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Baroness Hollis of Heigham: I entirely share that view. The noble Lord has essentially returned to the points made by his noble friend about the nature of tax credits and whether it is right for them to be the vehicle for providing support to those outside the traditional tax system. The noble Lord is absolutely right that there is considerable mobility between those in and out of work, particularly for the families who are going to be enjoying this support. We are talking about people who are probably in the next to bottom quintile of the income range—those in the bottom quintile are likely to be on benefit. These are people whose work is precarious, who very often find their hours reduced, who may well find themselves made redundant and whose partner may or may not be able to go to work as a result. They are families who move in and out of work and need to deal as far as possible with one system. It will be handled by the Inland Revenue. Clearly, anyone who is currently on IS or JSA will be able to get access to this information through Job Centre Plus, so an integrated service is being provided.

The proposition lying behind the argument of the noble Lord, Lord Saatchi, would bifurcate—cut right through the middle of—our overriding aim of integrating out-of-work and in-work support and thus dealing with both family poverty and the move into the labour market.

Clause 2(1) brings tax credits under the care and management of the board. This means that the board will be able to appoint people to administer tax credits and will be responsible for accounting for them. It derives from the Inland Revenue Regulation Act 1890. The concept of care and management cannot be applied to the Department for Work and Pensions

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because it does not have a parliamentary remit, so the amendment is technically flawed, although that should not perturb us particularly, as it is a probing amendment.

The more fundamental point is that the amendment would cut across our aim of achieving a single framework of support. The majority of those who will be eligible for tax credits will already be customers of the Inland Revenue, because they receive WFTC, DPC, DPTC or children's tax credit or are taxpayers. They are already relating to the Inland Revenue as they receive this through their wage packets. In the new system, the same framework will also apply to families with children in which the adults are out of work or do not currently qualify for income-based support. Those are the key features of the new system, which seems to have been widely welcomed.

I could go into technical detail about the board and so on, but we are going back to the bigger issue behind the Bill: whether we should try to separate out support for those in work and support for those not in work, with one being dealt with by the Inland Revenue and the other by DWP. The whole point of the Bill is to bridge that divide, which can impede people trying to make rather a risky journey from being out of work to being in work. I hope that with that explanation the noble Lord will not seek to pursue his amendment. I am happy to try to give him more technical information about the specific responsibilities of the Board of Inland Revenue, but he was probably after the bigger point.

The noble Lord also raised a point about numbers. I am sorry if I did not reply as fully as he would have liked to his letter. In a sense, I thought that I had given some of the statistics to his noble friend. About 10 to 11 per cent of the money going on the new tax credits will score as negative tax. I gave those figures on an earlier amendment. The rest of it will therefore be scored as public expenditure, out of a total cost of nearly £15 billion for CTC and WTC put together. I thought that I had answered that point in my reply earlier when I suggested that we bank those statistics, but if I am able to help the noble Lord any further, I shall certainly do my best.

Lord Saatchi: As much as anything else, I was seeking information with this amendment and I am grateful to the Minister for what she has said. Did I correctly hear her say that the total cost of tax credits was £15 billion?

Baroness Hollis of Heigham: The total cost of family support through the CTC and WTC together is nearly £15 billion. The additional support over and beyond the current system is about £2.7 billion.

Lord Saatchi: I am grateful to the Minister for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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The Deputy Chairman of Committees (Lord Burnham): Before I call Amendment No. 13, I have to tell your Lordships that if it is agreed, I cannot call Amendment No. 14.

Lord Higgins moved Amendment No. 13:


    Page 2, line 9, leave out subsection (2).

The noble Lord said: I shall speak also to Amendment No. 14. I understand very well the issue of pre-emption that has just been explained. Amendment No. 13 would delete the whole subsection. The argument is to some extent focused by the reference to "gross" in Amendment No. 14.

We are somewhat puzzled by this provision, which seems to us to be potentially open to dispute. It suggests that the section of the Exchequer and Audit Departments Act 1866, which refers to gross revenues being paid into the Exchequer, is suddenly, after a century and a half,


    "to be construed as allowing the Board to deduct payments for or in respect of tax credits before causing the gross revenues of their department to be paid to the account mentioned in that section".

The Act seems to have survived pretty well without this provision for 150 years or so. If I understand it correctly, it enables the Treasury to pay into the Exchequer less than the amount that it would pay under the provisions of the 1866 Act. I am particularly puzzled by the words,


    ""before causing the gross revenues of their department to be paid".

I would have thought that, if you deduct payments for and in respect of tax credits, the amount you are paying in is not the gross amount but the net amount. I simply do not understand why the term "gross amount" is used in this context. I beg to move.

Earl Russell: Is that provision of the Bill simply the reverse of what was normal practice in the Exchequer before 1640? It had both advantages and disadvantages, but usually the advantages outweighed the disadvantages.

Baroness Hollis of Heigham: I was promptly provided with a page or two of the 1866 Act to see whether the noble Lord and I would have a debate about how we construed it, but we would certainly have to ask the noble Earl, Lord Russell, to umpire.

I believe it is fairly straightforward. Amendment No. 14 would change the reference to accounting for gross revenues under Section 10 of the 1866 Act to a reference to "net revenues". It is simply drafting. The reference to "gross revenues" is necessary to bring tax credits into the ambit of that legislation, under which the Inland Revenue and Customs and Excise account for the money they have collected. We cannot refer back to the Act of 1866. While it is true to say that the receipts paid to the Exchequer by the board will be net of tax credits—that being the point of subsection (2). The use of the term "gross revenues" is a drafting device to ensure that the cross-reference to Section 10 of the Exchequer and Audit Departments Act 1866 works. A reference to net revenues would be meaningless in this context because there is no such

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reference in Section 10 of the 1866 Act to which a drafting device could link. With that explanation, I hope that the noble Lord will be able to withdraw his amendment.

Lord Higgins: While we have the greatest respect for the draftsmen—qualified a little on our earlier proceedings—I see the point made by the noble Baroness. Having said that, however, surely it would be possible to devise some other form of words which would amend the 1866 Act. Perhaps it would be better to amend it rather than simply to say it should be construed. It could be amended in a way which would enable the board to deduct the payments for the tax credits. However, if the tax credits are to be deducted, then the amount which will be paid in is a net amount and not a gross amount.

I take the point on drafting made by the noble Baroness, but I say simply that it is not an accurate way of drafting this. The 1866 Act should be amended rather than construed. Then the amount that will be paid in will be a net amount and not a gross amount. I can see that there may be some problem because it may be that other departments are paying in gross amounts, but the reality is that this department will not be paying in a gross amount. It will be paying a net amount after the deduction of the tax credit, as is made perfectly clear in the clause.

Baroness Hollis of Heigham: If the noble Lord is making a point about the drafting, I am sure he is correct and I would be happy to follow up the point by writing to him about the implications of seeking to do as he suggests; that is, retrospectively to amend or consolidate—I do not know what would be required here—the wording in the 1866 Act.

However, a different point can be made here which concerns whether people know what is happening by the use of this phraseology, as opposed to why it is being deployed. That point concerns transparency and accountability to Parliament. I believe that Clause 2(5) should address any of the noble Lord's concerns on that. It requires the Inland Revenue to set out accounts for tax credits, distinguishing the amounts for each tax credit. That is a more rigorous procedure than that undertaken in respect of voted money.

I can develop that argument but, if the noble Lord is concerned that we are concealing what is happening, then that is not true. If he acknowledges, however, that we need this as a drafting device but wonders whether there is some other way of approaching it, I would be perfectly happy to follow that up in writing.


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