Tax Credits Bill |
12. The bill introduces Working Families' Tax
Credit and Disabled Person's Tax credit which replace Family Credit
and Disability Working Allowance benefits. These tax credits will
be introduced from 5 October 1999 and will be paid by the Inland
Revenue until 6 April 2000. Thereafter employees will be paid
through the pay packet while the self-employed will continue to
be paid by the Revenue.
13. The bill operates on the existing social
security legislation and transfers functions to the Treasury and
the Inland Revenue. The bill creates some delegated powers (discussed
below) and transfers existing powers. The latter are discussed
at some length in the Department's memorandum and the Committee
has not found it necessary to report on them further. The bill
does not alter the existing provisions for Parliamentary control
and the change of subject matter is not such as to raise issues
as to the appropriateness of using delegated powers to make the
New Delegated Powers
14. There are new delegated powers in clauses
3(4), 6(2), 11(2)(c) and 15. These are all subject to negative
procedure and are discussed in the memorandum. We comment on Clause
6(2) and Clause 15 in the following paragraphs, and consider that
the other powers deal with matters which it is appropriate to
regulate by subordinate instrument.
15. Under Clause 6(2) the Board of Inland Revenue
shall make regulations with respect to the payment of tax credit
by employers. This power includes provision for the recovery of
overpayments of funding to employers and the calculation and payment
of interest on amounts due to or from the Board. Clause 6(3) specifies
that regulations made under this section may make provision for
different cases and circumstances.
16. This is a wide-ranging power with considerable
administrative and financial implications for employers, including
small employers. The House may wish to consider whether the bill
should be amended to provide for the affirmative procedure to
apply on the first occasion that the power is exercised.
17. Clause 15 is described in the memorandum
as enabling the Secretary of State to establish by regulations
"a new category of childcare provider, the cost of which
will be taken into account when calculating the maximum of the
new credits". The Explanatory Notes are a little fuller and
explain that regulations will establish a scheme under which the
Secretary of State will select organisations to be "accredited
organisations" eligible for grants or loans under the scheme;
these organisations would approve childcare providers (and charge
them reasonable fees for considering their applications for approval).
Clearly this is a wide power but it is difficult to maintain that
the substantive provisions should be in the bill. There will need
to be a great deal of detail and there is also a need for flexibility
(the clause contemplates "different provision for different
cases or circumstances or for different areas" and allows
regulations to delegate the power to determine criteria) and ultimately
the issue is whether charges for providing childcare are to be
accepted for tax credit purposes. The bill provides negative procedure.
18. In view of the width and significance
of the power the House may wish to consider whether the bill should
be amended to provide for the affirmative procedure to apply on
the first occasion that the power is exercised.
19. The Committee has suggested that the bill
should be amended to provide for the affirmative resolution procedure
to apply on the first occasions that the powers in clauses 6(2)
and clause 15 are used. There is nothing else in the bill which
the Committee wishes to draw to the attention of the House.
5 Explanatory Notes, page 6. Back