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Lorna Fitzsimons: Will the hon. Gentleman give way?
Experience from abroad shows that a system on which the working families tax credit is based has been more open to widespread abuse and has produced an increase in fraud. Canada introduced a similar scheme a few years ago, but is moving back to a benefits-based system. WFTC will offer huge bonuses for dishonesty and has the potential to pull employees into a web of dishonesty and corruption.
It seems that the lessons of Canada have not been learnt. In fact, they have not even been considered. We know that, because the Government's expert, Mr. Martin Taylor, told us so. In evidence to the Select Committee, Mr. Taylor said:
It is worth looking at how social security and housing benefit fraud occurs. I had an opportunity a few weeks ago to talk to social security and housing benefit fraud investigation officers. I asked them about the kind of person who commits fraud. It was their view that there were people who went about defrauding the system cleverly and maliciously. It was their experience that some people would create separate identities and make multiple claims. But it was also their view that the vast majority of people simply drifted into fraud because the system allowed them to do so. They then found it impossible to crawl their way out, and ended up having to lie to cover up previous lies, thereby reinforcing the deceit.
This House has a duty to ensure that we do not set up a system that makes it easier for people to drift into deceit. A fundamental characteristic of the WFTC is that fraud is more likely.
Dawn Primarolo:
Will the hon. Gentleman give way?
Throughout this speech, I have repeatedly referred to the Grundys. They have one distinct advantage. They are fictitious; they are played by professional and highly skilled actors. Thousands of families up and down the land are in similar circumstances, but will be made materially worse off by the Bill. [Interruption.] Their
personal and financial circumstances will be broadcast to their work mates. They will be seen as a burden by their employers--[Interruption.]
Mr. Deputy Speaker:
Order. The hon. Member for Rochdale (Lorna Fitzsimons) cannot keep shouting across the Chamber.
Mr. Pickles:
I am grateful for your protection, Mr. Deputy Speaker, although I hardly noticed the hon. Lady.
Mr. Frank Field (Birkenhead):
I start by declaring a non-interest. I do not listen to "The Archers". I know little about its characters, and I feel, after listening to the speech by the hon. Member for Brentwood and Ongar (Mr. Pickles), that that puts me at a severe disadvantage in debating the Second Reading of the Bill.
I congratulate my hon. Friend the Member for Bristol, South (Dawn Primarolo) on her promotion to the position of Paymaster General, and on the way in which she opened the debate. I thank her for the courtesy that she showed by meeting me to talk about the Bill. If her arguments did not fully persuade me, it was not because they were not applied effectively. I apologise for the fact that she has heard some of what I shall say this afternoon.
I wish to underscore what my hon. Friend the Paymaster General said when she said that the Bill needed to be seen as part of a total package that the Government are putting forward to try to re-emphasise the importance of work in our society. For we are not, as a Government, merely thinking about a working families tax credit; we are thinking of that together with a series of measures designed to ensure that, when people are available to work, they can work and are better off.
I have always supported the Chancellor of the Exchequer in his aim of reducing the starting rate of tax to 10p. I know that there are clever people in this world who say, "You can spend the money more effectively on raising allowances and so on; that would be a far better way of helping people who are poor"--but in 20 years of representing the constituents of Birkenhead, I have never met anyone who said that changes in tax allowances had played a part in convincing them to work. Constituents have constantly talked about what their rate of tax will be if they can work, or if they can work harder. The aim of reducing the starting rate of tax is therefore another part of the Government's strategy to try to ensure that people can move safely from benefit to work and be better off.
Similarly, the Government have a major programme in developing still further their welfare-to-work initiatives. That is part of ensuring that people make the transition from benefit to work. It is also important to emphasise that what the Secretary of State for Education is doing, in emphasising the Government's commitment to raise standards in school, is part of our welfare-to-work
programme. For the first time, it will be our aim that every child leaves school able to read and write. Some people listening in to the debate will say, "What an extraordinary country it is that has to adopt that objective." Well, that is the world that we now live in, and which we want to change. That objective will have the important effect of shifting our society from a culture of over-dependence, in the sense that people have drawn benefit when that is unnecessary, to one that rightly emphasises the key place that work can, and should, play in most of our lives--at least for part of the time.
The Bill must be viewed alongside all those other measures. Its essential aim is to ensure that, when people do work, they will be better off than they are on benefit.
I emphasise that I am speaking in general support of this measure, but I--like you, Mr. Deputy Speaker--have been in the House for some time, and those of us who have been in the House for some time realise that the debate has almost come full circle. I was here when the present official Opposition were in government and introduced family credit. I rose from the Opposition Benches to express critical support for that measure, although the official line was one of condemnation, emphasising instead the importance of Scrooge employers and of taxpayers subsidising low-pay employers.
On balance, I did not agree with that line. I thought that there was significant advantage in a new scheme that would help people who were working, but I did not think that my colleagues in opposition at the time were entirely wrong to emphasise the dangers. I am glad to be speaking now from the Government Benches and I merely register the worries expressed by us in opposition. I did not think that they carried the debate then, and I do not think that they carry it now.
My two main worries about the Bill are, first, that some women might become more vulnerable as a result of the measure than they would otherwise be, and secondly, that there is a danger of fraud. It was entirely proper and understandable that, when they heard about the Government's new initiative, a large number of hon. Members on both sides of the House were concerned about who would receive the benefit. I suggest that although we should not dismiss that concern, it is no longer the main concern.
In opening our discussion today, my hon. Friend was right to emphasise that in many senses the Bill is a measure to help single parents and to ensure that they can successfully move from benefit to work, where they consider that desirable. However, many single parents in work are particularly vulnerable, given the nature of their employment and some of the employers they come up against.
In my surgery I have met single mothers who, because they have got on the wrong side of the employer or because the employer has tried to take advantage of them, sometimes sexually, have left their employment, and rightly so. Under the present system of family credit, they have done so knowing that their payments of family credit, often worth twice their wage packet, are safe in the post office or will be delivered to their bank account.
"Canada is one of the few countries whose system I have not studied carefully".
In the United States of America, a similar tax credit, the earned income tax credit, was introduced, with the result that the Internal Revenue Service received claims of $4.4 billion more than the refunds that people were entitled to receive. To paraphrase the right hon. Member for Birkenhead (Mr. Field), the working families tax credit is fraught with great dangers. It offers high bonuses for dishonesty, strengthens the employer's hold over people, pulls employers into a web of corruption and rewards employers paying low wages. I see that the right hon. Gentleman is in his place. I shall not develop his case further because he may want to catch your eye during the debate, Mr. Deputy Speaker.
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