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Miss McIntosh: Will the Minister help me on one point? She accepts that there will be a great administrative burden on businesses, particularly small businesses. Is there any way in which the Government could provide an exemption for very small businesses?
Dawn Primarolo: We had the debate on exemptions for small businesses earlier, and I do not intend to go over it again. We did not accept the idea outlined by the hon. Lady, and my hon. Friend the Financial Secretary made it clear that small businesses that do not collect on the PAYE system or collect NICs would not have to pay the tax credit. It is obvious that businesses that do not collect any money cannot deduct the tax credit in order to pay it to their employees.
When the hon. Lady has read Hansard, I shall be happy to write to her on any further points that she may wish to take up with me. I shall write back as quickly as I can, subject to the thousands of letters that I receive.
Mr. Pickles:
The Minister said that the Bill was built on the foundation laid by the Chancellor's move towards tax credits in the previous two Budgets. I have to agree with her. The Bill increases dependency, spreads income further down the economic scale and ensures that the lower paid will have to pay more.
My hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) has made the good point that people on lower incomes will have to shell out because they happen to own a car. In rural areas, cars are the only practical means that low-paid workers have of getting to work, and they will have to find an extra £183 a year so that they can go to work. The Minister suggested that the point is not relevant, and that that amount cannot be claimed in tax or benefit. In fact, my hon. Friend's point was precisely that: the Government give with one hand and take away with the other.
Mr. Collins:
There was a perfect illustration of that point earlier. Does my hon. Friend recall that we are supposed to be grateful because people in rural areas will receive £20 million in rural transport initiatives, but the total taken from rural areas in increased petrol duties will be £1 billion?
Mr. Pickles:
I was not aware of that figure, but I know that my hon. Friend takes a close interest in the matter. Perhaps he will consider this point: there has been much moving around of the standard rates of income tax, but the increase in the fuel escalator, which directly affects
I am going to agree with the Paymaster General again.
Mr. James Cran (Beverley and Holderness):
Hey, wait a minute!
Mr. Pickles:
No, I must. The measure takes on the main features of family credit and disability working allowance--and makes them worse. It takes all the worst features and adds to them. The hon. Lady gave a pretty clear indication of that when I intervened. I thought that by now the issue would be non-controversial and that we would have had a view about passporting benefits. We are about to send the Bill to another place. Without the passports, people who are receiving family credit will be materially worse off under the new system. Unless their lordships know that, I cannot understand how they can come to a reasonable decision.
The Paymaster General says that the regulations are available--she says that she has produced them. That is true--we have had reams of them on a take it or leave it basis. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) went without sleep two nights running to go through the regulations so that we would be on line with working the issues out. A new clause has been produced today, with no regulations. There is a promise of regulations to come: they will be in another place when the matter is considered there. Here we are, the people's representatives, trying to reach a reasonable decision when the details are in the regulations and the House has not even been shown the courtesy of being given the most cursory glance at those before this most important legislation is read the Third time.
The hon. Lady makes great play of the increase in the child care cost. She says that that will tackle child poverty, yet we have still not had answers to the basic question of how much is in the kitty for child care. When you can consult Hansard tomorrow, Mr. Deputy Speaker, you will notice the repeated attempts to find out exactly how much the child care element will be and the Government's repeated stonewalling, to prevent us from knowing that sum.
We have presented some conclusive arguments and evidence to suggest that, while we agree that the Institute for Fiscal Studies may be a little way out in its suggestion that the cost will be £4 billion, it is not that far out. Probably, the cost will be nearer £3 billion, but even if that estimate is wrong, it will certainly not be less than £2 billion. If that is the case, it will be £2.5 billion more than the Government have allowed for in the Bill. That additional sum of money--the £1.5 billion--will disappear in an escalation of the child care tax element, which will be available further up the income scale. We understand that people earning as much as £37,000 will be entitled to receive that element.
Before the hon. Lady reached her final peroration, we heard her say that payment through the pay system is fundamental--she used slightly sweeter words when we were discussing the matter a few moments ago on Report. That will involve a fundamental shift of resources from women to men. At the moment, the majority of such payments are made to women, but the Bill will result in a substantial shift towards men.
The hon. Member for Northavon (Mr. Webb), said on Second Reading--I am sure that we will have the opportunity of hearing his wise words in a moment--that roughly 300,000 couples receive family credit, where the man is the principal breadwinner.
Mr. Pickles:
Under WFTC, that will mean that £900 million will be going to men rather than women, which is a fundamental shift.
We know from all the surveys and studies that if the money goes to the woman, there is a greater chance of its being spent on child care than if it goes to the man, because then it will merely be subsumed into family income. Some people might say that we are implying that the money will be spent on cigarettes, alcohol, lottery tickets and the like.
Mr. Greg Pope (Lord Commissioner to the Treasury):
Good.
Mr. Pickles:
We have just heard a most interesting intervention from the duty Whip, and I am sure that you, Mr. Deputy Speaker, heard the hon. Gentleman say, "Good." There is lots of tax paid on those items, after all.
Mr. Cran:
He is the Government Whip.
Mr. Pickles:
I do not know what is happening--Whips are supposed to be silent, but they are breaking that silence. My hon. Friend is absolutely right.
Both the Bill and the Chancellor's Budget mean that we shall be paying people working families tax credit so that they can pay tax. Under the Chancellor's system, people will not be spending the money on their families, or on lottery tickets as the Government Whip wants them to, but on paying extra taxes. If the Chancellor really wants to do something to help families on lower incomes, he should simply take them out of tax altogether.
The Paymaster General spoke about fraud and how she would deal with it. It is only reasonable that we should judge the Government on their record; unfortunately, the Government's record on fraud since coming to office is abysmal. Across the board, the Government are winding down their benefit fraud prevention operations. The London organised fraud investigation team was mysteriously shut down in October for six weeks, despite having increased its success rate month on month. During that period, all operations were suspended and evidence pertaining to pending cases was corrupted, thus threatening the successful prosecution of those cases. The team is now to be wound up by the end of this month.
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