HC Deb 08 November 2001 vol 374 cc362-4
12. Charlotte Atkins (Staffordshire, Moorlands)

What steps he is taking to improve incentives for those with children to work. [11340]

The Chancellor of the Exchequer (Mr. Gordon Brown)

To help families and to make work pay more than welfare, we have introduced and widened the 10p tax rate. We have reformed national insurance contributions and introduced the working families tax credit, including a child care component, which is helping to make work pay for more than 1.25 million families, giving a minimum income for a full-time working family of £225 a week. Building on those successes, we will introduce from 2003 a new system of tax credits that will allow further progress in supporting families in work.

Charlotte Atkins

By guaranteeing a minimum income, the working families tax credit has been a real boon to families in Staffordshire, Moorlands, which is traditionally a low-pay area. What impact has the child care element of the working families tax credit had and has take-up increased now that there are so many more child care places in the local economy?

Mr. Brown

My hon. Friend is right. If we are to help more mothers in particular to get back into work, we need to improve the number of child care places available. The child care tax credit was introduced a few years ago, and 145,000 mothers and fathers now benefit from it. It is making work possible for tens of thousands of people who would otherwise not be able to work, and we are determined to do more on the provision of child care places and the child care tax credit. Of course, we could not provide those places if we took the shadow Chancellor's advice and cut public spending to 35 per cent. of national income.

Mr. Michael Howard (Folkestone and Hythe)

indicated dissent.

Mr. Brown

The right hon. and learned Gentleman shakes his head. I refer him to his speech to the British Chambers of Commerce on 13 May 1997, when he called for public spending to be cut to 35 per cent.—a proposal more extreme even than the Letwin plan.

Mr. Mark Prisk (Hertford and Stortford)

Will the Chancellor enlighten those of us who come from a small business background as to the administrative costs of measures such as the working families tax credit? I understand that he and his colleagues have had the Carter report on that subject for at least two weeks. This vital report could provide support for small firms that find the cost not just of paying wages, but of administering the Government's proposals for the working families tax credit, such a burden. Will he make a commitment to giving relief to those small firms, rather than letting them struggle on in the way that they have?

Mr. Brown

Obviously, we will publish the Carter report's recommendations and deal with it in the pre-Budget report as I have promised. The hon. Gentleman must remember that we have cut small businesses' corporation tax from 23p to 20p, and introduced a 10p band for profits of up to £50,000. We have therefore cut small businesses' corporate taxation by the order of £1 billion.

The hon. Gentleman raises the question of regulations. The two issues that the Conservatives always have in mind are the minimum wage and the working families tax credit. Those measures help to relieve poverty and get people into work. I well remember the shadow Chancellor, when he was Secretary of State for Employment, saying that the minimum wage would cost 1 million jobs and raise inflation by 2 per cent. He went on to say, in 1991, that it would push us out of the exchange rate mechanism. The minimum wage did not cost 1 million jobs; we have created an additional 1 million jobs.

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