Tax Credits (Legislation)

HC Deb 05 July 1973 vol 859 cc705-6

8. Mr. Tom King

asked the Chancellor of the Exchequer when he expects to be able to introduce legislation on the tax credit system.

20. Mr. Horam

asked the Chancellor of the Exchequer what are the Government's present intentions as regards legislation on a tax credit system.

Mr. Barber

Until the Select Committee reports, the House will understand that I cannot add anything to what was said in the Green Paper.

Mr. King

My right hon. Friend will understand that there is reasonable impatience, in view of the obvious benefits that the scheme can bring, that it should be carried into legislation at the earliest possible date, and to consummate the wide-ranging reform of taxation that has been a feature of his term of office.

Mr. Barber

I am grateful to my hon. Friend for his comments, but it would be as well if I were to leave the question of timing and any other matters of substance to be said after the Select Committee's report, which I hope will not be for too long.

Mr. Horam

Many of us on the Labour side do not share the relative euphoria expressed by the hon. Member for Bridgwater (Mr. Tom King). The system as envisaged will help the rich and not the poor. It will make the position of many groups of the poor, such as the single-parent family, many pensioners, the sick and the unemployed, worse. It will make it more difficult to achieve a more progressive income tax system and will be wasteful, because it will eliminate claw-back. The only vestige of a benefit will arise from the £1,300 million of extra taxation achieved through the system.

Mr. Barber

The hon. Member has obviously not read the Green Paper recently or he would know that the proposals in it would give a positive social benefit in cash to millions of hard-pressed families—particularly those with children. The proposals would increase the income of between 3 million and 4 million pensioners and relieve hundreds and thousands of people of the need to claim supplementary benefit. These proposals will be simpler and easier for people to understand and fairer than the present system of tax allowances. They will also lead to considerable savings in civil servants.

Mr. William Clark

Any Labour Member who wants to know what the tax credits will or will not do would be better advised to await the report of the Select Committee, because obviously we are talking in a vacuum. It is obvious not only that the hon. Member has not read the Green Paper but also that he cannot possibly have read the report.

Mr. Barber

I entirely agree.

Mr. Joel Barnett

I, too, agree, and I hope that my hon. Friend would not have read the report. Equally, I hope that the Chancellor will not wish to mislead the House by suggesting that large numbers of pensioners and others will benefit, because they will benefit only if he finds the £1,300 million.

Mr. Barber

It comes a little strange from the hon. Member to talk about tax cuts—

Mr. Barnett

Who was talking about tax cuts?

Mr. Barber

—or of finding money in order to provide benefits—

Mr. Healey

Answer the question.

Mr. Barber

—finding money to provide the wherewithal for the tax credit scheme which, in part, will replace certain aspects of the income tax scheme. Under the Labour Government it would clearly have been impossible to find the means to finance these benefits. Under this Government, which has already reduced taxation by £4,000 million, it will be possible to finance the tax credit scheme.