HC Deb 06 December 2001 vol 376 cc447-9
2. Mr. Huw Edwards (Monmouth)

How many people in Wales receive the working families tax credit. [18683]

7. Harry Cohen (Leyton and Wanstead)

What assessment he has made of the impact on child poverty in (a) London and (b) other parts of the United Kingdom of the working families tax credit; and if he will make a statement. [18688]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Seventy-six thousand families in Wales and 95,000 families in London are among the 1.3 million United Kingdom families who benefit from the working families tax credit. Together with other policies, it has taken 1.2 million children out of poverty.

On Monday, the House will debate the Tax Credits Bill, which will create from 2003 the working tax credit and the child tax credit. Final decisions on that will be announced in the Budget. I can confirm that tax credits will disregard maintenance payments for the working tax credit, and that therefore work will pay even more.

Mr. Edwards

Does my right hon. Friend agree that the WFTC has been a valuable instrument in enabling people to get off benefit and into work, and an important measure against child poverty, for which the Government have not had the credit that they deserve?

Some small employers, who employ two or three people, have approached me. They are conscious of the problem of administering the WFTC and believe that it might discourage some small employers from taking on, for example, single parents. Will my right hon. Friend consider the administration problems for small employers?

Mr. Brown

That is precisely why the new integrated child credit will streamline the procedures. On my hon. Friend's first point about the success of the WFTC, not only have we taken 1 million children out of poverty, but it is our target to take another million out of poverty in this Parliament. We also aim to ensure that work pays for people who take up jobs.

There are 170,000 more single parents in work and many more people have been able to take up work because they know that it will pay more than social security benefits. Other countries around the world are considering the policy to ascertain whether they should adapt the same policy.

I am surprised that the Conservative party, which opposed the minimum wage and the new deal, also opposes the WFTC. After all, Ronald Reagan said of a similar system in the United States: It was the best anti-poverty, the best pro-family and the best job creation measure.

Mr. Speaker

I call Harry Cohen

Hon. Members

Where is he?

Mr. Speaker

I call Mr. Gibb.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

What is the Chancellor's assessment of the burden on small businesses of paying the benefit through the payroll system? Would not it be better to pay it directly to the homes of those entitled to it?

Mr. Brown

The regulatory impact survey has been applied to the benefit. The hon. Gentleman should take into account the fact that the measure benefits businesses, which are thereby able to get people to take jobs that they would otherwise not accept. It backs up the minimum wage and makes work pay. It pushes up the wages and take-home pay of the employees especially of small businesses, which might not otherwise be able to attract people. Like the earned income tax credit in the United States, the WFTC has widespread support. Belgium, the Netherlands and Spain are considering the WFTC and France has already introduced a version of it. It is the modern way of combining efficiency in business with fairness for business. It is time that the Conservative party, which opposed the minimum wage and the new deal, started supporting the WFTC.

Mr. Edward Davey (Kingston and Surbiton)

Will the Chancellor admit that 43 per cent. of children in London are living in poverty, that London has a higher percentage of families living in poverty than any other region, and that the initial analysis of the impact of the working families tax credit on households in receipt of housing benefit shows that families in London receive less benefit from his policy than families in other regions? As he considers the new policy of an integrated child credit, will he ensure that families and children in London do not lose out?

Mr. Brown

It is true that a report is being prepared on the situation in London. There are 95,000 families in London receiving the working families tax credit, which is a smaller proportion of the population than in the rest of the country. We are examining how to develop the integrated child credit and the employment credit in the future, but the fact is that 95,000 families in London are better off than they would otherwise have been because there is a Labour Government who have adopted the working families tax credit.