Schedule 1

Part of Finance (No. 2) Bill – in a Public Bill Committee at 11:30 am on 19 October 2010.

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Photo of David Gauke David Gauke The Exchequer Secretary 11:30, 19 October 2010

As the hon. Gentleman said, such proposals were announced in the previous Government’s last pre-Budget report of 9 December 2009. The PBR stated that the changes would take effect from 6 April this year. Despite that, the measure did not feature in the pre-election Finance Bill so, although the process was initiated at that stage, it is necessary to take it forward under the Bill that we are discussing.

Amendment 2 would commit the Treasury to publishing a review into the impact of the shared lives legislation. It is fair to say that Government and Opposition members of the Committee agree that bringing together reliefs for foster care and shared lives care will benefit carers on the whole. However, the low incomes tax reform group has raised concerns about individuals who may claim both reliefs separately. We believe that that is a theoretical possibility, but the reliefs are in place to make a standard allowance for household expenses incurred, so it would be inappropriate to make two allowances available for the same household expenses. It was certainly never the policy intention that individuals in a position to claim both the existing statutory relief and the extra-statutory concession for adult placement should have an unfair advantage.

As with any policy, HMRC will be monitoring the legislation’s effect in conjunction with interested parties to ensure that it operates fairly. Although Opposition Members make an understandable point through amendment 2, I do not think that it is appropriate for the Committee to accept it. Ensuring that legislation is implemented fairly and properly is important, of course, but it would be burdensome to put such a commitment into the Bill. However, I confirm that we will ensure that we review the measure’s implementation and discuss any cases of hardship with representative bodies. HMRC takes such issues seriously and has told me that it will happily receive representations on the matter.

Amendment 3 would allow carers a further year to apply the new rules. The schedule permits carers to continue to use existing practice until 5 April 2011, although they can choose to use the new rules from 6 April 2010. The proposals were announced almost a year ago, in December 2009, and have been widely publicised and discussed with interested parties. In most instances, the schedule merely has the effect of providing a firm statutory basis for existing practice. For most carers, the transition will be straightforward and have no appreciable effect. Furthermore, after consultation with interested parties, HMRC will prepare guidance, which will be published as soon as possible to support carers in making the change.

Given that the initial announcement was made in 2009 and there is the possibility of a year’s transitional period, carers will have ample opportunity to adapt to the new regime. Also, it would not be appropriate for HMRC to continue extra-statutory treatment for a full year while the parallel legislation is already in place, because that would confuse rather than reassure.

We are have not received any representations—nor are we aware of any—asking for full implementation to be delayed. It is necessary at some point to proceed to implement a process that was initiated nearly a year ago. The Government are committed to being clear in our decisions and to providing time for proper consultation and consideration to ensure that we have made the right choices. It is right that we proceed.

The hon. Gentleman asked about children turning 18 and the guillotine or cut-off point. Children in foster care who turn 18 and are staying with a family often come within staying-put care, which may qualify for shared lives care, depending on the circumstances.

Although I believe that amendments 2 and 3 were tabled with the best intentions and our debate has been helpful, it is clear that neither is needed. I stress, however, that we will review the implementation of the measure and discuss any hardship cases with representative bodies. I therefore ask the hon. Gentleman to withdraw his amendment.