Working Families Tax Credit

HC Deb 11 November 1999 vol 337 cc1269-72

1. Mr. Alan W. Williams (East Carmarthen and Dinefwr)

What is the total number of inquiries to date on the telephone hotline for the working families tax credit; and what percentage of these has led to successful awards. [96990]

8. Mr. Ian Stewart (Eccles)

What steps he is taking to increase public awareness of the working families tax credit. [96997]

9. Liz Blackman (Erewash)

How many people have been identified to date as eligible for the working families tax credit who were not previously claiming family credit. [96998]

12. Mr. Ben Chapman (Wirral, South)

If he will make a statement on the working families tax credit. [97001]

14. Ms Linda Perham (Ilford, North)

What progress is being made towards the implementation of the working families tax credit. [97003]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Since the Prime Minister and I launched the publicity campaign, there have been 700,000 inquiries about the working families tax credit—the biggest ever response to a Government advertising campaign—and 250,000 new applications have been made. We believe that 800,000 children will be taken out of poverty as a result of that and other measures.

Mr. Williams

I congratulate the Chancellor, and I pay tribute to the Financial Secretary for her excellent work in publicising and increasing awareness of that excellent new benefit. It will give poorly paid families £10, £20 or £50 a week, and will be a great help in tackling child poverty.

However, might there be a proactive role for the Inland Revenue in increasing awareness of the working families tax credit? Although we think of the Inland Revenue as being responsible for detecting tax evasion and maximising the tax take, does it have an equivalent obligation to advise people, especially low-paid workers, of their rights and entitlements?

Mr. Brown

The Inland Revenue will continue to publicise the new tax credits available to working families, but the best publicity for the benefit will be those working families who have been able to acquire it. Many of them are £50 a week better off as a result of what has happened. It is time for the Conservatives to tell us whether they will now drop their opposition to the working families tax credit and start supporting working families in this country.

Mr. Stewart

I welcome the measures taken by the Government to date, which were enhanced by the Chancellor's statement yesterday. My constituents in Pendlebury, Swinton, Eccles, Irlam and Cadishead will, as they say in Salford, be well chuffed. The working families tax credit will allow families with a full-time worker to achieve a guaranteed income of £200 a week, and to earn up to £235 before income tax kicks in. Does the Chancellor agree that the Opposition are very sad—indeed, quite mad sometimes—in saying that they will scrap that tax credit? Does that not show that they are extremely unelectable?

Mr. Brown

I agree with my hon. Friend. He represents a constituency in the north-west, and I can tell him that 210,000 families in the north-west are benefiting from the new working families tax credit. He is absolutely right to draw attention to the fact that if the Opposition abolished the working families tax credit, it would be a £24-a-week tax increase for some of our poorest working families. It is unfortunate that the Opposition has said that they will abolish it. Perhaps today the shadow Chancellor will answer the question—will he now drop his opposition to the working families tax credit?

Liz Blackman

Why has my right hon. Friend the Chancellor extended working families tax credit and the attendant child tax credit so far above family credit? Does he consider that over-generous?

I must tell him that those are not questions that are posed by families in my constituency, who welcome the additional resources that give them the security to bring up and care for their families. Apart from the general opposition to working families tax credit espoused by the Conservatives, why are they so particularly opposed to this extension? Does my right hon. Friend think that they have canvassed eligible families in their constituencies—or do they rely on getting their information from the Dispatch Box?

Mr. Brown

In my hon. Friend's region, 110,000 people are benefiting from the working families tax credit. She is absolutely right to draw attention to the fact that the working families tax credit is similar to the earned income tax credit in the United States. It was a policy that Ronald Reagan could support—even Milton Friedman supported it—but it is not supported by the Opposition.

Mr. Chapman

I am sure that my right hon. Friend is aware that 1,200 families in my constituency will benefit from this boost to their income. However, many are still to apply. Will my right hon. Friend join me in encouraging those people who have not yet applied to do so as quickly as possible, because that will mark their entitlement date for the credit?

Mr. Brown

We shall continue our campaign to advertise the benefits of the working families tax credit, which reduces the marginal tax rate for thousands of families in Britain and eliminates the poverty trap for many of them. Under the previous Government, there was sometimes a marginal tax rate of more than 100 per cent. for some of the lowest paid families in Britain. Working families throughout Britain will be sad to know that the Leader of the Opposition says that this is a tangible difference between Labour and Conservatives, and that a former Opposition social security spokesman says: We would cut the working families tax credit".—[Official Report, 19 October 1998; Vol. 317, c. 951.]

I again appeal to the Opposition: will they change their approach to the working families tax credit and to the minimum wage which underpins it?

Ms Perham

Will my right hon. Friend confirm that, by contrast with the more than 1.5 million people in London who were unemployed at least once between 1992 and 1997, nearly 125,000 families in London will receive extra help from the working families tax credit? Since 1997, unemployment has fallen by 31 per cent. in my constituency of Ilford, North. The working families tax credit and the measures that my right hon. Friend announced on Tuesday, including the enhanced new deal for lone parents, will be welcomed in my constituency, especially by those working families who need to get off benefit and make work pay.

Mr. Brown

I should have thought that all parties in the House would want to support measures that, first, give a guaranteed minimum family income of £200 a week; secondly, are backed up by a minimum wage which is available to 2 million workers; thirdly, at the same time give additional help for child care to millions of working parents in Britain now eligible for it; and fourthly, raise child benefit by 30 per cent., something that, unfortunately, the Conservative Government were unable to do—they froze it for two years. Again, the Conservative party must answer this question: will they help working families in Britain or hurt them by abolishing the minimum wage, the working families tax credit and child benefit tax increases?

Mr. Peter Bottomley (Worthing, West)

Does the working families tax credit give help to families rearing their families at home? If there is a preference for institutionalised child care, can the right hon. Gentleman explain why?

Mr. Brown

The working families tax credit is a help for people bringing up children at home. If, for example, a mother wants to be off work with a child, whether for months or years, the household's income is protected by the working families tax credit. The Conservatives fail to understand that this is a benefit that helps lone parents get to work, and helps working families make decisions and gives them choices. It is about time that the hon. Gentleman, who has a reputation for being a bit more compassionate than today's Conservative Front-Bench spokesmen, started to support the working families tax credit instead of opposing it.

Mr. Nick St. Aubyn (Guildford)

Is the Chancellor aware that the Federation of Small Businesses has described the working families tax credit as yet another administrative burden on small business owners, and that the Institute of Directors has protested that it is not the job of business to run the welfare system for the Government? Why have the Government designed the welfare tax credit system in a bureaucratic way that creates such a burden for British business?

Mr. Brown

The working families tax credit rewards work and is a good measure for business. It is about time that Conservative Members recognised that they left millions of people in poverty in Britain. They now say that they would do absolutely nothing about it. They would abolish the measures that we have taken, even those supported by right and left in the United States and elsewhere. It is about time that the Conservative party woke up.

Mr. Geoffrey Clifton-Brown (Cotswold)

Without blaming the Conservative party, will the Chancellor say what the cost of the working families tax credit is to business?

Mr. Brown

The cost of the working families tax credit depends on the business and the numbers, but it is a general benefit to business. Businesses can now tell their employees the benefits for work and for childcare. It is about time that the Conservative party saw the benefits not only to families but to business.

Mr. Oliver Letwin (West Dorset)

I hardly dare hope that we get a straight answer to a straight question. Will the Chancellor confirm that the cost to business of the working families tax credit is about £100 million a year? Does he agree with Chantrey Vellacott that that is just a part of the £5.2 billion a year of extra cost on business? What will he say to Mr. Nigel Fielding, who says in today's Daily Mail: I don't mind doing civil servants' work for them if I'm paid for my time and effort. But no such luck"?

Mr. Brown

The answer is no. The working families tax credit is a benefit to business. I do not think that the Conservative party understands that if wages are higher, if there is a reward to work as a result of the credit and if child care is available for mothers and for companies where those mothers work, that will benefit employment and industry. I repeat: a measure that can be supported by Ronald Reagan and Milton Friedman, but is too extreme for the Conservative party, says something about that party.

Mr. Dennis Skinner (Bolsover)

Is it true that someone who has four jobs does not qualify for the working families tax credit? If it is, there lies the answer to why the shadow Chancellor will not support it—he has four jobs.

Mr. Brown

I do not know why the shadow Chancellor does not have time to do the research for Question Time and for other matters, but I will leave that to further debates in the House.