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Mr. John Randall (Uxbridge): As my hon. Friend may know, I have some experience as an employer in a small business. Many valid objections to working families tax credit have been advanced, but one factor that concerns many small and medium-sized businesses is the lack of privacy--the fact that employers will be forced to look into their employees' private affairs. What effect does my hon. Friend expect that aspect to have on employer-employee relationships?
Miss Kirkbride: My hon. Friend will know the answer better than I, but I think that Conservative Members consider that human nature is such that, if an employer has to know that one of his employees is claiming a credit such as this, the employee concerned will consider it a much greater stigma.
Ms Buck: The hon. Lady is painting a romantic picture of family credit, as hon. Members have done throughout the debate. Does not the Benefits Agency regularly, and on an enormous scale, contact employers to seek verification of employment details, especially in the small-business, low-income sector? The idea that most employers are in the dark about their employees' claims is nonsense.
Miss Kirkbride: The difficulty with the hon. Lady's point is that to whatever extent that is true at the moment--we know not--it will be true of every employee and employer in the country as a result of the changes that the Government are introducing. There is no way around that, so I caution the Government about stigma and about the idea that the working families tax credit is better than the original system. That could blow up in their face, because people on lower wages will be deeply embarrassed that their employers--and, inevitably, their work colleagues--have to know the circumstances of their employment.
The House will forgive me for raising a point that has already been discussed, but I have to correct some of my hon. Friends. It has been suggested that we are increasing welfare dependency--I would agree that we are--by pushing up the income scale the level at which people will be eligible for the working families tax credit. It has been suggested that people might earn £37,000 a year and still be eligible for the working families tax credit, but I draw attention to remarks made by the Paymaster General, who said that
I find it particularly surprising that the new Labour Government should want to proceed in such a way, when we share the aim of focusing whatever money we have to spend on disadvantaged groups. How can we suggest that a family earning £38,000 a year--well above the level at which it would pay the top rate of tax--is in any way disadvantaged and should be eligible for a tax credit designed for poorer families?
We should go further. A lot has been said about the unfairness to two-parent families where one parent is left at home to look after the children while the other goes out to work. I do not accept that Labour Members really appreciate how angry many people up and down the country will be when they focus on what Parliament is doing.
We all know that, at this stage, we are the only ones discussing the measure. The majority of people outside have not focused on it and will not know what we have done until the day arrives when it is law and they have to accept the consequences. Two-parent families that want mum to stay at home and dad to go out to work will realise that they are getting no help from the Government, even though they earn less than the family next door which is eligible for more help from the Government, whether through benefits or tax credits.
The fact that a family in a certain segment of society can be helped because of the lifestyle it has chosen--whereas a similar family earning less will receive less help from the Government--will cause deep distress and deep anger. It will rebound in the Government's face when people realise that the legislation will have such an impact.
Ms Keeble:
That is a ridiculous argument. If women stay at home to look after their children, they do so because that is their preferred choice. I know that, because I have children. Women certainly do not expect to be paid to stay at home to look after their children. Most women, including many in my constituency, work part time because they have to--they need the money--and the real problem is the fact that they cannot afford the child care that they need. To put this issue up as the politics of envy is complete nonsense. The whole argument is about supporting families, supporting children and giving women choice.
Miss Kirkbride:
The hon. Lady's intervention demonstrates the case of Conservative Members, who are trying to point out to the Government that the Bill will be a source of great anger and concern to families who have chosen to stay at home because it does not help them. It is encapsulated in her intervention that she does not understand how aggrieved those people will feel that they should not be eligible for help, while other families, who will have a right to choose how they want to run their lives, will be eligible for Government help. Again, it is one of the unfortunate aspects of the way in which the Government are going forward.
I turn to the biggest difficulty with the Government's proposals. Again, we will see what behavioural effects there will be, but I suspect that they will be deeply shocking to the Government. It is perhaps why we have not seen detailed clauses on the child care tax credit arrangements. The Treasury is worried about what an open-ended commitment those tax credits might be.
The Institute for Fiscal Studies has suggested that, far from the Government's modest estimate being correct--I think that it is a few hundred million; I cannot quite remember--the cost could end up being closer to £4 billion. It is obvious how that might happen.
The Government's proposal could mean that two young women living next door to each other, both with families and both not working, could end up looking after each other's children, rather than their own, becoming employed, and becoming eligible for the minimum wage and family credit that the Government propose. An extraordinary volume of public spending could go into such arrangements, whereas now women look after their own children, or their mothers look after them. At the moment, the taxpayer does not pay for that, but under the Government' proposals the bill will be picked up by the taxpayer.
Ms Buck:
Will the hon. Lady give way?
Miss Kirkbride:
I am being told that I should move on a little more quickly, so the hon. Lady will forgive me if I do not give way. I am sure that we can further discuss the difficulties of the Government's proposals in the Select Committee on Social Security.
Mr. Barry Gardiner (Brent, North):
Two minutes is scarcely enough time to do justice to the Bill.
I think that we would all agree that one of the most humbling things about being a Member of Parliament is when people come to us in our surgeries. Two months ago, a young woman came to my surgery. As she walked through the door, I distinctly recall thinking, "What can possibly be her problem?" She looked self-assured and confident, yet, within 30 seconds of sitting down, she had burst into tears.
That young woman explained that she had two children, she had been a nurse and now had no prospect of getting back into employment. Quite simply, the costs of the travel that she would have to undertake to get to the jobs that she had looked at were so prohibitive that going back to work would make her worse off, and there was no way in which she could get child care for her children and still make work pay.
"the highest possible level of family income which will be supplemented by the WFTC depends on the number, and age, of the children in the family. For example, if the family had five children under 11 rather than two, it would still receive some WFTC with family income of . . . £38,000."--[Official Report, 21 July 1998; Vol. 316, c. 502.]
The level is even higher than some of my hon. Friends suggested. In my view, it is wrong that we are encouraging a welfare system that extends so far up the income scale.
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