Clause 188 - Vehicle licences for disabled people

Finance Bill – in a Public Bill Committee am 10:45 am ar 18 Mehefin 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Sir David Amess Sir David Amess Ceidwadwyr, Southend West

With this we will discuss that schedule 35 be the Thirty-fifth schedule to the Bill.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The clause relates to vehicle licences for disabled people. As I am sure members of the Committee are aware, the disability living allowance is split into three: the high, medium and low rates. Under the new personal independence payment, the payments will be split into just two rates: enhanced and standard.

Under the current legislation, the Vehicle Excise and Registration Act 1994, claimants are exempt from vehicle excise duty only if they are on the higher rate. That suggests that some claimants who previously received a full exemption will now receive only a 50% discount, while some who previously received no exemption will now have to pay only half the rate. In addition, the measure provides for a full vehicle excise duty exemption for those receiving the armed forces independence payment, which came into effect on 8 April this year.

It is true that the changes will bring new help to some people. The Government claim in their policy objective for the measure that their

“aim is to ensure that the tax system provides support for people with serious mobility impairments to lead full, active and independent lives.”

However, although the measure will work for some, large numbers of disabled people in the country will feel cast aside by the Government, with no support to help them to lead

“full, active and independent lives.”

The chief executive of Scope, Richard Hawkes, has said that

“times are tough for everyone but disabled people are being hit harder than most. They face a triple whammy of cuts to their benefits, cuts to local services as local authority budgets get squeezed and an ever increasing cost of living.”

In particular, the 500,000 disabled people who, by the Government’s own assessment, will lose support in the move from DLA to PIP are the very people who will not benefit from the changes in the clause. Even in respect of those who will remain in receipt of support after the move to PIP, it would be helpful if the Minister could clarify how many will stand to gain from this measure.

Will the Minister outline whether any of those affected by the move will see a reduction in support for VED rates, and, if so, how many? In other words, is it possible for people who were on the high rate of DLA to be re-categorised as on the standard rate of PIP, thereby going from a full exemption to only a 50% discount?

The operational impact section of the Government’s impact note for the measure states:

“Introducing the rates discount will require changes to tax systems at a one-off cost of between £5 million and £10 million.”

Will the Minister provide a breakdown of where those costs will fall? That would be helpful for the Committee’s understanding of the impact of the change. Given that the introduction of a full exemption for those receiving the armed forces independence payment was not mentioned in the impact note, will he clarify whether the costs associated with creating the new tax support are included in the £5 million to £10 million range?

Paragraphs 5 and 6 of schedule 35 provide that the full exemption or 50% discount will remain in effect during any period of the recipient’s treatment as an in-patient at a hospital or similar institution. Our understanding is that claimants will cease to receive PIP if their stay in hospital is more than a certain length of time. Will the Minister confirm whether that is the case and, if so, whether that will have any impact on a claimant’s ability to receive either the full exemption or the 50% discount? If it will, what processes will be put in place to claw back the exemption or discount from a pre-paid VED payment? The claimant may have already claimed the exemption or discount and then become ineligible.

Finally, will the Minister give an update on the time scale for the implementation of the PIP and the corresponding time scale for the implementation of this measure? We would assume that they would dovetail, but it would be helpful if the Minister clarified that.

Photo of Fiona O'Donnell Fiona O'Donnell Llafur, East Lothian

I would like to add to the questions asked by my hon. Friend the Member for Newcastle upon Tyne North. What discussions has the Minister had with the Minister for Disabled People, the hon. Member for Wirral West (Esther McVey), about the further consultation that she has announced on the mobility component of PIP? There has been such an outcry, and so many concerns have been raised by NGOs dealing with disability issues, that she clearly thinks it is time to go back to the drawing board and look at some of the assessment criteria. Has the Minister had any discussions with her on the impact? Would it not be better for him also to pause and wait for the outcome of the consultation?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury 11:00, 18 Mehefin 2013

Clause 188 introduces schedule 35, which maintains vehicle excise duty support for working-age people and armed forces veterans who suffer from serious difficulties in getting around. By way of background, successive Governments have recognised that tax support should flow from the award of welfare payments. This maintenance update to vehicle excise duty support flows from the changes the Government are making to welfare payments. In the June 2010 Budget, the Government announced their intention to reform DLA and have consulted on the change over the past two years.

The DLA is a payment that has been made for children and adults of working age who have had to cope with the effects of disabilities. For people who have had to cope with the most serious difficulties in getting around, there has been a higher-rate mobility component to the allowance, which links through to the vehicle excise duty exemption.

For people of working age, the DLA is being replaced by personal independence payments, and welfare claimants’ migration to the payment began on 8 April. Alongside PIP, the Government are introducing the AFIP to support veterans seriously injured as a result of service since 6 April 2005. The clause will ensure that the overall amount of vehicle excise duty support is protected with welfare claimants’ entry into those payments.

The changes made by clause 188 will protect the overall amount of vehicle excise duty support through two routes. First, the principle of tax exemption for those most in need of help is upheld by giving 100% tax exemption to armed forces veterans in receipt of AFIP and people in receipt of enhanced mobility PIP. Secondly, the clause includes the standard mobility PIP recipients by means of a 50% tax rate discount for people who have better, albeit still limited, mobility.

As a result of the clause, by May 2018 up to 223,000 more people than before will receive tax support for the first time. Altogether, up to 1.23 million people will be eligible for tax support by May 2018, of whom 602,000 will be eligible for the 100% exemption. I hope those numbers answer some of the questions that the hon. Member for Newcastle upon Tyne North had about the numbers of people affected.

The hon. Lady specifically asked whether some people will pay more tax. Our assessment for the new welfare benefit will mean that some people who currently enjoy the 100% tax exemption will pay more in vehicle excise duty because they have better mobility. The full tax exemption is focused on the most needy and the most seriously mobility impaired. The 50% tax rate discount is for disabled people who have better, albeit still limited, mobility. It is important to note that, in our assessment, 223,000 more people will receive tax support for the first time. That is important. The measure is targeted to help the most needy people; it also helps more people at the same time.

The hon. Lady asked about the impact of AFIP and whether we had numbers on that. The numbers are included in the numbers that I have mentioned. We have not separated those numbers or broken them down. I will check whether a breakdown is available. If there is, I will be happy to provide that for the hon. Lady.

I was also asked when the new regime would commence. The DWP will start to pilot the new personal independence payment and the new armed forces independence payment from 8 April 2013, and we expect them to be fully implemented by 2018.

Lastly, the hon. Member for East Lothian asked me if we would work with our colleagues in DWP on other changes that are taking place to disability benefits, particularly mobility benefits. Of course, we work very closely with our colleagues in that Department. The particular change under this clause and this schedule that we have discussed is fully accepted by all Departments as the right course of action, and it fits in with the general changes that the Minister with responsibility for disabilities, my hon. Friend the Member for Wirral West (Esther McVey), is making or proposing.

This clause helps to provide support active and independent living for people who have the most severe mobility impairments. It ensures that disabled people who want to work and are able to work have tax support for their means of transport to get to work. I move that the clause stand part of the Bill.

Question put and agreed to.

Clause 188 accordingly ordered to stand part of the Bill.

Schedule 35 agreed to.