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Miss Kirkbride: I am grateful to the hon. Lady, as this is an important matter. She compared a two-parent family in which both parents work, and which is thus eligible for child care credits, with one in which only one parent works. Although neither family will be very well off, the family in which only one parent works will have a lower income than the one in which both parents work and which is thereby eligible for child care tax credits. Given the Government's commitment to the two-parent family structure, how can that be fair?
Ms Hughes: As I explained earlier, the conclusion drawn by the hon. Lady depends on the way in which individual families' incomes pan out. When both parents in a two-parent family work, they are able to claim the child care tax credit because, by definition, they have to pay for child care. However, they will be reimbursed for those costs only up to a maximum of 70 per cent., and the second earner's wages will pay at least 30 per cent. of the total child care cost over and above the tax credit. So the extent to which such a couple might be better off than a family in which only one parent works, but which consequently does not pay for child care, is debatable. It would depend on the levels of income in the two families.
I was outlining the principles needed for a system to deal with the difficult problems I have mentioned. The final principle is to maintain an option of giving assistance directly to the woman.
Working families tax credit is the only system that fulfils all the criteria that I have laid out. We have heard arguments in support of family credit as the best way of delivering additional assistance to poor families, but family credit does not in fact deliver on many fronts. It does not guarantee a minimum income, it does not link measure with reward for work, it is not particularly child centred, and it carries, for lots of families, the stigma of many welfare benefits. On the criteria that are important in measuring effective delivery of help, working families tax credit delivers in a way that family credit does not, and tinkering with family credit would not make it deliver on those criteria.
We have heard much from Conservative Members about how working families tax credit will be an inefficient disaster--a complicated and bureaucratic system. [Interruption.] I am paraphrasing the views that I have heard, not giving my own. We ought to stick to our principles. The system will be complex; any system that delivers to hundreds of thousands of people will be complex. The change from the Department of Social Security to the Inland Revenue will also be complex.
However, the points made by Conservative Members are nothing more than speculation designed to fuel fear. It would be refreshing if Conservative Members would genuinely identify issues that they thought the Government should take into account, while still, because of the importance of the Bill, suggesting some constructive ways around problems. Instead, with the dead hand of opposition, they have retreated into saying, "No, we don't want it, and we won't support it."
Mr. Paterson:
I am grateful to the hon. Lady, who has been generous in giving way throughout her speech.
Ms Hughes:
Clearly, the Bill asks business to undertake an additional job, but its impact on business has been grossly overstated, particularly by the hon. Member for Vale of York (Miss McIntosh). In practice, the Bill involves a small addition to what businesses do routinely.
In my discussions with Ministers, I have been impressed by the seriousness with which they take the development of the Bill and its implementation. They understand that no matter how good the principles of the Bill are, its effectiveness will be at least partly determined by the practicalities of its delivery. I am sure that my hon. Friend the Financial Secretary to the Treasury will refer to implementation when she sums up the debate.
I have also been impressed by the way in which Ministers have attempted to bring business on board. My hon. Friend the Paymaster General referred to the code of practice being developed with business, which is a genuine attempt to deal in the most helpful and constructive way with the issues that we recognise will arise for small businesses. I must tell Conservative Members that I do not think it unreasonable as a general principle to expect business to be a partner with Government in trying to assist families in work, particularly those on low incomes. Business already acts in that way, as has been said, with income tax and other deliveries through the wage packet.
Mr. Bercow:
The hon. Lady sought to address my point, but has not entirely done so. She used the term "gross overstatement" about the prospective burden on business. Is she aware that the principal complainants on this score, in the first instance and all along over the past 12 months or so, have been the representative business organisations: the Federation of Small Businesses, the Confederation of British Industry and the Institute of Directors? It is very serious to accuse them of gross overstatement. I feel sure that she would not want to be guilty of any such offence.
Ms Hughes:
As the hon. Gentleman knows, my reference to overstatement applied to the speech of the hon. Member for Vale of York. I am aware of the representations that have been made--certainly when the working families tax credit was first being considered--by the organisations that the hon. Gentleman identifies. I am also aware that those organisations have since been in dialogue with Ministers. That process will continue. I have every confidence that those organisations and their members will take this measure on board, because Ministers are committed to ensuring that it as successful and effective as possible for the families whom we are trying to help. That, of course, involves accommodating, as far as possible, the concerns of business. I have no doubt that my hon. Friend the Financial Secretary will want to refer to that.
Reference has been made to the view that, under the proposed system, not only would fraud be easier to perpetrate, but policing would be more difficult. My reading of the proposal is entirely at odds with that conclusion. Clause 8 sets out clearly the arrangements for
dealing with fraud and the penalties incurred. That clearly demonstrates that, compared with the arrangements for family credit and many social security benefits, the tax regime will be more stringent. The scope of financial penalties will be extended, the burden of proof required before certain penalties are imposed will be lowered and, unlike other for social security benefits, it will be possible to impose a penalty, for example, for failing to provide information in relation to an application. Hon. Members who feel that the measure is more open to fraud and more difficult to police have misread and misunderstood the proposals.
I share concern about fraud. We must reduce it as far as we can in any system because money should go to the people for whom it is intended. Although I share such valid and serious concerns, I do not share the view that the system is inherently more open to fraud than the present system. As I have argued, it is less open to fraud and will be much more effectively policed when fraud is suspected.
I shall not go through all my points because others want to speak. This measure, taken together with the national minimum wage, the national child care strategy and child benefit increases for all families with children, will give more assistance to low-income families with children than has ever been provided as a package by any Government.
Miss Julie Kirkbride (Bromsgrove):
For my sins, I sit on the Social Security Select Committee. As my colleague, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), said, we have looked into the issue of the working families tax credit three times, with a view to issuing three reports.
Mr. Tony McNulty (Harrow, East):
The hon. Lady was never there.
Miss Kirkbride:
How would the hon. Gentleman know, when he is not a member of the Select Committee? If he wants to make such ignorant comments, perhaps he would like to go outside the Chamber and do so. However, he probably would be interested to know that, when the Select Committee discussed the subject of tax credits with witnesses, experts from both left and right roundly said--much to the chagrin of many Labour Members--what a very bad idea it was to introduce those tax credits. The matter has caused some concern among my Labour colleagues on the Select Committee, because it has been very difficult to find anyone who believes that it is a good idea.
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