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Lord Skelmersdale: If I were being unkind, I would say that my suspicions deepen. However, as I said, I shall read the remarks of the Minister. In the meantime, I can do no better than beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 agreed to.

10.30 p.m.

Lord Freeman moved Amendment No. 63:

After Clause 16, insert the following new clause--


(" . The Board shall lay before Parliament no later than 31st January 2001 a report on the performance in the first year of operation of each of the working families' tax credit and the disabled person's tax credit, setting out--
(a) the targets set for take up of each tax credit and actual performance against those targets;
(b) the comparative time for finally determining claims compared with the final year of operation of family credit and disability working allowance;
(c) the targets set by the Board for fully accurate determination of entitlement to tax credits and actual performance against those targets, and
(d) the percentage of claims which were--
(i) submitted by claimants in an incorrect form,
(ii) fraudulent, and
(iii) incorrectly determined by the Board (whether or not the determination was subsequently rectified).")

The noble Lord said: This is a probing amendment, but I hope that it will commend itself to the noble Earl, Lord Russell, and the noble Lord, Lord Goodhart, with whose earlier comments in Committee I find myself much in agreement, in particular as regards the role of the Social Security Advisory Committee.

Noble Lords may find my amendment a poor substitute for what was argued earlier. It requires the Inland Revenue to report to Parliament and to reveal the take-up rates for the working families' tax credit and the turnaround time rates. I wish to associate myself with the comments of my noble friend Lord Swinfen. He referred to the cultural difference--a point I made earlier--between the practices of the Benefits Agency and of the Inland Revenue. That is not a criticism of the Inland Revenue; it is a fact.

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In response to an earlier intervention in Committee, the Minister referred to the policy of the Chancellor of the Exchequer. The noble Baroness was right. I do not quarrel with her comments. But there is a difference between the policy of the Government and the administrative culture of a department. Therefore, the purpose of my amendment is to reveal to Parliament in due course what happens in terms of the administration of the working families' tax credit.

I should like to draw two parts of the clause to the Committee's attention. First, there is the requirement to report the take-up rate as against the target which the Inland Revenue either will have set itself or have had set for it by the Chancellor of the Exchequer. I find it disappointing that the take-up rate as reported by the Social Security Select Committee in its report of 3rd February 1999 is 70 per cent by volume. Seventy per cent of those estimated to be eligible have taken up family credit. I think that the target should be higher. That in no way implies a compromise with the importance of ensuring that there is no fraud in applications for the working families' tax credit.

In the other place on 9th March the Paymaster General is reported to have indicated--and I paraphrase--that on behalf of the Government he was assuming that the take-up percentage for WFTC would be slightly higher than for family credit. I find that disappointing. If there are people in need under the scheme, the duty of the Government and the Inland Revenue, which from 6th October will be taking over responsibility for WFTC, is to ensure that that take-up rate is improved upon. The target should be higher and I would like the Inland Revenue to report the take-up for the first full year of operation.

Secondly, I am concerned that the time taken to process such an application might become significantly greater than is presently the case for the assessment of family credit. The pre-award processing time within the Benefits Agency for family credit is on average five working days. I stand to be corrected, but that is the only statistic I can find. It bears out my constituency work experience in the other place. Five working days compared with the time that the Inland Revenue could take if the cultural practice of the Revenue is to be followed could be significantly greater by several weeks. The process is verify then refund. The principles of the Benefits Agency are process, pay, sample check and penalties where appropriate. That is a very different approach.

Therefore, I commend to the Committee a change in procedure. That is that after two weeks, for example, the Inland Revenue should process the application and ensure that it is paid and, where necessary, check afterwards. That will represent a major change in the procedure.

We need a balance between higher take-up to benefit those in need and fraud prevention. I note what the Social Security Select Committee stated in its report of 3rd February when it expressed concern that the Benefits Agency under the DSS had not in its pilot study of fraud instituted a more wide-ranging review. The figures we have to hand are alarming; almost a

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50 per cent rate of fraud or error in claiming family credit. I do not believe those statistics because the sample was far too small. However, the report of the Select Committee was published after the Bill had largely completed its passage in the House of Commons. It asked what improvements will be incorporated in the design and administration of the WFTC to minimise the risk of losses to fraud in the future. Those questions, to the extent they have not been answered by the Government, deserve answer. I beg to move.

Lord Higgins: I support the amendment. My noble friend Lord Freeman has had extensive experience in government. He is right to stress the importance of clearly appraising the way in which the new scheme will work. Throughout the debate there has been considerable doubt about the effect of the transfer from the DSS to the Inland Revenue. Indeed, during the course of the debate the DSS has received many compliments. Leaving on one side problems with computers and so forth, it has conducted its business so as to ensure that benefits reach people on a timely basis.

It is appropriate that my noble friend should suggest that if we change the system we should evaluate how successful or unsuccessful it has been in its introduction. He suggests that a full year would be appropriate.

I would like to pick up one or two particular aspects of what he suggested. He suggested particularly a target for take up. In that regard, I am still not absolutely clear whether it is the view of the noble Baroness that the take up will be higher under the new scheme than it is under the existing scheme. If that is so, it is surely appropriate to set targets in relation to the performance which we have at the moment under the DSS with regard to family credit. Perhaps she would give us some indication of the extent to which she expects the take-up under the new system to be better and perhaps even to suggest something that might be an appropriate target in that respect.

The other matter which my noble friend suggested in particular is the question of how quickly the claims will be determined. If I understand it correctly, the Government are proposing that the Revenue shall reach these assessments very quickly indeed. With regard to cash flow, if it is necessary to pay a balance in the direction of the company rather than the other way about, it will do so within a matter of three days. We certainly need in that area--and perhaps this is an extension of my noble friend's targets--to have some idea of what the situation is.

The hour is late and I will not go much further in expanding my noble friend's proposals. They seem to me to be eminently reasonable. We should not embark on the whole of this new system without being assured that the way in which it works out in practice will be evaluated after the event.

Lord Goodhart: I rise briefly to support the principle of the amendment moved by the noble Lord, Lord Freeman. It is arguable that there is a case for saying that the report ought to cover not the first year but the first 18 months of the scheme. If it covers the first year, it will only in fact cover six months of its

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operation relating to payment through the wage packet. I think that might be too short a period to enable an adequate evaluation of that process to take place. It may be that an appropriate date would be the 18 months ending in April 2001, with a report by 31st July that year rather than 31st January.

It is clear that information of the kind referred to in this amendment must be provided if Parliament and the country as a whole are to be able to do a proper evaluation of the success or otherwise of the tax credit scheme. The Government may take the view that this is a matter which can be adequately provided for by means other than an amendment to the Bill. If that is so, I would listen to their views with some respect. I hope very strongly that the Government will be able to give us an absolute assurance that, at the appropriate time, whether after 12 or 18 months of operation of the scheme, they will provide all the information referred to in this amendment.

Lord Blackwell: I too would like to support my noble friend by asking the Government to give serious consideration to this amendment. I believe there is merit in this kind of report back to Parliament after any changes of this magnitude have been introduced in this form. In this instance, I believe there is a wider interest in the application of the principle of shifting from the payment of benefits directly to tax credits. It is a principle which I imagine the Government might want to consider in other areas of policy. The particular benefit applied to direct payments has, of course, always been that there will be a higher take-up than through tax credits. Having introduced this kind of change in this specific area of policy, I consider that it would be very helpful to have a like-for-like comparison of what the take-up rates had been, so that general lessons could be learnt.

10.45 p.m.

Lord Skelmersdale: I support my noble friend. Indeed, I asked the noble Baroness last week when would be an appropriate moment at which to start probing those matters. I seem to recall that she said that, although the figures were published quarterly, it would not be practical until after a year. Therefore, the noble Lord, Lord Goodhart, rather took the words that I was about to utter out of my mouth, except that I should not be quite as generous as he was, in suggesting 31st July. I would opt for 30th June, but what is the difference?

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