TAX CREDITS
Mr O'Neill presented the detail of Tax Credits as outlined in his letter to the Committee dated 20th September 2001. The Chancellor of the Exchequer had announced, in the 2000 Budget, the Government's intention to introduce new payable tax credits for families with children and those in low paid work. The Tax Credits would replace and in some cases extend the support currently available under Working Families Tax Credit (WFTC), Disabled Persons Tax Credit (DPTC), the child elements of Income Support (IS) and income-based Jobseekers' Allowance (JSA) and the Children's Tax Credit.
The Bill will make provision for the consequential changes to social security legislation in Great Britain and it has been announced in Great Britain that policy and administration of Child Benefit will transfer in 2003 from the Department for Work and Pensions to the Inland Revenue.
Child Benefit, as part of Social Security, is devolved to the Assembly. However the transfer of child Benefit in Great Britain raises the question of transfer of policy and administration of Child Benefit in Northern Ireland to the Inland Revenue. While Child Benefit could continue to be paid separately in Northern Ireland, the parity principle requires that any changes in Great Britain be matched in Northern Ireland.
The Minister for Social Development has proposed to the Executive that they agree to the consequential social security legislative changes being carried in the Westminster Bill and also agree to the transfer of policy and administration of Child Benefit in Northern Ireland to the Inland Revenue.
Q. The Committee enquired if they were being consulted or informed on Tax Credits.
A. Mr O'Neill confirmed that his letter to the Committee on 20th September 2001 was to inform the Committee.
Q. The committee enquired about the timetable for introducing the Tax Credit Bill in Westminster.
A. Mr O'Neill confirmed that the Inland Revenue produced a consultation document on Tax Credits in July 2001 and the Bill will be introduced at Westminster this autumn
Q. The Committee enquired if it would have been possible to have been involved at an earlier stage when the Minister and officials were in discussions.
A. Mr O'Neill stated this had not been possible as the letter from the SOSS to OFMDFM was "In Confidence". The relevant devolution note provided that devolved administration had to respect the confidentiality of discussing with Central Government on future legislation. The Secretary of State for Work and Pensions has written to the First and Deputy First Ministers to offer to explore with Treasury Ministers the possibility of necessary consequential Northern Ireland amendments in the Westminster Bill, subject to the agreement of the Assembly. Such an arrangement would obviate the need for an Assembly Bill.
Q. The Members expressed concern that the Committee appeared to have no influence on Social Security legalisation.
A. Mr O'Neill explained that the changes would have to be replicated in Northern Ireland legislation as not to do so would result in double payments.
Q. The Committee also expressed concern that powers originally devolved to the Northern Ireland Assembly were now being returned to Westminster.
A. The Assembly could make a decision not to support the substantive motion, if so it would have to bear the responsibility for any increased costs that may arise and would, under parity, have to match any developments in Child Benefit which the Inland Revenue would undertake.
Q. The Committee enquired if the new arrangements would be more complex and complicated for those claiming benefit.
A. Once the new system is in place benefits would include a seamless, secure and transparent system, which will use common rules and definitions to create a more consistent basis for support. There would be greater continuity of payments for households through an annual cycle of assessment and a separate stream of payment for families with children, enabling direct payment of integrated child credit to the main carer.
Q. The Committee enquired how firm were the assurances about honouring jobs.
A. The changes would mean the transfer of around 150 staff from the Social Security Agency to the Inland Revenue. The Secretary of State for Work and Pensions has given assurance that, should the transfer take place, there will be no reduction in staff requirement nor will any staff be transferred out of Northern Ireland. Similar assurances given at the time of transfer of the Contributions and Family Credit Units from the Social Security Agency to the Inland Revenue have been honoured.
Outcomes
Following the exchange with Mr O'Neill and further discussion within the Committee it was agreed that:
- The Committee had concerns about the absence of practical mechanisms for its early and effective involvement in the proper scrutiny of Social Security legislation.
- The Committee had concerns about the transfer of a "devolved" to an "excepted" motion.
- The Chairman could speak to the Motion when it is brought before the Assembly expressing those concerns but should stop short of indicating if the Committee was in favour of, or opposed to, the motion.
- The Clerk was asked to research whether, how and when Committees' might be better consulted on Parity legislation.
Social Development Minutes 27 September 2001