HC Deb 09 December 1999 vol 340 cc971-2
2. Mr. Christopher Chope (Christchurch)

What plans the Government have to assist small firms with the cost and administration of their payroll. [100525]

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt)

Last month, my hon Friend the Financial Secretary and I announced that we would be providing extra help for new small businesses running their own payrolls by expanding the new enterprise support initiative.

Mr. Chope

That is a very disingenuous response from the Minister. In the 1998 Budget, the Chancellor of the Exchequer promised that, by April 1999, there would be a national automated payroll service in place for small businesses. In the 1999 Budget, he promised that £40 million would be invested to help small businesses in that way. Now the Government's policy is an absolute shambles. Does the Minister agree that the best way forward, bearing in mind the additional burdens of administering the working families tax credit, would be to allow all small businesses to deduct 1 per cent. of their pay-as-you-earn and national insurance contributions at source to meet some of the administrative costs that they have to bear to finance the Government's ludicrously high taxation programme?

Ms Hewitt

We did exactly what every sensible business does—we asked our customers how best we could help them. Our customers, the small businesses, told us that they prefer on-going, one-to-one help rather than one-off support. That is precisely why we are expanding the excellent service that the Inland Revenue offers through the new enterprise support initiative. That is what small businesses want.

As for the working families tax credit, we have made it clear that the average cost for a small business with a working families tax credit employee will amount to £37 a year. The Conservative party would deny nearly 1.5 million people the considerable help that they will get through the tax credit.

Mr. Peter L. Pike (Burnley)

My hon. Friend referred to the working families tax credit, which I strongly support and welcome. However, does she believe that some businesses are suffering cashflow problems as a result of the introduction of the credit through the payroll system? Does she think that steps need to be taken to resolve such difficulties? The scheme is in its early stages and we need to ensure that it is right and does not cause major problems for small firms.

Ms Hewitt

My hon. Friend the Paymaster General and the Inland Revenue have been working very closely with small businesses to ensure that the administration of the tax credit through the payroll system is as simple and efficient as possible. As part of the those discussions, the Inland Revenue will put in place arrangements to assist businesses which need it with cashflow support.

Mrs. Angela Browning (Tiverton and Honiton)

It is not just the working families tax credit that has to be paid through the payroll of small businesses; there are other items that the Government expect small business to administer on their behalf. For example, they include the recoupment of student loans and stakeholder pensions. What other plans does the Minister have for businesses to use their payroll systems as a benefits agency on behalf of government? Why is it necessary for stakeholder pensioners to be administered through the payroll? Surely that is not necessary; it is just an additional burden on small businesses.

Ms Hewitt

It was, of course, the previous Government who imposed on many employers the responsibility to deduct child support payments through the payroll. Every Member will be aware from their constituency surgeries of the complete shambles that we have inherited in the Child Support Agency, and are now having to put right.

We are working closely with business to ensure both minimum standards for employees and efficient administration of regulations and of payroll. We are determined to get intelligent and effective regulation and good support for business in this country.