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The Deputy Chairman of Committees (Baroness Lockwood): If Amendment No. 41 is agreed to I cannot call Amendments Nos. 42 to 44 inclusive under the pre-emption rule.

Lord Astor of Hever moved Amendment No. 41:


Page 4, line 17, leave out subsection (4) and insert--
("(4) This section shall not come into force until the Chancellor of the Exchequer has laid before both Houses of Parliament a statement that he is satisfied that employers are likely to be in a position to comply with their obligations under this Act.")

The noble Lord said: This is a probing amendment. If the Government and the other place accept the amendments passed today we shall be very content. This amendment aims to ensure that businesses will not be required to administer WFTC until they are ready to do so. The Minister told us earlier that all calculations will be done by the Inland Revenue and that work done by employers will be minimal. I am reassured by that. But as the tax credits are being introduced without any pilot exercises, implementation of this untried scheme will impose stresses on employers.

TaxAid suggests that the introduction of tax credits should be deferred for small businesses. It states:


4 May 1999 : Column 603

    pay, statutory maternity pay and redundancy payments. They need more time to prepare themselves for the change. I beg to move.

Lord Goodhart: I support the noble Lord, Lord Astor of Hever. This Bill contains a fixed commencement date which is unusual in a Bill involving substantial administrative changes within government departments. The time-scale is extremely short. The Government have committed themselves to bringing in tax credits on 5th October this year, which is half-way through the tax year. We do not object to the Government doing that, but only six months later, on 6th April 2000, Clause 6 will come into force. During that period of six months between October this year and April next year, the Inland Revenue will have to iron out the snags in its own administration of tax credits and make sure that employers are ready to deal with payment through the pay packet.

There will certainly be snags. The working families' tax credit may be family credit under a new name, but a number of changes are being made to it, particularly the introduction of childcare credit in place of the childcare disregard. These are likely to create serious, if temporary, problems. The transfer of responsibility from the Department of Social Security to the Inland Revenue will also create problems. I believe that the family credit section of the Benefits Agency will be transferred en bloc to the Inland Revenue, but it will still have to be bedded down into that system.

Everything may go smoothly, but equally it may not. If I were to bet on it, it would be that the scheme will not go as smoothly as the Government hope and expect. At the same time, the Inland Revenue will have to carry out a massive information exercise for employers and set up programmes to help them and to train staff to operate the help programmes. We have great difficulty in believing that that can be done in time to introduce payment through the employers on the proposed date.

But what if it becomes apparent early in the year 2000 that Clause 6 cannot be implemented by 6th April because, if it is, there will be a potential fiasco? The Government will then either have to allow the fiasco to take place or return to Parliament and ask for primary legislation to authorise a further delay in setting up payment through employers.

One hopes, and even expects as a probability, that it will be possible to go ahead on 6th April 2000, but that is a long way short of being able to say for certain that that is the case. Why do not the Government simply reserve the power to delay the impact of this legislation in the second stage (when payment through employers commences) until that scheme is ready? It may turn out that the Government can go ahead on 6th April next year. However, it is surely in everyone's interests that there should be a method short of primary legislation which will enable the Government to delay the working families' tax credit--even if by just a fraction of the delay which has hit the Jubilee Line. Surely it is wise to give the Government some power to defer the implementation of stage two until matters are ready to proceed. Speaking for myself, I would not press this

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amendment, but if the Government insist on continuing with their rigid timetable, they cannot say that they have not been warned.

The Earl of Dudley: In view of the fairly wide comments that have been made about this amendment, I believe I am in order in asking the noble Baroness a question which is causing concern. I could have spoken on Clause 6 stand part of the Bill, but I believe it is appropriate to speak now.

I believe that a number of practical points have not been given very serious consideration in the first part of the Bill. For example, a husband and wife may be employed by two different employers and they may not agree which of them should receive the tax credit. Perhaps the husband wishes to spend it in the pub on a Friday evening while his wife would like to spend it on new clothes for their child. The board of course has responsibility for deciding this matter, but what criteria is it to use in reaching that decision? There is nothing that I can see in the Bill which tells us that. I hope the Minister can comment on that matter as it is appropriate to discuss it in the context of this amendment.

Lord McIntosh of Haringey: These amendments seek to provide that Clause 6 shall not come into force until the Chancellor of the Exchequer has laid before both Houses of Parliament a statement that he is satisfied that employers are likely to be able to comply with their obligations under the Bill. I am grateful to those proposing Amendment No. 41 who have spoken also to the two amendments grouped with it as it gives me an opportunity to set out the preparations which have been made. It is important to have fixed commencement dates, not from the point of view of rigidity or the convenience of the Government, but from the point of view of employers who are greatly helped if they know that fixed intervals are already laid down in legislation. They thus know the timetable they have to work to. This situation is rather like the millennium bug except that we could by amendment change the dates we are discussing. It is rather unlikely that we could change the date of the end of the millennium and the start of the next. However, that assumes we have the matter right. I do not believe that we have.

I must say, however, that these amendments are wholly unnecessary. The Chancellor of the Exchequer would not have proposed the payment of tax credits by employers if he had not been satisfied that they would be able to comply with their obligations. We are doing everything we can to make sure that employers are in a position to fulfil their obligations. The Committee may ask how we are doing that. The most important step has been to involve employer representatives in detailed consultations on the design of the employer payment scheme. Regular meetings between Revenue officials and representatives of large and small employers have been held since last May and full account has been taken of employer concerns. Draft regulations have been made available to Members of both Houses of Parliament and will shortly be published for a much wider audience when the official consultation begins. We shall continue to consult the representative bodies on all aspects of the scheme.

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Alongside these consultations we have begun a programme of information and guidance to employers and payroll software suppliers so that they can make the necessary adjustments to their systems in good time for April 2000. Last December the Inland Revenue published a booklet, Working Families Tax Credit and Disabled Person's Tax Credit, which sets out the main features of the scheme. The Revenue's Employers' Bulletin and Notes on PAYE for Computer Users have also alerted employers to the preparations they will need to make over the next few months. Future issues of these publications will give much more detail in the run-up to April 2000.

The plan is for the employers' information packs issued in January next year to include detailed tax credit examples showing employers exactly what they have to do. The Revenue is planning to hold seminars for employers from July this year. These will be backed up by trade press advertisements and promotions in the regional press. From March 2000 onwards, samples of end-of-year stationery--that is, the Revenue forms--should be available from the employers' orderline, with test packs available around June that year.

This education programme should ensure that all employers are fully aware of what the tax credit scheme will mean to them. The noble Lord, Lord Burton, mentioned issues which were debated at some length on the first day of Committee when we considered Amendments Nos. 14, 16, 17 and 18. In the interests of mentioning only the amendments which are before us at any one time rather than ranging widely over the Bill, I hope the noble Lord will forgive me if I recommend that he reads the debate on those amendments in Hansard rather than my attempting to respond to them today.

I hope I have succeeded in persuading the Committee that there is no need for a statement from the Chancellor of the Exchequer on these matters and that the noble Lords who have spoken to the relevant amendments--which would be pre-empted if Amendment No. 41 were carried--will not consider it necessary to press them at the appropriate time.

6.45 p.m.

Lord Astor of Hever: I am grateful to the Minister for his reply and for setting out the detailed preparations for employers. The noble Lord, Lord Goodhart, has pointed out the problems that small firms will encounter and the fact that the introduction of these tax credits may not run smoothly. We agree with those comments, as I know do a number of business organisations. However, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 42 not moved.]


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