Select Committee on Delegated Powers and Deregulation Twelfth Report

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 necessary provision.

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.

Clause 6(2)

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.[5]

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.

Clause 15

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

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