HC Deb 23 April 1998 vol 310 cc964-5
13. Mr. Tony Baldry (Banbury)

What representations he has received on the impact on the number of families facing marginal deduction rates of 50 per cent. or more of the measures announced in his Budget. [38254]

The Chief Secretary to the Treasury (Mr. Alistair Darling)


Mr. Baldry

Does the Minister accept that written answers to parliamentary questions show that a staggering 320,000 families face marginal deduction rates of 50 per cent. or more? Is that not a demonstration of how the Budget will extend the poverty trap, and a rotten way of going about welfare reform?

Mr. Darling

We have received no representations along the lines the hon. Gentleman suggests, because the vast majority of people recognise that our proposals for working families tax credit will help substantially more people than were assisted under the family credit scheme. We have reduced by two thirds the number of people who pay marginal rates of more than 70 per cent. For the first time, no families will pay marginal rates of more than 100 per cent. Most people recognise that it is an extremely useful measure that will make work pay and help reduce barriers to work. That and the reduction in national insurance rates announced by my right hon. Friend are major reforms of the tax and benefit systems, which have been widely welcomed by most progressive-thinking people—but I accept that that does not include the hon. Gentleman.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

Does the Chief Secretary accept that he is right to say that the Budget marks an historic shift away from welfare being a prison in which millions of people are forced to double their incomes simply to earn £5 more a week and in which half a million people are better off by working not at all or less, such was the stupidity of the welfare system that, we inherited from the Tories? Does he accept also that, because of the high rent increases for which the Conservative party was responsible in both the public and the private sector during the 1980s and early 1990s, we must look forward to the review of housing benefit and to a clear policy of restraining rent increases to deliver millions more people from the welfare traps that we inherited from 20 years of Tory rule?

Mr. Darling

My hon. Friend highlights the fact that the Government are looking across the full range of the benefit and tax systems to ensure that people are not penalised as he describes. We will ensure that people can get into work and, when they do, that it pays. That is the whole point of the Green Paper on the future of the welfare state, which we published recently. My right hon. Friend was quite right to draw attention to the fact that the Government are committed to modernising the welfare state so that it is fit for the labour market and the social and economic conditions that we have today, rather than those that might have been appropriate 50 years ago.