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Baroness Hollis of Heigham: My Lords, I am a little puzzled. The noble Lord said that it was not a backlog of benefits. Clearly, we are not talking about a backlog of appeals or of compensation. What backlog did the noble Lord have in mind?

Lord Higgins: My Lords, as I understand it there is a backlog with regard to payment of the existing benefit which the working families' credit will replace; namely, family credit. If that is not so, I am quite prepared to accept the noble Baroness's assurance.

Baroness Hollis of Heigham: My Lords, that is not so.

Lord Higgins: My Lords, I am quite happy to accept that.

I wish to raise one further point. The Inland Revenue's plans have been published and it has suggested that it might not be possible to arrange payment promptly because an employer may not have the money, a point to which we shall no doubt return later. Generally speaking, one hopes that the Government--mindful of the difficult circumstances of many of those receiving working families' tax credit and disability benefits and so on--will

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introduce a system of targets. If the Government do not like the targets suggested in the amendment, perhaps they will suggest something more quantitative at a later stage of the Bill.

Lord Skelmersdale: My Lords, my noble friend has put flesh on the bones of a question which was asked in Committee but not answered. I made the point that the Inland Revenue currently takes a number of weeks to get someone off the PAYE emergency code on to his proper code. In extreme cases, that can take between six and eight weeks. That does not bode well for the transfer of family credit to the Revenue.

I should like to make two points. First, how quickly is family credit paid to a recipient at the moment? Let us imagine, for example, that I was unemployed and that I went for an interview and was accepted for a job starting on, say, Thursday week, and I then filled in the form for family credit and sent it off. Assuming, of course, that the application was accepted--which goes without saying--when could I realistically expect my first family credit payment to be made?

Secondly, does the noble Baroness expect any changes in payment times to occur as a result of the changes made in this Bill in transferring the responsibility from the Department of Social Security to the Inland Revenue? As I said, the precedents are not terribly good.

Baroness Fookes: My Lords, I support the amendment. First, it is very important for recipients of the benefit to know that they will get a quick and good service. It seems to me that the setting of targets is a very good way of making those responsible for the payments sharpen up their act and ensure that there are no delays. Most of us are able to point to previous delays in various matters by the Inland Revenue; the precedents are not good.

Secondly, today the Government have announced their intention to bring forward a freedom of information Bill. It seems to me that this kind of information falls very neatly into the categories where one would expect more open government.

Lord McIntosh of Haringey: My Lords, the amendment provides that the board shall publish annually targets for the speed and accuracy with which various categories of claims are to be processed and payments are to be made and shall publish annually a report showing how it has performed against the previous year's targets. We are fully in sympathy with the concerns behind the new clause and we agree absolutely that it is right that the Inland Revenue, in taking responsibility for the new tax credits, should not only set targets for its performance in key areas but should also be open to scrutiny as to how well it measures up to those targets. The success of the tax credit scheme will depend very largely on the speed and accuracy with which the Revenue gets the tax credits to the people entitled to them. It is only right that these matters should be in the public domain. So I have no hesitation in giving noble Lords the assurance that they seek that the board will be publishing details of key

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operational targets and of the performance against the targets set for working families' tax credits and disabled person's tax credit.

We are considering at the moment what the targets should be. Again, I can assure noble Lords that the concerns expressed in the debate will help the Government's deliberations about the priority to attach to different areas of work on tax credits and how best to ensure that the Inland Revenue's performance reflects those priorities. In particular, I think that the point made by the noble Lord, Lord Higgins, about initial claims and renewal claims is a valid one which ought to be considered for inclusion in the targets to be published.

The noble Lord, Lord Skelmersdale, asked about the processing time. The intention is that the processing time should be five days and that the payment could be made on the Tuesday a week after the claim has been made. The noble Lord will be reassured to be reminded that once a claim has been processed it stays at the same figure for 26 weeks, so there is some security in that sense.

We are also taking account of the point made by the noble Lord, Lord Higgins, about an employee who is involved in a trade dispute. If it lasts for less than a whole pay period, the employer will pay the full amount of tax credit due even though the pay might be reduced because of the dispute. If it lasts for the whole of a pay period or longer, the employer will not be expected to pay the tax credit but must, as soon as possible, provide the employee with a certificate of payment showing the amount of tax credits paid and the period they cover. The employee will be responsible for passing that to the Inland Revenue, which will then pay the tax credit direct to the employee until informed by the employee that he or she has returned to work. We are already giving detailed consideration to what targets and what measures of speed and accuracy will be involved. We are grateful to those noble Lords who have participated in this debate for pointing out particular cases.

As for reporting on performance against any targets which the Government set, the subject of the third part of the amendment, I am glad to confirm that the board will, as a matter of course, be reporting on how well the tax credit targets are being met. The board already lays before Parliament an annual report covering the aims and targets of the department in all the areas of its work. That will include working families' tax credit and disabled person's tax credit and those will be reported separately because the tax credit office will be a separate division within the Inland Revenue. The board's report is the appropriate place for setting out both targets and performance in relation to tax credits. I hope I have persuaded your Lordships that there is no need for another report as is called for in the amendment and therefore that noble Lords will not seek to press the amendment.

8.45 p.m.

Lord Skelmersdale: My Lords, before the noble Lord sits down, if he expects that the Inland Revenue or the separate division of the Inland Revenue dealing with

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tax credits will be able to act on them within five days, why does it take six to eight weeks for an emergency code to be translated into a real code?

Lord McIntosh of Haringey: My Lords, it is reasonably well accepted that the existing family credit is paid fairly well up to date. It is the family credit staff who are being transferred to the Inland Revenue who will be responsible for these payments. On behalf of the Government, I do not accept any criticism about emergency tax codes, but I do suggest that that is outside the scope of discussion on the Bill.

Lord Higgins: My Lords, the Minister was doing extremely well until the very last minute. One of the reasons why I was prompted to move the amendment is the number of cases in which the time for payment has amounted to six weeks or three months. I accept that that may not be typical, but it was important to raise the matter. The Minister has given a very forthcoming reply. I am a little worried that this kind of report may be buried in the department's annual report. He said that the information will be set out separately, which is of some advantage. The way in which departmental reports are now produced, which is due of course to the activities of the previous government, is vastly better than it was before. From years on the Treasury Select Committee, I know that we have made a good deal of progress there, but it is important to have this information, particularly for the transitional period.

I have one final point to make. Concern has been expressed about what will happen when industrial disputes occur and industrial relations are not likely to be at their best. It may be difficult for someone who is in fear of losing his job to bring to the attention of the authorities the fact that he has not been paid on time. No doubt the noble Lord will wish to consider that point.

This is the first amendment to which I have actually had a forthcoming reply in the sense of seeing movement. I think that we are making progress. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Payment of tax credit by employers etc.]:

Lord Higgins moved Amendment No. 17:


Page 4, line 4, at end insert--
("( ) Regulations under this section shall not provide that an employer shall pay tax credits to an employee unless he has received, either directly or by way of deduction from remittances which he is otherwise obliged to pass to the Board, finance to pay the tax credit.")

The noble Lord said: My Lords, this is a rather inelegant amendment, for which I must be held responsible. We are saying that we should not have regulations which require an employer to pay tax credits to an employee if he has not received the money which he will pass to the individual employee. Earlier in our proceedings we discussed at some length the whole issue of cashflow and so on. I do not wish to delay the House any longer on that point. Perhaps I may therefore use the amendment to ask the Minister whether the Government accept that it would not be appropriate for

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the regulations that will implement the proposals in the Bill to require the employer to pay money to an employee if, either by way of changes in the specific remittances made to the company or by way of deducting from the positive cashflow that the employer has already received as a result of collecting PAYE and NICs, the employer has not received it. I beg to move.


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