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Tax Credits Up-rating Regulations 2008

My Lords, I cannot be so peremptory as to suggest what will happen in the next few weeks, but the noble Lord will recognise that the Government look carefully at fuel costs for families. Certainly, if poor families were subject to very exceptional burdens we might address that issue. I was merely commenting on the obvious fact that we have not had to approach those issues with quite the insistence suggested by some this winter. What I am really defending is that the Government have to choose one index and, in so choosing, they are bound to be open to criticism that some families suffer against that index. That does not alter the fact that what is represented by all four statutory instruments is a proper and welcome increase in the allowances. I have not seen an enormous clamour, certainly from the Official Opposition, for increases in specific terms in any of these allowances. When I hear that, I might take some of their criticism a little more seriously. The noble Baroness asked what the Government will do about the Memorandum of Understanding as far as the SSAC is concerned. The review is under way, under Ann Chant. All the main stakeholders are being interviewed and are being given the opportunity to contribute. The report will be produced in the not too distant future and the substance will be reported to the FST for consideration. I cannot make a commitment now but I appreciate what the noble Baroness was at pains to point out: there are weaknesses in the existing situation that need to be addressed. We are subjecting it to review and we will produce that analysis in the fairly near future. She is pushing at an open door because progress has been made. Considerable work is being done in a difficult area. Nevertheless, I agree with her general proposition that openness and transparency is a virtue to which government should as far as possible adhere on all occasions. I also heard what she said about the criticisms of the PAC and tax credits. They have been well documented, but we make no bones about the fact that the tax credit system presents very real challenges in administration. The record over the last few years indicates that. However, that does not alter the fact that it is an excellent strategy for increasing support for families while providing an incentive to work. We are concerned about error and fraud, which are issues that the noble Baroness raised. This year has seen an improvement over previous years. The PAC recognises that and that there are unacceptable levels of performance in the system. We have a long way to go on that. The role of the Opposition is to be critical of what the Government do, but also to indicate what alternatives they would introduce to address these challenging issues of support for families in changing circumstances. The particular advantage of the tax credits system is that it takes account retrospectively, with the effect that support is given to families. The final evaluation is bound to be retrospective, which raises real administration issues. On the other hand, it also means that effective support for a large number of families is given when needed. I await a time when the Opposition are in a position not just to criticise what is done by the Government on tax credits, but to make a clear exposition of an alternative scheme of superior support for families than that achieved through tax credits, given that we are improving on both fraud and on misallocation each year. There will always be difficulties, because families’ circumstances change over the course of the year. There is bound to be a retrospective element within it. I accept the noble Baroness’s chiding when she indicates that the tax credits system must be looked at with the closest scrutiny each year so that we continue to improve how that support is offered to families. The noble Baroness also raised how well we were doing on child well being. The noble Lord, Lord Oakeshott, pointed out with his usual precision areas of underperformance in lifting children out of poverty. Those areas of slippage—he suggested that they were a little more than just slippage—are matters of concern to the Government. We always said that the 2010 target was challenging. It is; there is not much point in having targets if they are not. We are all too well aware of the fact that this past year has not seen the progress towards that target which we would have wished. Nevertheless, since 1997, the Government have produced a very significant reduction in child poverty through our strategy for support for children. There is a long way to go to achieve elimination by 2020, which remains the Government’s target. Of course, it is only right that the Opposition parties point out to us when we fall short of our high ambition. Again, it will be for those parties in due course to indicate the extent to which they subscribe to the ambitious targets which the Government have set and made so much progress on over recent years. I respect the questions which have been asked. Those which I have not answered, I will write to noble Lords about. They are proper questions and identify both where we wish to see improvements in performance and areas of conspicuous need. On the other hand, Opposition parties are pressing a Government who support families to a level not contemplated by past Administrations. We fall short of our ambitions, but are none the less reducing the level of poverty in this country—particularly child poverty—by significant amounts. These orders help to contribute towards that. On Question, Motion agreed to.