Clause 30 - Power to provide for automatic termination of universal credit

Childcare Payments Bill – in a Public Bill Committee at 2:30 pm on 23rd October 2014.

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Question proposed, That the clause stand part of the Bill.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The clause makes the same provisions as set out in clause 29, but with respect to universal credit rather than tax credits. We appreciate that universal credit has some way to go before it is rolled out beyond its current pilot areas, but the clause allows for regulations to provide for the automatic termination of a person’s universal credit award, or that of their partner, where that person or their partner has made a valid declaration of eligibility under this scheme.

My hon. Friend the Member for Stockton North has just made a reasonable and impassioned plea for those on the lowest incomes. There are doubts about when families will move to the universal credit system. The current working assumption is that it will happen in the next three years or so, in which case these provisions could impact on families in the long term, once the tax credit system is phased out.

What provisions do the Government intend to put in place to ensure that parents are aware of these automatic processes? This is the same concern that we had with clause 29: a recipient may apply for the scheme and be completely unaware that that application might affect their partner’s universal credit entitlement.

I appreciate that the Minister is keen to reassure the Committee that this process is not punitive and that the Government want to support people and are not out to get them. It is fair that HMRC has robust systems in place to ensure that tax benefits are not abused, but people could fall on the wrong side of the system inadvertently. How will the Government and HMRC ensure that parents are fully aware that their universal credit entitlement, or that of their partner, could be terminated on the basis that they applied for this top-up scheme? How will they ensure that people do not unwittingly fall into that trap? What steps will be taken to ensure that the decision can be reversed for those who apply for eligibility for top-up payments at the expense of their universal credit award?

We have discussed a host of concerns about the complexities of the relationship between the new scheme and universal credit, and we have talked about how parents will manage their way through what will be a  labyrinth for many, but particularly for parents whose incomes fluctuate. People have fluctuating family circumstances, be it a change in the number of children or a change in partner, that might unexpectedly change their entitlement. Clauses 29 to 33 contain a series of provisions on universal credit and tax credit awards, all of which could have a serious effect on parents: they could lose one entitlement or the other, which could far outweigh any potential benefit from top-up payments. Can the Minister reassure us that HMRC is focused on that particularly vulnerable group of parents, and will take every step necessary to ensure that the process does not become punitive, but provides the child care support that many parents and families desperately need?

Photo of Priti Patel Priti Patel The Exchequer Secretary

Clause 30 allows regulations to be made that can terminate a parent’s universal credit award when they or their partner make a claim for support under the new scheme. When the regulations are in force, they will have the same effect on those claiming universal credit as regulations under clause 29 will have on those claiming tax credits.

I have explained to the Committee that one eligibility condition of the scheme, set out in clause 11, is that a person or their partner cannot receive universal credit while receiving support under the new scheme. Clause 30 provides the mechanism for ensuring that that condition is met. It allows for regulations that will automatically end a universal credit award when a person makes a valid declaration of eligibility under the new scheme, resulting in the parent or their partner being unable to claim support under both schemes at the same time.

We come back to the provision of information, in this case to ensure that, as the hon. Lady says, no one falls through the gap. We recognise the importance of our duty to provide information and support to help parents make an informed choice about which scheme to access.  Alongside wider guidance and information, we will provide an easy-to-use online tool for parents choosing between universal credit and the new scheme. The tool is very much about enabling parents to enter the details of their personal circumstances and see what support they may be eligible for and how much they would get.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

We talked earlier about the issues for parents without online access. How will that be picked up in this instance?

Photo of Priti Patel Priti Patel The Exchequer Secretary

As I have touched on previously, we are working with a range of stakeholders and parents on access outside of online and digital technology. Factors such as tax credit awards and universal credit play into that as well. It is not about looking at one issue in isolation. The online calculator is being designed to enable parents to input information and make a choice, having seen what they are eligible for. That is right and proper. However, there will obviously be a certain small section of the population that will also require support and guidance, and we will provide that through the work that we are undertaking.

As I have said, HMRC has published the first tranche of draft guidance, well ahead of the new scheme’s introduction. We intend to continue to work with parents, users and stakeholders to ensure that the guidance is as helpful and user-friendly as possible, so that parents get the provision that they need.

Question put and agreed to.

Clause 30 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Gavin Barwell.)

Adjourned till Tuesday 28 October at twenty-five minutes past Nine o’clock.

 Written evidence to be reported to the House

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