Draft Child Tax Credit Regulations 2002 and Others

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Dawn Primarolo: The regulatory impact assessment is dated July 2002, takes into consideration the whole Bill and—I think that I am right in saying this but shall double check before replying—is in the Library.

Mr. Webb: I am grateful for that. I am straining to remember whether there was an initial regulatory impact assessment when we considered the Bill.

Dawn Primarolo indicated dissent.

Mr. Webb: The Minister shakes her head. There was no regulatory impact assessment when we considered the Bill, but there is now. I am slightly confused about that, so if she could clarify the situation, I would find that helpful. It applies to all four regulations.

I have two specific queries. The first relates to the definition of a child. The children's tax credit is the successor to various bits and pieces in the system, including the child tax credit, which is paid principally to dads through the pay packet once per family and amounts to about £520 a year. I may be about to be told that I am wrong, but I understood that it was paid only up to the age of 16. I did not understand some of the Minister's introduction, especially on the definition a child. What happens for a family with one 17-year-old who is on average earnings and beyond the scope of the working families tax credit? Is the Minister saying that because the definition of a child for the new integrated children's tax credit includes a sixth former, there is a set of gainers? They will be families whose only child is a sixth former who would not have been defined as one under the child tax credit but is for the children's tax credit.

Mr. Jack: From what I recall, much is borrowed from the old family credit legislation. Section 8(3) of what will be the Tax Credits Act 2002, to which the hon. Gentleman is referring, is borrowing much from the child credit and family credit definition of a child.

Mr. Webb: One problem is that we are merging family credit, which became working families tax credit, carried over its definitions and built on the child benefit definitions, and a separately created child tax credit, which was intended to link to the income tax system and created the different definition of a child as someone who is 16 or under. When those two systems are put together, which definition will apply? I hope that I have been sufficiently clear so that the Minister can clarify the point. My understanding is that a 17-year-old who is an only child would not qualify for child tax credit—the £520 thing—if the family was on

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average earnings, but would constitute a child for the purposes of the children's tax credit and would be entitled to claim it. Will the Minister confirm that those people will gain from the harmonisation and integration?

Mr. Bercow: Has the hon. Gentleman considered the possibility—I put it no more strongly—that the apparent generosity of the new provision could be but the first instalment in a series of policies and that a subsequent instalment could be the abolition of child benefit for those aged between 16 and 18? Is that possible or am I being unduly suspicious and harsh?

Mr. Webb: I would never dream of accusing the hon. Gentleman of being unduly suspicious and harsh, although I noticed that the Minister shook her head when he asked that question. I look forward to the resolution of that point. This may stray too far out of order, so I should probably not say it.

Mr. Bercow: Oh, go on.

Mr. Webb: I am sure that you will call me to order, Mrs. Adams, but the Chancellor said yesterday that the educational maintenance allowance, which is another form of means-tested support for 17 and 18-year-olds, would be financed by the savings on unemployment. We will see.

My second specific point relates to page 3 of the regulations. It contains a definition of remunerative work, which is work that is

    ''undertaken for not less than 24 hours a week.''

I was confused when I first saw that because remunerative work for working tax credit purposes is defined as 16 hours, which mirrors working families tax credit, and full-time work is defined as 30 hours. The definitions relate to stopping people getting money, and the definition in these regulations is a relaxed version to avoid that. It concerns remunerative work done by young people in respect of whom children's tax credit might otherwise be payable, and rather than saying that a family is knocked out of entitlement if a teenager does 16 hours a week, it has been slightly relaxed to 24 hours. In other words, the definition allows teenagers to do more work before the family is no longer entitled to children's tax credit.

I am rather unclear, however, because we seem to have three different definitions of work—16 hours for the working tax credit, 24 hours of remunerative work in this proposal and 30 hours for full time. I wonder about the thinking behind these different thresholds and what they are intended to achieve. In particular, why was 24 hours rather than 16 hours chosen here? I was expecting to read 16 hours, but read 24 and did not fully understand why. I hope that the Minister will clarify those specific points and the general ones about the regulatory impact and the claiming from August process.

5.10 pm

Mr. Jack: Today's debate illustrates an important feature of legislation on this subject and the impact of the regulations. The Bill uses the regulatory mechanism as a means of translating the new tax credit legislation into reality, and the Minister said in her opening remarks that many of the lobby bodies

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that contributed to the pre-legislative scrutiny had warmly welcomed the outcome of their deliberations being replicated in the regulations. However, hon. Members have the privilege of being able to ask many questions in Committtee, and, among others, we are the humble practitioners who have to explain matters to our constituents when they arrive at out surgeries scratching their heads with technical queries. Sometimes we have to experience the sadness of constituents denied the help of tax credits and we may have trouble ourselves in understanding why our constituents have not been assisted.

What efforts will be made to produce a plain English guide to what the regulations mean? They are written in legislation-speak—the unique language of the House of Commons—which, as my hon. Friend the Member for Buckingham and the hon. Member for Northavon (Mr. Webb) have shown, is not always easy to understand. The hon. Member for Northavon rightly drew the Committee's attention to the dates in regulation 1. I was particularly intrigued by regulation 1(c), according to which ''for all other purposes'' 6 April will be the date on which further action takes place. A constituent attending my surgery after 1 August, perhaps having heard on ''Today in Parliament'' what we have been up to, might ask me to provide him with information about what will happen. When the Minister replies, will she tell us more about the public information campaign?

Mr. Webb: The right hon. Gentleman reminds me that when we debated the Lords amendments, I drew the Minister's attention to one of my constituents who had rung the working families tax credit helpline for information about children's tax credit and found that no one knew the first thing about it. If the proposals come into effect on 1 August, it is vital that folk on the helplines know every last dot and comma.

Mr. Jack: I am most grateful to the hon. Gentleman, who amplifies my point. Reference was made in our discussions to legislation whence the tax credit regulations came and to other forms of help for children within the tax and benefits scheme. It would be helpful if, in addition to a document of information, the helpline suggested by the hon. Gentleman or the web, information about all the help available to children could be pulled together in the light of the different definitions. I am worried about take-up, which we might debate later. If people do not understand, they can walk away on the grounds that they do not want to be bothered with a plethora of detail unless it is explained clearly.

My hon. Friend the Member for Buckingham referred to case B, which deals with a

    ''child or qualifying young person . . . being looked after by a local authority''.

Under normal social security and tax regulations, people do not get paid for doing the same thing. The idea behind the credit is to provide money within the context of a caring family to help contribute to the cost of bringing up a child. If other public funds are being used for that purpose by a local authority, one clearly cannot be paid twice.

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What happens with fostering? Two working parents could foster a child and I am unclear how the credit system would be used in the context of their work, particularly if they receive money from the local authority in respect of the expenses of the fostered child—though not enough to provide them with a living from fostering alone. I ask that question in respect of the able-bodied and the disabled child. Different social services departments may have different arrangements according to the disability or behavioural characteristics of a child. It would be useful to know how it works out.

I should also like to look more to the future. Case C draws the Committee's attention to the eligibility for the credits of those detained ''during Her Majesty's pleasure'', particularly in the light of the Home Office's current attempts to deal with recidivism. In the generality of social security benefits, the Home Office clearly sees value in maintaining a degree of entitlement, especially for a prisoner who enters jail for short period and then emerges to pick up a life, perhaps a family life. I do not wish to trespass into territory beyond that. Someone in receipt of credit could tread over one line, but his family will have to face the implications if it is disentitled as a result. Will the Minister respond—if not now, in written correspondence—to that problem?

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