Clause 33 - Offence of fraud
Tax Credits Bill
2:00 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
As we are also debating clause 33 stand part, I want to raise the wider point of concern that the Bill will lead to a great deal more fraud and questionable behaviour. I do not intend to repeat the formidable arguments advanced by the right hon. Member for
Birkenhead (Mr. Field) on Second Reading, which I am sure that he will repeat on Report and Third Reading. I hope that there will be more opportunity to comment on the subject in relation to new clause 13.
We have learned and understood that in the interests of continuity several requirements in the administration of tax credits will be relatively fuzzy. The Financial Secretary told us that he sees the complexities as being analogous to those of a television, in that people will be able to switch on their entitlements without understanding how the system works. However, it has been a sound tradition of Anglo-Saxon law to try to achieve maximum legal clarity so that people know whether they are on the right or the wrong side of the law. As the Paymaster General will know, I have on many occasions argued against the dangers of bracketing or muddling together tax evasion and tax avoidance. Where that has happened in continental Europe, notably in Germany, it has led to widespread social condoning of tax evasion. That is why the Germans wanted the withholding tax.
There are grey areas in the Bill. For example, it is not clear whether overpayments will be refunded or to what extent the Inland Revenue will be able to be more rule-driven about people's entitlements, and people will not be required to undertake formal reporting of their circumstances. I fear that that will lead to the kind of fuzziness that leads people to condone actions that are not wanton fraud but are slightly over the line. That is apart from the possibilities for fraudulent collusion between employers and employees that worry the right hon. Member for Birkenhead. We risk encouraging such behaviour if we try to make arrangements that are not too onerous for claimants who may not want to—or even be able to—deal with a more demanding regime.
That brings me back to negligence and fraud. For the reasons that were given, I agree that it is wrong to bracket the two. Apart from the danger that claimants will not really know what they are entitled to, as people learn the ropes they will develop bad habits. They will find out what the Revenue does not check or investigate and develop wheezes such as the child care providers wheeze described by the hon. Member for Northavon. The machinery needs to be much tighter. Perhaps this is only a framework Bill providing for various regulations that will ultimately achieve that. However, the explanations of the Government's intentions that we have heard so far have led me to catch a nasty case of unease from my hon. Friend the Member for Hertsmere.
The practices that may develop are not of a wickedly fraudulent nature or liable to send their perpetrators to prison, but wheezes that are wrong in themselves, cost the taxpayer a lot of money and lead to further clouding of the sound Anglo-Saxon approach of precision regarding what is within or not within the law.