§ 6. Mr. Andrew Robathan (Blaby)How much the abolition of the married couples allowance will cost the average couple of working age in this financial year. [121376]
§ The Paymaster General (Dawn Primarolo)As a result of the measures that we have taken in this and previous Budgets, from April 2001 households will be on average £460 a year better off, and families with children will be on average £850 a year better off.
§ Mr. RobathanI am sure that the House will deprecate the fact that the Minister, like everyone else on the Treasury Front Bench, is unable to answer a simple question. Let me help her out—the abolition of the married couples tax allowance will lead to approximately £200 in extra tax paid by 10 million couples in this country. How does she square that with the statement by the Prime Minister who, when he was Leader of the Opposition, said:
The programme of the Labour party does not imply any tax increases at all…?Will the Minister also tell us how this joined-up Government square that with teaching about the importance of marriage, which the Secretary of State for Education and Employment wishes to see?
§ Dawn PrimaroloI am delighted to help the hon. Gentleman by reminding him that the cost to married couples when the allowance was cut from 40p to 15p under the previous Government was £430 a year. Indeed, the shadow Chancellor, who was then Chief Secretary, described the married couples allowance as having "the least ongoing justification".
The hon. Gentleman misses the point. The purpose of the abolition of the married couples allowance was to focus resources on families with children. As a result of the Conservative Government's policies, there were 3 million children in poverty when this Government were elected. The increases in child benefit, the introduction of 452 the working families tax credit, the rises in income support, the 10p tax rate and the cut in the tax rate to 22p have helped families when they need help most—when their children are small.
§ Ms Sally Keeble (Northampton, North)Does my hon. Friend agree that the married couples allowance was a hangover from the days when married men were compensated because they took on financially dependent wives? The allowance bears no relation to present circumstances, in which 70 per cent. or more of married women work and are financially independent. Does my hon. Friend agree also that most couples will very much welcome the extra help that will be introduced next year? I refer to the £416 that will be available when couples need it most, which is when children come along.
§ Dawn PrimaroloMy hon. Friend is right. In, I think, 1994 Lord Lamont, the then Chancellor of the Exchequer, said that the married couples allowance gave the most help to those on the highest incomes who needed it least, and the least help to those on the lowest incomes, who needed it most. The introduction of the children's tax credit will give, on average next year, £8.50 a week to lower and middle-income families. That is in addition to the extra resources that we introduced this year for child benefit increases, which are the greatest that have ever been made available. The previous Government were freezing such increases, which this year more than equal the married couples allowance.
§ Mr. David Ruffley (Bury St. Edmunds)Is the Paymaster General aware of the report produced by the Independent Item Club of economists, which was sponsored by Ernst and Young, which draws attention to an interesting feature of the abolition of tax allowances? The report demonstrates that when new Labour came to power, income tax accounted for 10 per cent. of household pre-tax income. After three years of new Labour Budgets, that has risen to 12.5 per cent. Will the hon. Lady give an undertaking that Treasury Ministers will cease to claim that the tax burden on households is decreasing, when independent evidence shows that it is increasing?
§ Dawn PrimaroloI am interested to hear what the hon. Gentleman says. I always follow his comments with care. In the Select Committee on the Treasury, when he was studying the tables for the Budget for the year 2000, he said:
From these tables it will be seen that the 2000 Budget makes successive reductions in tax (compared to the position if thresholds…I wonder how he squares that with what he has just said.