| Previous Section | Index | Home Page |
Miss Anne McIntosh (Vale of York): I congratulate the hon. Member for Regent's Park and Kensington, North (Ms Buck) on her excellent speech. I apologise for not being in my place for the whole of it, but I had a meeting with the Minister for Local Government and Housing to discuss the standing spending assessment grant for North Yorkshire.
I congratulate my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) on his excellent speech moving the Opposition amendment. I especially agree with the part that refers to the Bill leading to increased business costs while undermining family structures. It would be ungracious of me not to congratulate the Financial Secretary on her well-deserved promotion. I trust that we have not lost the hard bargain that we struck on the Agenda 2000 deal for North Yorkshire; I hope that her successor will hold to it. I congratulate the Paymaster General in her absence. There will soon be only ladies at the Treasury; we shall watch this space.
I have problems with the tax credit scheme, which is bad for business and a poor deal for electors, contrary to what many Labour Members said. It is particularly bad news for the traditional family unit as we know it. Its effect on business will be negative, even though we heard that the proposals may be revised following the thorough Social Security Committee report, which I welcome.
The tax credit is negative in approach and will be difficult to administer. Small businesses in particular will be burdened by extra administration. The Confederation of British Industry is on record as firmly believing that all employees should have the option to receive credits directly from the Inland Revenue. Speaking up for employees, I think that flexibility for them is important. Many single parents may wish to continue to receive payment through the Inland Revenue for reasons of confidentiality. In that respect, I pay tribute to the contribution of my hon. Friend the Member for Arundel and South Downs (Mr. Flight).
Continued payment through the Inland Revenue would avoid the perception of being on benefits, which carries a particularly negative social connotation. It would also cover temporary workers and employees with more than one employer. I shall return to that momentarily. I think that the Government have closed down that option. Perhaps the Financial Secretary will surprise me by saying that they are minded to reopen it. I make a personal plea to her to consider allowing employees to continue the option of being paid directly from the Inland Revenue and not, as the Government propose, through their employer in their pay cheques.
The administration of the working families tax credit will hit small firms especially hard. A huge raft of extra administration is involved, and small firms will inevitably suffer from the cash-flow problems mentioned earlier. I understand that the Government may not have considered the point that in the vast majority of cases, the amount of credit will exceed the tax liability of the claimant. Will they will give that some thought, because that it will impose a heavy administrative burden on employers?
The Paymaster General has said that the Inland Revenue intends to put employers in funds when requested. I still argue that the administrative burden on
smaller employers of paying credit up front and having to claim funds from the Inland Revenue in advance will be a significant burden that many cannot meet. It is not fair to ask small firms to meet that extra responsibility. Will the Financial Secretary consider exempting smaller firms from the requirement to administer the credit through the pay packet? Perhaps employees of very small companies should have their benefit administered by the Revenue. I wonder whether the Financial Secretary can satisfy me that the Government have not yet considered such an exemption, but may be minded to agree to it now that I have given them the opportunity to consider it this evening.
I mentioned low-paid workers in multiple employment. Individuals may have several employers paying their salary. Which employer will be asked to pay the credit and whose decision will it be? I have not so far heard an answer to that question. It is not a hypothetical question; it is a concrete question.
The Government have paid lip service to helping small businesses and reducing the administrative burden on them. I appreciate that the Government look to small businesses, as the previous Government did, to create jobs. Small businesses are perhaps the most positive generators of new jobs, so this is the most extraordinary time for the Government to introduce an extremely complex working families tax credit scheme, which will clobber small businesses and put an unacceptable burden on them.
I argue that the Government intend to use employers as unpaid tax collectors and will inevitably impose an even greater burden on small businesses. Perhaps we can pause for a moment and consider the already lengthy list of statutory schemes imposed on businesses. Income tax, national insurance contributions and VAT, and benefits such as statutory sick pay, maternity pay, paternity pay--I am not sure whether that has been introduced yet--and redundancy pay have to be funded by employers. The Financial Secretary can imagine the impact on small businesses of adding to that impressive and growing list the working families tax credit, especially on small and sole-employer businesses. It is an unacceptable burden to ask them to take on at this time.
I would go further and say that the scheme gives entirely the wrong message to the business community. The Government are asking it to create jobs and to act as an unpaid tax collector. I echo the comments made by my hon. Friends in saying that it would be more appropriate to leave the administration of support for families with the Government, as it is now through the Department of Social Security, and not, via the back door, to use the good offices of already hard-pressed employers.
The relationship between an employer and an employee is extremely finely balanced. If the working families tax credit is introduced in the way that we have heard this evening, employers may even be accused of invading the personal and private life of an employee--not by their choice, but because they are required to do so by statute. As we heard from my hon. Friend the Member for Arundel and South Downs, fellow employees may be able to link into the computer system and find out not only what other employees earn, but what tax credits they receive. Employees may be offended and the employer could be placed in an embarrassing situation. The scheme could also lead to ill feeling on the part of an employee should an administrative error occur. The complicated
nature of the tax credit and the manner in which the Government expect the employer to administer it on behalf of the Government mean that the potential for administrative error, in my humble judgment, is huge.
The Paymaster General said that there was a choice to be made by the Government and, by implication, by the Opposition, between being business friendly and being family friendly. I put it to the House that the Government have failed on both counts. It comes as a great sadness to me that the Government have wasted an opportunity in the Bill. It is neither family friendly nor business friendly. For the reasons that I have given, it is positively unfriendly and unhelpful to business.
Mr. Desmond Swayne (New Forest, West):
My hon. Friend has been eloquent in examining the Bill's unfriendliness to business. Is she satisfied at the prospect that the Bill will impose a means-tested benefit, with all the corrosive effects that that may have, on people earning incomes up to £37,000? Is she satisfied that the Bill is fair to two-parent families with only one earner?
Miss McIntosh:
My hon. Friend can obviously read my mind. I was coming to the specific question of two-parent families with a single earner. As for means-testing up to £37,000, I have a hazy recollection of figures in the early morning--or not so early morning as the Paymaster General said--interview on the "Today" programme this morning. The Paymaster General did not refute the figures. If my memory is correct, in a study undertaken by Alan Duncan of the Institute for Fiscal Studies, it was said that not many jobs would be created by the tax credit scheme. On the institute's calculation, the cost of each job would be a staggering £40,000.
I was left with the impression that £40,000 would be the cost of each job and that not many jobs would be created. I was mildly surprised that the Paymaster General let that allegation go past without refuting it. Perhaps, like me, the Financial Secretary is having some difficulty finding that figure. I have read through the press release and the revised press release from the Institute for Fiscal Studies, and the evidence that it gave to the Select Committee, and I have to confess that I did not find that figure. However, that allegation was made this morning and was not refuted. That amount is an unacceptable cost to the taxpayer for no saving.
The hon. Member for Pontefract and Castleford(Yvette Cooper) alleged to my hon. Friend the Member for Brentwood and Ongar that the Conservatives were not in favour of increasing the bill by £1.5 billion. I had the impression that the Government were elected on the basis of a commitment to cut social security spending. I put it no higher than that I am left confused. Perhaps the Financial Secretary could answer that point. How a £1.5 billion increase in one measure can be interpreted as a cut leaves me in a state of confusion.
| Next Section
| Index | Home Page |