HC Deb 18 June 1985 vol 81 cc157-8
7. Mr. Eggar

asked the Secretary of State for Social Services what representations he has received about the integration of the tax and national insurance systems.

The Minister for Social Security (Mr. Tony Newton)

The review team looking into benefits for children and young people received a considerable number of representations advocating the integration of the tax and benefit systems. The review team also heard oral evidence on the subject during its public sessions.

Mr. Eggar

Will my hon. Friend confirm that it is the Government's long-term intention to integrate the tax, benefit and national insurance systems? Will he give an undertaking that nothing will be introduced in the next two years which would make eventual integration more difficult?

Mr. Newton

It is the Government's intention to bring about closer co-ordination between the tax and benefit systems, and the review proposals contain two important steps in that direction. They are the family credit proposals and, not least, the proposal to change the social security uprating year to the same as the tax year. My hon. Friend may rest assured that we shall continue in that spirit.

Mrs. Beckett

Does the Minister recall that, when it was decided to adjust the national insurance system by giving employers a rebate for a year to compensate them for the introduction of 28 weeks' statutory sick pay, the Government made a great point of the fact that the SSP measure imposed a burden on employers for which they would be recompensed? What recompense do the Government expect to give? How much will it cost to compensate employers for having to administer the new family credit scheme?

Mr. Newton

In proposing the extension of the SSP scheme and the national insurance contribution reduction, the Government laid emphasis on their general desire to reduce employment costs, with the aim of seeking to promote employment. The hon. Lady's point about cost was incidental to that. In the light of experience with SSP, I have no reason to suppose that employers will not readily be able to operate the family credit scheme.

Mr. Galley

Does my hon. Friend accept that the main difficulty with the family credit scheme will be take-up? There is nothing intrinsic in the new scheme proposed in the Green Paper that will increase take-up. Does my hon. Friend agree that the problem of family poverty will not be resolved until we have at least partial integration of the tax and benefits systems for child benefit, family credit and taxation?

Mr. Newton

Although I would hesitate to describe it as integration, it is of considerable significance that the proposed method of paying family credit is by directly offseting the tax and national insurance contributions that the beneficiary would otherwise pay. That will be a significant step forward in simplifying receipt of the benefit and in encouraging take-up.