Working Families Tax Credit (Hansard, 20 July 2000)

§ 1. Mr. David Watts (St. Helens, North)
How many inquiries have been received by the working families tax credit response line from the north-west region. [130128]

§ 3. Mr. Richard Burden (Birmingham, Northfield)
If he will make a statement on progress with the implementation of the working families tax credit. [130130]

§ The Chancellor of the Exchequer (Mr. Gordon Brown)
Up to 30 November 1999—the end of the first phase of television advertising—the response line handled 89,000 inquiries from the Granada Television region. In total, more than 3 million calls have been received on our response and helplines, and more than 1 million families are now receiving working families tax credit. Already this is almost 230, 000 more than the number who were receiving family credit, even at its peak. Some families are £50 a week better off, and 110, 000 families are receiving help with child care costs. That is twice as many than under the old system, and it is making work pay.

§ Mr. Watts
I thank my right hon. Friend for his response. Does he agree that this initiative has been one 520 of the most positive ways of getting people out of poverty and into work? What does he think about the Opposition's proposals to scrap this tax credit? Does he believe, like me, that that would put people—

§ Madam Speaker
Order. It is not the Chancellor's business what the Opposition's policies are.

§ Mr. Watts
I will try again, Madam Speaker. Does my right hon. Friend agree that if the tax credit were to end, it would put many families into poverty and increase unemployment?

§ Mr. Brown
I am grateful to my hon. Friend for the careful way in which he words his question to me. It is true that 1 million families are better off; it is true that they are £24 a week better off, and it is true that if working families tax credit were taken away, that would effectively be a tax rise of £24 a week for the poorest families in the country. We invite the Opposition to tell us what they would do. I understand that they would abolish the new deal and working families tax credit. They would make people unemployed, and they would make people in work poor.

§ Mr. Burden
Although I realise that my right hon. Friend has no responsibility for the Opposition—it would be quite wrong if he had—will he comment on any advice that he has received, for instance from the Dimbleby programme in 1998, when I understand that the Leader of the Opposition said about the working families tax credit, "We wouldn't do it."? Given that more than 2,500 families in my constituency stand to benefit from the working families tax credit, will my right hon. Friend tell me whether he would follow that advice or stick to our current line of tackling poverty, not ignoring it?

§ Mr. Brown
I understand my hon. Friend's concern to point out the virtues of the working families tax credit. It is, after all, similar to the earned income tax credit in the United States of America. If Ronald Reagan could support the working families tax credit through the earned income tax credit, it is quite surprising that the Conservative Opposition have moved so far to the right that they cannot support it.
I understand that the shadow Chancellor has made a decision that he will not make a spending commitment to support the working families tax credit or the new deal. I understand also that he has been prepared to give the figure of £16 billion as the public spending cuts that the Conservatives would impose. I understand also that there is now a regional breakdown of those cuts. The Conservatives have even issued press releases for their candidates on this matter. I understand also that "The Common Sense Revolution" is being pulped today. We knew that it was fiction—now we know that it is pulped fiction.

§ Mr. Michael Portillo (Kensington and Chelsea)
But is not the working families tax credit fundamentally misdesigned? Families have to give intimate details about themselves to their employers. The money does not go to the parent who looks after the children, and it may never reach the children. It is the Chancellor of the Exchequer who proposes to abolish the scheme in two years' time. Is that not the substance behind the spin?
521 When the Chancellor made his spending review statement the other day, why did he not tell us that the election war chest had been collected from taxing the least well-off families in our society? Is it not deplorable that it is the poorest fifth of our society which has faced the largest increase in tax under this Government? The Government take the money that people have earned for themselves, churn it around the system, and give some of it back to them in the form of benefits so that the Chancellor of the Exchequer can get the credit and take the moral high ground.
I know that the Chancellor is not a fan of the Prime Minister's memos but, to borrow a phrase from one of them, would it not be bizarre to believe that any Government in which he was Chancellor could be thought of as pro-family?

§ Mr. Brown
If the shadow Chancellor wants to help the low paid, why would he abolish the working families tax credit? Why would people be £24 a week worse off? Why would he abolish the new deal? Why did the Conservative party not support our 10p basic rate of income tax? I know that the shadow Chancellor does not want to answer any questions about his public spending cuts guarantee, but perhaps when he stands up again he will explain, bearing in mind the document that was produced by the Conservative party only yesterday, where the public spending cuts would be made. He has said that there is a difference of £16 billion between the 2 per cent. that he would finance and 3.3 per cent. He has even had his party break it down in regional terms. Now he must tell us where those cuts will fall.
The right hon. Gentleman broke his promises on tax after the election in 1992. The Conservatives have now had to break their promises before the election.

§ Mr. Portillo
It is perfectly clear to me that even the Chancellor does not believe that all that bluster will be believed by working families. Is he aware that the polling organisation ICM conducted research in his constituency on Tuesday night, after his statement? The responses make interesting reading. Three per cent. of the Chancellor's constituents believe they are being taxed less; 48 per cent. of the Chancellor's constituents believe they are being taxed more; 79 per cent. of the Chancellor's constituents say that public services are not improving—[HON. MEMBERS: "Ah!"] Wait, it gets better. Seventy-two per cent. of the Chancellor's constituents say they do not believe the spending figures that he promised on Tuesday.
Even the Chancellor's constituents can see through the spin. Even they know that they have been taxed more and that the Chancellor has delivered less; they do not believe a word that he says.

§ Mr. Brown
It is getting more and more expensive for the shadow Chancellor to ask me a question. He now has to hire an opinion polling agency before he comes to the House.
Will the right hon. Gentleman answer the question that I put to him on the Conservatives' £16 billion of public spending cuts? [Interruption.] The Opposition are getting very agitated. Last night during the debates on the Finance Bill, they voted £ 1 billion extra in tax cuts simply for 522 double taxation relief and national insurance on share options. The total bill from the Finance Bill alone is extra tax—extra revenues that have to be raised—of £5 billion.
Will the shadow Chancellor answer the question? The Opposition had—[Interruption.] They do not like it. The Opposition had five guarantees. Where will the cuts fall—on health, education, transport, social services, defence, or law and order? It is about time that the Conservatives gave the country an answer.

§ Mr. Dennis Skinner (Bolsover)
I was just listening to those polling figures. There was one figure of 3 per cent.; one of 48 per cent.; another of 79 per cent. and another of 72 per cent. Those figures demonstrate clearly that when we get more than 200 per cent. voting, that is as phoney as the shadow Chancellor and a £9 note.

§ Mr. Brown
It certainly does not add up. When the shadow Chancellor still had his tax guarantee and he wanted to prove that the economy was doing well, he went around the television studios saying: Well, governments are in a strong position when the economy is doing well, there's absolutely no denying that. He also said that fortunately, the national finances are good enough. He then said that we had an absolutely reliable anti-inflation strategy.
The shadow Chancellor has been going around saying that the economy is doing well. He now tries to tell us that our spending figures are unsustainable. I put it to him that the last Chancellor who said that our spending figures were unsustainable found that his position was as well.