I hope that the Minister will be sympathetic to what we seek to achieve, and will be as tempting as she was last time.

Dawn Primarolo: I shall do my best to help the hon. Gentleman, and explain why I think that his amendment and new clause are unnecessary. I do, however, agree with the points that he is making, and we are trying to proceed on the issues contained in his proposals.

The role of the Social Security Advisory Committee is set out in part XIII of the Social Security Administration Act 1992. That role is to advise the Secretary of State in connection with carrying out his functions. The amendment and new clause seek to widen the SSAC's remit, giving it an advisory role in relation to the Treasury's functions under the Bill. I do not think that it needs to be concerned with everything there.

I understand the hon. Gentleman's concern that we should ensure that the experience and knowledge of the committee, in the area of social policy, can inform the development of the tax credits system and that proposals for draft legislation made under the Bill are subject to the appropriate scrutiny and consultation. I wholeheartedly agree with that sentiment.

When the working families tax credit and disabled person's tax credit were introduced and, similarly, when the responsibility for national insurance contributions was transferred to the Inland Revenue, I was anxious to ensure that that consultation was happening. I asked my officials to make sure that the committee was shown all relevant regulations in draft so that we benefited from its members' expertise. That practice has continued, and I take the opportunity to place on record my appreciation of the contribution that those people make.

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The SSAC was also consulted about the proposed introduction of the two new tax credits. Officials from the Inland Revenue, the Treasury and the Department for Work and Pensions met the committee to discuss the Government's proposals. My officials are already in touch with the committee to ensure that arrangements are made for the dialogue to continue and progress.

I hope that the hon. Gentleman and I are—I do not think that I can say this—as one on this issue. I have embarrassed him now. However, I do not think that the appropriate way forward is to amend the Bill. I agree that the provision must be made. In the area of tax contributions and tax credits, the Government's function, and what is important to the committee, is the new tax credit system, including the making of new regulations for it.

The board of the Inland Revenue is a statutory body, with duties set out under the Inland Revenue Regulation Act 1890. There are clear lines of accountability here, and it would be messy and difficult to put things in the way that the hon. Gentleman has suggested. The board is answerable to Treasury Ministers on the matter. I sincerely hope that the hon. Gentleman will accept that I agree with his points about the SSAC. We intend to ensure that it will continue to be involved, consulted and referred to, not through amendments to the Bill but by direct agreement between the relevant Departments. I hope that, on that basis, he will withdraw the amendment.

Mr. Webb: I am grateful that the Paymaster General accepts the spirit of what we seek to achieve in the amendment. I have one reservation about how far the process that she described meets those concerns. As far as I can see, it is largely or entirely a private process. I did not know that those meetings had happened, although perhaps I should have done. I do not know if there are minutes of those meetings. I believe that the SSAC probably has the power to call witnesses when it holds inquiries into regulations, but it has probably not done much of that in its discussions with the Treasury.

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Dawn Primarolo: Treasury officials have gone to the SSAC on those matters. I shall examine what the hon. Gentleman says about whether those meetings are known about, but those are not issues of principle. We are prepared that there should be such arrangements.

Mr. Webb: I hope that that scrutiny will be open, accountable and publicly reported. Grateful for the Paymaster General's assurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 93, in page 46, line 43, after ''of'' insert—

    ''Part 1 of''.—[Dawn Primarolo.]

5 pm

It being Five o'clock, The Chairman proceeded, pursuant to Sessional Order D [28 June 2001] and the Order of the Committee [15 January], as amended by the Order of the Committee [22 January] to put forthwith the Questions necessary to dispose of the business to be concluded at that time.

Schedule 3, as amended, agreed to.

Question put, That clauses 44 to 47, schedule 4, clauses 48 to 55, schedule 5, clause 56, schedule 6 and clauses 57 to 65 stand part of the Bill:—

The Committee divided: Ayes 8, Noes 6.

Division No. 9]

AYES
Buck, Ms Karen Cruddas, Jon Mole, Chris Pond, Mr. Chris
Primarolo, Dawn Sheridan, Jim Sutcliffe, Mr. Gerry Wright, Mr. Anthony D.

NOES
Clappison, Mr. James Flight, Mr. Howard Luff, Mr. Peter
Swire, Mr. Hugo Webb, Steve Younger-Ross, Richard

Question accordingly agreed to.

Bill, as amended, to be reported.

Committee rose at three minutes past Five o'clock.

The following Members attended the Committee:
Beard, Mr. Nigel (Chairman)
Buck, Ms
Casale, Roger
Clappison, Mr.
Cruddas, Jon
Flight, Mr.
Hoban, Mr.
Luff, Mr.
Mole, Mr.
Pond, Mr.
Primarolo, Dawn
Sheridan, Jim
Sutcliffe, Mr.
Swire, Mr.
Webb, Mr.
Wright, Mr. Anthony D.
Younger-Ross, Richard

 
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Prepared 24 January 2002