Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the merits of extending the Financial Conduct Authority's remit so that it can tackle poor or misleading debt advice delivered by insolvency practitioners and individual voluntary arrangement firms.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Government recognises the importance of individuals receiving accurate and reliable information when they are considering an Individual Voluntary Arrangement (IVA). When administered well, IVAs provide a debt solution to people who are not eligible for a Debt Relief Order, or who want an alternative to bankruptcy. However, if an IVA is unsuitable, it can leave people in debt for longer and result in further financial difficulty. Oversight of Insolvency Practitioners, who administer IVAs, is provided through standards applied by one of three Recognised Professional Bodies and overseen by the Insolvency Service.
The Insolvency Service is taking action to address concerns about the debt solutions market and expects to see swift action from volume IVA firms to eliminate poor practice. To support this, the Insolvency Service are also working with the sector to publish a new simplified IVA Protocol and key facts document to help consumers understand what they are signing up for. New guidance is also being published for Insolvency Practitioners on their control of cases. This is further to the 2023 publication of a new Standard for Insolvency Practitioners (SIP 3.1), making clear their responsibility to ensure consumers have received an explanation of all potential debt relief solutions so that they can make an informed judgement. The Insolvency Service continues to work to address poor practices through its ongoing review of the personal insolvency framework and continued collaboration with other regulators.
Debt advice providers, and debt packager firms which may refer individuals to IVA providers and other debt solutions, are regulated by the Financial Conduct Authority (FCA). In 2023, the FCA banned referral fees for debt packager firms to remove incentives to recommend debt solutions which may not be in the consumer’s best interest.
The ongoing collaboration between the FCA, the Insolvency Service, and other stakeholders reflects a concerted effort to enhance consumer protection in the debt advice and insolvency sectors. The Government will continue to monitor the effectiveness of existing regulatory frameworks.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Baroness Vere of Norbiton on 25 April (HL3770), how they intend to assess entitlement for contributory working age benefits and pensions, should they abolish national insurance contributions in line with their stated ambition.
Answered by Baroness Vere of Norbiton
Cutting NICs rates does not affect anyone’s entitlement to the State Pension or contributory benefits.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Baroness Vere of Norbiton on 8 April (HL3589), whether they will now answer the question put; namely, what is their assessment of the implications for calculating entitlement to contributory working age benefits and pensions of abolishing, rather than cutting, national insurance contributions.
Answered by Baroness Vere of Norbiton
The Government already cut employee NICs by 4p, self-employed NICs by 3p and abolished the requirement to pay Class 2 for self-employed people across Autumn and Spring without increasing borrowing or cutting spending. That is the model the Government wants to follow when it is prudent to go further.
The ambition to abolish NICs is about reducing tax and rewarding work, not about reforming the contributory benefits system. It is a long-term ambition, and the Government has been clear, this cannot be done overnight and this can only be done in a fiscally responsible way.
Cutting NICs rates does not affect anyone’s entitlement to the State Pension or contributory benefits.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the remarks of Baroness Vere of Norbiton on 18 March (HL Deb col 82), what is their assessment of the implications for calculating entitlement to contributory working age benefits and pensions of abolishing national insurance contributions.
Answered by Baroness Vere of Norbiton
Cutting NICs does not affect anyone’s entitlement to the State Pension or contributory benefits.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the letter from the Economic Secretary to the Treasury to The Share Foundation on 23 January where he stated that "the government currently has no plans to introduce a 'Default Withdrawal at 21' process" for unclaimed and unregistered HMRC-allocated child trust funds, what are their reasons for declining this proposal.
Answered by Baroness Vere of Norbiton
The government carefully considered the proposal outlined in The Share Foundation’s letter of 24 November 2023 and decided it was not deliverable for several reasons.
The Share Foundation have proposed a complex scheme which would require the co-operation of ISA and Child Trust Fund (CTF) managers, other Government Departments and banks and building societies to identify the relevant young people (and whether they are in receipt of benefits or government payments) and to facilitate the transfer of information and funds between those agencies. Such a scheme is likely to engage with data protection issues and interfere with an individual’s right to manage their own financial affairs.
The Government attaches great importance to ensuring young people can access their matured CTFs. HMRC assists these young people through its online tracing service and through targeted communications appropriate to the age group. It will continue its work with providers, industry representatives and other stakeholders exploring ways of increasing the profile of CTFs and enabling account owners to be aware of and trace their accounts.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what is the total number of unique search requests for child trust funds which have been entered to date by young people aged 16 to 21 into the Government Gateway and which have resulted in successful linkage to their accounts.
Answered by Baroness Vere of Norbiton
For the tax years 2020-2021 to 2022-2023 HMRC replied, in total, to over 157,000 requests to trace Child Trust Fund (CTF) accounts. HMRC does not hold data on how many of those who made the request successfully linked to their CTF accounts. Some may be below 18 and seeking to trace their account in anticipation of account maturity. Others may have traced the account but decided not to access it at that point, withdrawn their CTF savings or may have transferred the savings to an ISA or other type of current or savings account. (HL2166)
Primary responsibility for communicating with account holders and their registered contact (usually a parent) lies with the CTF account providers. The government is committed to helping people identify and access the savings they are entitled to and continues to explore new routes to reunite young people with their matured CTFs.
HMRC actively engages with the industry, other government departments, organisations such as the Money and Pensions Service, and youth focused charities to raise awareness of CTFs amongst young people. HMRC also issues a range of communications and provides resources for key intermediaries such as the University and Colleges Admissions Service, who have greater influence and visibility amongst the CTF audience.
The government’s current plans will reunite most accounts with their owners, but there may be some cases where further action will be required. The government will monitor how many matured accounts remain open and judge when it is appropriate to intervene in other ways.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what steps they are taking to inform young adults with unclaimed child trust funds, particularly those from low-income backgrounds, how to access their accounts.
Answered by Baroness Vere of Norbiton
For the tax years 2020-2021 to 2022-2023 HMRC replied, in total, to over 157,000 requests to trace Child Trust Fund (CTF) accounts. HMRC does not hold data on how many of those who made the request successfully linked to their CTF accounts. Some may be below 18 and seeking to trace their account in anticipation of account maturity. Others may have traced the account but decided not to access it at that point, withdrawn their CTF savings or may have transferred the savings to an ISA or other type of current or savings account. (HL2166)
Primary responsibility for communicating with account holders and their registered contact (usually a parent) lies with the CTF account providers. The government is committed to helping people identify and access the savings they are entitled to and continues to explore new routes to reunite young people with their matured CTFs.
HMRC actively engages with the industry, other government departments, organisations such as the Money and Pensions Service, and youth focused charities to raise awareness of CTFs amongst young people. HMRC also issues a range of communications and provides resources for key intermediaries such as the University and Colleges Admissions Service, who have greater influence and visibility amongst the CTF audience.
The government’s current plans will reunite most accounts with their owners, but there may be some cases where further action will be required. The government will monitor how many matured accounts remain open and judge when it is appropriate to intervene in other ways.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what steps they intend to take to ensure that young people do not lose track of their investments in Child Trust Funds.
Answered by Baroness Penn
HMRC has worked closely with Child Trust Fund (CTF) providers, the wider industry and the Money and Pensions Service to ensure that young people are aware of, and can access, their CTFs.
HMRC has:
Children with maturing CTFs also receive a significant amount of written information pertaining to their account directly from their account provider.
The government is committed to helping people access the savings and money they are entitled to and continues to explore new routes to reunite young people with their Child Trust Funds.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what is their estimate of the number of adults (1) in paid work, and (2) not in paid work, who have incomes below the income tax threshold.
Answered by Baroness Penn
Estimates of the number of adults in paid work and not in paid work who have incomes below the Income Tax Personal Allowance during the 2019-20 tax year, the latest year for which these figures are available, are set out below.
| Estimated number of adults in 2019-20 (millions) |
Paid work | 10.2 |
Not in paid work | 6.7 |
Total | 16.9 |
Source: Survey of Personal Incomes, tax year 2019 to 2020
The Income Tax Personal Allowance for the 2019-20 tax year is £12,500. The adult population (individuals aged 18 and over) in paid work is based on individuals with employment and/or self-employment income. Other income amounts such as occupational or State pension is not included as paid work but individuals with incomes such as pensions could be in either category. The data underlying the Survey of Personal Incomes is based on a large sample of over 820,000 individuals with incomes reported to HMRC. As is the case with the published Personal Incomes Statistics, these figures are statistical estimates and will be subject to sampling variation.
Asked by: Baroness Lister of Burtersett (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the report by the Office of Tax Simplification OTS evaluation note: Update on OTS work on the High Income Child Benefit Charge and its wider implications, published on 1 March; and in particular, (1) the criticisms of the progress on recommendations made to improve the working of the high income child benefit charge, and (2) the further recommendations contained in that report.
Answered by Baroness Penn
The High Income Child Benefit Charge (HICBC) ensures that support for families is targeted at those who need it most. The Government is grateful to the Office of Tax Simplification (OTS) for their suggestions for how the individual’s experience of child benefit and HICBC could be improved.
The OTS acknowledge that HMRC has made progress following their “Simplifying everyday tax for smaller businesses” and “Life events review: simplifying tax for individuals” reports from 2019, including by improving the child benefit form to ensure that it is clear that the form should be completed, even where the parents may wish to opt out of getting child benefit payments. HMRC has also undertaken customer research to explore child benefit claimants’ understanding of HICBC, benefits of claiming and the reasons why some do not make a claim.
HMRC has also taken considerable steps to raise awareness of HICBC. It currently shares information via social media, through third parties such as websites aimed at parents or families, and on GOV.UK. HMRC also writes to around 70,000 customers each year to remind them what they need to do to pay HICBC.
The OTS’ findings will continue to inform HMRC’s ongoing work.