HL Deb 26 March 2001 vol 624 cc1-3

Lord Goodhart asked Her Majesty's Government:

What is their response to the report of the National Association of Citizens Advice Bureaux, published on 27th February, on working families' tax credit.

Lord McIntosh of Haringey

My Lords, working families' tax credit is a success in making work pay for families on low to middle incomes and in tackling child poverty. Over 1.1 million families receive it—300,000 more than claimed its predecessor, family credit. Working families' tax credit is boosting incomes, paying on average an extra £76.86 a week to families looking after 2.2 million children. We welcome NACAB's recognition of the contribution made by working families' tax credit to making work pay and tackling child poverty.

Lord Goodhart

My Lords, in the light of the NACAB report will the Government reconsider their insistence on payment of the tax credit through employers? Will the noble Lord accept, as we forecast during the debates on the Bill in your Lordships' House, that the payment system throws unnecessary administrative burdens on small employers and, as the NACAB report has shown, is actually detrimental to a significant number of employees?

Lord McIntosh of Haringey

My Lords, we do not accept that argument. We did not accept it at the time and it has not proved true now. The only evidence that has been produced in favour of removing what is called a burden on employers is from the Better Regulation Task Force. We very much respect that body but it reported before the working families' tax credit came into effect. Of course, if there is evidence of particular burdens on particular kinds of employers, we shall listen carefully to that.

Baroness Carnegy of Lour

My Lords, the citizens advice bureaux, which have had a great deal of contact with people who are having problems with working families' tax credit, maintain that some 371,000 people who the Government expected would be able to claim the credit have not done so. Is it the case that the effect that credit has on housing benefit, council tax benefit and on help with school clothes may well mean that people would be less well off if they receive the working families' tax credit and therefore they are failing to claim it? If that is the case, are the Government disappointed?

Lord McIntosh of Haringey

My Lords, that is not the case. No one is worse off as a result of receiving working families' tax credit. Indeed, the tapers have been so devised that everyone is better off to some extent as a result of working families' tax credit; in other words, they do not lose as much in housing benefit or council tax credit as they would if they were not receiving working families' tax credit. That is in contrast to the previous family credit system. As regards free school meals, those were consolidated into the benefit, not when working families' tax credit was introduced but when family credit was introduced.

Lord Saatchi

My Lords, does the Minister agree that if a company held on to money which it knew belonged to its customers, that would be considered a pretty poor show? But is that not what the Government do on a grand scale by devising complicated tax credits such as the one we are discussing and then not paying them to millions of people? Will he tell the House how many billions of pounds the Government are saving this year by the non-payment of tax credits and allowances to families who are entitled to them?

Lord McIntosh of Haringey

My Lords, nothing. It is simply not the case that the Government are holding on to money. If the noble Lord, Lord Saatchi, refers to the fact that employers pay working families' tax credit—which, indeed, they do—they offset it against the money which they receive in the form of national insurance contributions. If any employers have particular cash flow problems, they can have that dealt with by arrangement with the Inland Revenue. The Revenue does not benefit.

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