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Lord Higgins: Does it cut both ways? Does it mean that Inland Revenue officials who are not qualified will now be able to appear on Inland Revenue matters?

Baroness Hollis of Heigham: At the moment we are talking solely about the powers of the Contributions Agency and staff being transferred to the Inland Revenue for decision-making. We are referring to DSS officials who will now be employees of the Inland Revenue so to speak. We expect that after proper training in due course there will be an integration of functions, but that is not where we are at the moment.

Lord Higgins: I have not made my point very clear. As I understand it, new provisions are to be sought under which people who are not qualified as either solicitors or barristers will be able to appear in a magistrates' court and fulfil the functions that are normally carried out by solicitors and barristers. If I understood it correctly, the noble Baroness said that there would be no change. I was unclear whether that would give Inland Revenue officials dealing with Inland Revenue matters the same powers.

Baroness Hollis of Heigham: This particular provision of the Bill refers to the Social Security Administration Act 1992. Therefore, it transfers powers that social security staff currently have to be carried with them when they go over to the Inland Revenue. We are not talking here about mirror activities. But as in all these matters, if I receive any further information to the contrary, I shall write to the noble Lord. I believe that the heading to paragraph 20 which refers to the Social Security Administration Act 1992 makes that point clear.

As to timing, the noble Lord asked whether this was the appropriate moment because of concerns about the computer. Not having had advance warning of the

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particular case to which the noble Lord referred, he will understand that I cannot comment upon it. But in so far as it is illustrative of a general problem, I take his point. The problems that we have experienced with the late running of the NIRS 2 contract are undeniable. Although stabilisation plans are under way, I understand that as at 1st January, while a total of £1.4 billion of age-related rebates had been paid, it equates to about 60 per cent. of the figure paid this time last year. I do not seek in any way to diminish the problem associated with NIRS 2, but it does not affect this Bill. The responsibility for its administration--ring-fenced so to speak--simply transfers from one section of the Civil Service to another and has no necessary implications (whatever one wishes) for the better or more efficient, or worse or less efficient, running of the computer. The project and its operation and co-ordination with Andersens simply transfers across. Although we hope that those problems will be addressed quickly, they will be addressed neither more nor less rapidly by virtue of this switch than they would have been if it had remained within the responsibility of DSS.

Lord Higgins: I am grateful to the Minister for that explanation. I do not wish to pursue the individual case. Fortunately, following my move from another place to this House, my preoccupation with individual cases has disappeared. However, it is apparent that the department has not written to the individual concerned to say what is happening. I do not know to what extent that is generally the case. Having said that, is it really appropriate to hand over the matter when it is not working very efficiently? Can the Minister clarify whether the same individuals will deal with the whole operation as at present? Presumably while the noble Baroness will no longer be dealing with any points on this particular issue and it will be for Treasury Ministers to answer any questions with regard to the computer, if we can be assured that at least the same people will deal with it rather than that others will inherit what is clearly a very difficult situation, that would be helpful.

Baroness Hollis of Heigham: My understanding is that the same body of people who run it currently will move across. In that sense, the formal reallocation of day-to-day functions should not make a difference to the NIRS 2 problems, which I do not underestimate in any way. If the noble Lord gives me the name of the individual concerned, I shall try to follow up the case, but not having had advance warning of the example he gives, I am unable to help him any further this afternoon.

Schedule 1, as amended, agreed to.

4.15 p.m.

Schedule 2 [Transfer of functions under subordinate legislation]:

Lord Skelmersdale moved Amendment No. 3:

Page 26, line 30, column 3, leave out ("regulations 37 to 39, 41 to 42 and") and insert ("regulation").

The noble Lord said: I said at Second Reading that I found Schedule 2 to be a very strange being. Drawing a bow at a venture, I then asked the noble Baroness to

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explain the transfer of Regulations 23 and 61 of the Occupational Pension Schemes (Contracting-out) Regulations 1996. In her round-robin letter addressed to my noble friend Lord Higgins, she explained that both these regulations related to policy, as indeed they do. But I was confused by the fact that in a separate part of the letter the noble Baroness explained that the policy was to remain with DSS Ministers. I am the first to agree that that is right.

However, the third column in Schedule 2 is headed, "Provisions conferring functions transferred". I find it very difficult to work out how something can be both policy and yet be transferred. I am sure that I am not alone in my confusion. The only conclusion at which I could arrive was that those matters which were not excepted according to this particular amendment were to be transferred.

In brief, the Secretary of State is to hang on to those regulations which are to do with items of policy for the moment, as the Explanatory Notes rather ominously say, and transfer the operational nuts and bolts of the Contributions Agency to the Board of the Inland Revenue. Knowing from previous experience how complicated these matters are, I went through those orders that I could acquire to see whether the nuts and bolts matters were in (that is, in the hands of the Secretary of State) or out (that is, in the realm of the Inland Revenue, or would be following the enactment of this Bill). We would all agree that operational matters should certainly be transferred with the Contributions Agency to the Inland Revenue. Incidentally, the noble Baroness did not respond to my intervention when my noble friend drew up the rules of engagement, but I assumed from her nod that it would be all right to deal with Amendments Nos. 3 and 4 together at this point.

That brings me to the first of my string of amendments which concerns the Social Security (Contributions) Regulations 1979. The entry in the schedule states that the Secretary of State is to hang on to the power in Regulation 37. That regulation is headed,

    "Reallocation of contributions for benefit purposes".
If one looks at the regulation it is clear that that is an operational matter. I shall not weary the Committee by quoting it.

I suspect that it was the direction of the Secretary of State that originally caused the draftsman to exclude this regulation from the handover. However, the Secretary of State does not himself give the direction; it is delegated to someone in his department, which these days means the Contributions Agency. It would be logical if that was an official in the Contributions Agency. If that is the case why can it not be transferred? It is clear that the Government agree with me because in Amendment No. 4 tabled by the noble Baroness, Regulation 37 is replaced by Regulation 36. I welcome that.

Regulations 38 and 39--also excepted--are much clearer examples of nuts and bolts operations. They tell the agency how to treat late paid contributions under the Act. Why then is Regulation 40, which covers the

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treatment of voluntary Class 2 contributions not paid within the permitted period, to be transferred and not excepted? I simply cannot see the logic.

Regulation 41 covers late payments through ignorance or error and the Secretary of State is to hang on to that. Regulation 42 covers a different form of treatment, that of contributions paid under an arrangement, and again that is to remain with the Secretary of State.

For the avoidance of doubt, I agree with the Minister about Regulation 40, concerning the application for allocation of a National Insurance number. It is quite logical that it remains with the Secretary of State. However, I believe that all the preceding excepted matters are indeed nuts and bolts and I would be grateful to hear the Minister's response to that. I beg to move.

The Deputy Chairman of Committees (Lord Elton): If Amendment No. 3 is agreed to, I shall be unable to call Amendment No. 4.

Baroness Hollis of Heigham: The noble Lord, Lord Skelmersdale, is something of an expert on delegated legislation as a result of his role on the Joint Committee on Statutory Instruments. Due to his commitments with that committee, he was unable to attend a briefing meeting when we might have been able to clarify some of these matters for him, which was why we offered such a meeting. Alas, to no avail. I understand his interest in the detail of Schedule 2, to which all these amendments relate.

I believe that the noble Lord is, quite rightly, seeking to check that we have done our job properly. Let me make clear at the outset that I do not think that there is any difference between the Government and the noble Lord on what we intend to do. However, the noble Lord does not have confidence that we are doing what we think we ought to be doing and, therefore, he believes that we should go along his route. I would like to suggest some problems in going down his route and suggest why I prefer our route.

Our strategic intention behind the Bill is to transfer the operational functions of the Contributions Agency to the Inland Revenue, together with policy responsibility for national insurance contributions. The way we have done this is to go through the relevant primary and secondary legislation to identify those provisions which confer specific functions on the Secretary of State for Social Security and to decide whether those specific functions should be transferred to the Inland Revenue or the Treasury as necessary. The functions conferred in primary legislation are amended as necessary in Schedules 1 and 3. Clause 1(2) transfers to the Inland Revenue functions conferred on the Secretary of State by provisions of subordinate legislation specified in Schedule 2.

The noble Lord's amendments fall into two categories. The first seeks to specify in Schedule 2 whole sets of regulations rather than individual provisions. The explanation as to why these amendments are unnecessary is somewhat technical and I hope he will bear with me as I set out how I am advised Schedule 2 works.

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The first point is that we need to specify only provisions which actually confer a function on the Secretary of State. The noble Lord will have noticed that the heading for column three of Schedule 2 is "provisions conferring functions transferred". Where a provision of regulations simply deals with how a function conferred elsewhere is to be exercised, there is no need to specify it in Schedule 2. So, in order to ensure the regulations work when they have been transferred, there is no need to transfer regulations which deal with how a function is to be exercised if the regulations do not themselves identify the function holder. Any stray references to the Secretary of State which do not themselves confer functions are converted into references to the Inland Revenue or Treasury, as necessary--as a sweep-up, if you like--by paragraph 1(4) of Schedule 7.

That deals with the first category of the noble Lord's amendments. The remainder would actually change the boundary of operational functions between the Secretary of State and the Inland Revenue. Perhaps I may give two examples of how these would work, and if the noble Lord would like a fuller explanation I shall be happy to write to him with more details of why we have drawn the Bill as we have.

First, take his Amendment No. 4, to the reference to the Social Security (Contributions) Regulations 1979. This would have the effect of transferring responsibility to the Inland Revenue for deciding how to treat certain contributions--for example, those paid late--for the purposes of contributory benefits. This is a function relating to the administration of contributory benefits and therefore we think it should remain with the Secretary of State.

Secondly, Amendment No. 7, to delete the reference to the Statutory Sick Pay (General) Regulations 1982, would retain with the Secretary of State certain administrative functions relating to the operation of statutory sick pay. We have already discussed in the context of Schedule 1 that the administration of, but not policy on, statutory sick pay will transfer to the Inland Revenue. The noble Lord's amendment would leave with the Secretary of State the functions of: arrangements for making payment of statutory sick pay where an employer is insolvent or refuses to make payments when an officer of the board has determined that it is payable; appointing someone to act on behalf of a person who is, or claims to be, entitled to statutory sick pay but who is unable to act for himself or herself (for example, where that person is in a coma); and requiring information from an employer or employee where the board determines whether there is entitlement to statutory sick pay but needs further information in order to resolve a particular question.

That would mean that employers and employees would need to deal with two government departments in respect of statutory sick pay--the Inland Revenue when a question arises whether a person is entitled to the benefit, and the Benefits Agency when a person is not being paid the benefit because the employer is insolvent, or refuses to pay, or where someone needs to act on behalf of someone who is unable to do so. Furthermore, the amendment would mean that, where an officer of

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the board requires further information to determine whether a person is entitled to statutory sick pay, he would need to ask the Secretary of State to require the information from the employer or employee involved. That would be rather bureaucratic and hardly the sort of service we would want to provide.

The reason we have transferred these provisions to the board is because decisions on entitlement to statutory sick pay normally involve questions of employment status--for example, whether a person is an employee or not, and what are his or her average earnings. They are obviously not medical questions. It makes sense, therefore, for other functions, such as those connected with the payment of statutory sick pay where an employer is insolvent or refuses to pay, also to be undertaken by the board.

I hope that reassures the noble Lord. Perhaps if he has any further concerns we can deal with them in correspondence. I do not believe that the thrust of the noble Lords' amendments would deliver what he wishes. I hope he will withdraw his amendment.

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