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Miss Julie Kirkbride (Bromsgrove): Will the hon. Lady give way?
Dawn Primarolo: Not at the moment.
The tax credit will be administered by the working families tax credit unit in the Inland Revenue, which has been working hard with other Government Departments and interested bodies outside, to ensure that the new system is up and running by October 1999.
From April 2000, the tax credits will be paid to employees through the pay packet or directly to the self-employed by the Inland Revenue. The tax credit is also flexible because it provides couples with a choice about who claims and receives it, which means that each family will be able to decide how the tax credit is paid to suit best their individual circumstances.
Miss Kirkbride:
Will the hon. Lady explain why she believes that greater stigma is attached to claiming a benefit, which is essentially anonymous because the cheque comes through the post and no one knows about it except for an anonymous person who works for the Benefits Agency? Under her new system, employers will know the precise circumstances of their employees. Conservative Members argue that greater stigma attaches to the employer knowing the personal circumstances of the individual than the anonymous Benefits Agency. Will she respond to that point?
Dawn Primarolo:
The hon. Lady knows full well the arguments about family credit and the stigma that many people attach to applying for it. She is wrong in her assertion that the employer will know all the details of an employee. That will not be the case. The employer will simply be directed to pay a specific amount to the employee. Therefore, there is no way that he or she will know the details of an individual's circumstances, or be able to find them out. Clairvoyance may be a talent of some employers, but not all. The information will not be disclosed to them.
The Conservative party has made clear its opposition to WFTC and DPTC. The shadow Secretary of State for Social Security told the House that the Conservatives would cut the working families tax credit, thereby decreasing the budget dramatically. They should explain why they are prepared to take away an extra £ 1.5 billion from the poorest working families. I think that the hon. Member for Brentwood and Ongar (Mr. Pickles) wanted me to give way to him before I sat down. Does he wish to intervene?
Mr. Pickles
indicated dissent.
Dawn Primarolo:
Earlier, the hon. Gentleman asked whether he could intervene, but he does not have to do so.
Mr. Pickles:
Perhaps because of the excitement of the occasion, the hon. Lady does not realise that she has already given way to me. This morning on the "Today" programme, she was keen to say that no extra money was involved in the working families tax credit and yet it has been conclusively demonstrated that an extra £1.5 billion will be involved. Will she take this opportunity to withdraw her misleading statement on that programme?
Dawn Primarolo:
My interview was not that early in the morning, so I am surprised that the hon. Gentleman was not as awake as he might have been. If he checks the record--Conservative Members seem to be informing me that they have--he will see that there is no inconsistency in what I said.
The Opposition's amendment contains some fundamental errors and misunderstandings about the Bill. They claim that it would penalise women, when it would not do so as it would give them a choice. I remind the
House that 50 per cent. of family credit claimants are single families headed by women, who will still receive the payment direct. I note that the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) is laughing.
Another group of women are the primary wage earners for the family. In families where both parents are wage earners, they will be able to choose who receives the credit. The self-employed are another group who must be considered. The Opposition are trying to say that the measure will discriminate against women, or families, and that they will be worse off. That is simply not true.
The Opposition claim that there will be extra burdens, especially cash-flow problems, on business. That is also being dealt with in discussions with companies to ensure that there is no cash-flow problem and that companies are supported. Companies will be required to deduct the working families tax credit payments that they have made from the pay-as-you-earn and national insurance payments that they have collected, and pay the difference to the Inland Revenue. Where employers do not have enough money to meet the full obligation, they can apply for a grant that will be paid by the Inland Revenue to ensure that there is no loss to companies in making the payment.
Mr. Archy Kirkwood (Roxburgh and Berwickshire):
The Minister cannot deny that she is constructing an elaborate edifice of administrative change. I listened carefully to her analysis and have no difficulty with her aspirations, which are logical. Most people would agree that it is right to try to get people off benefit and into work. I want some idea of what targets the Government have set for the measure's success. Does she have any operational research that suggests how many people will be persuaded to take this route from benefit into work?
Dawn Primarolo:
The Government expect that 400,000 more people will want to claim the working families tax credit in the period when we move from family credit to the fully operational new system. Take-up is clearly linked to eligibility and information. That was to have been my next point; we are talking about supporting another 400,000 families. The guaranteed minimum income for working families of £10,000 a year is crucial to that.
The case is clear. The Bill makes economic sense, provides support for families, gives families incentives to work, eases the taper in helping people move from welfare into work, gives them certainty, and provides for a child care credit. That means that we have put in place the support that is necessary for families hitherto prohibited from moving back into paid employment.
The Opposition, in their amendments, simply want to return to a system that has failed and to deny families the support that they would otherwise get. They do not acknowledge the failure of the child care credit within the family credit system, or recognise that the working families tax credit system is better and that more families will be assisted. I urge my hon. Friends to support the Government, vote for Second Reading and support us in Committee, where the full details can be clearly spelt out.
4.23 pm
Mr. Eric Pickles (Brentwood and Ongar):
I beg to move, To leave out from 'That' to the end of the Question, and to add instead thereof:
Mr. Geraint Davies:
May we have a clear commitment tonight that in their manifesto for the next election the Conservatives will pledge to repeal the working families tax credit? Yes or no?
Mr. Pickles:
The hon. Gentleman, who I am sure is a very nice person, has been sadly let down by that appalling daily note sent out by the Labour party. It included an incomplete quote. Of course we do not want to see this measure brought in--we prefer family credit--but we recognise too that once we take control there will be people banging on the doors demanding a change from this lousy system. They will want us to address the problems.
Yvette Cooper (Pontefract and Castleford):
Is the hon. Gentleman now committed to supporting the additional £1.5 billion of spending that will go into the working families tax credit, which his colleague on the Front Bench, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), said that he wanted to cut?
Mr. Pickles:
Again, the hon. Lady has been let down by her Whips. We are saying clearly that when we take control we will have to build on what the Government have done and improve on it. We have made it clear that we will pursue the matter of the extra £1.5 billion. The Government will have their way in Committee and we will have to deal with the problems that they create. Then the hon. Lady will probably be urging us to deal with the problems.
Dawn Primarolo:
I am grateful to the hon. Gentleman for giving way so that I can be clear about what he is saying. Is he saying that when the Government introduce these measures and they are a success, his party will not repeal them if it is ever re-elected? Is he contradicting what the hon. Member for Chingford and Woodford Green has previously said?
"this House declines to give a Second Reading to the Tax Credits Bill because it will increase the costs of social security when the Prime Minister has pledged to cut those costs; and it will increase benefit dependency, stigma, fraud and business costs, whilst undermining family structures."
There is some consensus on this matter in the Chamber. We share the Government's aspirations and want such measures to succeed, but we doubt whether the Bill will work. It proposes to remove a highly successful benefit, understood and trusted by the British people, and replace it with a tax credit that will increase dependency, stigmatise low-income families and place a heavy burden on small businesses. On the Government's own figures, the measure will add £1.5 billion on top of family credit. It breaks the Prime Minister's pledge to cut the growth in the social security budget. It is a dangerous Bill that will do great harm to the support of working families on low incomes.
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