Clause 2 - Functions of board

Part of Tax Credits Bill – in a Public Bill Committee at 11:15 am on 15 January 2002.

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Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs 11:15, 15 January 2002

I beg to move amendment No. 3, in page 2, line 9, leave out subsection (2).

As the Committee is aware, the clause brings the management of the new tax credits under the Inland Revenue and confers the same management discretion that the Inland Revenue has on other matters. Does that mean that the Inland Revenue will have greater discretion generally than the Department for Work and Pensions with respect to social security benefits?

The real point addressed by amendment No. 3 is that the primary objective of the arrangement is to cook the nation's accounting books. In the back of the Bill's explanatory notes, it is pointed out that a further £4 billion of the existing child-related expenditure and jobseeker's allowance expenditure of the Department for Work and Pensions will be transferred to be booked as a reduction in tax revenue rather than expenditure. If benefit levels are as anticipated to ensure that nobody is worse off, there will be a further £2.8 billion of expenditure. That will bring the total welfare expenditure that is netted of tax revenues rather than booked as expenditure to £15 billion. That is a substantial distortion of national accounting.

Will the national accounts—the Red Book—show that expenditure clearly, or will it appear as only netted of tax revenue? How did the Government satisfy themselves that the arrangements are not in

breach of section 95 of the European standards of accounting?

The Minister responded to an amendment tabled by the Liberal Democrats to say that one particular benefit definitely will be cast as a family benefit. If the Government argue that we are discussing tax measures rather than welfare measures, how can they have their cake and eat it on the European Union requirements?