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

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

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Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury) 2:30, 23 October 2014

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?