Working Families Tax Credit

HC Deb 06 April 2000 vol 347 cc1133-5

1. Mrs. Betty Williams (Conwy)

What assessment he has made of the impact of the changes to the working families tax credit announced in the Budget.[116600]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Three million people have now inquired on our special telephone line about working families tax credit. There are already 1 million families with children receiving the new working families tax credit, including almost 100,000 receiving the child care tax credit. Following the changes that I announced in the Budget, the minimum income guarantee for a family with someone in full-time work will be £207 a week from June this year—£80 more than the family would receive on income support—and it will be £214 a week from April 2001. Taking all our measures together, the changes introduced since 1997 will lift 1.2 million children out of poverty.

Mrs. Williams

I thank my right hon. Friend for that answer. I know that the extra help will be warmly welcomed by more than 2,000 lower-paid families in my constituency, Conwy. Does he share my sadness that the Conservative party has learned so little that it would scrap the working families tax credit and thereby bring back the despair, distress and heartache felt by so many hard-working families before the general election of May 1997, after 18 years of a Tory Government?

Mr. Brown

I am grateful to my hon. Friend. Not only are 60,000 people in Wales benefiting from the working families tax credit, but in almost every constituency in the country there are at least 1,000 families who are now receiving, on average, £24 more per week. Abolition of the measure would mean a tax rise of £24 a week for working families. I do not think that any party should contemplate that.

The response to the working families tax credit is quite different from what the Opposition predicted. Three million people have inquired about it and 1 million people are on it. I believe that more people will want to join it. We are achieving two things: we are making work pay, and we are taking children out of poverty.

Mr. Michael Portillo (Kensington and Chelsea)

I know that the Chancellor likes to swagger and boast about the working families tax credit, but if it really is the greatest thing since sliced bread, as he claims, why is he proposing to abolish it? Having made such play of the fact that it should be paid through the wage packet, why is he proposing that the replacement benefit should be paid to the carer? Is it not the case that, for such a clever fellow, the Chancellor has got himself into a complete muddle and has made the benefit an unholy mess?

Mr. Brown

We are doing what should have been done years ago. We are making work pay for working families. I take it—[HON. MEMBERS: "Answer."] Opposition Members will listen. I take it from the shadow Chancellor's remarks that the next Conservative Government, if there were one, would abolish the working families tax credit. What the shadow Chancellor must now explain—[Interruption.]Opposition Members are very restive this morning. They are clearly on edge about a measure that is popular within the country.

We will expand the working families tax credit by creating an integrated children's credit and an employment credit. We will achieve two things: first, we will make work pay and, secondly, we will tackle child poverty.

I should have thought that the shadow Chancellor would think twice before wanting to abolish the benefit. In the Sunday Times of 20 September 1998, he stated: Conservatism has become inextricably connected with uncaring social attitudes, selfish behaviour and sleaze. Of course it should be apologetic for mismanaging the economy. Those are his words.

Mr. Portillo

Why does not the Chancellor of the Exchequer answer the question? If the benefit is so good, why is he abolishing it? If it is so important that it is paid through the wage packet, why is he going to change it so that it is paid to carers? It is all very well him preening himself on the working families tax credit; does he not do that because he wants to obscure the real damage that he has done to hard-working families?

Is not the Chancellor less than honest when he speaks of the reducing tax burdens on families, when he knows that that applies only to a family who does not drink, does not smoke, does not drive, does not save, does not have a mortgage, is not married, does not have a pension and does not go on holiday? He knows that real families are not like that. He knows that the real position is that the average family now has to pay £670 more a year. Why will not the Chancellor be honest with us? Why does Mr. Toad have to be so slippery?

Mr. Brown

We will expand the working families tax credit; the Opposition are trying to abolish it. People will know at the next general election that the Opposition want to abolish not only the new deal and put thousands of people out of work, but the working families tax credit. That would lead to a tax rise of £24 a week. We know from last week's votes in the House that they did not support the first spending measure on the health service or the cigarette tax, which will provide £400 million. They would make working families worse off by cutting into health service expenditure. We are on the side of working families; the Opposition are the enemy of those families.