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Baroness Hollis of Heigham: My Lords, we cannot be sure. Given the new methods and procedures, we hope to obviate the need for a number of the appeals held. I refer to what we call the meritless appeals in the sense that they cannot succeed, as well as those appeals based on the resolution of difference which can be achieved by negotiation. We hope that as the number of appeals will be reduced, those appeals heard will be handled more expeditiously because we shall have a better deployment of staff. Some appeals on matters of fact can go to a one-member tribunal. Others which require perhaps complicated medical evidence can go to a two or three-member tribunal. If one puts those two factors together, one sees that they should speed up the hearings, reduce the costs of the system and allow for far more disputes to be resolved without going through the appeals procedure. That was the purpose of last year's DMA Bill.

I shall write to the noble Lord on the costs of the service. We expect the workload to fall in consequence over time.

I have gone into those factors at some length because I thought that the purpose of the noble Lord's amendment was to make sure that the appeals system is expeditiously handled, as we all want. But the noble Lord's amendment would not achieve what he intends. The amendment is about funding. The DSS will be responsible for funding the appeals service. Similarly, the Lord Chancellor's Department is responsible for funding the tax appeal commissioners. In both cases, the adjudication of appeals against penalties under Clause 9 will be one of the tribunal's duties taken into account in ensuring that this work can be carried out efficiently. The financing of that work is one aspect of that planning process. That will be so, regardless of the amendment.

If the amendment were accepted, the cost of appeals against penalties under the clause would have to be separately identified funding agreed with the Treasury. That work would carry its own costs. So it feeds on itself, if I may put it that way. Given that the work would be taken into account in planning the work of the two tribunals, there would be no advantage for appellants if the amendment were accepted.

I hope that I have answered the noble Lord's substantive point that we expect the new DMA to kick in during the second part of 1999, which will reduce the pressure on the appeal system. The amendment does not achieve that. It requires a separate costing to be identified by the Treasury and separate analysis to be undertaken for that purpose. It will not help the length of time taken to hear appeals.

For that reason, we cannot accept the amendment. It is an unnecessary complication. I suggest that the noble Lord does not pursue it further.

Lord Higgins: My Lords, we are grateful for the Minister replying to the amendment which I did not

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move. It was probably the amendment I intended to move in the first place! Be that as it may, I am still not clear whether the budget will be cut. The noble Baroness may wish to intervene in my remarks, but in just one second.

Secondly, in the light of our discussions on the Social Security Bill last year, one remains concerned about some aspects, in particular single member tribunals. I drew to her attention safety risks, where particular social security claimants may be rather less stable than others who appear in front on them. But that is a broad issue I do not want to go into again. Perhaps we could know whether the budget is cut or not.

Baroness Hollis of Heigham: My Lords, forgive me, but I believe that I said three times that we are reviewing the total budget in the light of the expected work patterns. If I have further information on that, I shall write to the noble Lord.

Lord Higgins: My Lords, I am most grateful for that reply. We have the estimated budget as it stands. Presumably, as is normal in the Treasury, that is set in concrete. But if it is to be reviewed we should welcome that and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins moved Amendment No. 28:


After Clause 9, insert the following new clause--

DISCHARGE OF FUNCTIONS BY OFFICERS

(" . The Chancellor of the Exchequer shall each year lay before each House of Parliament a report relating to the discharge by officers of the Board of their functions under section 9 and Schedule 4.")

The noble Lord said: This is a probing amendment in relation to the Bill and the discharge of the department's responsibilities with regard to fraud and so forth. The proposal is that each year the Chancellor shall lay before both Houses a report relating to the discharge by officers of the board in relation to their functions under Clause 9 and Schedule 4. Obviously, it is important that there should be accountability as regards these officers and it seemed appropriate to suggest that such a review would cover the point.

As I said in regard to the earlier amendment, there is concern about work that is being done in relation to fraud and the appropriate ways in which that could be considered. I beg to move.

Lord Swinfen: My Lords, will there be an annual report of the amount paid out under working families' tax credit and disabled persons' tax credit so that those of us who wish can add it to the amount paid out under social security benefit?

Lord McIntosh of Haringey: My Lords, in case I forget to answer the noble Lord, Lord Swinfen, I shall do so at the outset. Yes, of course there will be a report on the amount paid out, but it would be illegitimate of the noble Lord to--no, he can do what he likes with the figures! Of course he can.

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Amendment No. 28 relates to Clause 9 and Schedule 4 to the Bill. Clause 9 sets out the penalties to be imposed on individuals who receive excessive payments because they have not told the Inland Revenue the truth about their circumstances and on employers who refuse or persistently fail to make payments, or who fraudulently or negligently pay or receive the wrong amounts. For the vast majority of honest individuals and employers, these provisions are totally irrelevant.

However, it will be an important part of the Inland Revenue's duties to identify and take action against the minority who abuse the system. Schedule 4 relates to the penalties concerned. Of course we agree with the movers of the amendment that it is important for Parliament to be informed each year of the way in which the Inland Revenue is performing its new responsibilities for administering the tax credits.

Before I leave the point about the way in which the revenue is performing its new responsibilities, perhaps I may return to the response I gave on Amendment No. 16. I gave the House assurances about other targets; for example, aiming to process fast-track claims in the same way as the Family Credit Unit does currently--within five days with rapid payment thereafter. I may have given the impression, wrongly, that that could apply across the board, which is not what happens at the moment and could not happen in the future. However, I hope that your Lordships were pleased to hear that we shall aim to maintain the fast-track process for new claims from employees.

I return to the reporting procedures. The Board of the Inland Revenue lays before Parliament each year a report on its aims, targets and performance against those targets for all of its work. The board's report to Parliament already includes details of compliance activity and the board would expect to include details in respect of the new tax credits in a similar way. The Government are considering which targets will provide the best measure of the performance of the department in all aspects of the administration of the new tax credit. I assure the House that the concerns raised in the debate on this amendment and on earlier amendments will be taken into account in that process. The targets and measures will be included in the board's annual reports from next year. Therefore, there is no need to make an additional report to Parliament.

On earlier amendments, I heard complaints about the number of reports which are produced. It is the Government's responsibility to produce reports, particularly when encouraged to do so by the Opposition. But we cannot ensure that noble Lords and anybody else read the reports which are produced. With the assurance that the existing reporting arrangements are sufficient, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Higgins: My Lords, the House will be grateful to the Minister for that response. It is not just a question of individual Members reading the reports. It is a question also of Select Committees and so on scrutinising them. As I said earlier, that degree of

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scrutiny has improved considerably over the years. However, in the light of what the Minister said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 [Disclosure of information]:

Lord Higgins moved Amendment No. 29:


Leave out Clause 12

The noble Lord said: My Lords, this amendment relates also to Schedule 5 with regard to the disclosure of information. I wish to make one broad point. Over the years, much concern has been expressed about disclosure of information between government departments. Some years ago now, we tightened the rules considerably. In any event, exchange of information between the Revenue departments and elsewhere in government were subject to fairly tight controls on the basis of disclosure being permitted only at a reasonable level within the Civil Service. That was an important form of Chinese Wall, I suppose one might call it, to ensure that people had confidence that the information provided to the Revenue would remain confidential and not be used in a context different from that within which it had been provided.

The problem is that, in effect, the Revenue is taking over another government department. To that extent, one presumes that everything which was previously restricted from disclosure between the Inland Revenue and the Department of Social Security will no longer be so because it will all come within the Inland Revenue.

Can the Minister say whether that Chinese Wall is effectively being demolished by the takeover of the Revenue of this aspect, and indeed a number of others, of the Department of Social Security, or whether there will be some restraint on transfer of information between what used to be two separate departments?

10.30 p.m.

Baroness Hollis of Heigham: My Lords, we were slightly baffled as to what the noble Lord was proposing with the extraction of Clause 12. We could hardly think that he was in favour of confidentiality that allowed for people committing fraud to get away with it, and so on. However, we presumed it was a probing amendment, as indeed is the case, in order to find out the guidance or self-regulation under which the Inland Revenue will work. I am happy to attempt to give the noble Lord the explanations or descriptions he seeks.

The clause is entitled, "Disclosure of Information" and needs to be considered against the backdrop of the Inland Revenue's rules on confidentiality. The Revenue has a strict legal duty of confidentiality to ensure that information about a person's tax affairs is not disclosed to any third party except for the purpose of its duties or as otherwise required by law.

The Revenue places a high priority on the preservation of confidentiality regarding people's tax affairs. It wants to ensure that the same strict legal rules on confidentiality are also applied to tax credits. That is what Clause 12 provides. It brings the tax credit functions within the Revenue's strict legal rules about

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disclosure of information. It will ensure that information about tax credits is kept as securely as any other tax information.

The disclosure of any information received or held by the Revenue and its officers, or any person providing services to the Revenue, is subject to the sanctions set out in Section 182 of the Finance Act 1989. That may be what the noble Lord was referring to. That section makes any unauthorised disclosure of information a criminal offence punishable by imprisonment or fine.

This clause amends Section 182 so that it also applies to information relating to tax credits. Therefore the Revenue's confidentiality rules will apply to this. I hope noble Lords will agree that it is essential to keep that information confidential and that they will support the provision. This is, indeed, what the Act does. I do not believe there is any difference between us on this.

The other part of the clause contains provisions on exchange of information. As I have explained, the Revenue operates under strict rules of confidentiality. Information is only provided outside the department through statutory gateways.

Therefore, if there are to be exchanges of information between the Revenue and another department, that needs to be provided for in legislation. After October 1999 and the introduction of WFTC and DPTC, the units dealing with tax credits will need to exchange certain information with the DSS in order to carry out their respective functions. They will also need to exchange information with local authorities, which administer housing benefit and council tax benefit, to enable those authorities to calculate correctly the level of benefits, avoid duplicate claims and continue their compliance activities, as established under legislation relating to fraud introduced by the previous administration, with a fair degree of support from our side.

We have therefore provided, in Schedule 5, for exchange of information between the Revenue, DSS and local authorities in relation to social security benefits, child support, war pensions and tax credits. The provisions are on similar lines to those already enacted in the Social Security Contributions (Transfer of Functions, Etc) Act 1999 for the merger of the Contributions Agency with the Revenue.

It is important to emphasise that the changes in this clause and schedule with regard to exchange of information do no more than allow the Revenue, DSS and local authorities continued access to information that is essential for carrying out their respective functions. This reflects the fact that because WFTC replaces family credit, the functions relating to FC are being transferred to the Revenue, but the connection with the DSS will need to be maintained.

It is important also to note that the schedule clearly provides that information exchange between the Revenue and the DSS can only be used for the purposes of their respective specified duties.

The effect of the amendment would be that such essential exchanges would not be possible. That would affect not only the effective administration of WFTC and DPTC but would also make it extraordinarily difficult to administer child support, war pensions,

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housing benefit and council tax benefits if the existing exchange of information was not carried through to the Inland Revenue.

I hope that has given the noble Lord a description of what Clause 12 does and how necessary it is. The Inland Revenue needs to continue the existing arrangements that the DSS has, both with other sections of the DSS and with local authorities if what were benefits and are now to become tax credits are to be effectively administered.

I hope the noble Lord will be satisfied on those two points: first, the strict duty of confidentiality which has been tightened up, and the Chinese Wall principle that has been maintained; and, secondly, that the exchange of information that will continue is no more or very little more than that which currently operates under family credit. However, because the Inland Revenue is taking over, it needs to keep these gateways. I hope on both those counts the noble Lord will be satisfied and withdraw his amendment.


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