Government – Tax-benefit backtrack

The House of Commons social security committee signalled its disappointment last week when it revealed the government had abandoned wholesale integration of the tax and benefit system.

In a pre-Budget report, the committee studying proposals for long-term reform says: ‘It is clear that the review of tax and benefits will not result in complete integration.’

The report cited comments from Martin Taylor, the chief executive of Barclays Bank, whose appointment by Chancellor Gordon Brown to lead a government task force was taken as a hopeful sign by welfare reformers.

Taylor said the task force had not considered ‘full-blown integration’ as he was persuaded by arguments it would not be practical. ‘I think there are far better things to do, far more urgent things to do, than to make them into one system,’ he said.

But the report counters: ‘We have heard no evidence to suggest a current integration is impractical.’

Integrating the tax and benefit systems more closely could improve work incentives and ameliorate the poverty trap, committee members said.

Andersen Consulting government practice partner Tim Gbedemah explained obstacles were usually put up for particular schemes, but if they could be tackled, ‘we could devise and implement a sustainable integrated scheme’.

Andersens proposed setting up a tax/benefit laboratory to pilot integration schemes – one of many proposals under review by the Commons committee.

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