Withdrawal of Tax Allowances (Hansard, 6 April 2000)

§ 5. Mrs. Cheryl Gillan (Chesham and Amersham)
How many families that qualified for the married couples allowance in 1999–2000 will not qualify for the child tax credit in 2001–02. [116605]

§ 7. Mr. Desmond Swayne (New Forest, West)
How many married couples will be liable for higher-rate tax as a result of the withdrawal of married couples allowance. [116607]

§ 11. Mr. Graham Brady (Altrincham and Sale, West)
If he will make a statement on the impact on married couples reaching pensionable age after 6 April of his withdrawal of tax allowances to date. [116613]

§ The Chief Secretary to the Treasury (Mr. Andrew Smith)
As a result of the measures that we have taken in this and previous Budgets, pensioner households will, from next April, be on average £400 a year better off, and families with children will be on average £850 a year better off. The number of couples liable for higher rate tax as a result of the withdrawal of married couples allowance will be zero.

§ Mrs. Gillan
Why is the Minister congenitally incapable of answering the question on the Order Paper? As that answer bore no relation to my question, I shall tell him that, today, 10 million people lose the married couples tax allowance, and that, of those 10 million people, 5 million will not qualify for the child tax credit. Is the Minister proud to be part of a Government who have removed the last recognition of marriage from the tax system and a Government whose stealth taxes mean 1142 that the typical, decent, hard-working family is paying £670 a year more in tax? Does not the way in which this Government are robbing the family make Maxwell look like an amateur?

§ Mr. Smith
The Budget's success has clearly upset Conservative Members. My colleagues and I are proud to be members of a Government who are focusing resources on families with children and tackling the obscenity of the extent of United Kingdom child poverty which we inherited from the previous, Conservative Administration. The fact is that 5 million families will benefit from the child credit. Moreover, from next week, people will see the record increase in child benefit—£15 for the first child and £10 for others. From June, they will see the increase in the working families tax credit—£4.35 extra for a child under 16. From next April, they will see the children's tax credit of £8.50 a week. Families are benefiting from those measure because we are a Government who are working hard for hard-working families—whereas the previous, Conservative Government consigned millions of children to poverty.

§ Mr. Swayne
Madam Speaker, do you think that the Chief Secretary's failure to answer question 7 was intentional or unintentional? The question is quite simple, and the answer has to be a number. I have asked the question twice before, but twice before the Chief Secretary has failed to give me the answer. How many families is it? My hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) says that it is 10 million. Is it 10 million? Is the right hon. Gentleman ashamed to say the answer?

§ Mr. Smith
The hon. Gentleman not only did not listen to my answer, but seems not to have read his own question. His question was to ask the Chancellor of the Exchequer: How many married couples will be liable for higher—rate tax as a result of the withdrawal of married couples allowance. I gave him the answer: it is zero.

§ Mr. Brady
Are not the Chief Secretary and the Chancellor, in their Budget tax increase, which is effective today, also hitting 200,000 pensioner couples who this year will lose the married couples allowance? Will not those couples each be up to £500 a year worse off? Is not the Government's policy hitting hardest those who, in the Chancellor's phrase, are "most prudent" and have made some provision for themselves?

§ Mr. Smith
It is very important on this question to underline that those pensioners who get the married couples allowance have not lost it as a consequence of our changes. Moreover, those who become pensioners from today will benefit not only from the higher rate of personal allowances, but from the introduction of a £150 winter allowance—which Conservative Members would take away from them—and a lop tax rate on savings which we have introduced and which benefits 1.5 million pensioners. The minimum income guarantee for the poorest pensioners will give 1 million poor pensioner couples £1,000 a year more than they were receiving under the Conservatives.

§ Mr. Ian Stewart (Eccles)
The people of Eccles and Salford welcome my right hon. Friend's answer. The situation is a great improvement on what the Tories left. Does he agree that he should take no lessons from the Liberals, who were irresponsible in the city of Salford by suggesting an illegal budget, supported by their leader?

§ Mr. Smith
I welcome my hon. Friend's support. He is right that we should accept no lectures from Opposition Members. However, we cannot let the issue go without mentioning that when the current shadow Chancellor was taking the axe to the married couples allowance, he said: We have considered the tax system and chosen the allowances that appear to have the least on-going justification or to be the most anomalous.—[Official Report, Standing Committee A, 22 February 1994; c. 348.] Those are the words of the Conservatives.

§ Mr. Bill Rammell (Harlow)
Does my right hon. Friend agree that any political party needs credibility on taxation? Does he also agree that to promise to cut taxation year on year, regardless of economic circumstances, while at the same time promising to match our huge spending commitments to schools and hospitals is not only incredible, but the most sure-fire way of returning to the economics of boom and bust? If one believes recent newspaper articles, it is a policy with which even the shadow Chancellor does not agree.

§ Mr. Smith
Absolutely. The last time that the Conservatives made similar promises, they broke them all. They brought in the 22 tax rises and put VAT on fuel when they promised not to do so. Their sums do not add up. They cannot promise the so-called tax guarantee and at the same time say that they will maintain our levels of health spending. When they had the chance on the Budget, they refused to vote for the first £400 million for the health service from the tobacco tax.