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Lord Higgins: The interesting question is whether the transition arrangements will continue permanently. In effect, these proposed changes reflect the move away from the Department for Work and Pensions to the Treasury. As the Minister has rightly pointed out, considerable criticisms and reviews are taking place so far as the review system or the Treasury itself is concerned. The Bill will come into effect, so to speak, at the point the arrangement into which the system is being transferred is itself generally regarded as not being satisfactory.

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The Minister referred to the general commissioners. It would be helpful if she would distinguish between the general and the special commissioners. I presume it does not involve the special commissioners as far the tax credit system is concerned.

The appropriate question here is this: given that 90 per cent of what we are dealing with here concerns payments of benefits, while in broad terms only 10 per cent could reasonably be regarded as a genuine tax credit—that is, a deduction against tax that would otherwise be paid—would it not be more appropriate not to have these transition arrangements and thus not eventually to shift the system on to the Inland Revenue system, which is already deficient and may well not be ideal when the review is completed? Should it not remain within the social security or work and pensions appeal systems rather than move to the Inland Revenue system?

In particular, I ask how much more rigorous—from the point of view of an individual who may be on low income and dealing normally with work and pensions—is it going to be for him to go to appeal to the special commissioners? The atmosphere is probably not as user friendly, since usually they deal with highly technical matters, as the existing appeals procedure for social security matters. Since there are others in the House who are far more expert on such matters than I am, and perhaps other colleagues, we shall probably need to return to this on the Floor of the House. If the noble Baroness will clarify the situation on those points at this stage it would be helpful.

Baroness Hollis of Heigham: I am not sure that I can help the noble Lord but I shall write to him about special and general commissioners. I dispute the assumption behind his remarks that 90 per cent of the payments are really benefits and therefore should remain with DWP in perpetuity. We are anxious that they should be regarded as part of the seamless way in which people move out of work; into work; they move up the income ladder; they may continue to receive just the family element for a large swathe of their income and then fall back again.

We are anxious that they should move and, given that the Inland Revenue is administering the whole of the tax credit range, it is right that, if at all possible, the administration of the appeals should also move over to the Inland Revenue. However, given that the Inland Revenue is in the process of reviewing its current structure of appeals and given that there are more profound questions about the integration of the appeals system across Whitehall, it seemed sensible to continue the current arrangements that apply to WFTC for at least a transitional period. How long that transitional period will be I cannot say, but I would expect them to come within the responsibility of the Inland Revenue as soon as those considerations have been resolved.

Lord Higgins: Is the end of the transitional period to be determined by positive or negative resolution?

Earl Russell: Before the Minister replies, I entirely agree with her about the inappropriateness of dividing

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it into 90 per cent benefit and 10 per cent tax, or vice versa. It reminds me of the times when people say that a child takes 90 per cent after his father and 10 per cent after his mother, or vice versa. It is the sort of thing that is only said during a quarrel and is usually regretted afterwards.

Baroness Hollis of Heigham: As on so many points in the Bill, I entirely agree with the noble Earl, Lord Russell. I cannot help the noble Lord, Lord Higgins, about how long the transitional period may be, but the changes would certainly be introduced by negative regulation.

Lord Higgins: So we would not automatically have a chance to debate them.

Baroness Hollis of Heigham: Noble Lords can choose to debate them if they so wish. All negative resolutions are in that sense available to your Lordships. This is not an uncommon transitional arrangement.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendments Nos. 121 and 122:


    Page 13, line 46, leave out from beginning to "is" and insert "Where the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year has been enquired into under this section, it"


    Page 14, line 3, leave out from "a" to end of line 5 and insert "tax year is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year."

On Question, amendments agreed to.

Clause 18, as amended, agreed to.

Clause 19 [Decisions on discovery]:

Baroness Hollis of Heigham moved Amendment No. 123:


    Page 14, line 9, leave out "an award of a tax credit made to him" and insert "his entitlement to a tax credit for a tax year"

The noble Baroness said: In moving Amendment No. 123, I shall speak also to Amendments Nos. 124 to 135. Again these are consequential technical changes to Clause 19. In other words, going back to my original schema, they are substantially about splits between decisions and notices. They also imply readjusting the terminology of "awards" and "entitlement". I hope that, with those assurances, the Committee will feel able to accept the amendments.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendments Nos. 124 to 135:


    Page 14, line 10, leave out "amend or revoke the award" and insert "revise that decision"


    Page 14, line 40, leave out "amendment or revocation" and insert "decision"


    Page 14, line 41, leave out "correctness of the award" and insert "person's entitlement"


    Page 14, line 46, leave out from first "to" to "is" in line 47 and insert "the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year"

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    Page 15, line 1, leave out from "on" to end of line 4 and insert "the part of the person, or of either of the persons, or on the part of any person acting for him, or either of them,"


    Page 15, line 5, leave out "amend or revoke the award" and insert "revise that decision"


    Page 15, line 6, leave out "amendment or revocation" and insert "decision"


    Page 15, line 7, leave out "correctness of the award" and insert "entitlement, or joint entitlement,"


    Page 15, line 10, leave out "award" and insert "conclusive decision"


    Page 15, line 11, leave out "an award" and insert "the entitlement of a person, or joint entitlement of persons, to a tax credit for a tax year"


    Page 15, line 12, leave out "17(6) or (8)" and insert "(Decisions after final notice)(1), (5), (6) or (9)"


    Page 15, line 19, leave out from third "a" to end of line 21 and insert "tax year is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year."

On Question, amendments agreed to.

Clause 19, as amended, agreed to.

Clause 20 [Decisions subject to official error]:

Baroness Hollis of Heigham moved Amendment No. 136:


    Page 15, line 24, leave out "17(6) or (8)" and insert "(Decisions after final notice)(1), (5), (6) or (9)"

The noble Baroness said: This is a technical amendment which refers directly to the separation of decisions and notices. I beg to move.

On Question, amendment agreed to.

5.30 p.m.

Lord Freeman moved Amendment No. 137:


    Page 15, line 26, at end insert ", provided that the effect of the regulations shall not be more restrictive than would be the case if Extra-statutory Concession A19 were to apply"

The noble Lord said: There has been a great deal of running between legislative wickets over the last few minutes. Perhaps I can deal with something that is not a technical point and pause for breath.

As the Minister will appreciate, Clause 20 is unique in the sense that in tax law there is no reference to an official error and therefore some tax history will be written if we pass this Bill.

There is a clash of two cultures here. As the Minister will understand better than most, in social security legislation the regulations deal with detail, almost exhaustively. In tax law, the extra-statutory concessions amount in total to several Finance Bills put together. They are not submitted to Parliament. They may be commented upon but they do not pass through Parliament.

Perhaps I may give the noble Earl, Lord Russell, an example of an extra-statutory concession which he will not find written down in regulations. When he is completing the tax return to which he referred earlier, is he allowed to deduct the bus fares from Parliament,

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one place of work, to his publisher, another place of work, and offset the bus fares against the royalty income for the preceding year?


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