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Mr. Gibb: Is there not also an additional point--that when an employer knows that an employee receives family credit, he does not often receive information? A renewal claim for family credit, which lasts for six months before it changes, requires no contact with the employer, so employers will be contacted probably no more than once a year. There is a difference between that and the employer having monthly or weekly information from the Inland Revenue with the daily rates included.
Mr. Webb: The hon. Gentleman is right. The proposal is to force employers of lone parents to be intimately involved in their personal circumstances and changes to those circumstances. That is wholly unnecessary.
The measure tries to solve a problem that does not exist. It will force lone parents, against their will, to receive their benefits in a particular way. If the measure is not against their will, why do not the Government let them choose? If the Government are happy to let them choose and think that lone parents want that measure, the outcome will be the same. If lone parents do not want the measure, the Government are imposing it on them to teach them, as far as I can tell from the Government's rhetoric, that work pays and that they receive something when they are in work that they do not receive when they are out of work. They are doing so by delivering the credit through their pay packet instead of by a credit to their bank account.
That is patently absurd, unnecessary, bureaucratic for employers, patronising to lone parents and intrusive on their privacy. I therefore encourage the House to back amendments No. 7 or No. 6.
Mrs. Lait:
We get the same pleasure in the House as we do in Committee when we find ourselves agreeing with the Liberal Democrats. It is an unusual circumstance, but we are as one on the amendments.
We all find it difficult to understand the Government's insistence on the proposal. The Financial Secretary's mantra is that
If people receive their tax credits from the Inland Revenue rather than through a pay packet, they will realise that it is an acknowledgement of the fact that they are in work. They do not need to have that fact acknowledged by the payment of tax credits through their pay packet. The more we have examined the proposal, in Committee and again today, the more we have realised that, although the Government think they have taken a simple line, the practical difficulties outweigh the pay packet argument and bring into play the role of the Inland Revenue.
I strongly support the argument about potential delay in payments of working families tax credits in certain circumstances. I accept that the efficiency of the Inland Revenue has improved over recent years, but various circumstances will have an impact on payments. Bankruptcy is the most extreme example, but there others, such as strikes, and circumstances where people work part-time for a number of different employers. Such people are not necessarily employed in agriculture; more and more people work in a number of part-time jobs, even during the course of a week.
The Government's faith in the speed with which the Inland Revenue can react is, to say the least, touching. Most of us who deal with the Inland Revenue--I imagine that most of us in the Chamber have had to come into
contact with it at some stage--know that, however hard and efficiently the staff of the Revenue work these days, they cannot deliver money within a week, which is what many claimants of working families tax credit will need. I do not want to stray out of order, Mr. Deputy Speaker, but on a previous amendment we talked about child care tax credit--
Mr. Pickles:
My hon. Friend is talking about delays in payment, and people working in different jobs. Does she agree that privacy is an equally important point? Many people who have part-time jobs do not want their main employer to know. Employers will be interfering in every aspect of family life. They will know how many children their employees have and all their sources of income.
Mrs. Lait:
I can only agree with my hon. Friend. In certain circumstances it may be difficult for an employer to accept that his employee has a part-time job--even though that may be necessary to the employee given his or her family circumstances. If an employee's work requires a high level of concentration, for example, an employer may feel that when he is not working he should be taking time off rather than working elsewhere.
If the high-quality child care from which we all agree children will benefit is to be provided, child care tax credit will often have to be paid week by week. Child minders do not tend to have large incomes and will not have the savings or resources to allow them to cope with delayed payments through the Inland Revenue where an employee or parent suddenly experiences a break in the payment of working families tax credit.
We are talking about nurseries and after-school kids' clubs. Do I surmise that the Government are prepared to subsidise nurseries and all the various clubs so that they have a cash cushion and can sustain a parent who has fallen into cash-flow difficulties caused by an employer's difficulties?
Mr. Deputy Speaker (Mr. Michael J. Martin):
Order. Perhaps it is me, but I am at a loss to understand what the hon. Lady's remarks have to do with the amendments.
Mrs. Lait:
The Bill indicates that the Revenue should pay into the pay packet except in exceptional circumstances. I am saying that, however efficient we believe the Inland Revenue to be, it cannot guarantee to get the money into an employee's pay packet. We believe that an employee should be able to opt for the Inland Revenue paying him week by week or month by month so that he can maintain his cash flow. There is a difficulty with the interaction between employment and the Inland Revenue when it comes to the payment of working families tax credit.
The payment of the tax credit is a burden on employers. The compliance cost assessment is about £37 for a company employing up to four people. By definition, large employers will probably pay a smaller sum proportionally. However, those figures indicate the drain on the national economy overall. If the Revenue were able to pay more people, it would probably reduce the cost to the overall economy. Given that, within the Budget, the Government have offered the new Small Business Service
specifically to help small employers with compliance with regulations, it would seem that the cost could be cheaper if the Revenue were to make the payments.
I ask the Government to accept the amendment, which would allow employees more readily to elect for the Inland Revenue to pay working families tax credit. It would make life easier for them and their employers and would reduce stigma and problems of privacy and confidentiality. That is extremely important when people are trying to regain their self-esteem after it has been battered because they have been out of the work market for so long.
Mr. Edward Leigh (Gainsborough):
In a way, it is a pity that there is a convention in the House that Back-Bench Members have to speak before the Minister intervenes. Such a devastating case has been made in favour of the amendments--not least by the hon. Member for Northavon (Mr. Webb), who always speaks very well on these matters, and by my hon. Friends the Members for Bognor Regis and Littlehampton (Mr. Gibb) and for Beckenham (Mrs. Lait)--that it is difficult to know what possible argument the Minister can advance against them. Anyone would think that we were trying to drive a coach and horses through the concept of working families tax credit.
Dawn Primarolo:
That is what the Opposition are doing.
Mr. Leigh:
That is an interesting admission. The Minister says that we are doing that. Why does she take that view? Surely we are only saying that people should be given a choice. If the Government are saying that the family credit system does not work; that it entails enormous stigma; and that they want to move on to a much more modern system, so be it. If I am in receipt of family credit, I can agree with the Minister and choose, if I am a lone parent, to receive the money through my pay packet. But why should I be forced to do so?
Why do we legislate in this place? Do we legislate as part of the Government's programme to make the Government look good in the national press, to tell the country that they are taking people off social security, reducing the social security bill and getting people back into work? Is that why we are legislating in the Chamber? Or are we trying to legislate to help ordinary people in low-paid jobs, who, for their own reasons--for reasons of privacy or convenience or for any other reason, such as the fact that they are changing their job or have several jobs, or because they do not trust the people in the accounts department not to talk--want to choose to receive payments at home as they have always done? Some of those reasons may seem trivial, but they are important to the people involved.
I serve on the Select Committee on Social Security, which has taken a considerable amount of evidence on these matters. We have taken evidence, as we heard, from Martin Taylor, the Federation of Small Businesses and others; written evidence from the Trades Union Congress; and evidence from the National Council for One Parent Families. If the Committee had had an overwhelming sense from the evidence that family credit did not work--that people did not want to make use of it, or felt ashamed, or felt that they were living off the state if they drew it--our all-party Committee, which generally tries to
approach such matters in a non-partisan spirit, would have included that in our report. Our report would have made it clear that family credit had failed.
We studied working families tax credit in other countries, including the United States. I went up to Preston. In the DSS office I stood behind the assessment officer as she was going through the simple forms to work out whether family credit should be paid in a particular case. She was a conscientious civil servant, going through the mechanics and working out the figures quickly and easily, ensuring that for someone who had a family and was in a low-paid job, it was made worth his while to work.
I can speak only from my practical experience. We have heard many statistics cited tonight, but speaking to people on the ground is equally important. Practical experience could be wrong, however. If I am wrong, why is the take-up rate of family credit so high? A figure of 91 per cent. was bandied across the Chamber. If there is such a stigma attached to family credit, why is the take-up rate so high--and why not give people the choice?
What is the hidden agenda? Are the Government genuinely concerned about ordinary people, or is there another agenda? I believe that there is. If people could choose to receive working families tax credit at home, what would be the effective difference between working families tax credit and family credit? Virtually none. A great part of the Government's propaganda machine would be demolished at a stroke. People would say that the only difference was the change of name. That is what this debate is about.
"it reinforces the connection with work."--[Official Report, Standing Committee D, 9 February 1999; c. 111.]
I should have thought that anybody in work would know and appreciate the fact that they are in work, and would realise the benefits of that at the end of the week or the month. People who are out of work tend by and large not to have to deal with the Inland Revenue and fill in PAYE forms and other communications. It comes as a bit of a shock to some people when they have to fill in those forms. People know when they are in work, earning money and dealing with the Inland Revenue.
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