HC Deb 09 May 2002 vol 385 cc255-7
1. Mr. Kevan Jones (North Durham)

What estimate he has made of the number of families in the north-east of England on middle and low incomes who will be affected by measures in his Budget aimed to support them. [53543]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Some 300,000 families with children in the north-east and 800,000 families with children in the north-west—around 90 per cent. of families—will be eligible for the child tax credit from April 2003 which, together with child benefit for those earning £50,000 or less, will deliver a minimum of £26.50 and up to £54.25 a week in support of the first child. That compares with a minimum of £11 and a maximum of £27.70 a week in April 1997.

From next April also, the national insurance rise will fund an expansion of the national health service to the benefit of all. After all the changes, a family on median earnings with two children will be £3.90 a week better off.

Mr. Jones

I thank my right hon. Friend for that answer. Does he agree that the child benefit reforms will help to eradicate child poverty, and that the announcements of increased health spending will mean that it will amount to 9 per cent. of national income? Is not that good news for hard-working families in the north-east and for families everywhere who rely on a health service that is free at the point of delivery?

Mr. Brown

The question is, "What will benefit families in all regions of the country?" There is no doubt that the combination of the changes in child benefit through the new child tax credit and the increased resources available to the NHS means that the quality of life of all families is better. I am pleased that more than 90 per cent. of families will benefit from the child tax credit and that we will have been able to inject, by 2007–08, an additional £40 billion into the NHS. We will invest that money: other parties would make cuts.

Mr. Edward Davey (Kingston and Surbiton)

Is the Chancellor aware that, for the north-west, the north-east and other regions of the country, new figures from the Office for National Statistics show that the poorest families pay a higher percentage of their income in tax than the richest families? The poorest 20 per cent of families pay 41.2 per cent. of their income in tax, compared with the 35.5 per cent. paid by the richest 20 per cent. of families. Does the right hon. Gentleman acknowledge that that is due primarily to the burden of council tax and indirect tax? When will he do something about that? When is he going to reform—indeed, abolish—council tax?

Mr. Brown

This is another proposal from the Liberal Democrats that one suspects would cost some additional sums of money. If the hon. Gentleman wishes to abolish the council tax in its entirety, he will have to replace it with something else. As for lower-income families, those in the bottom 20 per cent. are £2,400 a year better off as a result of all the measures that we have taken. The hon. Gentleman should start to recognise that the working families tax credit means, for the first time in our history, that those families are subject to a negative tax rate. They are better off as a result. The measure helps people to get back into work. In addition, the child tax credit means that we are relieving people from poverty. Those are exactly the measures that I wish the Liberal party would support.

Mr. Roy Beggs (East Antrim)

Does the Chancellor agree that even his best efforts to improve the lot of those on lowest incomes cannot be delivered unless there is uptake of benefits? Has he any plans to increase promotion of uptake of the benefits that he has made available?

Mr. Brown

I am grateful to the hon. Gentleman, and I enjoyed my visit to Northern Ireland last week, when his concerns were among the issues that were raised. The working families tax credit is, for 400,000 more people than was the case with family credit, a benefit for families with children that goes with working. Increased numbers of people therefore receive that benefit.

As the hon. Gentleman rightly says, the advertising and publicity of the benefits are important. When the children's tax credit was introduced, the surrounding publicity meant that the uptake was far higher than when family credit was first introduced. Equally, when we introduce the child credit and the pension credit next year, we will be telling people of their rights so that they, too, can claim the benefit. Opposition parties opposed the minimum wage and now have to accept it. They opposed the working families tax credit and then—at the election, at least—accepted it. They opposed the children's tax credit and then had to accept it. In the same way, over time they will have to accept the pension credit, the child tax credit and the new employment credit.

Mr. Michael Howard (Folkestone and Hythe)

Given his last three answers, is the Chancellor proud of the fact that the Budget was redistributive?

Mr. Brown

Money went to families and to people in employment. Therefore, it was a progressive Budget. It put money in the hands of families, as it should do, and in the hands of people who work. Thank goodness that we have got away from the situation that existed under the Tories, when child poverty rose and there were 4 million children in poverty in this country. Child poverty trebled under the Conservatives. The right hon. and learned Gentleman in particular should be ashamed of his record as Secretary of State for Employment, when unemployment went up by 1 million.

Mr. Howard

I remind the Chancellor once again that that was when we were in the exchange rate mechanism—a policy which he specifically supported. Why is the right hon. Gentleman so coy about using the word "redistributive"? Could it have something to do with the fact that on two separate occasions in answer to questions from Sir David Frost on 21 April, the Prime Minister specifically denied that the Budget was redistributive? Is not it utterly pathetic that there is such a chasm between the Prime Minister and the Chancellor that they cannot agree even on whether the Budget was redistributive?

Mr. Brown

The one thing that our Budgets have not been is what the Conservative Budgets were—totally regressive. [Interruption.] Let me tell the right hon. and learned Gentleman, so that he can say what the Conservative party position is—[Interruption.]—that first—[Interruption.]

Hon. Members


Mr. Speaker

Order. Let us hear what the Chancellor is saying. I cannot hear him speak.

Mr. Brown

First, a progressive Budget will transfer money to families. Does the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) agree with our policy of eradicating child poverty? Will he support the child tax credit that is doing more to take people out of poverty now than ever was done under the Conservatives?

Mr. Speaker

Order. The Chancellor should not be asking questions, he should be answering them.

Mr. Brown

This is a progressive Budget because it transfers money to families. I hope that the whole House will support the measures that give extra money to children and to families, and where more goes to those who need it most. Equally, the Budget transfers money so that people who are in work and on low incomes get extra income, and I hope that the whole House will support those measures too. This is a progressive Budget and, as the Conservatives have had to admit, it has the support of the people of this country.

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