§
'.—(1) Section 6 above shall not apply to the payment of tax credits to employees of agricultural trades or businesses.
(2) The Board shall make payments of tax credits directly to employees of agricultural trades or businesses who are entitled to receive such payments.'.—[Mr. Pickles.]
§ Brought up, and read the First time.
§ Mr. PicklesI beg to move, That the clause be read a Second time.
Mr. Deputy SpeakerWith this, it will be convenient to discuss the following amendments: No. 9, in clause 6, page 3, line 34, after 'section,', insert
'and subject to the exception provided for in section (Payment of tax credits to agricultural employees) below,'.No. 10, in clause 17, page 8, line 23, at end insert'"agricultural" has the same meaning as in the Agriculture Act 1947;'
§ Mr. PicklesIf there is a common thread running through our deliberations, it is that the loyal Opposition are here to help the Government. This new clause is no different. In many ways, we are making parliamentary history today. I recall that the Modernisation Committee received some interesting ideas on how a modern, thrusting, young Member of Parliament might offer alternative work patterns as we approach the millennium, and I recall the suggestion by a Labour Member of a job-share system. The new clause, as well as helping agriculture, is an attempt to move towards a job share for the Minister of Agriculture, Fisheries and Food. We know, via The Sunday Telegraph on 25 February, that he was deeply concerned about the introduction of the working families tax credit. According to the newspaper, he felt that the Chancellor of the Exchequer had gone too far and had not gone through the proper channels, which is something that we often feel about the Chancellor. The Minister of Agriculture did not feel that there had been enough consultation and he felt that it would be deeply damaging to impose additional regulatory burdens on small farmers and food shops.
We understand that the Secretary of State for Trade and Industry is also concerned by the growing revolt among all businesses at the cost of the new regulations. We have even been told that Downing street is concerned about the effects on middle England and the rural economy. There were plans afoot, apparently, among various Secretaries of State to ambush the Chancellor and try to scrap the Bill in the Budget. Perhaps that is why Report and Third Reading have been so delayed.
As we all know, the Chancellor was triumphant. He beat off all opposition and his flagship continues to sail. However, the problems that will face agriculture and small businesses remain, and that is why we have tabled new clause 4 which would help to rectify the problem. 1166 We know that the problems facing farming in Britain today are severe. Farmers face a downturn that is affecting their short-term incomes and their long-term prospects. We know from figures from the Ministry of Agriculture, Fisheries and Food that all sectors of farming are experiencing a sharp decline.
Some 37 per cent. of farm incomes fell in real terms last year, and if this year and last year are taken together, it is projected that farm incomes will drop by 80 per cent. Farm incomes traditionally fluctuate, but this is the first time that all sectors of farming have faced that problem.
Many sectors of farming have now fallen well below the growth in average earnings. We know from our constituents that farm-gate prices are significantly below the retail prices index. The amount of borrowing by farmers has gone up dramatically, to the tune of £1,000 million since this Government came to power. Agriculture faces compliance costs of an estimated extra £30 million a year in higher regulatory burdens. Farmers face the additional costs of the national minimum wage and the working time directive, both introduced without a full cost assessment from the industry. The Library has suggested that the fuel escalator is hitting rural communities especially hard, and the farming community even harder.
Farmers in my constituency have briefed me on three specific new burdens that agriculture will face this year. Some relate to measures that are welcome in the interests of farming, the environment and good husbandry, but they will all impose an additional regulatory and financial burden on farms. My constituents tell me that the ban on the three main antibiotics, the ground water regulations and the new regulations on stalls and tethers will cost the industry an extra £766 million a year.
The National Farmers Union has expressed several concerns about the working families tax credit and the huge administrative burden that it will place on farmers. It is a matter of common sense that farmers employ mostly seasonal and casual workers, so their workers come and go throughout the year. Paying the working families tax credit through the pay packet will mean that employers will have to keep signing their workers on and off the payroll and, in the words of the NFU, will create "an administrative nightmare".
There are also cash flow problems for farmers. The NFU feels that there is no guarantee that employers will receive an advance payment from the Government to ease their financial burdens. The NFU supports the new clause and the consequential amendments. We know that a substantial proportion of the Cabinet support it, too.
I urge Ministers—I have repeatedly said that they are reasonable people—to spare us the sight of Cabinet Ministers whose hearts are in the right place being mercilessly dragooned through the No Lobby by a Treasury Bench that is deaf to their pleas. We should stand up for the Minister of Agriculture, Fisheries and Food and the Secretary of State for Trade and Industry by giving them a chance to vote yes, but I hope that the Financial Secretary to the Treasury will accept our amendment.
§ Mrs. RocheNew clause 4 and amendments Nos. 9 and 10 would exempt employers in agricultural trades and businesses from paying tax credits to their employees through the payroll. Employees would therefore receive their tax credits direct from the Inland Revenue.
1167 I note that the hon. Member for Brentwood and Ongar (Mr. Pickles) is making yet another attempt to help the Government. It pains me to be cynical, but I believe that the new clause is yet another attempt by the Opposition to chip away at the principle of employer payment of tax credits by eliminating certain groups of employers from the scheme.
§ Mr. PicklesThe Minister should be aware that during the Committee stage of the Welfare Reform and Pensions Bill, her colleague, the Minister of State, Department of Social Security, suggested that there should be some exemption for stakeholder pension regimes for small employers. Most farms are relatively small employers, so why does not the hon. Lady follow that lead?
§ Mrs. RocheIf the hon. Gentleman will be a little patient, I shall come to that point. As Scarlett O'Hara said in "Gone with the Wind", tomorrow is another day.
I must repeat the arguments for employer payment of tax credits, which go to the heart of the Bill. The scheme will reinforce the message that tax credits are a reward for work. It will emphasise tax credits as part of the tax system, and it will help break the links with benefits, thus reducing the stigma of claiming in-work support.
We want all employees—in large and small firms—to enjoy these advantages and we see no reason to exclude agricultural workers, many of whom are on low incomes and particularly in need of encouragement to increase their earnings rather than relying on out-of-work benefits. Tax credits received in the wage packet will show that work pays.
I recognise that the agriculture industry work force tends to include a large proportion of casual, part-time and seasonal workers on fluctuating earnings and short-term contracts. However, that is not in itself a good reason for abandoning the general rule of employer payment of tax credits. As the hon. Gentleman will know from his own constituency, all farmers employing labourers have to operate a pay-as-you-earn scheme for their employees and deduct tax and national insurance contributions from their workers' pay. The same is true of so-called gangmasters, who hire labour for general agricultural work such as planting, picking and packing agricultural produce. Like all other employers required to pay tax credits, employers in the agricultural industry will be able to set off the tax credits against PAYE tax and national insurance contributions deducted.
6.15 pm
It may be helpful if I remind the House of the conditions that must apply before any employer, large or small, will be asked to pay tax credits through the payroll. First, the Inland Revenue will give all employers adequate time to adjust their payrolls before the first tax credit payment is due in the pay packet. The notice period will be 14 days in respect of employees paid weekly and 42 days in all other cases.
Secondly, the Inland Revenue will notify employers to start paying tax credits only if there is enough time before the end of the employee's contract of employment—or the end of the employee's tax credit award period if 1168 that is earlier—for the employer to make at least three tax credit payments. In other words, no employer will be asked to pay tax credits and make the necessary payroll adjustments for a shorter time than three pay periods.
§ Mr. WebbThe hon. Lady is helpfully outlining the way in which the system will be administered through employers. Will she clarify paragraph 35 of the draft regulatory impact assessment, however? It states:
The Government has decided to exclude those very small employers who do not operate PAYE/NICs schemes because all their employees are below the NICs threshold.Can she confirm that I am right to understand that payment will not happen through the pay packet for employers, such as agricultural employers, for whom every employee is paid lower than the prospective lower earnings limit of £81 or so?
§ Mrs. RocheThe hon. Gentleman is right, and I shall probably say something more about that.
The new arrangements are set out in the Inland Revenue booklet, "Working Families Tax Credit and Disabled Person's Tax Credit", and they mean that, wherever practical, even employees on short-term contracts will be able to receive tax credits with their pay, rather than from the Inland Revenue. However, our overriding aim will, of course, be to ensure that tax credits are delivered to people efficiently and on time. Although payment by employers will be the predominant method of delivery after April 2000, it will not be attempted if it would put that aim at risk.
I hope that I have reassured right hon. and hon. Members that employers, including those in the agriculture sector, are not being asked to do the impossible. In practice, because of working patterns in the industry, a fairly high proportion of tax credit recipients may well receive their tax credits direct from the Inland Revenue, because the conditions for employer payment are not met. However, there is no need for a blanket exemption of all employers in that or any other sector. All employers will be treated in the same way.
I hope that my explanation will persuade the hon. Gentleman to withdraw the motion. If he does not, I must ask my hon. Friends to reject it.
§ Mr. PicklesI am sad to say that the hon. Lady has uncharacteristically failed to satisfy me on this point. She has tried to palm me off with a concession. I want what the Minister of Agriculture, Fisheries and Food wants. In order to stand up for his rights, and for those of his Cabinet colleagues who oppose this part of the Bill, I shall press the matter to a Division.
§ Question put, That the clause be read a Second Time:—
§ The House divided: Ayes 167, Noes 300.
1172| Division No. 113] | [6.18 pm |
| AYES | |
| Allan, Richard | Beresford, Sir Paul |
| Ancram, Rt Hon Michael | Body, Sir Richard |
| Arbuthnot, Rt Hon James | Boswell, Tim |
| Ashdown, Rt Hon Paddy | Brake, Tom |
| Atkinson, David (Bour'mth E) | Breed, Colin |
| Baker, Norman | Brooke, Rt Hon Peter |
| Beggs, Roy | Browning, Mrs Angela |
| Bercow, John | Bruce, Ian (S Dorset) |
| Burstow, Paul | Lilley, Rt Hon Peter |
| Butterfill, John | Livsey, Richard |
| Cash, William | Lloyd, Rt Hon Sir Peter (Fareham) |
| Chapman, Sir Sydney (Chipping Barnet) | Loughton, Tim |
| Luff, Peter | |
| Chidgey, David | Lyell, Rt Hon Sir Nicholas |
| Chope, Christopher | MacGregor, Rt Hon John |
| Clappison, James | McIntosh, Miss Anne |
| Clark, Rt Hon Alan (Kensington) | MacKay, Rt Hon Andrew |
| Clark, Dr Michael (Rayleigh) | Maclean, Rt Hon David |
| Clarke, Rt Hon Kenneth (Rushcliffe) | Maclennan, Rt Hon Robert |
| McLoughlin, Patrick | |
| Clifton—Brown, Geoffrey | Madel, Sir David |
| Collins, Tim | Major, Rt Hon John |
| Colvin, Michael | Malins, Humfrey |
| Cormack, Sir Patrick | Maples, John |
| Cotter, Brian | Maude, Rt Hon Francis |
| Cran, James | Mawhinney, Rt Hon Sir Brian |
| Curry, Rt Hon David | May, Mrs Theresa |
| Davis, Rt Hon David (Haltemprice & Howden) | Michie, Mrs Ray (Argyll & Bute) |
| Moore, Michael | |
| Day, Stephen | Moss, Malcolm |
| Donaldson, Jeffrey | Nicholls, Patrick |
| Dorrell, Rt Hon Stephen | Norman, Archie |
| Duncan, Alan | Oaten, Mark |
| Duncan Smith, Iain | Öpik, Lembit |
| Evans, Nigel | Page, Richard |
| Faber, David | Paice, James |
| Fabricant, Michael | Paterson, Owen |
| Fallon, Michael | Pickles, Eric |
| Fearn, Ronnie | Prior, David |
| Forsythe, Clifford | Randall, John |
| Forth, Rt Hon Eric | Redwood, Rt Hon John |
| Foster, Don (Bath) | Rendel, David |
| Fowler, Rt Hon Sir Norman | Robathan, Andrew |
| Fox, Dr Liam | Robertson, Laurence (Tewk'b'ry) |
| Fraser, Christopher | Roe, Mrs Marion (Broxbourne) |
| Garnier, Edward | Ross, William (E Lond'y) |
| George, Andrew (St Ives) | Rowe, Andrew (Faversham) |
| Gibb, Nick | Ruffley, David |
| Gill, Christopher | Russell, Bob (Colchester) |
| Goodlad, Rt Hon Sir Alastair | St Aubyn, Nick |
| Gorman, Mrs Teresa | Sanders, Adrian |
| Gorrie, Donald | Sayeed, Jonathan |
| Gray, James | Shephard, Rt Hon Mrs Gillian |
| Greenway, John | Smith, Sir Robert (W Ab'd'ns) |
| Grieve, Dominic | Smyth, Rev Martin (Belfast S) |
| Hague, Rt Hon William | Soames, Nicholas |
| Hamilton, Rt Hon Sir Archie | Spicer, Sir Michael |
| Hammond, Philip | Steen, Anthony |
| Harris, Dr Evan | Streeter, Gary |
| Hawkins, Nick | Swayne, Desmond |
| Hayes, John | Syms, Robert |
| Heald, Oliver | Tapsell, Sir Peter |
| Heathcoat—Amory, Rt Hon David | Taylor, Ian (Esher & Walton) |
| Horam, John | Taylor, Rt Hon John D (Strangford) |
| Howard, Rt Hon Michael | Taylor, John M (Solihull) |
| Howarth, Gerald (Aldershot) | Taylor, Matthew (Truro) |
| Hughes, Simon (Southwark N) | Taylor, Sir Teddy |
| Hunter, Andrew | Tonge, Dr Jenny |
| Jack, Rt Hon Michael | Tredinnick, David |
| Jackson, Robert (Wantage) | Trend, Michael |
| Jenkin, Bernard | Tyler, Paul |
| Johnson Smith, Rt Hon Sir Geoffrey | Tyrie, Andrew |
| Wallace, James | |
| Keetch, Paul | Wardle, Charles |
| Kennedy, Charles (Ross Skye) | Waterson, Nigel |
| Key, Robert | Webb, Steve |
| Kirkbride, Miss Julie | Whitney, Sir Raymond |
| Kirkwood, Archy | Whittingdale, John |
| Lait, Mrs Jacqui | Widdecombe, Rt Hon Miss Ann |
| Lansley, Andrew | Wilkinson, John |
| Leigh, Edward | Willetts, David |
| Letwin, Oliver | Willis, Phil |
| Lewis, Dr Julian (New Forest E) | Winterton, Mrs Ann (Congleton) |
| Lidington, David | Winterton, Nicholas (Macclesfield) |
| Woodward, Shaun | Tellers for the Ayes: |
| Yeo, Tim | Mrs. Eleanor Laing and Mrs. Caroline Spelman. |
| Young, Rt Hon Sir George | |
| NOES | |
| Abbott, Ms Diane | Crausby, David |
| Adams, Mrs Irene (Paisley N) | Cryer, Mrs Ann (Keighley) |
| Ainger, Nick | Cummings, John |
| Ainsworth, Robert (Cov'try NE) | Cunliffe, Lawrence |
| Allen, Graham | Cunningham, Jim (Cov'try S) |
| Ashton, Joe | Dalyell, Tam |
| Atherton, Ms Candy | Darling, Rt Hon Alistair |
| Atkins, Charlotte | Darvill, Keith |
| Austin, John | Davidson, Ian |
| Banks, Tony | Davies, Rt Hon Denzil (Llanelli) |
| Barnes, Harry | Davis, Terry (B'ham Hodge H) |
| Barron, Kevin | Dawson, Hilton |
| Bayley, Hugh | Dean, Mrs Janet |
| Beard, Nigel | Denham, John |
| Beckett, Rt Hon Mrs Margaret | Dismore, Andrew |
| Begg, Miss Anne | Dobbin, Jim |
| Bell, Stuart (Middlesbrough) | Donohoe, Brian H |
| Benn, Rt Hon Tony | Doran, Frank |
| Bennett, Andrew F | Dowd, Jim |
| Benton, Joe | Eagle, Angela (Wallasey) |
| Bermingham, Gerald | Edwards, Huw |
| Berry, Roger | Efford, Clive |
| Best, Harold | Ellman, Mrs Louise |
| Betts, Clive | Ennis, Jeff |
| Blackman, Liz | Etherington, Bill |
| Blears, Ms Hazel | Ewing, Mrs Margaret |
| Blizzard, Bob | Fatchett, Rt Hon Derek |
| Borrow, David | Field, Rt Hon Frank |
| Bradley, Keith (Withington) | Fisher, Mark |
| Bradley, Peter (The Wrekin) | Fitzpatrick, Jim |
| Bradshaw, Ben | Fitzsimons, Lorna |
| Brinton, Mrs Helen | Flint, Caroline |
| Brown, Rt Hon Gordon (Dunfermline E) | Flynn, Paul |
| Follett, Barbara | |
| Brown, Rt Hon Nick (Newcastle E) | Foster, Rt Hon Derek |
| Brown, Russell (Dumfries) | Foster, Michael Jabez (Hastings) |
| Browne, Desmond | Foster, Michael J (Worcester) |
| Buck, Ms Karen | Foulkes, George |
| Burgon, Colin | Fyfe, Maria |
| Butler, Mrs Christine | Galloway, George |
| Campbell, Alan (Tynemouth) | Gerrard, Neil |
| Campbell, Mrs Anne (C'bridge) | Gibson, Dr Ian |
| Campbell, Ronnie (Blyth V) | Gilroy, Mrs Linda |
| Canavan, Dennis | Goggins, Paul |
| Caplin, Ivor | Golding, Mrs Llin |
| Casale, Roger | Griffiths, Jane (Reading E) |
| Caton, Martin | Griffiths, Nigel (Edinburgh S) |
| Chapman, Ben (Wirral S) | Griffiths, Win (Bridgend) |
| Chaytor, David | Grocott, Bruce |
| Chisholm, Malcolm | Hall, Patrick (Bedford) |
| Clapham, Michael | Hanson, David |
| Clark, Rt Hon Dr David (S Shields) | Healey, John |
| Clark, Dr Lynda (Edinburgh Pentlands) | Henderson, Ivan (Harwich) |
| Hepburn, Stephen | |
| Clark, Paul (Gillingham) | Heppell, John |
| Clarke, Rt Hon Tom (Coatbridge) | Hewitt, Ms Patricia |
| Clarke, Tony (Northampton S) | Hill, Keith |
| Clelland, David | Hoey, Kate |
| Clwyd, Ann | Home Robertson, John |
| Coaker, Vernon | Hoon, Geoffrey |
| Coffey, Ms Ann | Hope, Phil |
| Coleman, Iain | Hopkins, Kelvin |
| Connarty, Michael | Howarth, George (Knowsley N) |
| Cook, Frank (Stockton N) | Hoyle, Lindsay |
| Cooper, Yvette | Hughes, Kevin (Doncaster N) |
| Corbett, Robin | Humble, Mrs Joan |
| Corston, Ms Jean | Hurst, Alan |
| Cousins, Jim | Hutton, John |
| Cox, Tom | Iddon, Dr Brian |
| Cranston, Ross | Jackson, Ms Glenda (Hampstead) |
| Jackson, Helen (Hillsborough) | O'Brien, Mike (N Warks) |
| Jamieson, David | O'Hara, Eddie |
| Jenkins, Brian | Olner, Bill |
| Johnson, Alan (Hull W & Hessle) | O'Neill, Martin |
| Johnson, Miss Melanie (Welwyn Hatfield) | Organ, Mrs Diana |
| Osborne, Ms Sandra | |
| Jones, Helen (Warrington N) | Pearson, Ian |
| Jones, Jon Owen (Cardiff C) | Pickthall, Colin |
| Jones, Dr Lynne (Selly Oak) | Pike, Peter L |
| Jones, Martyn (Clwyd S) | Plaskitt, James |
| Kaufman, Rt Hon Gerald | Pollard, Kerry |
| Keeble, Ms Sally | Pond, Chris |
| Keen, Alan (Feltham & Heston) | Powell, Sir Raymond |
| Keen, Ann (Brentford & Isleworth) | Prentice, Ms Bridget (Lewisham E) |
| Kemp, Fraser | Prentice, Gordon (Pendle) |
| Kennedy, Jane (Wavertree) | Primarolo, Dawn |
| Khabra, Piara S | Prosser, Gwyn |
| Kidney, David | Purchase, Ken |
| Kilfoyle, Peter | Quin, Rt Hon Ms Joyce |
| King, Andy (Rugby & Kenilworth) | Rapson, Syd |
| King, Ms Oona (Bethnal Green) | Raynsford, Nick |
| Kingham, Ms Tess | Reid, Rt Hon Dr John (Hamilton N) |
| Ladyman, Dr Stephen | Roche, Mrs Barbara |
| Lawrence, Ms Jackie | Rooney, Terry |
| Laxton, Bob | Ross, Ernie (Dundee W) |
| Leslie, Christopher | Roy, Frank |
| Levitt, Tom | Ruane, Chris |
| Lewis, Terry (Worsley) | Ruddock, Joan |
| Linton, Martin | Russell, Ms Christine (Chester) |
| Livingstone, Ken | Ryan, Ms Joan |
| Lloyd, Tony (Manchester C) | Savidge, Malcolm |
| Lock, David | Sawford, Phil |
| Love, Andrew | Sedgemore, Brian |
| McAllion, John | Sheerman, Barry |
| McAvoy, Thomas | Sheldon, Rt Hon Robert |
| McCabe, Steve | Simpson, Alan (Nottingham S) |
| McCafferty, Ms Chris | Singh, Marsha |
| McDonagh, Siobhain | Skinner, Dennis |
| Macdonald, Calum | Smith, Rt Hon Andrew (Oxford E) |
| McDonnell, John | Smith, Angela (Basildon) |
| McFall, John | Smith, Miss Geraldine (Morecambe & Lunesdale) |
| McIsaac, Shona | |
| McKenna, Mrs Rosemary | Smith, Jacqui (Redditch) |
| McNamara, Kevin | Smith, Llew (Blaenau Gwent) |
| McNulty, Tony | Soley, Clive |
| MacShane, Denis | Southworth, Ms Helen |
| Mactaggart, Fiona | Squire, Ms Rachel |
| McWalter, Tony | Starkey, Dr Phyllis |
| Mahon, Mrs Alice | Steinberg, Gerry |
| Mallaber, Judy | Stevenson, George |
| Mandelson, Rt Hon Peter | Stewart, David (Inverness E) |
| Marsden, Gordon (Blackpool S) | Stewart, Ian (Eccles) |
| Marsden, Paul (Shrewsbury) | Stinchcombe, Paul |
| Marshall, David (Shettleston) | Stoate, Dr Howard |
| Marshall, Jim (Leicester S) | Stott, Roger |
| Martlew, Eric | Stringer, Graham |
| Maxton, John | Stuart, Ms Gisela |
| Meale, Alan | Sutcliffe, Gerry |
| Merron, Gillian | Taylor, Rt Hon Mrs Ann (Dewsbury) |
| Michie, Bill (Shef'ld Heeley) | |
| Mitchell, Austin | Temple-Morris, Peter |
| Moonie, Dr Lewis | Thomas, Gareth (Clwyd W) |
| Moran, Ms Margaret | Thomas, Gareth R (Harrow W) |
| Morgan, Alasdair (Galloway) | Timms, Stephen |
| Morgan, Ms Julie (Cardiff N) | Todd, Mark |
| Morgan, Rhodri (Cardiff W) | Touhig, Don |
| Morley, Elliot | Trickett, Jon |
| Morris, Ms Estelle (B'ham Yardley) | Turner, Dennis (Wolverh'ton SE) |
| Mountford, Kali | Turner, Dr Desmond (Kemptown) |
| Mullin, Chris | Turner, Dr George (NW Norfolk) |
| Murphy, Denis (Wansbeck) | Twigg, Derek (Halton) |
| Murphy, Jim (Eastwood) | Twigg, Stephen (Enfield) |
| Murphy, Rt Hon Paul (Torfaen) | Vaz, Keith |
| Naysmith, Dr Doug | Vis, Dr Rudi |
| Norris, Dan | Walley, Ms Joan |
| O'Brien, Bill (Normanton) | Ward, Ms Claire |
| Wareing, Robert N | Wood, Mike |
| Watts, David | Worthington, Tony |
| White, Brian | Wright, Anthony D (Gt Yarmouth) |
| Wicks, Malcolm | Wright, Dr Tony (Cannock) |
| Williams, Alan W (E Carmarthen) | Wyatt, Derek |
| Wills, Michael | Tellers for the Noes: |
| Winnick, David | Mrs. Anne McGuire and Mr. Greg Pope. |
| Winterton, Ms Rosie (Doncaster C) |
§ Question accordingly negatived.