Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Skelmersdale: My Lords, before the noble Lord sits down, perhaps he can clear up some confusion in my mind. He told my noble friend Lord Swinfen that the statutory instruments flowing from the legislation would not be discussed by this House. I seem to recall that in answer to a similar question on Second Reading, the noble Baroness, Lady Hollis, said exactly the opposite. Who is correct?

Lord McIntosh of Haringey: My Lords, it is not for the Government to determine whether any particular regulation or piece of legislation is ruled to be a money matter. That is for Madam Speaker to rule, not for us to say. The regulations will be available for scrutiny by this House unless they have been ruled by Madam Speaker to be a money matter. All I did in response to the noble Lord, Lord Swinfen, was acknowledge that that might be the case.

Lord Goodhart: My Lords, I am most grateful to the noble Lord, Lord Higgins, for the thought that he gave to my amendment. I was tempted when he suggested that he might support me if I sought a Division. I might have accepted his invitation if we did not have the draft regulations before us. The draft regulations are of considerable importance. Although I said that I thought they were not enough, the difference between us would not justify my seeking to divide the House. The amendment was brought forward as a protest at what we regarded as the somewhat high-handed attitude of the Inland Revenue rather than with the intention of dividing the House and seeking to have the amendment placed on the face of the Bill. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale moved Amendment No. 26:


After Clause 6, insert the following new clause--

PAYMENT OF TAX CREDITS BY BOARD

(" .--(1) Section 6 above shall not apply to the payment of tax credits to employees whose contract of employment is for less than ten weeks.
(2) The Board shall make payments of tax credits directly to the employees specified in subsection (1).")

The noble Lord said: My Lords, by this stage of the Bill we know a lot about the change from family credit to the working families' tax credit, and about the disabled person's tax credit. We know who is to receive it; how steep the angle of the taper is to be; how it is to be paid; by whom; the daily rate and so on. We have come a long way.

However, there is a further issue that I wish to probe. On the second day in Committee, I said that I regarded the amendment of my noble friend Lord Astor on agricultural workers as the most important on the Marshalled List; and that, by definition, it went much

24 May 1999 : Column 742

further than he intended. In the event, he did not move his amendment. But, by tabling the amendment, he clearly regarded the method of payment of short-term casual workers as a definite worry.

Under the current scheme of family credit, when such workers are in work they are paid straightforward family credit. If they are in work for the 26 weeks for which the credit runs, there is obviously no problem. The same applies under WFTC. If, however, they have several periods of work with lay-offs in between, they still get family credit for the full 26 weeks, if necessary topped up to income support levels when they are not working. Whether or not they are working, they currently receive their money through the Post Office.

However, it seems to me--as, I suspect, it does to my noble friend Lord Astor--that there is a problem with WFTC. As we have been told over and over again by the Minister, this replacement benefit is to be paid by the employer through the wage packet. That is all well and good if the employee is working but, by definition, the people that the amendment seeks to address are not working continuously for the full period of their award. Two questions therefore arise. First, who is to pay them when they are not working? Secondly, should the same payment method be used throughout the award? I beg to move.

Lord Astor of Hever: My Lords, I support Amendment No. 26, which stands in my name and that of my noble friend Lord Skelmersdale.

My noble friend referred to my Committee stage amendment on agricultural workers, which covered casual and part-time workers. Although I did not move it-- much to the disappointment of the noble Baroness--I agree with my noble friend that the method of payment for short-term casual workers is unsatisfactory. I have in mind such people as agricultural seasonal workers who come and go throughout the year. The NFU has pointed out that paying the WFTC through the pay packet will involve farming employers having to keep signing their workers on and off the payroll, which will be an administrative nightmare. Other examples of workers with intermittent employment are seasonal packers for clothes, Christmas Post Office workers, waiters (in some cases) and shop workers taken on for busy periods.

The replacement benefit is to be paid through the wage packet. I agree with my noble friend that that will be fine if the employee is working. But, as he said, the people the amendment seeks to address are not working continuously for the full period of their award. I look forward to the Minister's reply to my noble friend's questions, particularly on who is to pay employees when they are not working.

10 p.m.

Lord Swinfen: My Lords, I wish to support the amendment. As the Bill stands, it will be impossible for employers to take on casual workers, very often for only a few days at a time. The noble Baroness the Minister shakes her head. She will no doubt put me right when she rises to reply to the amendment, or perhaps her

24 May 1999 : Column 743

noble friend will do so. The amendment is purely a matter of practicality. I hope that the Government will either give a satisfactory explanation or accept the amendment.

Lord McIntosh of Haringey: My Lords, this is not what my brief says, but I think that the amendments are intended to be helpful. I am quite sure that they are. However, I am sorry to say that they strike at the heart of what we are attempting to do and would have perverse effects which would be undesirable.

We recognise that in practice some employees on very short contracts may well find that they are paid their tax credits direct by the Inland Revenue rather than through their employer. I shall come on to show how that will be the case and the examples given by noble Lords are relevant to that. But that will happen because their particular circumstances make the payment by the Inland Revenue the only sensible approach. It does not mean, as the amendment would provide, that all employees on short contracts must be paid directly from the Revenue. Perhaps I may repeat the arguments for paying working families' tax credit and disabled person's tax credit through the payroll.

The employer scheme will reinforce the message that tax credits are a reward for work. It will emphasise tax credits as part of the tax system and will help to break the link with benefits, thus reducing the stigma of claiming in-work support. So we should not be looking for ways of excluding any category of employee from the scheme. In particular, since the tax credits scheme is a work incentive measure, it seems perverse to try to exclude all employees on short-term contracts. For many of these people, a short-term contract may be the first step on the employment ladder. These are just the people we are anxious to encourage to stay in work and move up the earnings scale rather than relying on out of work benefits.

Of course, as noble Lords have said, many employees on short-term contracts are casual, part-time or seasonal workers, but many of them will have their contracts renewed. Indeed, we hope that will happen frequently. For those employees, payment through the payroll will be the norm. I can assure noble Lords that the tax credit scheme has been carefully designed with the interests of tax credit recipients in mind. Although payment through the payroll will be a key feature of the scheme, the Inland Revenue will never ask an employer to pay tax credits unless we can ensure that entitled employees receive their tax credits on time and without hassle.

Two conditions will have to be met before employer payment is instigated. First, the Revenue will give employers adequate time to adjust their payroll before they can start paying tax credits--14 days in respect of weekly paid staff and 42 days for all other cases. Secondly, no employer will be asked to pay working families' tax credit or disabled person's tax credit unless there is time for at least three tax credit payments before the end of the employee's tax credit award period or the end of the employment contract, if earlier. That means that a very substantial number of the cases to which the amendment refers will be paid by the Inland Revenue.

24 May 1999 : Column 744

The point of setting these conditions is not only to make things as convenient as possible for employers but also to ensure that we do not jeopardise the prompt and efficient delivery of tax credits to employees who are entitled to them. In the case of employees on contracts lasting less than 10 weeks, there may not be time for the Inland Revenue to ask the employer to pay tax credit. In that case, the Revenue will pay the employee direct throughout the 26-week tax credit award period. The tax credit scheme, therefore, already adopts a pragmatic approach which will ensure that payment via the employer will not be attempted when it would clearly be inappropriate. What I have just said about it being through the 26-week period deals with the issue raised by the noble Lord, Lord Skelmersdale, about the period in which the employee is not an employee; in other words, when he is not working. A special provision in the Bill would be quite unnecessary. In the light of what I have said, I hope that the noble Lord will feel able to withdraw the amendment.


Next Section Back to Table of Contents Lords Hansard Home Page