Clause 6 - Notifications of changes of circumstances

Part of Tax Credits Bill – in a Public Bill Committee at 6:30 pm on 15 January 2002.

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Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury 6:30, 15 January 2002

I am afraid that I shall disappoint the hon. Member for Northavon. After the dawn comes the deep, deep dusk, and not a hint or shaft of light shall I cast on the issue of thresholds. There will be no

ball-park figure revealed by anything that I say. Those matters are entirely for the Chancellor. In due course, the gloom will be dispelled and all will be revealed, but I shall not be doing it.

I shall address the principle that underlies the hon. Gentleman's contribution. I am interested in the line that the hon. Member for Arundel and South Downs is taking, and I can see exactly where he is coming from. Time will tell, but we believe that the system that we have unveiled will be able to deliver without the modifications that have been suggested. It is a matter of judgment and experience, and it will be interesting to see what emerges, but I am confident in the system that we propose.

One reading of the amendment suggests an apparent misunderstanding of clause 6 and a misreading of its purpose. Clause 6 is concerned with changes in non-financial circumstances: for example, when a family becomes responsible for a new child. It does not touch at all on how the credits will respond to changes in income from one year to the next. I understand what the hon. Member for Northavon is getting at in his amendment, but he will appreciate that, as drafted, it concerns the regulations setting out changes that decrease the rate of entitlement, which have to be notified by a claimant to the Inland Revenue during the year.

The amendment seeks to introduce the proviso that the regulations must include

''a threshold below which changes in income do not have to be notified.''

That is not necessary, because the power to make regulations about the changes that must be notified does not extend to regulations about notifying changes in income. Income is dealt with in clause 7 and I shall not anticipate our consideration of that clause, except to point out that subsections (4) and (5) of the clause make it clear that awards will be based on income for a tax year. It would be unreasonable to impose on claimants a formal requirement to notify changes in their annual income during the course of a year because annual income cannot easily be determined until after the end of the year.