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Amendment made: No. 23, in page 21, line 22, after "has" insert—
', by reason of his fraud or neglect,'.—[Mr. Boateng.]
§ Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]
1114 6.12 pm§ Dawn PrimaroloI beg to move, That the Bill be now read the Third time.
I am pleased to open this debate on the Bill. I am grateful to hon. Members on both sides of the House for the detailed and constructive debates that have taken place on Second Reading, in Committee and on Report. We have been able to discuss a wide range of matters of concern to hon. Members. My right hon. Friend the Financial Secretary and I have been happy to explain the Bill's provisions, and I believe that they address some of those concerns. I am extremely grateful to hon. Members for their assistance in these proceedings and for the very thoughtful way in which they have approached the Bill, not only in challenging the Government, but in genuinely helping us to consider the issues that it raises. I shall return to a few of those points briefly.
The Bill marks another important step towards achieving the Government's aims of providing employment opportunities for all and tackling poverty. The Bill will introduce two new tax credits—the child tax credit and the working tax credit—which will provide focused and flexible support to families. There will be a single credit to support families with children and a separate credit to provide a top-up for the low paid, providing inclusive support for those facing persistent in-work poverty.
The Bill will provide the framework for the credits, as well as a further streamlining in the way that support for families is administered, through the transfer to the Inland Revenue of responsibility for child benefit under part 2. By establishing a common framework for the credits, the Bill provides an opportunity to create an inclusive system of support in which families comply with a common set of rules regardless of their income or circumstances. The detailed rules for the credits will be brought out in regulations. I was grateful for the opportunity in Committee to provide more detail on those rules. I was also grateful for the challenge set by the Opposition to respond in varied and creative ways to their insistent and creative questions on whether I was able to share details on the rates and tapers, which as the House well knows are the subject of the Budget statement.
Hon. Members expressed a desire for more detail to be included in the Bill. It provides the framework for the credits and the regulations contain the technical detail. That is the right way to introduce the reforms and is the norm for such legislation. It allows us the flexibility to adjust the detailed rules over time as we have more experience of the pattern and changing lifestyles of the families that we want to support.
However, as the hon. Member for Mid-Worcestershire (Mr. Luff) and other Committee members explained, the powers to make regulations are subject to negative resolution procedure. There is nothing wrong with that approach. Like all Governments, we try to strike a balance between the appropriate use of parliamentary time to construct a framework and the way in which we deal with the mechanical issues, which in this case relate to how the credits work.
I have given the use of regulations careful consideration. Important regulations will need to be made and I accept that it will be helpful to reconsider whether we need to use negative resolutions for every set of regulations. When we introduced the child care tax credit 1115 as part of the working families tax credit, and the disabled person's tax credit, the first statutory instruments to contain the relevant legislation were subject to affirmative resolution procedure. I will consider how we can make some of the regulations subject to the affirmative resolution procedure in the first instance, although they would have to return to the negative procedure. That reflects further the co-operative and suitable way in which the Committee approached its work.
The new tax credits will be awarded for up to a year and are based on an annual income of the claimants for a tax year. They will make the process of claiming easier and will further integrate tax credits with the income tax system. The annual framework will allow the credits to be more flexible during the year. In Committee, we discussed at length how to provide the claimant with the certainty of having a stream of income for the year while ensuring that the system was flexible enough to adjust to changes in income that were dramatic for a family. At the same time, we did not want claimants to think that every penny of change would require a notification to the Inland Revenue. We had a helpful discussion on that in Committee. I hope that the draft regulations, on which we are consulting, will be available to Members of this House. They should also be available to Members of the other place when they consider the Bill and before it returns here.
Hon. Members were concerned about the potential for overpayments to be run up, and about the complexity of the system. The annual nature of the credits will simplify the income assessment process. We will aim to make sure that in any in-year reporting of changes our desire to avoid any overpayment at the end of the year is borne in mind. When hon. Members see the draft regulations, they will realise that progress has been made to deal with those details.
The Bill also provides for the credit to contain several elements so that the level support is dependent on circumstances. I confirm that the working tax credit will contain elements focused on helping various groups who may face in-work poverty. In particular, elements in respect of disabled workers and severely disabled adults will be included, alongside extra recognition for couples, lone parents and those working full-time hours. The working tax credit will also build on the success of the child care tax credit in the working families tax credit by providing a child care element. The basic existing framework will be retained, but the payment will be made directly to the main carer.
In considering legislation in isolation, we often forget or are not able to bring into our debates the often complex reality of people's lives. Although the nature of legislation such as the Bill is simple, the legislative drafting of simple concepts sometimes demands further explanation. When considering the main principles of the Bill, hon. Members were anxious to ensure that persons or families claiming the credit were given a simple, direct and clear explanation of their entitlement, and that requests for advice or for help in making sure that they receive their full entitlement were responded to.
I am confident that the Bill provides that framework for entitlement and strikes the right balance in respect of the problems to which my right hon. Friend the Financial Secretary spoke in the important debate on how to deal 1116 with those who commit fraud against the system. The penalties, sanctions and effective deterrents we can use against those who seek to cheat the system enable us to strike the right balance between making sure that people receive their rightful entitlements and preventing those who seek to steal the money to which others are entitled from doing so. None the less, the regime is geared towards ensuring that everyone claims their rights. The Bill strikes the right balance in respect of compliance and the provision of support to genuine claimants.
The Government are resolute in our commitment to tackle child poverty and to ensure that work pays. We have already taken more than 1 million children out of poverty. The new credits build on the successful reforms of the last Parliament: the working families tax credit, the children's tax credit, the disabled person's tax credit, and the unprecedented real-terms increases in child benefit and out-of-work benefits. Those reforms have achieved a lot in a short time, but we now have the opportunity to introduce a modern system of support that can deliver even more.
I agree with the hon. Member for Northavon (Mr. Webb): we have the opportunity to change the system radically. That is precisely what the Bill is designed to do. We should not pass up this opportunity to make a huge difference to the lives of the poorest in our society, and to ensure that their children are not scarred by poverty, grow up in poverty, and inherit poverty in their working lives. I commend the Bill to the House.
§ Mr. FlightWe have had a constructive debate on Report and in Committee. The only sadness is that we have not discussed or focused on many parts of the Bill. The Government should have delayed introducing it until they had resolved their policy and intentions, and decided how they wanted to implement them. There are no forecasts about costs, no indication of the size and nature of the benefits and no cost analysis. As the Institute for Fiscal Studies said, the consultation process was wholly inadequate. I understand that the original numbers in the consultation document were taken out before publication.
Parliament is being asked for a blank cheque. This is a framework Bill too far, and Opposition Members do not accept that that is a justifiable approach to legislation that is likely to result in £2.8 billion of expenditure of taxpayers' money. The Bill is not in a form for it to be practicable to make a proper assessment of its proposals, either to oppose them in aggregate or support them.
As I pointed out on Second Reading, the Bill's proposals are essentially similar to the negative income tax reforms proposed more than 25 years ago by the Heath Government. As the House will be aware, a Select Committee then reported on tax credits and there was an important minority report by Labour Committee members, some of whom still serve as MPs. The minority Committee was advised by Lord Kaldor and the Child Poverty Action Group, and led the incoming Labour Government in 1974 to decide against implementing tax credits. There were good reasons of principle for that. Those principles remain valid today and are the antithesis of the fine intentions that the Paymaster General has just expressed. The Committee felt that tax credits were insufficiently focused on those most in need, that the majority of the expenditure benefited people not in 1117 poverty, that the costs were too great in relation to the benefits paid to those who were in need and that the additional revenue would be better spent on more focused measures to help people in need.
§ Roger Casale (Wimbledon)I am interested to hear the hon. Gentleman repeat the argument that he made on Second Reading. Does he not accept that the world has changed enormously 25 years on? The argument for tax credits is valid today because we can no longer hope just to compensate people for being poor, on low wages or not having access to work. We have to achieve the dynamic effects that come from reconnecting people with the labour market, providing incentives to get back to work and, of course, providing proper child care and support for their children.
§ Mr. FlightFirst, I made those points in Committee, not on Second Reading. Secondly, they are points of principle, not just points of practice. Given the expenditure and the difficulties associated with the Bill's approach to addressing the problems of those most in need, the arrangements are not particularly effective. The hon. Gentleman will note that these criticisms have been made by a number of organisations that focus on poverty. There are many good things in the proposals, to which I referred on Second Reading. However, our objections of principles remain valid and have not been adequately debated—[Interruption.]
§ Mr. FlightIn view of the many issues that have not been addressed, I suggest that the Government agree to give the relevant Select Committee responsibility to scrutinise the substantial volume of regulations that will need to be introduced; otherwise, as the Law Society has warned, many important issues and principles will not be considered properly by Parliament.
I shall focus on difficult issues raised by the Bill, many of which are issues of principle that have not been resolved. There is the simple question of how generous and expensive the child tax credits will be. The lower the level of child tax credit, the less effect there will be on reducing child poverty, but the higher the level, the greater the risk of reducing work incentives, which the tax credits are intended to increase. More generous tax credits will reduce the financial disincentives to marriage or cohabitation for parents who are jobless, but the CTC and WTC proposals will continue some of the financial disincentives of the working families tax credit to marriage and cohabitation for parents. In Committee we touched on this issue, which is acknowledged by the study sponsored by the Rowntree Trust.
Working families tax credit and child tax credit have already brought back elements of joint assessment for both married and cohabiting couples. As a result of the Bill, one partner will be liable to repay the CTC or WTC if it is wrongly paid to the other partner. That could cause a nightmare situation when couples split up. Although working tax credit will increase incentives for people to get a job, it will reduce the incentives as they earn more, and some will lose more than 90 per cent. through tax and the withdrawal of benefits. The problem of squaring incentives to work is by no means fully addressed by the 1118 Bill. Under working tax credit, as with working families tax credit, parents remain the only people who are not eligible for child care subsidies.
As I said on Second Reading, I welcome the fact that the savings rules that applied to WFTC will not apply to child tax credit, but I do not recollect the Government ever setting forth the policy on savings for working tax credit.
Both credits are complex and present people in real life with complex decisions about whether to work more hours and whether to live together or apart. There is an issue of principle as to whether Government should use financial incentives to influence people's personal behaviour in those areas.
As in Australia and Canada, payments will be based on annual income figures, but unlike Australia and Canada, in the UK the Inland Revenue will not have the necessary data for many potential claimants unless the Government adopt the suggestion that all claimants should be required to produce annual returns for the Revenue.
Major problems will remain in defining and determining cohabitation. The Revenue said that it would check whether anyone was lodging a tax return from the same address as the claimant, but care will be needed by the Inland Revenue to avoid the risk of making a wrong cohabitation decision, such that under the law a couple is deemed to be cohabiting, because there will be consequent penalties and difficulties in recovering overpayments.
The arrangements depend on a great deal of information being transferred between Government Departments, especially from the Department for Work and Pensions to the Inland Revenue. We have not touched on the question whether this is potentially in breach of the data protection legislation, if not data protection principles.
The Bill fails to ensure that a national system of credits and benefits is maintained, and it risks the possibility of disputes similar to the current threat that the Whitehall moneys financing attendance allowance could be withdrawn in Scotland. The threat exists as a result of Scottish Ministers having chosen to provide free nursing care. It is in the interests of the country that there should be one system in all of Britain to avoid the possibility of conflicts, which the drafting of the Bill has not ruled out.
The Government have not resolved the difficulty of defining minimum hours to be worked to qualify for working tax credit, or how that will be checked, if at all. Will employers be required to provide information either regularly or on a spot-check basis? We have argued very strongly—this is the main point that has been made by the Institute for Fiscal Studies—that there is no work incentive argument for providing tax credits for singles and couples without children and thereby adding about 500,000 claimants a year.
Another issue that has arisen is the fact that the Government continue to propose in the Bill what I can only call Enron-style, off-balance-sheet accounting. Some £4 billion of existing expenditure is automatically being transferred to a tax net-off, and another £2.8 billion will probably be transferred as a result of the Bill. A total of £15 billion of welfare-related expenditure will then be accounted for in terms of netting off tax receipts, rather than being shown as expenditure. The Office for National Statistics, which adopts the accounting conventions set out in the 1995 European standard of accounting, keeps 1119 the national accounts on one basis, but there are now difficulties in reconciling the Red Book with national accounts. There is no logic to justify taking the proposed approach other than that of seeking to conceal the extent of such expenditure.
It has emerged from this debate that at the heart of the issue are our concerns about the complexities of the arrangements and our anxiety that the need for claimants to keep detailed records and monitor the number of hours worked, the amount of income earned and child care costs will lead to a much-increased risk of non-compliance. The right hon. Member for Birkenhead (Mr. Field) was more constrained today, but as he has warned previously, the arrangements in the Bill are likely to result in spiralling costs of the sort that were experienced in America as people learned to play the system and to offer excessive bonuses for dishonesty.
Above all—I suggest that hon. Members think about this point—the Bill will ensure that about 40 per cent. of all families will be on means-tested benefits. Some 30 per cent. of those will be of working age; and, on the Government's figures, about 80 per cent. will have children. Other tax credits will go to 56 per cent. of those in retirement. Stepping back, one can see that that means that well over half of the recipients will be paying for their benefits through direct and indirect tax. Is there any logic in a system that includes the costs, difficulties and administrative issues that are involved in taking money from people and then giving it back to them? That cannot be an ideal way of running our affairs. Indeed, the Prime Minister himself has warned of the major problems in having too much means-testing.
There are good objectives in the Bill and several aspects that we support, which I highlighted on Second Reading, but the House has not had the opportunity to consider many serious problems and a lot of the issues that I have sought to raise in this speech. I end where I started: it would surely be much more healthy for the Government who seek to introduce such legislation to bring to the House much more detailed proposals, rather than a framework in respect of which we do not know how many of the problems will be solved, when we do not know how much it will cost or whether 1.3 million people will be worse off as a result of its introduction. That is not the way to legislate, and I do not think that the Paymaster General made any convincing case for addressing this important territory with such a framework Bill, so we will abstain from voting. On the many areas that it does not address, there is scope to deal with hon. Members' queries through parliamentary questions, but it is to be hoped that many of the outstanding issues can be addressed in the other place.
§ Jon Cruddas (Dagenham)Two elements dominated Government thinking on the social security/labour market interface in the last Parliament: first, helping families in poverty, especially those with children, by means of the children's tax credit; and secondly, pricing people into work through measures to alter the trade-off between work and non-work, through the working families tax credit.
The Bill proposes two new targeted tax credits: the child tax credit to tackle child poverty and target support for parents, and the working tax credit to tackle in-work 1120 poverty and remove barriers to work. These two new initiatives develop the strategy of confronting poverty and restructuring the supply of labour that was started in 1997. The strategy on the labour market has been to alter the derived utility of work for those not in employment. It makes work pay by altering the trade-off between work and non-work by building a minimum floor for wages—through the minimum wage—and by constructing a take-home premium above market wage rates for poorer labour market participants through the working families tax credit.
These measures work alongside the new deal and benefit-policing arrangements in terms of people's availability for work. If we add to that the record rises in child benefit and the 10p starting rate for income tax, the reform package begins to take shape. The Child Poverty Action Group has identified a substantial reduction in poverty—whatever measure we care to use. Separately, Piachet and Sutherland estimate that 1 million children have been lifted out of poverty since 1997.
Any labour market initiative such as the working tax credit should be judged against the nature of the labour market that it seeks to affect. New analysis of the labour force survey data by Professor Peter Nolan, the director of the future of work programme at the London school of economics, is helpful here. Let us consider the three general classifications in the labour force survey: white collar; traditional services; and manual, manufacturing and construction. Between 1992 and 2000, white-collar professionals accounted for 1.5 million of the 2.3 million increase in employment numbers. Yet traditional services—covering clerical and secretarial, personal and protective, sales, postal and cleaning services—together with manual, manufacturing and construction workers still account for nearly two out of three jobs.
Closer analysis suggests that the fastest-growing occupations have been: first, the four long-established services of sales assistants, data-input clerks, storekeepers and receptionists; secondly, state-dominated education and health service workers; and thirdly, the caring occupations such as those of care assistants, welfare and community workers, and nursery nurses. The fastest-growing occupation in the 1990s has been hairdressing. The fastest-growing manual occupation since 1992 was housekeeping, with a rise of 368 per cent. In short, the key areas of growth in the demand for labour through the 1990s have been in traditional, low-paid, unskilled and routine employment. Much of that is carried out by women and much is part-time.
It is precisely because of these developments that the policy proposals before us are so important. The child tax credit will be the first single system of income-related support for families with children, irrespective of whether they are in or out of work. The working tax credit rationalises and extends the current provision of in-work support and, in so doing, increases the utility of work for more people.
The Bill establishes the machinery, prior to the Budget, for an extension of our attack on poverty in terms of the realities of labour market structure. There appears to be a problem, however, in terms of the operation of the working tax credit. This exists in areas with exceptional market conditions and strong disincentives to work. They are areas characterised by relatively high-wage economies, but with significant proportions of deprived families and, often, single parents. There are shortages of 1121 child care and early-years provision, together with exceptionally strong disincentives in the housing market in terms of labour market participation.
I am talking about London. Research by the Greater London Authority suggests that London has the lowest take-up rate of the working families tax credit in the UK—in London the rate is one in 10 families compared to one in six nationally, and one in five lone parents compared to one in three nationally. Part of this is accounted for by regional earnings differentials, yet even with a 70 per cent. write-off of child care costs, the higher-cost child care is a disincentive to participation, as are higher housing costs. Research suggests that people paying higher rents lose out. The gain through the tax credit is lost through housing benefit withdrawal.
In short, because of a combination of forces, the labour market participation strategy underscoring the policy is less effective in London, as there are greater financial disincentives to participation. Let us take my constituency as an example. It is one of the capital's more deprived constituencies, with a high number of one-parent families and housing benefit recipients. According to House of Commons statistics supplied to my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), Dagenham remains 533rd out of 641 constituencies in the ranking relating to the proportion of families receiving the working families tax credit.
That implies serious imbalances between poor families' unemployment entitlement and take-up incentives. The issue should be investigated and there may be a need to introduce regional premiums to the regime to ensure that the policy works with maximum effect, consistently across the country.
Overall, I welcome the Bill, as it is specifically designed to confront the labour market that we have, but I am concerned that we are not yet maximising the strategy's potential in deprived parts of the capital such as my constituency.
§ Mr. WebbIt is interesting to follow such a well-informed and thoughtful contribution from the hon. Member for Dagenham (Jon Cruddas). It is a shame, in many ways, that we did not have the benefit of those and other insights from him in Committee. That is perhaps a shortcoming of our proceedings.
On Second Reading, we gave a broad welcome to the Bill's aim to streamline and focus extra resources on families with children. We have not changed our position. As the Minister said, the Committee debates were instructive, and hon. Members from both sides contributed thoughtfully and helpfully. The Committee process highlighted the difficulty of debating such Bills in the absence even of draft regulations. I hope that the import of what the Minister said a few moments ago is that their lordships will have sight of the regulations early in their deliberations. I am reassured by her nodding in response. That will make a big difference.
It is important to put on record one or two reservations that survived the Committee's scrutiny. As the Minister is aware, my principal reservation is about what the working tax credit is supposed to achieve, as distinct from other support for low-income childless people. I tabled two written questions to pick up on the Government's two 1122 justifications for the strategy. Both were for answer today and they were submitted in good time, but neither has been answered.
One question relates to the Government's statement that poverty also affects childless people—they cite 1 million childless people in poverty. I simply asked how many of those people would be entitled to the working tax credit. In other words, how many are over 25 and working 30 hours a week? Very few, I suspect, but answer came there none. The argument that we need the working tax credit to relieve poverty is open to question.
I asked about the incentive argument—an unemployment trap exists because a childless person who takes low-paid work does not get much reward. Clearly, there is not much reward for a renter, but there is a much greater incentive for a person whose mortgage is not paid for by work and whose help is not taken away when he gets a job. The anti-poverty and unemployment trap arguments for the strategy are weak and it is regrettable that we did not discuss the meat of that in Committee.
The practicalities for our constituents of claiming these tax credits still worry me considerably. If authorities are to decide whether they will be assessed on this year's income or last year's, that requires an estimate of this year's income. Therefore, if 1 million-plus people must estimate income and if some get that or their hours wrong, there could be serious over-payment problems. Without being patronising, some members of that client group are simply not used to such calculations, so we may be storing up troubles ahead.
The strategy is a difficult mix of the tax and benefits systems. In some cases, the benefit route has been chosen, as in the example of joint assessment, while in others the tax route has been taken. In particular, the appeals process, which we raised briefly, still gives me real cause for concern. I am worried that, instead of appeals going through the effective tax credit appeal procedure, a whole new tax appeal process will be created.
We welcome the additional support for families with children and the attempt at streamlining, so we support the Bill.
§ David CairnsI am pleased to speak in this debate. Unfortunately, I could not take part in the discussions on Second Reading or in Committee. However, I have followed the debate in the Official Report, and it has been fascinating, instructive and, of necessity, very technical. It is important to step back from the technicality and consider the broader picture of the range of Government strategies aimed at alleviating poverty and making work pay for those who are in work but, for whatever reason, inadequately remunerated for it.
The Government's commitment to poverty alleviation is strengthened by the Bill, which builds on the success of the working families tax credit, which in turn currently benefits 1.3 million families, including 1,893 families in my constituency. That is a large number in what is, even before the boundary changes, a relatively small constituency. Across Scotland, 119,000 families are benefiting in a very direct way from the measures.
Incidentally, it is a disappointment to me that no member of the Scottish National party, which is alleged to stand for Scotland, has sought to take part in or even 1123 be present at most of what is an extremely important debate for Scotland. Now I shall move on, before I am called to order.
We have heard about the minimum wage, the children's tax credit and the increases in child benefit, but no one has mentioned another important element in the strategy—the Jobcentre Plus initiative. I thought that my hon. Friend the Member for Dagenham (Jon Cruddas) might mention it, but perhaps time constraints got in the way. In my district authority alone, £3 million has been spent on modernising jobcentres, giving them excellent computer connections and making them better and friendlier places that can help people to move from welfare into work. The programme has been tremendously important throughout the country.
It was said on Second Reading and in Committee that the fact that we are introducing this measure to build on the working families tax credit is an admission that we got it wrong. That is baffling. The entire history of the welfare state—certainly the modern welfare state—is that measures are introduced and the world moves on, as my hon. Friend the Member for Wimbledon (Roger Casale) so tellingly said, so that we have continually to refine and improve on our systems. I hope that Ministers will not rest on their laurels and that they are already examining what further improvements can be made five or six years down the line. I am sure that they are.
It was said of Beveridge, perhaps wrongly, that he believed that unemployment, or idleness, was the root cause of poverty. Perhaps there was too much emphasis in the past on simply getting people into work and off benefits, with the assumption that they would automatically stop being poor. We know from constituency experience that that is not the case, and we need tailored programmes for people who are in work but remain poor.
I urge Ministers not to retreat one inch from the principle of delivering our programmes through the wage packet and the good offices of the Inland Revenue. We have had a good debate about the comparative stigma attached to the benefit book or the Inland Revenue approach, and I take on board the sincere points that have been made, but people in receipt of the working families tax credit who come to my surgery are very grateful for what they get and they want to explain all their circumstances to ensure that they can claim everything to which they are entitled. Stigma is not quite the issue that Opposition Members would have us believe.
There are undoubted benefits in incentivising work and allowing people to look at their pay slip at the end of the month and say, "I earned that by my own endeavours, by being disciplined and getting out of bed in the morning." That is a positive gain, and I hope that the blandishments to revert to a benefit book approach will be rejected.
We need only consider the difference in take-up between the working families tax credit and the systems that it replaced—family credit and so on—let alone the opportunities for fraud that the benefit book system introduced. If some of the amendments that we discussed earlier had been accepted, employers would have been printing their own order books and distributing them to their employees, and there would have been a great risk of fraud.
1124 We have heard some criticism about a lack of flexibility with regard to changing circumstances; the hon. Member for Northavon (Mr. Webb) made some good points on that subject. It is true that the situation must be monitored closely, and the system must react quickly to people's changing circumstances—but that applies to the current system, including the benefits system, too.
A classic example, of which all hon. Members will be aware, is the position of school cleaners, who work fewer hours in the summer but get paid the same because their wages are aggregated and averaged over the year. I had a constituency case recently involving a school cleaner whose benefit entitlement was changed over the few months of the summer when she was working fewer hours. I am thankful to say that we got a result fairly quickly, so there is flexibility in the current system. It is not perfect, however; no system would be, and the hon. Gentleman was right to raise those issues. It is a flawed assumption that the current system is flexible enough. It must be improved.
Some hon. Members have talked about stigma, but one positive change that has not been mentioned on Third Reading so far is the fact that the disabled person's tax credit will now be focused on the working tax credit. There will be a focus on the work that disabled people do, by their own endeavour and efforts, and they will get the rewards of being in work. That is a positive step, and has been welcomed by those who represent disabled people. They are not being patronised or getting a handout for being disabled; the focus is on the work that they do, not who they are.
Much has been said about the effects on businesses. My hon. Friend the Paymaster General was too modest, in that she did not explain everything that the Government have done for business. That gives me the opportunity to mention that under the Labour Government we have the lowest inflation in Europe, the lowest interest rates in 30 years, favourable tax regimes for capital investment, the lowest corporation tax in many years for larger businesses—it is down from 33 to 30 per cent.—favourable regimes for research and development, and 1 million more people in work today than when we came to power in 1997. We must balance what some may call the burdens on business with the tremendous benefit to business of having a Labour Government who are friendly to business and understand and reflect its needs.
The Bill will also affect the work of the Inland Revenue, where there is a quiet revolution under way. If hon. Members have not been to their regional office lately to talk to the people who work there, I recommend that they go. North of the border, we were fortunate to be invited by the Minister of State, Scotland Office to meet the Scottish chief executive of the Inland Revenue, and we were told that as a direct result of the Bill, the work of calculating, assessing and collecting taxes will be a minority part of the Inland Revenue's business by 2003. That is a big change from the position a few years ago.
With its work on integrated tax credits, making sure that businesses comply with the minimum wage, administering student loans and so on, the Inland Revenue is undergoing a quiet revolution, and it is to be commended. When I have spoken to the people there I have been tremendously impressed by their vigour and their zeal for that approach to their work. They realise that there is a change in attitude towards them, because they are no longer seen as the bad guys of the piece but as 1125 people doing something positive. The Inland Revenue now has a much more business-oriented approach. It is proactive, going out to businesses to explain the integrated tax credits and helping them comply with the new arrangements.
On Second Reading the Paymaster General said:
By the mid-1990s, the United Kingdom had the highest rate of relative poverty in the European Union and the highest proportion of children living in workless households."—[Official Report, 10 December 2001; Vol. 376, c. 598.]By the middle of this decade we will be able to say that 1 million children have been lifted out of poverty and 1 million more people are in work, and they will be receiving more help through the tax credits. I am extremely proud of that, and I commend the Bill to the House.
§ Question put and agreed to.
§ Bill accordingly read the Third time, and passed.