I beg to move amendment 1, in schedule 1, page 24, leave out lines 11 to 13.

The amendment would delete subsection (6) of proposed new section 804A of the Income Tax (Trading and Other Income) Act 2005, which addresses the way in which the shared lives care tax relief arrangements propose to treat a group of siblings—brothers and sisters—placed in the same household as though it was a single placement, no matter how many brothers or sisters are actually placed in the household. Clearly, while there might be ease-of-administration reasons why HMRC wishes to restrict the relief in that particular way, there are surely additional burdens and costs that grow according to the number of related shared lives placements, especially if the people involved are adults. It might be preferable to reflect that in some way in the tax relief system. I can imagine, for instance, that when there are two individuals physically together, while it is important to keep the family unit happy and cohesive, there is obviously an additional burden on the carers  involved. It would be regrettable if we unwittingly put into the system a disincentive to keep a family together. I would have thought that there would be worth and value in ensuring that there was some reflection of the fact that an opportunity to keep brothers and sisters together as a family unit, albeit moving into adulthood, is something the system should reflect.

At this stage, this is a probing amendment that is designed simply to seek an explanation from the Minister on how, in circumstances where there are multiple siblings in one household and shared lives placements—that could be an extremely laudable and welcome scenario—there could be a risk of a penalty or disincentive for the carers concerned.

I appreciate that this is a probing amendment, and I am sure that I can provide the reassurance for which the hon. Gentleman is looking. Amendment 1 would remove subsection (6) of proposed new section 804A of the Income Tax (Trading and Other Income) Act 2005, as introduced by schedule 1 to the Bill.

The new section deals with the placement cap, which focuses the relief on small-scale arrangements by limiting the availability of the relief to arrangements where no more than three people are cared for at a time. Subsection (6), which covers siblings, qualifies the terms of this limit so that if a carer provides shared lives care for a family group, that will not automatically mean that the placement cap is exceeded. It achieves that by treating siblings as if they were one person for the purposes of establishing whether the placement cap has been exceeded. Without subsection (6), a carer looking after four siblings would exceed the placement cap. This subsection therefore preserves the entitlement to relief in those circumstances.

The hon. Member for Nottingham East rightly said that it would be regrettable if there was a disincentive to keep families together. The provision ensures that families can be kept together. It is worth noting—this might be the hon. Gentleman’s concern—that siblings are not treated as one person when determining the amount of relief available to the carer. For these purposes, the carer would treat each sibling as a separate person for whom qualifying care was provided so that the appropriate amount of relief could be calculated.

I understand that the Opposition want to ensure that there is fair treatment for carers, as we do, but I think that they might have misunderstood the purpose of subsection (6). It does not penalise carers; quite the contrary, it ensures that the placement cap, which affects the relief that they receive, is not exceeded should carers look after siblings. I hope that that explanation is satisfactory to the hon. Gentleman and that he will withdraw his amendment.

I am certainly interested to hear the Minister’s points, and I am reassured if it is the case that carers who look after brothers and sisters will not be financially worse off for doing so compared with if they looked after non-siblings or another set of individuals. I think that he is nodding his assent, which is extremely welcome. I do not know whether other organisations will have observations to make on those points but, given the Minister’s reassurance, I am more than happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 2, in schedule 1, page 26, line 8, at end insert—

With this it will be convenient to discuss amendment 3, in schedule 1, page 28, line 17, leave out ‘2011-12’ and insert ‘2012-13’.

Amendment 2 would change paragraph 12 of schedule 1 to the Bill by adding—for belt and braces purposes, as much as anything else—an additional requirement on the Treasury It raises issues that were first highlighted by the Chartered Institute of Taxation, which hosts a low incomes tax reform group. It made its representations in June, pointing out that one group of carers might lose out under the proposed changes. Mr Robin Williamson, the technical director of the LITRG, asserted:

“If a person is both a foster carer and an adult placement carer” simultaneously,

“the tax free limit on the amounts they receive from the local authority or fostering agency will actually fall.”

Specifically, paragraph 12(2) of the schedule sets a new weekly amount for an adult of £250, which I think stands in contrast to the £400 a week received for the first child in a foster care scenario. I would welcome the Minister walking the Committee through exactly how those arrangements will apply, especially in the different circumstances of shared lives placements versus foster care.

I understand that the new fixed amount per residence is worth while, but there are circumstances in which some carers who look after both foster children and an adult placement might lose out. That could be the intent of the Treasury, but I doubt it, or it could be a drafting anomaly. Carers in such circumstances might well risk losing the enhanced weekly amount of £400 under the new rules, when they would have been entitled to it previously. The proposal creates a problem for the particular set of carers who have looked after a number of young people, perhaps some of whom have passed the age of 18. The guillotine age of majority issue does not necessarily change the circumstances of the care that young people require when they move from the ages of 16, 17 and 18 to 19. Even though young people have passed the age of 18, they might still require home support although they are technically adults.

Such circumstances can occur relatively frequently, and such carers might find themselves in the predicament whereby they lose tax relief on income of up to £7,800 per year, which is £400 weekly minus the new amount of £250, multiplied by 52 weeks. That, in turn, could create a tax burden at the basic rate of £1,560—money that would then not be available for use by carers on the children and adults in their care. The Chartered Institute of Taxation has, in particular, urged Ministers to reconsider that aspect of the rules. It would be useful in a wider context to look not only at the point raised by the institute, but at the importance of the fact that the new  adult placement care arrangements are coming under a relatively recent set of tax changes.

Given our debate on clause 1 and the changing nature of care arrangements, we need to have an ongoing review to ensure that carers do not fall into hardship and that they can sustain the costs involved in that care. For young people, that can include school uniforms, sports clothing, school equipment, travelling expenses, babysitting and childminding costs, gifts for birthdays and Christmas, holidays, other educational costs, glasses, playgroup fees, hobbies, sports, activities, passports, adaptations to housing and the general well-being of the child—they are just a few of the miscellaneous costs that will be incurred whether a foster carer is looking after children or in adult placement arrangements. It will be important if the Bill underlines such principles, especially in respect of adult placement care arrangements, which are relatively new to legislation. If we could draw attention to such matters and hold a review, it would be important.

I accept that Labour Members must take responsibility for initiating such technical changes—I am proud that we did so. However, we believe that it would be a fair concession to allow for a review of such arrangements, especially to test for hardship that might result from the new blanket adult weekly amount of £250. Such an amendment would be worth while.

As the hon. Gentleman said, such proposals were announced in the previous Government’s last pre-Budget report of 9 December 2009. The PBR stated that the changes would take effect from 6 April this year. Despite that, the measure did not feature in the pre-election Finance Bill so, although the process was initiated at that stage, it is necessary to take it forward under the Bill that we are discussing.

Amendment 2 would commit the Treasury to publishing a review into the impact of the shared lives legislation. It is fair to say that Government and Opposition members of the Committee agree that bringing together reliefs for foster care and shared lives care will benefit carers on the whole. However, the low incomes tax reform group has raised concerns about individuals who may claim both reliefs separately. We believe that that is a theoretical possibility, but the reliefs are in place to make a standard allowance for household expenses incurred, so it would be inappropriate to make two allowances available for the same household expenses. It was certainly never the policy intention that individuals in a position to claim both the existing statutory relief and the extra-statutory concession for adult placement should have an unfair advantage.

As with any policy, HMRC will be monitoring the legislation’s effect in conjunction with interested parties to ensure that it operates fairly. Although Opposition Members make an understandable point through amendment 2, I do not think that it is appropriate for the Committee to accept it. Ensuring that legislation is implemented fairly and properly is important, of course, but it would be burdensome to put such a commitment into the Bill. However, I confirm that we will ensure that we review the measure’s implementation and discuss any cases of hardship with representative bodies. HMRC takes such issues seriously and has told me that it will happily receive representations on the matter.

Amendment 3 would allow carers a further year to apply the new rules. The schedule permits carers to continue to use existing practice until 5 April 2011, although they can choose to use the new rules from 6 April 2010. The proposals were announced almost a year ago, in December 2009, and have been widely publicised and discussed with interested parties. In most instances, the schedule merely has the effect of providing a firm statutory basis for existing practice. For most carers, the transition will be straightforward and have no appreciable effect. Furthermore, after consultation with interested parties, HMRC will prepare guidance, which will be published as soon as possible to support carers in making the change.

Given that the initial announcement was made in 2009 and there is the possibility of a year’s transitional period, carers will have ample opportunity to adapt to the new regime. Also, it would not be appropriate for HMRC to continue extra-statutory treatment for a full year while the parallel legislation is already in place, because that would confuse rather than reassure.

We are have not received any representations—nor are we aware of any—asking for full implementation to be delayed. It is necessary at some point to proceed to implement a process that was initiated nearly a year ago. The Government are committed to being clear in our decisions and to providing time for proper consultation and consideration to ensure that we have made the right choices. It is right that we proceed.

The hon. Gentleman asked about children turning 18 and the guillotine or cut-off point. Children in foster care who turn 18 and are staying with a family often come within staying-put care, which may qualify for shared lives care, depending on the circumstances.

Although I believe that amendments 2 and 3 were tabled with the best intentions and our debate has been helpful, it is clear that neither is needed. I stress, however, that we will review the implementation of the measure and discuss any hardship cases with representative bodies. I therefore ask the hon. Gentleman to withdraw his amendment.

With the leave of the Committee, I shall return to the Minister’s point about amendment 2. I do not quite follow the logic that enshrining in legislation the Treasury’s requirement to conduct a review would be burdensome in any way, although I accept that he is on record as giving a commitment to conduct an ongoing review to ensure that arrangements are up to date and minimise any possible difficulties. Will he give us some indication of what sort of review process that will be? Will officials put contact details on the website for people to use if issues arise? Often, people in those circumstances do not know who to make representations to, and the large, monolithic face of the Treasury is not necessarily the easiest to make representations to, particularly in its current guise.

Amendment 3, which I did not dwell on sufficiently in my original comments, is designed to build on the transitional arrangements that the Treasury had conceived originally. The reason why we want to delete “2011-12” and insert “2012-13” in proposed subsection (2) is to give a two-year transition period so that those affected can opt for the current rules instead of moving straight away to the new arrangements.

We felt it important at least to seek a concession from the Minister because it is reasonable to allow that slightly longer transition to give busy individuals and families the proper opportunity to adjust and come to terms with the extremely complex arrangements. A two-year transitional phase would recognise the time that it takes for families and households to adjust their circumstances and shared life care arrangements to the new financial regime—circumstances that might well take many months to alter, given the human scale and the nature of the issues at hand.

Why two years rather than one? I believe that we need to give help to families in those particular circumstances because, although to many of us 12 months might be ample to move house or change particular arrangements, the financial circumstances in such arrangements require a little bit more care and attention and, possibly, time. If the financial arrangements are changing, the carer’s circumstances may well have to change, and to force that change within 12 months may prompt a premature series of changes in the carer arrangements. That might not be particularly welcome.

I ask the Minister to err on the side of generosity in that respect. I do not believe that it would have a major impact in a financial sense, but I think it could make a vast difference to the carers.

I am grateful for the hon. Gentleman’s further remarks. As far as a review is concerned, I do not think it is necessary to put something on the face of the Bill, nor necessarily have a full formal review with requests for consultation. The Treasury may have a large, monolithic face, but it and HMRC are in continuous discussion with organisations such as the low incomes tax reform group, and we will ensure that we discuss the implementation of this matter with it and other interested parties.

As far as the transitional period is concerned, we have to remember that the reforms are based on an existing relief. Guidance on how this works will be published by HMRC, but in the vast majority of cases, there will not be a substantial change to what is already in place. Consequently, we believe that it is right to proceed. If we tried to run a parallel system over a long time, it would cause more confusion than it would solve. I note the concerns that have been reasonably expressed by the hon. Gentleman, but we believe that it is right to proceed with the reform according to the timetable in the Bill.

I think that I have made the point on behalf of Opposition Members, and I do not want to labour it more than is necessary. The officials will also have heard the points. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.