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 Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 6:30, 15 January 2002

I beg to move amendment No. 61, in page 4, line 34, at end insert—

''; the prescribed description shall include reference to a threshold below which changes in income do not have to be notified.''.

We are still on clause 6, looking at the regulations concerning notification of changes of circumstances. We are concerned through the amendment to ensure that the regulations, which we have not yet seen, will include a minimum threshold beyond which changes that would reduce someone's entitlement do not have to be reported. There will be further discussion on those thresholds and their size, but we do not want someone who has a marginal change in circumstance to accrue an overpayment or, worse still, be accused of fraud. There could be something in the regulations about that. NACAB bravely put a figure on it and suggested that £500 a year might be a relevant change. Thus if someone received up to about £10 a week more in tax credit than their current circumstance implied,

when under their previous circumstance that was not the case, notification or failure to notify would not make any difference to their entitlement.

Obviously, as with all such things, there is a balance to be struck. The bigger the threshold, the more taxpayers' money will go to people who are technically not entitled. On the other hand, if the threshold is very small, many people will need to tell the Inland Revenue about trivial changes, which will have an administrative cost.

It is worth reflecting for a moment on the fact that quite a lot of changes could affect the amount of tax credit to which one is entitled, especially in the lower income ranges. All manner of changes in child care arrangements, working hours, overtime and family circumstances could affect entitlement to working tax credit, its child care element and child tax credit. We do not want the Inland Revenue constantly to be bombarded by 6 million people telling it all about the fine details of their lives. That is not the world that we want to go towards.

The amendment relates specifically to fluctuations in income. The group currently in receipt of working families tax credit are the sort of folk who may do an extra shift or a bit of overtime, and it may be different from one week to the next. There may well need to be some averaging provisions, and there should certainly be a de minimis threshold, which is what the amendment proposes. I would be grateful, in probing the matter, for an assurance that that is the Government's thinking and that there will be such a threshold, and for an early suggestion of the level of threshold that they are thinking about.

Mr. Boateng indicated dissent.