Clause 10 - Entitlement
Tax Credits Bill
4:15 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
The 16-hour rule will carry forward, with regard to the working families tax credit and disabled person's tax credit, and we are looking closely at how to measure that across the year,
so that people do not fall in and out of categories, which might happen in some cases.
During the consultation process, we received representations in favour of varying the 16-hour rule, but we are not prepared to do that. However, the annual assessment could be tailored to give some latitude, with regard to the calculation of hours.
It is important to get that matter right. With regard to the current tax credits, the calculation of hours is rigidly fixed. We do not think that that is appropriate. We are examining ways in which the new tax credits might address that calculation more flexibly, because—for example—people's hours could fall and then rise during the course of a year, so that their annual average would be high enough to reach the 16-„hour rule, and it would be difficult to explain why they did not qualify. However, we also need to ensure that changes to the rule will not cut across any employment rights, such as contributions. We have nearly achieved our aims in that regard.
It is true that the introduction of the new tax credits gives us the opportunity to make matters smoother. We might be able to help certain groups, such as people who have a chronic disability, and whose health deteriorates, resulting in a reduction in their hours, but who subsequently return to the labour market; that variation will not be reflected in their hours across the year.
I cannot be more specific about such matters at the moment, but the new regulations will not be as rigid as they are in the current arrangement. The annual assessment gives us more room for manoeuvre, and it helps with administration, because it will be easier to understand.
Question put and agreed to.
Clause 10 ordered to stand part of the Bill.