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Page 6, line 23, leave out subsection (5) and insert--
("(5) Where an application has been made under subsection (1), for the purpose of any rule as to the time allowed for bringing an appeal, the decision in question shall be treated as made on the date it is revised or the date the Secretary of State notifies the claimant of his refusal to revise.").

The noble Lord said: Here again we are looking at a matter under Clause 10. Subsection (5) says:

So far so good, but that leaves a lacuna because what is to happen if the decision is that the original decision is not to be revised? We seek to clarify when the time limit for appeal starts running where the original decision is not revised.

The time limit should run from the date of the Secretary of State's decision on the application to revise, whether the decision is to revise or not to revise. In another place the Government said that this was unnecessary because, if a decision was not revised, a claimant would still have one month to appeal from the date of that decision. It is not clear that that is in fact the effect of Clause 10(5) as it stands. As a lawyer, I would expect a judge to hold that subsection (5) does not apply where the original decision is not revised and that the time in those cases runs from the original decision. That point needs clarification.

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The time should run also from the date of notification, not from the date of the decision. The regulations should provide for a presumption, in the usual way that notification has been received on the next working day after posting if the notification is sent by post. That is a technical matter.

I hope that the point about the running of time for an appeal, or where there is an application for revision which is rejected, can be clarified.

Lord Hardie: As the noble Lord has said, he is rightly concerned about the claimant's right of appeal once the Secretary of State has dealt with an application for a decision to be revised.

There are three possible situations. The first is where the Secretary of State actually refuses to act on the application because she considers that it is without foundation--that is, that the reasons provided are such that there is no question of the decision being revised. A ludicrous example would be where someone applied for extra benefit for their pet cat or budgerigar. Clearly this is meaningless in benefit terms and the applicant should not expect to receive consideration. This refusal to act on the customer's application will not be a decision under Clause 10(1). Therefore it will not carry a right of appeal under Clause 13(1). Of course, I can reassure the Committee that the claimant will still have the right of appeal against the original decision. Some claimants may have less time in which to appeal because of the time that has to be taken to notify them of the Secretary of State's refusal to act on their application. We intend to make provision in regulations to allow such claimants a reasonable time to lodge an appeal.

The second situation is where the Secretary of State acts on the application but does not change the award. This would happen where the claimant raises a point of substance which requires the Secretary of State to reconsider her decision, but it transpires that it does not affect the amount of the award. This action would generate a new outcome decision, and the claimant would have a month to dispute or appeal against the new decision. For example, a claimant may notify the agency of the birth of a child. This would result in an increase in income support. At the same time, the claimant's part-time earnings increase, which would result in a reduction in income support. If those changes cancel each other out, the net result would be that the benefit remains the same. But there would have been two changes of circumstances which would have required the Secretary of State to reconsider and revise her decision.

The third situation is where the Secretary of State acts on the application and changes the award. Again, this would generate a new outcome decision with a new dispute period with a fresh month in which to lodge an appeal.

The amendment seeks to ensure that where a decision is reconsidered but the award is not changed, the customer not only retains a right of appeal but has the time to exercise that right. As I hope that I have explained, this will be the case.

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More importantly in terms of the amendment, this is already catered for on the face of the Bill by Clauses 10(5) and 13(6). With that explanation, I hope that the noble Lord will withdraw the amendment by virtue of it being unnecessary.

Lord Goodhart: My Lords, I still have some difficulty with the provision. Clause 10(5) states,

    "Where a decision is revised ... the decision shall be regarded as made on the date on which it is so revised".
Clause 13(1), the appeal section, states:

    "This section applies to any decision of the Secretary of State ... (whether as originally made or as revised under section 10 above)".
It is clear that, where the matter is considered again but the decision is taken not to alter the original decision, the relevant decision against which the appeal is to be made is the original decision because it has not been revised under Section 10.

I accept that the matter could be covered in regulations. However, I am not clear whether the noble and learned Lord the Lord Advocate is giving an undertaking to do so or whether the matter has not yet been considered. I wonder whether I can ask for his response.

Lord Hardie: As I said earlier, we intend to make provision in regulations to allow claimants a reasonable time to appeal if the period has been delayed by virtue of the application to the Secretary of State and the notification has caused further delay.

Lord Goodhart: I accept that it is an appropriate matter for regulations. On the basis of that statement, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Clause 40 agreed to.

Clause 11 [Decisions superseding earlier decisions]:

Lord Haskel moved Amendment No. 12:

Page 6, line 29, leave out ("subsection (3)") and insert ("subsections (3) and (3A)").

The noble Lord said: Before I move the group of amendments and the new clause concerning directors' liability for national insurance, I think that it would be helpful to give the Committee some information about how the Chancellor of the Exchequer's announcement in his Budget on changes to the national insurance regime could affect this Bill.

Noble Lords on the Front Bench opposite have been consulted about this and have agreed that I should clarify matters in advance of more detailed discussion on those aspects of the Bill which might be affected. I beg the indulgence of noble Lords.

The Chancellor of the Exchequer announced a number of significant changes in national insurance as part of his strategy to reduce the barriers to lower paid employment and further to align the tax and contributions regimes so as to streamline administration, and thereby help businesses.

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Some of these changes require primary legislation, and must be brought forward urgently so as to allow time for them to be implemented by April 1999. We therefore propose to bring forward new clauses to this Bill in the following two areas only: first, alteration of the structure of some of the earnings bands and rates used to calculate national insurance contributions. Essentially, the new clauses will provide for three changes: first, the abolition of employees' national insurance contributions on earnings up to the lower earnings limit--the so called entry fee for employees; secondly, the abolition of employers' contributions on earnings up to the single person's tax allowance--the employers' entry fee; and, thirdly, the replacement of multiple "earnings bands" and contribution rates for employers' contributions with a new single rate payable on all earnings above the single person's tax allowance. The present system of contracted out rebates will be maintained.

While these measures will simplify national insurance, the legislative changes themselves are more complex. It will unfortunately not be possible to bring forward amendments until Report stage. There will be an opportunity for full consideration of the changes at that stage. I am sure noble Lords will be pleased to learn that these changes command widespread support from business. Secondly, we will also introduce a new clause to mirror in national insurance, changes to the income tax treatment of shares which are subject to the risk of forfeiture or that are convertible.

It is essential that we should take action now to ensure that the tax and contributions regimes are consistent in their treatment of different types of earnings. The income tax change will be introduced in another place through the Finance Bill and will take effect from 6th April. We therefore need to take this opportunity to ensure that our national insurance changes can be made within a similar timescale. To keep to a minimum the period over which income tax and national insurance positions are out of step, the clause will apply to shares awarded from the date that the clause is tabled for Report.

The Chancellor of the Exchequer also announced that, in line with the Taylor recommendations, administration of national insurance carried out by the Contributions Agency would be transferred to the Inland Revenue from April 1999.

There are two key areas of this Bill which are potentially affected by this: the arrangements for appeals against national insurance decisions; and the new penalties and distraints regime for the Contributions Agency. Noble Lords will be aware that there are amendments relating to the appeals arrangements for national insurance which my noble and learned friend the Lord Advocate will be speaking about later on in this Committee. I do not wish to open that debate now; but I can advise noble Lords that we will be considering carefully the implications of the planned transfer of responsibilities for appeal arrangements on contributions issues. Much complex detail needs to be considered. We do not therefore propose to bring forward any amendments to appeals arrangements in this Bill as a consequence of the planned transfer, but we will be

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looking carefully at the options. The Government will bring forward legislation in due course to make necessary changes flowing from the transfer of responsibilities to the Inland Revenue, and conclusions on the appeals arrangements will be reflected as necessary in that legislation. That will give Parliament the necessary time to scrutinise the implications in appropriate depth.

Similar considerations and a similar approach will apply to the measures on penalties and distraint for national insurance which also form part of the current Bill, and where some adjustments to the legislative structure are likely to be needed to support administration of these arrangements within a single organisation.

I mention now an issue on which we might need to return to the House. To ensure continuity of service to contributors and employers, some preparatory expenditure may need to be incurred in advance of Royal Assent of the transfer legislation itself. It is possible that the Government may need some additional powers to permit that. We are addressing the issue urgently and, if it seems that a further amendment to the current Bill is necessary, we will bring it forward at a later stage. I am grateful for the opportunity to make that announcement. I hope that noble Lords will find it helpful.

I should now like to return to the amendments standing in the name of my noble friend--

7 p.m.

Lord Higgins: Perhaps the noble Lord will allow me to intervene. We are already engaged on a Bill of which a number of clauses are being taken in a very complex sequence. That in itself presents some difficulties. The noble Lord's statement is in one sense helpful. I must confess that I am suffering some culture shock. There is little doubt that in another place it would have been out of order to make the announcement at this point; but clearly in this House we have a more flexible arrangement, which is perhaps a great advantage. However, I suggest to the noble Lord that it might be better if we discuss the points that he has made up to now without mixing them up with the amendment to which he is speaking, which is concerned with the responsibilities of company directors and, with great respect, has absolutely nothing to do with what he has said up to now. It would be slightly less confusing-- I will not say disorderly--if we were to comment on what he has now said before going on to debate the amendments themselves. Perhaps the noble Lord will consider whether that would be a better way of doing things.

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