Working Families Tax Credit (Hansard, 21 July 1998)

§ Dr. Lynne Jones
To ask the Chancellor of the Exchequer what proportion of the working families tax credit will count as public expenditure for the purpose of the spending totals announced in his Economic and Fiscal Strategy report 1998. [50129]

§ Mr. Gibb
To ask the Chancellor of the Exchequer (1) what proportion of the expenditure on working families tax credit is included in social security expenditure as set out in page 167 of the Comprehensive Spending Review; [51247]
(2) how much he estimates the working families tax credit will cost in terms of (a) expenditure and (b) tax forgone in (i) 1999–2000, (ii) 2000–01 and (iii) 2001–02. [51476]

§ Mr. Darling
[holding answers 20 July 1998]: Following existing national accounts conventions, the element of the Working Families Tax Credits (WFTC) payment that exceeds the tax paid by the individual taxpayer is treated as Government expenditure in Public Sector Current Expenditure, Annually Managed Expenditure, Total Managed Expenditure and General Government Expenditure. The balance is treated as tax forgone. This expenditure proportion is estimated to be 80 per cent. of the total cost of WFTC.
However, as the WFTC is to be part of the Income Tax system and will be paid by the Inland Revenue through the pay package as an Income Tax credit, the Government will, as stated in the Financial Statement and Budget Report, treat the whole of the WFTC payments, as Income Tax credits in the calculation of Net Taxes and Social Security Contributions.

§ Mrs. Lait
To ask the Chancellor of the Exchequer, pursuant to his answer of 13 July 1998,Official Report, column 62, (47484) what would be the circumstances in which a family with an income of £31,000 and above could receive Working Families Tax Credit; and what would be the highest possible income. [50880]

§ Dawn Primarolo
A family with two children and maximum eligible child care costs of £150 would still be receiving some WFTC with family income of £31,000. However, the highest possible level of family income which will be supplemented by the WFTC depends on the number, and age, of the children in the family. For example, if the family had five children under 11 rather than two, it would still receive some WFTC with family income of around £38,000.

§ Jackie Ballard
To ask the Chancellor of the Exchequer what estimate he has made of the percentage of working families with children who will be eligible to receive(a) 70 per cent. and (b) some of their child care costs through the child care tax credit in the working families tax credit. [50582]

§ Dawn Primarolo
I refer the hon. Member to the answer I gave to the hon. Member for Havant (Mr. Willetts) on 1 April 1998,Official Report, columns 553–54. The latest estimate of the cost of the child care tax credit in the WFTC is £200 million in 2000–01 (the first full year of the tax credit).