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Mr. Peter L. Pike (Burnley): When considering these proposals, it is important to remember that we are discussing not only replacing family credit with a working
family tax credit, which I am sure will be better for the low-paid people in a constituency such as mine, but an accompanying, important proposal to provide an increase in child benefit of £2.50--well above inflation--which will be paid directly to the mother. My hon. Friend the Paymaster General referred to that in her opening speech.
Mr. Pickles: The hon. Gentleman has been misled by the Minister, because the proposals go much further and will mean that families earning as much as £38,000 will benefit.
Mr. Chris Pond (Gravesham): Is the hon. Gentleman aware that a family earning £38,000 would need to have five children to qualify? Will he tell the House how many people would fit into that category?
Mr. Pickles: The hon. Gentleman's argument is inconsistent with that of his colleagues on the Front Bench, who have been bellowing, from a sedentary position, "So are you against that, then?"
The Henry VIII clauses might be better described as "The Archers" clauses--or, more specifically, the Clarrie Grundy clauses. The Paymaster General referred in passing to "The Archers", but I think that she entirely misunderstood the Grundy family's problems. As regular listeners to Radio 4's serial about the everyday life of country folk know, the Grundys have fallen on hard times. The money-making schemes of husband Eddie and father-in-law Joe have come to nought: to get extra income, wife Clarrie has applied for family credit by obtaining a form from the local post office.
Under the Government's proposals, the money will not automatically be put into Clarrie's hands: it could arrive in her pay packet, or by way of her husband's. The latter possibility illustrates the problem described by the hon. Member for Regent's Park and Kensington, North. Hon. Members will recall that, in recent episodes, Clarrie has been cheated out of a world cup ticket, council tax money has been misappropriated to meet the family's tax bill, and part of the £25 owed to Caroline Bone over a cushion cover has been used to buy two meat pies.
Jacqui Smith (Redditch):
Will the hon. Gentleman give way?
Mr. Pickles:
No, I have been far too generous already.
I am confident that, if Clarrie gets family credit, she will use the benefit money for her boys. If Eddie or Joe gets hold of the money, I am equally confident that they will either spend it on madcap schemes or behind the bar of The Bull.
However, not all households are composed of lovable rogues. The Government must recognise that the more they use working families tax credit to shift income from the purse to the wallet, the smaller will be the amount spent on children.
Ms Keeble:
Will the hon. Gentleman give way?
Mr. Pickles:
I have been more than generous and have given way more than the Paymaster General did. I intend to make some progress, but if the hon. Lady is patient, I may give way to her later.
The Select Committee proposes that the default payment be made to the mother. The Government, I understand, are less enthusiastic.
Mr. Alan Johnson (Hull, West and Hessle):
Is that the end of "The Archers"?
Mr. Pickles:
The hon. Gentleman will be pleased to know that I shall return to "The Archers" in due course. The programme is a very good plough to push: I shall come back to it again and again.
As I said, the Select Committee wants the default payment to be made directly to the mother. The Government are less enthusiastic, but are in favour of a choice on the form. We want that choice to be included clearly in the Bill.
One question must be resolved. If there is a conflict in the household, who will receive the payment? Should it go into the purse or into the wallet? Who will decide? Will the first result of the Government's much vaunted family policy be that it sets husband against wife?
Family credit is a remarkably successful benefit. It has a take-up rate of 72 per cent., and that rate rises to 85 per cent. when calculated by expenditure. No other benefitis so successful. According to the Joseph Rowntree Foundation, there is virtually no stigma attached to claiming family credit. The foundation is hardly a right-wing organisation, but it has stated that family credit
Let us return to "The Archers". We have examined the case for having the money go to Eddie Grundy, but let us suppose that it went to Clarrie's pay packet at Bridge farm. That might of course put strain on Pat Archer, but Pat is a benign employer. If, however, the employer was Brian Aldridge, the cold-hearted capitalist, he would be able to know at a glance exactly what Clarrie's income was, and to adjust her salary to take into consideration the money she would get from working families tax credit.
Jacqui Smith:
I thank the hon. Gentleman for giving way to me, because I claimed in my maiden speech to be the Member for Ambridge. Does he accept that when the Government are successful in bringing in the working families tax credit, the Grundys will be better off on average by £17 a week? In addition, as he has said, Clarrie will have the option of receiving the credit herself because she works, meaning that the Grundys are a pair of workers, the group who, as my hon. Friend the Paymaster General said, represent a significant proportion of people on family credit.
However, in addition to all that, does the hon. Gentleman accept that for the first time Clarrie will be able to receive support for child care for her two boys? Will the hon. Gentleman tell the Grundys and other such families that the Conservative party would not support that change, and that he would repeal that type of support?
Mr. Pickles:
I was beginning to think of asking the hon. Lady to give way to me. I have a feeling that the
Mr. Pickles:
The hon. Lady must pay attention to the good advice of her right hon. Friend. The Leader of the House then said:
Lorna Fitzsimons (Rochdale):
Will the hon. Gentleman give way?
Mr. Pickles:
No, I am afraid the hon. Lady has not caught my eye.
Businesses will intrude into personal and family financial circumstances, to the detriment of privacy. The change will also place on business the heavy financial burden of administering the system. Large firms may have a payroll and personnel section, but the majority of people are employed by small firms that do not have such a facility. The owners of small firms will have to fill in the paperwork on the kitchen table after a hard day's work.
The Institute of Directors has commented that that
We must remember that the credit was not originally intended to be delivered in the way that is now intended. As recently as 16 June 1998, Mr. Martin Taylor, the author of many of the Government's proposals, told the Select Committee on the Treasury:
"is often seen as a form of supplementary child benefit."
By contrast, the Institute for Fiscal Studies--which has no axe to grind--has observed:
"As employers and the potential work colleagues would observe the WFTC, it might increase the stigma associated with receiving transfer payments and so decrease take-up."
Discouraging families from taking up the benefit is surely not what the Government intend.
"Unfortunately, there are instances in which employers deliberately manipulate the system and withhold benefits to which employees are entitled . . . For the Government to propose putting the weight of payments that are an important part of family income on to a system which gives employers that freedom it is a substantial risk."--[Official Report, Standing Committee B, 18 March 1986; c. 943.]
I agree with that.
"could discourage companies from taking on low skilled or semiskilled employees."
When, in 1986, the current President of the Council and Leader of the House of Commons considered the problems of using employers to deliver family credit through the wage packet, she said:
"It will be impossible for the DHSS to make the scheme work without the co-operation of employers and if employers, both large and small, are expressing their considerable anxiety, the Department will be running its neck into a noose."--[Official Report, Standing Committee B, 18 March 1986; c. 942.]
New Government, new neck, new Labour, same noose.
"I think that it would be better from the employers' point of view that the thing should run through the tax code which would allow the present cumulative principle to apply."
The Select Committee heard that officials had devised an N code to run a series of examples in which every case created distortion after some time.
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