§ 8.40 p.m.
§ Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 3rd March be approved [12th Report from the Joint Committee].
The noble Lord said: My Lords, I am pleased to introduce this order which follows our first annual review of the rates and thresholds of working families' tax credit and disabled person's tax credit, which we introduced in October last year.
When we came into government, we found 4.5 million adults living in households where no one worked; one in three children living in poverty; and nearly one in five children growing up in families without work.
899 Too often in the past, people, including the disabled, faced alarming reemployment and poverty traps. If they tried to work, they found that they were better off staying on benefits. If they tried to find decent childcare, they found that very little was available and that what there was they could not afford. If they overcame those obstacles and started work, they often found that it just did not pay them to try to better their situation by taking on more hours or more responsibility. They were caught in a poverty trap because they saw so little of the extra money that they earned.
Working families' tax credit and disabled person's tax credit are at the heart of this Government's strategy to make work pay and to tackle poverty. They are targeting extra support to those who need it. Already, only five months after the launch of the new tax credits, more than 3 million people have called the tax credit response and helplines; more than 1 million people have submitted applications; and more than 700,000 tax credit awards have been made. Already, more than 1 million families are receiving working families' tax credit or disabled person's tax credit, or are in transition from family credit and disability working allowance.
The order increases the rates and thresholds of working families' tax credit and disabled person's tax credit from 11th April 2000 1.6 per cent in line with the increase in the Rossi index (the index which is broadly in line with the Retail Prices Index, less certain housing costs).
In addition, in order to fulfil a commitment made in the Budget of 1999, it increases the child credit for under-11s by an extra £1.10 over and above the indexation, to align it with the child credit for 11 to 900 16 year-olds. These increases will boost the incomes of around 1.4 million low income working families and disabled people who work.
Perhaps I may explain in a little more detail. The order increases the amount of credits for an adult, child or young person, including the extra 30-hour tax credit, which a family gets when one earner works at least 30 hours a week. These credits determine the maximum working families' tax credit or the maximum disabled person's tax credit available. The order also increases the income threshold for working families' tax credit and the thresholds for disabled person's tax credit. The thresholds, or applicable amounts, are the levels over and above which income begins to taper away the maximum award of the tax credits.
Following the transfer of functions under the Tax Credits Act 1999, we have also taken the opportunity to combine the relevant annual changes to the lax credits for England, Scotland, Wales and Northern Ireland in a single instrument. This Government are promoting opportunity for all. They are not writing people off, but helping them to get on. Working families' tax credit and disabled person's tax credit are about making work pay, thus encouraging people to work rather than to rely on out-of-work benefits. And they are about helping families, including disabled people, out of poverty.
The order ensures that the differentials between in-work tax credits and out-of-work benefits are maintained and it provides extra help, over and above indexation, for young children. I commend the order to the House.
Moved, That the draft order laid before the House on 3rd March be approved [12th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
§ On Question, Motion agreed to.
§ House adjourned at sixteen minutes before nine o'clock.