New Clause

HC Deb 26 June 2002 vol 387 cc892-916

Lords amendment: No. 1, after clause 2, to insert the following new clause—Annual report to Parliament—

The Paymaster General (Dawn Primarolo)

I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Speaker

With this we may take the Government amendment in lieu, a new clause—Annual reports.

Dawn Primarolo

Noble Lords introduced the new clause in a desire to ensure that Parliament was furnished with sufficient information about the operation of tax credits properly to scrutinise that operation. That is undoubtedly a wholly desirable intention and the Government wish to ensure that there is maximum transparency in providing information on the operation of tax credits and in enabling proper scrutiny.

As Baroness Hollis explained in another place, the sort of information sought by the proposed report will be available through existing channels, primarily the board of the Inland Revenue's annual report, which is laid before the House each year. Nevertheless, we are sympathetic to the Lords' view that it would be useful for the relevant information to be contained in a single document, and I am therefore pleased to move a Government new clause in lieu of the Lords amendment.

The Government new clause covers much the same ground as the amendment made in another place. There are some changes in the drafting, and it would be helpful if I explained them in more detail.

First, it is properly up to the board of the Inland Revenue, rather than my right hon. Friend the Chancellor, to produce such a report and present it to the Treasury. As hon. Members know, the Inland Revenue reports to Treasury Ministers. That is why subsection (3) of the new clause imposes on Treasury the requirement to lay the report before both Houses.

Secondly, the Lords amendment intended that the report should include the amount of tax credits paid out each year as reported in the Inland Revenue's departmental accounts. That was not clear in the Lords amendment and subsection (2)(a) of the Government new clause sets it out in detail.

Let me consider the other items that we propose to cover in the annual report. Subsection (2)(b) makes it clear that the report will set out the number of awards of each tax credit in the year. The Inland Revenue currently publishes detailed statistical reports on the number of awards of working families tax credit and disabled person's tax credit on a quarterly basis. However, the Government understand the value of including information about awards in an annual report on tax credits. That matter is therefore now covered.

Subsections (2)(c),(d)and(e)cover information relating to compliance inquiries, penalties and prosecutions. Of course, there must be the utmost transparency in reporting the Inland Revenue's compliance activity. This was a matter of considerable concern to hon. Members during our debates on the Floor of the House and in Committee. Much of this information is already provided in relation to the working families tax credit and the disabled person's tax credit, as part of the Inland Revenue's annual report, but the Government acknowledge the convenience of bringing all the information together in a single report.

Mr. Steve Webb (Northavon)

On a point of clarification, I am following the Paymaster General's references to subsection 2(b), 2(c), 2(d), and so on, in the Government's amendment in lieu. However, these provisions are numbered 1(b), 1(c), 1(d), and so on, on the Order Paper, and I wonder whether I have a different version to the one that the right hon. Lady is looking at. It is on page 2341 of the Order Paper. I just want to be sure that we are looking at the same amendment.

Dawn Primarolo

I most certainly hope that we are looking at the same amendment, otherwise I would be moving something that was not before the House, which would be even more difficult. I know that the House fully appreciates that I always try to be as helpful as I possibly can, but anticipating the views of the House on a matter that is not yet before it would be beyond even my ability to ensure that Members are properly advised. Perhaps the hon. Gentleman will allow me to finish making these points, because I want to make it clear that the amendment before the House today is the Government's amendment to replace the Lords amendment. It provides for the same information, but in a form that is readily translatable into our legislation. I will return as quickly as I can to the hon. Gentleman's question about whether we should be referring to subsection 1(c), (d), (e) and (f); certainly, in terms of how the amendment is drafted, it should read "1(a), 1(b), 1(c), 1(d)". I can only say that perhaps when I was putting my notes together, I transposed numbers that I should not have done.

Subsections (c), (d) and (e)—I shall stick to calling them that—cover compliance inquiries, penalties and prosecutions. As I was saying, there was much discussion in the House and in Committee about this. Much of this information is already provided in relation to the working families tax credit and the disabled person's tax credit, as part of the Inland Revenue's annual report, but hon. Members and noble Lords made the point that they would prefer it to be brought together in one publication. To be perfectly honest, I do not think that the House would expect us to disagree on this point about duplication, in such an important piece of legislation, for the sake of an argument about whether the information has already been published in one report, or whether it should be published in another.

Finally, the House will no doubt be aware that the new clause does not include reference to the cost to employers of operating tax credits. The Government continue to take the view that it would not be appropriate to provide an estimate of employers' costs in an annual report. That matter is properly and comprehensively addressed by the regulatory impact assessment of the Bill. That assessment is being revised in the light of announcements made in the Budget, and the revised assessment will be made available to Members of both Houses.

Regulatory impact assessments are the right place to deal with the impact of tax credits on employers. That is the process that the House now uses to assess all its legislation, in terms of its likely impact on employers. The Board of Inland Revenue cannot be responsible for accounting formally for costs other than its own. More important, the assessment of employers' costs does not need to be taken on an annual basis. The assessment of the impact on employers is based on the provisions of the Bill. Such an assessment will not fluctuate significantly year on year, because there is a constant set of legal obligations. As the obligations of employers do not change, the assessment of the impact on employers is not likely to change.

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I remind the House that the Government produce comprehensive impact assessments whenever legislation that contains a significant regulatory impact is introduced or amended. The Government take the regulatory impact of legislation seriously. We introduced the concept of a regulatory impact assessment, and we intend to be nothing less than transparent on this issue.

I do not want to revisit the debates that we had in Committee about the changes in the Bill, such as the lessening of the requirement on employers and the £1 million a year saving that is expected as a result of these changes, which has been widely welcomed by employer groups. I hope from what I have said about the importance of regulatory impact assessments that the House will appreciate that we keep a close eye on these matters.

The Government have listened sympathetically to the arguments put in the other place, as we did on many issues when the Bill was considered in Committee in this House. We have considered the arguments put in the other place for an annual report, and we want to be helpful to their lordships and to hon. Members in this House. I urge the House to accept the Government's amendment in lieu of their lordships' amendment. The only issue that the Government's amendment does not deal with is the annual assessment of the impact on employers. To all other intents and purposes, the Government amendment is the same and is correctly drafted to fit into our legislation.

I am grateful to the hon. Member for Northavon (Mr. Webb) for correcting my references to subsection 2: I should have said subsection 1. I am sure that the record will ensure that that correction is made.

Mr. Howard Flight (Arundel and South Downs)

The Bill seems to have been dogged by incorrect definitions and references. As the Paymaster General said, the Government are seeking to substitute their own prescription for an annual report in lieu of a rather broader if less specifically defined annual report prescription passed on an Opposition amendment in the other place.

The purpose of the annual report as introduced by Conservative Peers is to ensure the submission of data giving an account of the care and management of tax credits. In particular, the report would contain estimates of the total take-up of each tax credit, the statistical and other assumptions on which such estimates were made, and the actual take-up of each tax credit. The Opposition amendment prescribed that the board's reports should be published by the Treasury. As the Paymaster General said, it is correct that the report should be made by the Board of Inland Revenue to the Treasury.

The key point is that Parliament should know when the take-up of any tax credit is less than the forecast level, and the report would set out the estimate of the amount of moneys not spent by reason of the deficiency of take-up to which that estimate related. It would also include the Government's proposals for increasing take-up to the forecast level. It would deal with fraud, and with other issues on the Government's list.

The report is considered necessary because of the vastness and complexity of the Bill and the fact that the new arrangements are untested. We still fear that there could be major administrative difficulties in their implementation. Unless the legislation is monitored, what is actually happening will be inscrutable for some time.

Lady Hollis described collecting the information from existing sources as a simple cut-and-paste task. Perhaps I am a little slow-witted, but I do not think collating such information is at all easy, and I think it is right to require it to be presented in a digestible form. Conservative Members are pleased that the Government have accepted the case for a single, clearly understandable—I will not say "easily understandable"—report.

The Government's alternative raises certain issues. The Paymaster General has commented on the differences between the two proposals, but I should like to extract a little more information before agreeing to the Government's version. Take-up is a key issue on which the Paymaster General did not comment. If the measure is about what it is supposed to be about—helping the needy—a crucial aspect will not have been covered if we do not know whether it is being effective, what the targets are, and so forth.

The reference to numbers in what I think is subsection (1)(c), not subsection (2)(c), could be interpreted to cover the process of reporting on the estimated and actual take-up and the reason for the difference, if any, and on what the Government are doing to improve take-up. I should be grateful if the Minister could elucidate a little further.

The Government seem to think it fairly impractical to report on costs to business. There is an argument to that effect, but if the Bill encounters administrative problems, it will be to employers that the Revenue will be forced to go to find information it may be seeking in order to check that awards have not been made that are materially in excess of entitlements. The Government, MPs and indeed businesses should want to know whether costs to businesses are turning out to be significantly greater than was estimated. I ask the Paymaster General to consider, at least, avoiding a meaningless exercise and requiring the report to include any comment on whether there is evidence on administrative costs to business are proving larger, or indeed smaller, than expected.

Take-up is crucial to whether this complex machinery helps those who are most in need. In Committee and on Third Reading, I observed that it was somewhat ironic that when in 1974 the outgoing Conservative Government proposed similar arrangements for tax credits, then called negative income, it was the leaders of the Labour party who produced a minority report warning that such mechanisms might be rather blunt and unsuccessful in helping those most in need. Despite all the wonders of modern computers—which invariably go wrong or break down—the basic issue remains of whether the tax credits will do their first duty of helping those who are in real need. We believe that an analysis of, and report on, take-up is important and we hope that the Government will confirm that their reference to numbers will cover that point.

The second area of concern, to which the Paymaster General has already referred, is the investigations into fraud and what I call fiddling, because most of the problems will not be of sufficient magnitude to deserve the label of fraud. It is important that we know what is happening, including how many prosecutions and convictions have occurred. My hon. Friend the Member for Hertsmere (Mr. Clappison) will talk in more detail on that issue later, but new subsection (1)(c), (d) and (e) appear to cover that territory and we are happy with that.

On the issue of cost to business, the history of the Bill shows a little obfuscation. If the Government expected costs to decline or be less than forecast, they might have been keen to boast about that. If they are unwilling to say anything, we infer that they think that the news could be bad. In the other place, the Government responded that their initial estimate was that the new working tax credit and child tax credit arrangements would cost business £11 million per annum less than the WFTC. We are pleased to hear that, but it was only after being pressed that the Government came clean that the cost to business had been £100 million a year. Therefore, it will still be £89 million a year. [Interruption.] The Paymaster General will find that Baroness Hollis gave that figure in the debate in the Lords.

Dawn Primarolo

There is no secret about that figure. The regulatory impact assessment clearly details the figure and I have given it repeatedly in the Chamber. Baroness Hollis was not imparting any new information, because I even gave that information on Second Reading.

Mr. Flight

I am delighted to be corrected, because that means that the Government will have no problem keeping tabs on the future cost to business. If there is any significant increase, they will be able to tell us about it.

Problems could arise because the Inland Revenue will have a demanding task when it comes to check awards paid against entitlements at the end of the year. One key area will be whether people have met the requirements for number of hours worked. Presumably, except for the self-employed, that check can be done—if the Revenue wishes to go further than what people report to them—only by making inquiries of employers of the number of hours worked. If the administrative difficulties that I fear arise, employers could have to deal with large numbers of inquiries from the Revenue to check information, and that could add considerably to costs.

The overall background to the need for a report is that the complex new arrangements must be monitored to determine whether those in need are getting the help that they need. I confess that our concern is that the general drift of policy, and especially the contents of the Bill, is that the Government should be seen to be giving money to large numbers of people. Some 6.5 million families—38 per cent. of the total—will be eligible for the means-tested benefits. The Government seem more concerned with that than with focused efforts to help those in need.

4.45 pm

There are widespread concerns about fraud and fiddling, and the House will be familiar with the much quoted fears of the right hon. Member for Birkenhead (Mr. Field), who is worried that the whole of the family tax credit venture is fraught with great dangers. It offers huge bonuses for dishonesty. It strengthens the employers' hold over working people—'these are the conditions: cheat and both of us will be better off'. It thereby pulls employers into a spider's web of dishonesty and corruption. It rewards employers paying low wages. It takes the pressure off improving productivity and thereby the scope for increasing real wages. It is crucial for the House, the Government and the community to know, when the system is up and running, whether those fears prove justified. We are pleased to note that the Government have covered that.

Dawn Primarolo

The hon. Gentleman has alluded to some points made by my right hon. Friend the Member for Birkenhead (Mr. Field). I refer especially to the point about depressing wages. Will the hon. Gentleman explain why the previous Conservative Government would not support the introduction of the minimum wage? If he is so concerned about depressing wages, why did the previous Government allow that to happen in the absence of a minimum wage?

Mr. Flight

I do not think that we are really discussing minimum wages today, but their very existence is a tacit admission by the Government of the need for legal protection in a situation where too many factors are driving wages down. As I have noted before, I have to my regret encountered in my dealings with businesses a feeling among many of them that the provision is to be greatly welcomed, as it can be considered to be a big subsidisation of wages.

Dawn Primarolo

Okay, let us try this another way, as I do not think that the hon. Gentleman has answered the point. The former Select Committee on Social Security conducted an investigation specifically into the use of tax credits in the United States, to see whether their existence depressed wages. Tax credits have been in use for much longer in the US, but the Select Committee found no evidence that they depressed wages there. Is the hon. Gentleman disagreeing with that assessment? The Conservative party supported neither tax credits nor the minimum wage, yet there is no evidence that they depress wages.

Mr. Flight

First, I cannot resist noting, in connection with the US experience with similar arrangements, that evidence did emerge that there had been some $4.7 billion in unjustified claims. Also, the Select Committee duly noted the serious concerns raised about increased potential fraud in working families tax credit, as compared with family tax credit.

These are new arrangements. Let us hope that the right hon. Lady and the Committee are correct that the measure will not depress remuneration. However, rather cynically, one reason for businesses welcoming many aspects of the Bill is because it is seen in the business community—as similar measures have been seen in our history—as a jolly good way of subsidising employment, enabling companies to pay less because their staff will get more from the Government. However, it is the business of the House to know whether the concerns of many are justified and how the legislation will work out in practice.

I repeat that we are glad that the Government have essentially accepted our argument. We think that extracting the evidence will not be easy. On cost, it was not clear until the Bill was in Committee that the tax credits would cost some £15 billion overall, as I recollect pointing out. The Government have now agreed that the figure will be £16 billion, which is not easily identifiable in their statistics. It was not clear until the Bill went to the other House that 90 per cent. of tax credits will be accounted for as Government expenditure paid as benefits and not treated as bogus deductions against tax revenues. We think it thoroughly healthy for the proper accounting principles of the Government that the objections of the Office for National Statistics should eventually have won the day.

The Budget Red Book estimate for 2002 shows that tax credits will cost some £4.6 billion next year. That figure is based on a take-up assumption of 85 per cent. If the take-up were 100 per cent, tax credits would cost some £5.43 billion. It will be necessary to know, for reasons of cost as well as meeting the target of helping the needy, what take-up is expected and how much more or less than budgeted the measures will cost as a result of the actual take-up figures.

It is important to know the total public expenditure on social security, including the 10 per cent. that will not be treated as expenditure. The figure for 2001–02 seems to be £110 billion—about 30 per cent. of total expenditure. That figure has increased in the past five years by more than spending on health or education and despite a massive and welcome fall in unemployment, and is expected to grow to £126.7 billion next year—an increase of £34.58 billion or 37 per cent. over the past seven years. That contrasts with increases of only £22 billion for education and £28 billion for health.

Rob Marris (Wolverhampton, South-West)

Only £22 billion?

Mr. Flight

I remind the House of the Government's commitment in 1997 that the additional spending on education and health would come from rationalisation and reforms of social security expenditure. It is important to note that in reality the reverse occurred: at a time of prosperity, spending in that sector has increased by more than spending on health or education.

The crucial point is whether the money is reaching those in greatest need. The latest estimates on income-related benefits for 1999–2000 showed disappointing take-up figures, mainly for pensioners where the figure was between 74 and 78 per cent. by case load; 1.2 million pensioners had not received council tax benefits, while 580,000 had not received their income support and 150,000 had not received housing benefit. About £3 billion in benefits were unclaimed.

The arrangements for the new tax credits are rather more complicated than the long-standing arrangements in the areas to which I have just referred. I beg to differ strongly with anyone who does not think that take-up data are important in a humanitarian sense.

Our main concern is that the tax credits should address their key objectives—helping those in need. The report is about that and about not wasting money. In essence, the Government's version fine tunes the Opposition's proposals, but before I agree to it I should like the Paymaster General to confirm two points: first, that the reference to numbers will cover everything that I mentioned in respect of take-up; and, secondly, that, although it is sensible not to have annual estimates or guesses as to the cost to business, the Government will encourage the Revenue to indicate any evidence that costs to business are rising substantially as a result of administrative problems with the tax credits.

Mr. Webb

I congratulate the hon. Member for Arundel and South Downs (Mr. Flight) on the breadth of his contribution, although I was slightly disappointed that he did not ride into battle on behalf of his noble Friends, instead seeming meekly to accept the Government's half-offering in the form of the amendment in lieu.

We are being asked to consider two versions of an annual report to Parliament on tax credits. It is instructive to reflect on the fact that when the proposition was first put to the Government in another place, they felt that no annual report was necessary. The Government advised their lordships that Parliament was able to scrutinise such matters through parliamentary questions—we all know what an effective and lucid means they provide for obtaining information—or that perhaps the appearance, once a year, of the chairman of the Board of Inland Revenue before the Treasury Committee would enable us to acquire all those hard data. It strikes me, however, that the Treasury Committee might want to raise other issues with the chairman.

I welcome the fact that, after their defeat in another place, the Government have conceded the principle of an annual report.

Dawn Primarolo

I am sure that the hon. Gentleman did not mean inadvertently to mislead the House. The annual report of the Inland Revenue is placed in written form before the House. It is not dependent on the attendance of the chairman of the Board of Inland Revenue before the Public Accounts Committee—the Committee to which he reports, as accounting officer. The report is already produced in written form and presented annually to the House. If the House decides that it wants to receive the report in another form and that it wants more bureaucracy—something that it normally does not want—the Government will provide it.

Mr. Webb

The right hon. Lady is right; there is an annual written report. However, in another place, Lady Hollis referred to the written report and said: the chairman of the Inland Revenue appears annually before the Public Accounts Committee so that the committee can more closely scrutinise the details of the annual report."—[Official Report, House of Lords, 12 June 2002; Vol. 636, c. 289.] If we want scrutiny of detailed aspects of tax credits, an annual response to a report that covers the whole range of the Inland Revenue's activities may not provide the necessary degree of detail.

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Dawn Primarolo

I remind the hon. Gentleman that we have a very effective Select Committee system in the House, and the Treasury Committee calls me, as the responsible Minister, before it. I have just appeared before the Treasury Sub-Committee as part of its examination of that very annual report. There are checks on the accounting officer and on the Minister, and there is a printed form in the annual report, so there are three ways to check the information. Our amendment merely provides a fourth way for exactly the same information to come before the House. Quite rightly, Baroness Hollis pointed out that the House already had this information; but if hon. Members insist that they want more bureaucracy and a fourth way of expressing the same information, we are happy to provide for it in the amendment.

Mr. Webb

I think I am right in saying that the amendment in lieu before us is a Government proposal to produce an annual report containing the information. Therefore it is the Government who are today offering to produce it. If the Government consider that that would be a waste of time and a duplication and would add nothing else, they should have stood against—[Interruption.] No, they should be standing against the Lords amendment today. They have decided not to, and essentially accept the principle of an annual report.

Dawn Primarolo

Let me get this right. The hon. Gentleman is saying that, when something is pressed on the Government that they do not believe to be necessary. but which Members of the House and the other place continue to insist they would like in a particular form. the Government should turn their face against those propositions and continue not to provide it. He is saying that, consequently, when a Minister comes to the House saying, "Even though we do not believe that this is necessary, we will do it anyway because that is what the Members of the House want," that Minister should be criticised. That is a bit crazy.

Mr. Webb

The right hon. Lady told us that the information that her proposal would make available was unnecessary because it would be available in three other ways, but she proposes to ask the House to support its publication.

We have before us two alternative proposals for different variants of the annual report, which the Minister considers to be unnecessary. There are two differences between the Lords and Commons versions of these annual reports and, as the hon. Member for Arundel and South Downs said, one relates to take-up and one relates to the burdens on business.

If we accept the Government's version, we have sold the pass on take-up, because the Lords version refers in paragraph (d) to an estimate of the take-up of the working tax credit and in paragraph (c) to an estimate of the take-up of the child tax credit". The word "take-up" can be used by different people to mean different things. Let me make it clear what we are talking about here.

If the information published is an estimate, it must be an estimate of the proportion of those who are entitled to the credit who take it up. It cannot be statistics on the numbers who get it, because the Government know the precise number, so if it is an estimate, it must be information about rates of take-up—the proportion of the eligible population who claim the credit—which is very valuable information indeed. The Government have taken that out of the Commons version of the report. The Government's amendment in lieu simply refers to "the number of awards".

I absolutely agree with the Minister on that point. The number of awards will be available trivially, all over the place. The value added of the Lords report would be an estimate of take-up rates, which are, as the hon. Member for Arundel and South Downs said, absolutely central to any means-tested or tax credit-based approach. It is a central issue: what proportion of the money available is claimed by those who need it, as compared with other routes. I am sure that the Minister's amendment in lieu takes out the requirement to give an annual report on tax credit take-up as part of the overall report, and that is a very important thing to keep in, because not enough work is done on giving the House up-to-date information on take-up.

The hon. Member for Arundel and South Downs quoted take-up figures for 1999–2000—three years ago. The House should have much more up-to-date information on take-up, and if the Lords amendment requires that that information be provided annually, systematically and together with all the other information on tax credits, that amendment is preferable to the amendment that the Government have asked us to accept today.

The second thing that is different about the two versions of the annual report concerns burdens on business. When I first read the ministerial response, I thought, "That's fair enough." An initial assessment on business would be undertaken, and then things would be left to run, so why would anyone want to keep picking away at the burdens on business each year? However, one reason why things might change would not be picked up by the initial regulatory impact assessment.

The legislation on tax credits might not change, but the environment in which they are applied will change. For example, the balance between small and large firms changes over time, as does the minimum wage. Because of those changes, the effects of the tax credit regime on business will change over time. So it is no good saying, "We did an impact assessment when we passed the legislation a year or two ago and things will always be more or less the same until we change the primary legislation."

The world in which the legislation operates is changing all the time. For example, one can imagine that a Government who substantially increased the minimum wage and floated large numbers of people off tax credits would substantially reduce the burden on business because far fewer people would claim the credits. However, if the minimum wage were allowed to drift below the wages of the low paid over a period, people would be drawn into tax credits and the burden on business would increase, but none of that would be captured in the initial regulatory impact assessment.

Obviously, if nothing else changed, there would be no point in carrying out a reassessment every year for the sake of it—but the world is changing all the time. The measure's impact on business will change because unemployment and employment rates, working patterns and business patterns are all changing.

Roger Casale (Wimbledon)

The hon. Gentleman is light to be concerned about the costs to business of operating the working tax credit scheme, but does he think that it might be possible to assess the benefits to business of that scheme? What does he think those benefits might be?

Mr. Webb

The hon. Gentleman may not recall this, but we voted for this legislation. We do not dispute the attractions of supporting the low paid. There is no difference between us on that. However, in all these things, there is a balance to be struck between the advantages to individuals and the burdens on business. In my view, delivering the tax credits through the pay packet creates a burden on business, with no advantage to the citizen, so updating information on the burden on business each year will help us to make the case that such things should be done differently. It would help us to keep an eye on the problem inherent in the scheme that has been adopted.

I shall not detain the House any longer. There are two differences between the Lords version of the report and the Commons version. The Lords version is superior because take-up and other information would be provided every year and because it would provide an up-to-date picture of the burden on business, which will change over time. For those reasons, we are disinclined to disagree with the Lords in the said amendment, and we hope to find out in due course whether the House agrees with us.

Hywel Williams (Caernarfon)

I, too, am glad that the Government have given ground on the annual report issue, despite the arguments against taking the step proposed on their behalf in the other place by Baroness Hollis. Hon. Members will perhaps have noted that Baroness Hollis argued that the various statistics were available from a variety of sources and all that the curious needed to do was track them down. That may be so, but that does not detract from the value of publishing all the statistics annually and in a form that is easily accessible not only to hon. Members but to the public, in the fine tradition of open government.

Baroness Hollis also said that she was against what would be a cut-and-paste exercise, so I am glad that, despite her persuasions, we will now have an annual report. I am sure that the Government are poised, even now, with the scissors and glue. I congratulate the Government on changing their mind, and look forward to the result.

However, unlike the Lords amendment, under the Government amendment in lieu, the report would note only the number of child tax credit and working tax credit awards and the number of inquiries, penalties, prosecutions and convictions. It will not contain an estimate of the take-up rates. The Lords amendment would require (b) an estimate of the take-up of the working tax credit; (c) an estimate of the take-up of the child tax credit". I am sure that the Government are always pleased to report positive figures to the House, such as the number of awards made. They are always pleased to report how often they have hit a particular barn door. In itself, that is interesting; it might lead to favourable headlines of the variety that say, "Barn door targeting—another Government success!" However, I am sure that that consideration could not be further from the Government's mind. Of equal interest is not only how often the Government have hit the barn door, but how often they have missed it. Indeed, such a comparison is essential for any serious assessment of the success or otherwise of the tax credit system.

The statistics are available on take-up, or they can be worked out. The noble Baroness noted that in the first year, take-up of WFTC…was 76 per cent—which is close to the 81 per cent for family credit".—[Official Report, House of Lords, 12 June 2002; Vol. 636. c. 291–2.] I do not regard a difference of 5 per cent. as close, although, in terms of barn doors, I suppose that it might be.

The Government are, of course, reticent in talking about take-up rates, for good, if not laudable, reasons. Those who have a right to means-tested benefits but who do not claim them are a continuing demonstration of the inefficiency of means-tested benefits as a way of relieving poverty. Given the higher proportion of people in Scotland and Wales who are dependent on those means-tested benefits, drawing attention away from the deficiencies of the system is not a politically neutral step. Apart from our interest in promoting open government, that was one more reason why Plaid Cymru and the Scottish National party were very much in favour of the Lords amendment and why we are disappointed with this Government revision.

Mr. James Clappison (Hertsmere)

With the leave of the House, I shall intervene briefly—as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) suggested I would—on the subject of fraud, which has been of some interest to me and other Members during the passage of the Bill.

I congratulate the Paymaster General on the eloquence of her opening remarks, and the elegance with which she executed a strategic retreat from the position of the noble Baroness Hollis, who told the House of Lords that the amendment was wholly unnecessary, and that it amounted to a scissors-and-paste job. If I may say so, the right hon. Lady has carried out a scissors-and-paste job today with our hardly noticing. After my initial admiration for her elegance, however, I began to feel a sense of unease about the way in which she responded to the points made by my hon. Friend the Member for Arundel and South Downs and other hon. Members on eligibility as part of the information required to assess take-up, and on the question of burdens on business.

If one looks at the difference between the Lords amendment and the Government amendment, whether subsection (1) or subsection (2), it strikes one immediately that the Government have changed the wording from "estimate" to "number" and that the question of business costs is left out altogether. I feel a slight sense of concern about what the Paymaster General said about a figure for business costs being available later and being revised. First, in the regulatory impact assessment, the Government conceded that the impact of some of the proposed legislation could only be estimated once the system is up and running, and that there may be an additional cost to businesses as a result of the need to respond to in-year changes in recipients' circumstances.

Secondly, if the right hon. Lady is right in her statement that it is inappropriate to include business costs in the annual report, and she is right that the cost will be fixed, what are the Government afraid of? Why are they shy about including that as part of the annual report? They will be able to say, "Look here, we were right. There was only this fixed cost for business. It isn't changing each year. The amount isn't increasing." Whether the arguments of the hon. Member for Northavon (Mr. Webb) are right or wrong, the Government will be able to say that there is not an increased cost to business every year. What would be the harm of including that in the annual report? Many businesses, especially small businesses, will feel some small sense of unease that that has been left out of the annual report.

On fraud, an important question arises from the Lords amendment. The right hon. Lady will recollect that concern has been expressed in many quarters. My hon. Friend the Member for Arundel and South Downs was absolutely right to talk about fraud and misdirection of public money in tax credits. He quoted the right hon. Member for Birkenhead (Mr. Field), who is in a good position to judge given his previous experience in the Department of Social Security, and whose contribution on Second Reading we all recollect. He said that some people in Whitehall are less keen on countering fraud than hon. Members."—[Official Report, 10 December 2001; Vol. 376, c. 617.] I know that Members on both sides of the House are concerned about fraud and Conservative Members are certainly keen to bear down on it. We recognise that fraud is a misuse of public funds and we recognise the affront that it causes to hard-working taxpayers and claimants alike.

5.15 pm

The vast majority of those in receipt of tax credits are, of course, decent and honest people who properly claim what they are entitled to and, when we talk about fraud, we are not talking about those who simply make a mistake and thereby receive more than their entitlement. The Paymaster General will recall that, throughout our proceedings, we have been at pains to draw a distinction between those who commit fraud and those who make a mistake. We have tried to argue that the Government should not bundle the two groups together. However, members of the public want those who set out to cheat the system and who sometimes obtain substantial sums of money to be brought to justice.

Under the amendment in lieu, the annual report will give details of the number of prosecutions and convictions for offences connected with tax credits. Members of the other place were right to press for that information to be made available in the annual report because, thus far, the record of prosecutions for tax credit fraud has been feeble. In the first two years of the working families tax credit, there were 22 prosecutions for false working families tax credit applications. That is for the whole two-year period up to September 2001, the first two years of the working families tax credit.

It is true that a little more vigour has been shown since then. In the six-month period since September 2001, 26 prosecutions were instigated for fraud. according to a written parliamentary answer that I received on 1 May this year. However, even if there has been that slight increase in the past six months, on any view of the potential scale of fraud in tax credit, it remains a low number of prosecutions. We note that there have been no prosecutions at all for fraud in the child care element of the tax credit, but stories abound of what members of the public regard as irregular practices in that area.

In a written answer. I was told: As at 31 December 2001, there were a total of 542 Inland Revenue staff involved in investigating possible false applications for tax credits. The figure comprises 27 Investigators and 226 support staff employed centrally at the Tax Credit Office. There are a further 247 Inland Revenue Network staff who also deal with tax credit investigations, and a specialist team of 42 staff dealing with the most serious cases including those resulting in prosecution."—[Official Report, 19 December 2001; Vol. 377, c. 326W.] All those staff for the annualised equivalent, on the latest figures. of 52 prosecutions a year! According to my simple maths, that means we employ 542 staff for 52 prosecutions, so there are 10 man-years for each prosecution that is brought by the Inland Revenue.

Dawn Primarolo

The hon. Gentleman said that stories and allegations of fraud abound. Is he suggesting that the Inland Revenue does not investigate those allegations or that the investigations do not come to fruition in terms of prosecutions?

Mr. Clappison

I remind the right hon. Lady of what I said. I pointed out the number of staff involved in investigating possible false applications for tax credits. I hope that she is not suggesting that the record of prosecutions is anything other than feeble. She has also conceded in written parliamentary answers that there have been no prosecutions whatever in cases involving child care. Even if one takes into account the number of investigations and the number of penalties—they run into a few hundreds—the performance is less than spectacular.

Prosecutions and the threat of imprisonment have the greatest deterrent effect, or so the Government would have us believe with their television advertising campaign. The right hon. Lady looks quizzical, but their campaign shows a benefit cheat languishing in a prison cell. When it comes to the facts, the truth is rather different.

Dawn Primarolo

rose—

Mr. Clappison

I will give way to right hon. Lady, but she may want to comment on the fact that in the first two years of tax credits only seven people have been sent to prison for fraud.

Dawn Primarolo

Is the hon. Gentleman suggesting that allegations should not be investigated and proven before a prosecution on fraud takes place? I am a little confused. The hon. Gentleman talks about allegations and the number of investigating staff. Has it crossed his mind that sometimes allegations are made but not proven?

Mr. Clappison

The right hon. Lady is a little confused about the role of the prosecution in the criminal justice system. It is not the role of the prosecutor to prove the offence—

Dawn Primarolo

The role is to get the evidence.

Mr. Clappison

It is the role of the prosecution to get the evidence—[Interruption.] Of course they carry out an investigation. They then make a decision based on whether there is sufficient evidence to prosecute, to which they apply the public interest tests, before taking the case to court. Is the right hon. Lady trying to persuade us that the 26 prosecutions in six months or the 22 prosecutions in the previous two years are representative of the scale of fraud in tax credits? I will give way to her if she is prepared to defend that.

Dawn Primarolo

Is the hon. Gentleman suggesting that the Inland Revenue should take cases to court without evidence to support the allegation that fraud has been committed? Is that the centre of his argument?

Mr. Clappison

No, the centre of my argument is that the Inland Revenue's record of prosecuting fraud under this Government's policies is feeble to have brought such a small number of cases to court. That amount of fraud beggars belief.

The right hon. Lady will he familiar with the estimates by the Department for Work and Pensions on the extent of fraud within the rest of the benefits system. It estimates that total fraud varies from £2 billion to £7 billion. Some 12,000 prosecutions are brought each year, but when the Labour party was in opposition it said that that was inadequate. The right hon. Lady's Government have brought only 26 prosecutions in the past six months and 22 prosecutions in the previous two years. That hardly bears out the gist of the Government's advertising campaign.

Mr. Mark Hendrick (Preston)

How many cases were investigated and what percentage were found to be fraudulent?

Mr. Clappison

We have obtained a massive amount of statistics on that which the hon. Gentleman can find in the responses to written parliamentary questions. The fact of the matter is—[Interruption.] The hon. Gentleman will find those if he looks at the written answers for the relevant periods. I do not have the figures in front of me, but I can tell him that the number of prosecutions in relation to the extent of possible fraud is very low. I do not know whether the right hon. Lady is defending that, but however one looks at it, the number is very low.

Dawn Primarolo

I hate to spoil the hon. Gentleman's speech, which he obviously prepared before he read the Government's amendment, but has he noticed that our amendment goes further on fraud than the Lords amendment by making it necessary to provide more information on such matters? If he is arguing against the Government's amendment in favour of the Lords amendment, he should realise that the other place asked for less information to be provided than we will give to the House on penalties, prosecutions and other matters.

Mr. Clappison

If the right hon. Lady will exercise a little patience, I will come to that. In the spirit of being open about information and given her remarks about the extent of fraud, perhaps she will tell us something else so that we can make a judgment on the information requested in the amendments. The extent of take-up can only be judged when we compare the number of people who take up the benefit with the number who are eligible. The right hon. Lady is defending the number of prosecutions, and her hon. Friends joined her in that. Perhaps she will be as bold as her words in defence of the Government's policy by telling us one thing: how much fraud is there? So far, the right hon. Lady has refused to tell us. She will remember that she wrote to me in April 2001A telling me that the Inland Revenue was conducting a benchmarking exercise to establish the level of fraud in tax credit claims, and that that would run from September 2000 for 12 months. At the end of that 12 months—we shall see whether the right hon. Lady's openness will be forthcoming again—I asked the question again. That was in December. She told me that the results would be known "early next year".

That was earlier this year, and we had the opportunity to ask the right hon. Lady about these matters when we were considering the Bill in Committee. When I asked her again about the extent of the fraud and the outcome of the benchmarking exercise—[Interruption.] This is of interest to the hon. Member for Preston (Mr. Hendrick), because this is the answer to his question. The right hon. Lady told me: I cannot give him a guarantee that I will be able to publish that information because it deals with specifics of possible frauds that it would be unwise to put in the public domain. However, I will consider how to ensure that he is properly informed so that he can discharge his parliamentary duties."—[Official Report. Standing Committee A, 24 January 2002; c. 239.] That was me. I did not hold my breath when I received that reply from the right hon. Lady. It says something about the Government's mentality that they presume that they are the judge of what information can be given to the Opposition and to other hon. Members. I suspect that I was right not to hold my breath because when I raised the question again after a reasonable interval in April 2002, I was referred back to an earlier answer in February 2002, which told me: The Inland Revenue are currently analysing the data from their compliance benchmarking exercise. We shall be considering the results, and questions of publications, within the next few months."—[Official Report, 5 February 2002; Vol. 379, c. 851W.] We are talking about a report that Ministers have had since September 2001. We have asked repeatedly for information, and months have elapsed. In response to our questions, we have had one blocking answer after another. We have been referred back to previous answers. The right hon. Lady had much to say earlier when I was asking about numbers of prosecutions, and suggesting that there were not very many. Perhaps she will now be as brave as her words and tell us whether the Government will publish their own report—Ministers have had it in their hands since September 2001, at least—and state how much fraud there is within the working families tax credit mechanism. Will the Government publish the results of their own benchmarking exercise?

We simply want to obtain this information. We will be able to judge both sets of amendments when we know how much fraud there is. We shall then know whether the numbers of prosecutions and convictions are an adequate reflection of the level of fraud. Once again, I am waiting with bated breath. I hope that I will not again have to use the procedure of parliamentary questions, because we know how effective that is when the Government are determined to withhold something. My sad experience is that that has been the case so far in this instance. Will the Government tell us how much fraud there is in the working families tax credit mechanism. I ask for a straightforward answer to a straightforward question.

5.30 pm

Roger Casale

I wish to speak in support of the Government amendment in lieu and in support of the motion to disagree with the Lords amendment.

There is much common ground between what the Government are proposing and the Lord's amendment. I welcome the Government's decision to publish an annual report. I am sure that there will be a great deal of interest in the report from both sides of the House—given the level of support for the tax credits system—and in the way in which it operates in practice.

We have heard that there is common ground on the issue of tackling fraud. The Government's amendment goes much further than the amendment from another place in terms of a commitment to report on the steps that they are taking to tackle fraud. That is despite the huff and puff that we have heard from the hon. Member for Hertsmere (Mr. Clappison).

There is also common ground on reporting on the take-up of tax credits. Again, the commitment that the Government make to that in their amendment is much stronger than that in the Lord's amendment.

Mr. Flight

The hon. Gentleman has just said something that may be important or may not be quite right. I await the Minister's response. All we know is that the Government will publish a report on numbers. We do not know what the commitment is under the Government's measures to report on take-up. If the hon. Gentleman can tell us, we would be delighted to hear.

Roger Casale

I draw the hon. Gentleman's attention to the text of the Government amendment, which refers to the number of awards, the number of inquiries conducted and the number of penalties imposed by the scheme. The Government have got the balance right in terms of the focus of the annual report. They are right to reject the suggestion that there should be an annual assessment, in addition to the regulatory impact assessment that will have been made, of the cost of the scheme to business.

It is interesting that in the other place it was Lord Saatchi who drew attention to the cost to business of the working of the tax credit schemes. During the debate in the other place, he explained why he was asking for an assessment of that cost as part of the report. He said: Why do we ask for this? Because we believe that such a responsibility being placed on the Treasury will have the healthy effect of focusing the Treasury's attention"— and, presumably, everyone else's— on the cost of the Bill to small business."—[Official Report, House of Lords, 16 May 2002; Vol. 635, c. CWH 31.] It is rather ironic that in moving the amendment in the name of cutting red tape on business, Lord Saatchi seems to want to do so by imposing a greater burden of red tape on the Inland Revenue—it would be onerous to run regulatory impact assessments every year. I am not saying that we should not be aware of the impact on business and seek to ameliorate that, but we must set the costs that there may be to business against the real benefits to business of increasing the number of people who are in work and participating in the labour market through the operation of the scheme.

Of course, it was Lord Saatchi who, 20 years ago, drew everyone's attention to the costs of "Labour's not working," as he put it then. It seems ironic that he is now drawing everyone's attention to the costs when Labour is working. We have more than 1 million more people in work as a result of labour market interventions such as the tax credit scheme.

It is all very well for the official Opposition and the Liberal Democrats to say that they support the tax credits, but if the tax credit schemes are to have their full beneficial effect in practice, it is important that they have the full support of the business community in their implementation. By drawing attention the whole time to the cost to business of operating the tax credit scheme, rather than taking a more balanced approach which emphasises the great benefits to business, especially if there is a high take-up of the scheme, the Opposition get the balance wrong.

In responding to the wishes of hon. Members in all parts of the House for the tax credit scheme to be effective, for a way of benchmarking that from year to year, and so for an annual report, the Government have got the balance right in their amendment. If the Opposition intend to support the scheme, they should stop carping about the form of the annual report and support the Government's amendment.

Dawn Primarolo

With the leave of the House, I shall respond to the three major points that have been made in the debate this afternoon, although I get the feeling that it does not matter what I say in my concluding remarks; the Opposition have already made up their mind that they will vote against the Government regardless.

The three points refer, first, to the cost to employers; secondly, to take-up; and thirdly, to fraud and the enforcement of the compliance system to reduce the level of fraud. I shall deal briefly with each point, starting with the cost to employers. As I said earlier, it is not for the Government to assess and account for employers' costs. However, it is for the Government—and it is we who introduced the process—to monitor and evaluate the introduction of measures that may impact on employers' costs, as the regulatory impact assessment does in relation to the regulations required under the Bill.

Two further issues were raised. First, the hon. Member for Northavon (Mr. Webb) accepted my argument that, if the regulations were set, they would not change. He also said, however, that the Government would do other things that might impact on employers and that the situation had to be seen in the round. The Lords amendment did not ask us to deal with such matters—it asked only for an annual report on the Bill—so even if he votes against the Government and in favour of the amendment, he will not get the assessment for which he has called on the Floor of the House. As the Government are committed to regulatory impact assessments, an evaluation is conducted of every measure's impact on employers and presented to the House.

I would also go further—the hon. Member for Northavon is aware that the same issue has arisen in previous debates on the working families tax credit, the disabled person's tax credit and the new tax credits—and say that the Government have worked very closely with business on the design and development of the systems. The consultative group has given an enormous amount of time, for which the Government are grateful, to ensuring that we properly take forward the work. That group will continue to have the ability to monitor and consider the situation should any changes occur that might impact on business. It will then be for the Government to bring the matter to the House. We take the view that the suggestion that we must conduct an annual report on regulations that will not change, costs that will not vary and an impact on business that is not yet accounted for is a waste of time, as such a report would produce information that would take the House no further forward.

The hon. Member for Arundel and South Downs (Mr. Flight) demonstrated that he still did not quite grasp what employers are being asked to do. In particular, he said that employers would be asked to supply a lot of information about hours. Precisely because of the way in which the new tax credits are structured, however, people will claim on the basis of information that the Revenue already has. Furthermore, the end-of-year checks will not routinely involve employers, so even his suggestion that the checking system will cause extra work is incorrect. The idea that we should conduct an annual report on something that is not happening is somewhat bizarre.

I turn now to the question of fraud and tax credits. The irony is that the Government, having listened closely to debates in this House as well as the other place, tabled an amendment that goes further than their lordships requested in their amendment. The Inland Revenue system does not operate only on the basis of prosecutions; the position is fundamentally different in relation to the Department for Work and Pensions. We also impose penalties, as we have a process that graduates through the system. The original Lords amendment asked for details on the number of investigations, prosecutions and convictions. The Government amendment requires the inclusion of both sets of information in the annual report. In addition, it requires that the report set out details of the number of penalties imposed under the Bill. That is an area on which hon. Members concentrated when we discussed the matter on the Floor of the House and in Committee.

On the first two points, hon. Members are asking for information as regards employers for which the Lords amendment does not provide, yet claim that that amendment is better. On the second amendment, about fraud and compliance with the system, the Government listened not only to their lordships but to this House, and tabled an amendment that goes further. We have also dealt with the issue of take-up.

Mr. Clappison

I am afraid that the Paymaster General is doing it again—she is bracketing fraud and non-compliance together. Does she appreciate that it is fraud that really angers members of the public, and will she now tell us how much fraud was involved in the working families tax credit?

Dawn Primarolo

I was hoping to save the House the explanation of the difference between how the Inland Revenue operates what it calls its non-compliance regime and how the Department for Work and Pensions conducts its regime for prosecutions. I fear that I will now have to give that explanation, because although the hon. Gentleman has repeatedly had the matter explained to him, he has not grasped it.

It is true—I think that the hon. Member for Northavon would entirely support this proposition—that the Government want to ensure that all those who are entitled to the new tax credits claim them. Of course, there is no reason not to tackle fraud where it arises, but the development of the regime must not have a negative impact in frightening or discouraging people from applying for their rights.

The Inland Revenue has a long history of dealing with non-compliance. Since 1999, that has been extended to dealing with tax credit claimants in order to ensure that tax credit claims are subject to a suitable compliance strategy. That experience, together with that obtained by the Department for Work and Pensions in operating the benefits system, has led to the development of a robust new compliance regime for the tax credit systems. That will make full use of automated systems and data sources used by the Inland Revenue to counter non-compliance. If we can prevent people from committing the fraud in the first place, we will not need to prosecute them because it has been picked up at an early stage.

The Inland Revenue can use penalties as forms of prosecution. We should consider the improvements that have been made. The Bill, like the previous tax credits provisions, contains structural improvements that should help further to reduce fraud. First, there is a move away from payment by the order book to payment directly into the hank account. Misuse of the order book is a well known and extensive area of fraud. Secondly, one of the biggest areas of fraud is understated earnings, which the Inland Revenue has long experience in tackling. Moreover, the measure of income for the tax credits will be aligned much more closely with those that are used for tax. Along with links between different Inland Revenue systems, that will make it much harder for claimants to hide sources of income.

The Bill goes further. It provides new powers to tackle fraud effectively, including powers to charge penalties and to provide the Revenue with the necessary power to obtain information, to check claims and to carry out inquiries where fraud is suspected. It allows for a co-ordinated approach of investigating tax and tax credit non-compliance. It includes new powers to investigate criminal fraud when necessary. It creates a new criminal offence of tax credit fraud and provides for powers that will allow the Revenue to recover overpayments. That contrasts with the system in the Department for Work and Pensions, which the hon. Member for Hertsmere (Mr. Clappison) keeps mentioning.

Compliance activity in the Department for Work and Pensions traditionally depends more on prosecutions, and contrasts with the Inland Revenue's approach of a compliance regime that reinforces at every point that the application is correct. The Inland Revenue's approach to tax credit fraud is consistent with its approach to other sorts of fraud. So the points made by hon. Member for Hertsmere are simply not valid.

5.45 pm

Mr. Clappison

The Paymaster General has been generous in giving way, but I want to press her on the matter. Whatever one's view about dealing with the matter as fraud or non-compliance, surely she agrees that it is important to know the amount of fraud. She wrote me a letter, which stated: The Inland Revenue are carrying out a benchmarking exercise to establish the level of fraud in tax credit claims. Will she tell us the amount of fraud and publish the report?

Dawn Primarolo

That is precisely what the Government new clause will do annually. Where has the hon. Gentleman been? It will provide annual information to the House on penalties, prosecutions and convictions.

Let me consider take-up. It is argued that the Government should somehow put in place estimates of take-up. I am surprised at the hon. Member for Northavon, who is well versed in the various surveys that are conducted and on which the Government draw. He also well knows that there is a gap between the studies being conducted and publication of the evidence. He knows that the studies do not always cover points that may now be relevant and need to be asked in the context of tax credits.

Estimating take-up rates is not as straightforward as hon. Members suggest. The purpose of an annual report is to provide the House with meaningful and structured information so that it can assess the impact of the tax credits. The matter is not straightforward because the take-up rate is calculated by dividing the number of awards by an eligible population. Survey data are used to estimate the number of eligible non-recipients. There is a time lag between conducting the survey and publishing the data. For example, the family resource survey for 2000–01 was published earlier this year. Eligibility tests, not only on household income but on hours worked, makes estimating the eligible population, especially those without children, far more complex.

Take-up was discussed when I appeared before the Treasury Sub-Committee. I explained the difficulty with the surveys on which we depend. I also explained that the Inland Revenue was in discussion with the bodies responsible for conducting the surveys to ensure that they included relevant questions for gleaning the information that would provide a more accurate measure of eligibility. We do not currently have that information. Producing an annual report now, when the information is unavailable and unreliable, would be a waste of Parliament's time and would not give us a true picture.

We have tried to be helpful; we have listened to the debate here and in another place, and we have tabled a better new clause. Despite the force of the argument, some people prefer to vote against the Government for the sake of doing so.

Question put, That this House disagrees with the Lords in the said amendment:—

The House divided: Ayes 296, Noes 188.

Division No. 284]	[5.50 pm
AYES
Abbott, Ms Diane	Battle, John
Adams, Mrs Irene (Paisley N)	Bayley, Hugh
Ainger, Nick	Beard, Nigel
Ainsworth, Bob (Cov'try NE)	Begg, Miss Anne
Anderson, Rt Hon Donald (Swansea E)	Benn, Hilary
Armstrong, Rt Hon Ms Hilary	Bennett, Andrew
Atherton, Ms Candy	Benton, Joe
Atkins, Charlotte	Berry, Roger
Austin, John	Betts, Clive
Bailey, Adrian	Blackman, Liz
Baird, Vera	Blears, Ms Hazel
Barnes, Harry	Blizzard, Bob
Barron, Rt Hon Kevin	Borrow, David
	Bradley, Rt Hon Keith (Withington)

Bradley, Peter (The Wrekin)	Griffiths, Win (Bridgend)
Bradshaw, Ben	Grogan, John
Brennan, Kevin	Hain, Rt Hon Peter
Brown, Rt Hon Nicholas (Newcastle E & Wallsend)	Hall, Mike (Weaver Vale)
Bryant, Chris	Hall, Patrick (Bedford)
Buck, Ms Karen	Hamilton, Fabian (Leeds NE)
Burden, Richard	Hanson, David
Burgon, Colin	Harris, Tom (Glasgow Cathcart)
Burnham, Andy	Havard, Dai
Cairns, David	Healey, John
Campbell, Mrs Anne (C'bridge)	Henderson, Doug (Newcastle N)
Campbell, Ronnie (Blyth V)	Henderson, Ivan (Harwich)
Caplin, Ivor	Hendrick, Mark
Casale, Roger	Hepburn, Stephen
Cawsey, Ian	Hesford, Stephen
Challen, Colin	Hill, Keith
Chapman, Ben (Wirral S)	Hinchliffe, David
Chaytor, David	Hodge, Margaret
Clark, Dr Lynda (Edinburgh Pentlands)	Hoon, Rt Hon Geoffrey
Clark, Paul (Gillingham)	Hope, Phil
Clarke, Rt Hon Tom (Coatbridge)	Hopkins, Kelvin
Clarke, Tony (Northampton S)	Howarth, Rt Hon Alan (Newport E)
Clelland, David	Howarth, George (Knowsley N)
Coaker, Vernon	Hoyle, Lindsay
Coffey, Ms Ann	Hughes, Kevin (Doncaster N)
Cohen, Harry	Humble, Mrs Joan
Coleman, Iain	Hurst, Alan
Connarty, Michael	Iddon, Dr Brian
Cooper, Yvette	Illsley, Eric
Corbyn, Jeremy	Irranca—Davies, Huw
Cousins, Jim	Jackson, Glenda (Hampstead)
Cranston, Ross	Jackson, Helen (Hillsborough)
Crausby, David	Jamieson, David
Cruddas, Jon	Jenkins, Brian
Cryer, John (Hornchurch)	Johnson, Alan (Hull W & Hessle)
Cunningham, Tony (Workington)	Jones, Helen (Warrington N)
Dalyell, Tam	Jones, Jon Owen (Cardiff C)
Davey, Valerie (Bristol W)	Jones, Kevan (N Durham)
David, Wayne	Jones, Lynne (Selly Oak)
Davidson, Ian	Jones, Martyn (Clwyd S)
Davies, Rt Hon Denzil (Llanelli)	Kaufman, Rt Hon Gerald
Davies, Geraint (Croydon C)	Keeble, Ms Sally
Dawson, Hilton	Keen, Alan (Feltham & Heston)
Dean, Mrs Janet	Keen, Ann (Brentford & Isleworth)
Dhanda, Parmjit	Kelly, Ruth
Dobbin, Jim	Kemp, Fraser
Dobson, Rt Hon Frank	Khabra, Piara S
Donohoe, Brian H	Kilfoyle, Peter
Doran, Frank	Knight, Jim (S Dorset)
Drown, Ms Julia	Kumar, Dr Ashok
Dunwoody, Mrs Gwyneth	Lammy, David
Eagle, Angela (Wallasey)	Lawrence, Mrs Jackie
Eagle, Maria (L'pool Garston)	Laxton, Bob
Edwards, Huw	Lazarowicz, Mark
Efford, Clive	Lepper, David
Ellman, Mrs Louise	Leslie, Christopher
Ennis, Jeff	Levitt, Tom
Fisher, Mark	Liddell, Rt Hon Mrs Helen
Fitzpatrick, Jim	Linton, Martin
Fitzsimons, Mrs Lorna	Love, Andrew
Follett, Barbara	Lucas, Ian
Foster, Michael (Worcester)	Luke, Iain
Foster, Michael Jabez (Hastings)	Lyons, John
Foulkes, George	McCabe, Stephen
Francis, Dr Hywel	McCartney, Rt Hon Ian
Gapes, Mike	McDonagh, Siobhain
Gardiner, Barry	MacDonald, Calum
George, Rt Hon Bruce (Walsall S)	McDonnell, John
Gerrard, Neil	McFall, John
Gibson, Dr Ian	McIsaac, Shona
Gilroy, Linda	McKechin, Ann
Godsiff, Roger	Mackinlay, Andrew
Goggins, Paul	McNulty, Tony
	Mactaggart, Fiona
Griffiths, Nigel (Edinburgh S)	McWalter, Tony
	McWilliam, John

Mahmood, Khalid	Sheerman, Barry
Mahon, Mrs Alice	Sheridan, Jim
Mallaber, Judy	Shipley, Ms Debra
Mandelson, Rt Hon Peter	Simon, Siôn
Mann, John	Singh, Marsha
Marris, Rob	Skinner, Dennis
Marsden, Gordon (Blackpool S)	Smith, Rt Hon Andrew (Oxford E)
Marshall, Jim (Leicester S)	Smith, Angela (Basildon)
Marshall—Andrews, Robert	Smith, Rt Hon Chris (Islington S)
Martlew, Eric	Smith, Jacqui (Redditch)
Michael, Rt Hon Alun	Smith, John (Glamorgan)
Miller, Andrew	Smith, Llew (Blaenau Gwent)
Mitchell, Austin (Gt Grimsby)	Soley, Clive
Mole, Chris	Southworth, Helen
Moonie, Dr Lewis	Speller, Rt Hon John
Moran, Margaret	Squire, Rachel
Morley, Elliot	Starkey, Dr Phyllis
Morris, Rt Hon Estelle	Steinberg, Gerry
Mountford, Kali	Stevenson, George
Mudie, George	Stewart, David (Inverness E)
Mullin, Chris	Stewart, Ian (Eccles)
Murphy, Denis (Wansbeck)	Stinchcombe, Paul
Murphy, Jim (Eastwood)	Stoate, Dr Howard
Murphy, Rt Hon Paul (Torfaen)	Strang, Rt Hon Dr Gavin
Naysmith, Dr Doug	Stuart, Ms Gisela
O'Brien, Bill (Normanton)	Tami, Mark
O'Brien, Mike (N Warks)	Taylor, Rt Hon Ann (Dewsbury)
Organ, Diana	Taylor, Ms Dari (Stockton S)
Osborne, Sandra (Ayr)	Taylor, David (NW Leics)
Owen, Albert	Thomas, Gareth (Clwyd W)
Perham, Linda	Thomas, Gareth (Harrow W)
Picking, Anne	Timms, Stephen
Pickthall, Colin	Tipping, Paddy
Pike, Peter	Todd, Mark
Plaskitt, James	Touhig, Don
Pond, Chris	Trickett, Jon
Pope, Greg	Truswell, Paul
Pound, Stephen	Turner, Dr Desmond (Kemptown)
Prentice, Ms Bridget (Lewisham E)	Turner, Neil (Wigan)
Prentice, Gordon (Pendle)	Twigg, Derek (Halton)
Primarolo, Dawn	Twigg, Stephen (Enfield)
Prosser, Gwyn	Tynan, Bill
Purchase, Ken	Vaz, Keith
Purnell, James	Wareing, Robert N
Quin, Rt Hon Joyce	Watson, Tom
Rammell, Bill	Watts, David
Rapson, Syd	White, Brian
Reed, Andy (Loughborough)	Whitehead, Dr Alan
Robertson, John (Glasgow Anniesland)	Wicks, Malcolm
Rooney, Terry	Williams, Rt Hon Alan (Swansea W)
Ross, Ernie	Winnick, David
Roy, Frank	Winterton, Ms Rosie (Doncaster C)
Ruane, Chris	Wood, Mike
Ruddock, Joan	Worthington, Tony
Russell, Ms Christine (Chester)	Wright, Anthony D (Gt Yarmouth)
Ryan, Joan	Wright, David (Telford)
Salter, Martin	Wright, Tony (Cannock)
Sarwar, Mohammad	Wyatt, Derek
Savidge, Malcolm	Tellers for the Ayes:
Sawford, Phil	Mr. Ian Pearson and
Shaw, Jonathan	Mr. Gerry Sutcliffe.
NOES
Allan, Richard	Beith, Rt Hon A J
Arness, David	Bellingham, Henry
Ancram, Rt Hon Michael	Bercow, John
Arbuthnot, Rt Hon James	Beresford, Sir Paul
Atkinson, Peter (Hexham)	Blunt, Crispin
Bacon, Richard	Boswell, Tim
Baker, Norman	Bottomley, Peter (Worthing W)
Barker, Gregory	Brady, Graham
Baron, John	Brake, Tom
Barrett, John	Brazier, Julian
Beggs, Roy	Breed, Colin

Brooke, Mrs Annette L	Letwin, Oliver
Burnett, John	Lewis, Dr Julian (New Forest E)
Burns, Simon	Liddell—Grainger, Ian
Burnside, David	Lidington, David
Burstow, Paul	Lilley, Rt Hon Peter
Burt, Alistair	Llwyd, Elfyn
Butterfill, John	Loughton, Tim
Cable, Dr Vincent	Luff, Peter
Calton, Mrs Patsy	McIntosh, Miss Anne
Campbell, Gregory (E Lond'y)	MacKay, Rt Hon Andrew
Campbell, Rt Hon Menzies (NE Fife)	Maclean, Rt Hon David
Carmichael, Alistair	McLoughlin, Patrick
Cash, William	Malins, Humfrey
Chidgey, David	Maples, John
Clappison, James	Marsden, Paul (Shrewsbury)
Clarke, Rt Hon Kenneth (Rushcliffe)	Mates, Michael
Clifton—Brown, Geoffrey	Maude, Rt Hon Francis
Collins, Tim	May, Mrs Theresa
Cormack, Sir Patrick	Mercer, Patrick
Cotter, Brian	Moore, Michael
Curry, Rt Hon David	Murrison, Dr Andrew
Davies, Quentin (Grantham)	Norman, Archie
Davis, Rt Hon David (Haltemprice)	Oaten, Mark
Djanogly, Jonathan	O'Brien, Stephen (Eddisbury)
Doughty, Sue	Öpik, Lembit
Duncan Smith, Rt Hon Iain	Osborne, George (Tatton)
Evans, Nigel	Ottaway, Richard
Ewing, Annabelle	Page, Richard
Fabricant, Michael	Paice, James
Fallon, Michael	Paterson, Owen
Field, Mark (Cities of London)	Pickles, Eric
Flight, Howard	Price, Adam
Flook, Adrian	Prisk, Mark
Forth, Rt Hon Eric	Pugh, Dr John
Foster, Don (Bath)	Randall, John
Francois, Mark	Redwood, Rt Hon John
Gale, Roger	Reid, Alan (Argyll & Bute)
Garnier, Edward	Rendel, David
George, Andrew (St Ives)	Robathan, Andrew
Gibb, Nick	Robertson, Angus (Moray)
Gidley, Sandra	Robertson, Hugh (Faversham)
Gillan, Mrs Cheryl	Robertson, Laurence (Tewkb'ry)
Goodman, Paul	Robinson, Peter (Belfast E)
Gray, James	Roe, Mrs Marion
Grayling, Chris	Rosindell, Andrew
Green, Damian (Ashford)	Ruffley, David
Grieve, Dominic	Russell, Bob (Colchester)
Hague, Rt Hon William	Salmond, Alex
Harris. Dr Evan (Oxford W)	Sanders, Adrian
Harvey, Nick	Sayeed, Jonathan
Hawkins, Nick	Selous, Andrew
Hayes, John	Simmonds, Mark
Heald, Oliver	Smith, Sir Robert (W Ab'd'ns)
Heath, David	Smyth, Rev Martin (Belfast S)
Heathcoat—Amory, Rt Hon David	Spelman, Mrs Caroline
Holmes, Paul	Spicer, Sir Michael
Horam, John	Spink, Bob
Howard, Rt Hon Michael	Spring, Richard
Howarth, Gerald (Aldershot)	Stanley, Rt Hon Sir John
Hughes, Simon (Southwark N)	Steen, Anthony
Hunter, Andrew	Streeter, Gary
Jack, Rt Hon Michael	Stunell, Andrew
Jackson, Robert (Wantage)	Swayne, Desmond
Jenkin, Bernard	Swire, Hugo
Johnson, Boris (Henley)	Syms, Robert
Jones, Nigel (Cheltenham)	Tapsell, Sir Peter
Key, Robert	Taylor, Ian (Esher & Walton)
Kirkbride, Miss Julie	Taylor, John (Solihull)
Kirkwood, Archy	Taylor, Matthew (Truro)
Lait, Mrs Jacqui	Taylor, Dr Richard (Wyre F)
Lamb, Norman	Taylor, Sir Teddy
Lansley, Andrew	Thurso, John
Laws, David	Tredinnick, David
	Trend, Michael
Leigh, Edward	Turner, Andrew (Isle of Wight)
	Tyler, Paul

Tyrie, Andrew	Winterton, Ann (Congleton)
Viggers, Peter	Winterton, Sir Nicholas (Macclesfield)
Waterson, Nigel	Wishart, Pete
Watkinson, Angela	Yeo, Tim
Webb, Steve	Young, Rt Hon Sir George
Whittingdale, John	Younger—Ross, Richard
Wiggin, Bill
Willetts, David	Tellers for the Noes:
Williams, Roger (Brecon)	Mr. Charles Hendry and
Willis, Phil	Mr. David Wilshire.

Question accordingly agreed to.

Lords amendment disagreed to.

Government amendment in lieu of Lords amendment No. 1 agreed to.