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The Second Deputy Chairman: Order. I appreciate that the hon. Gentleman is only just starting his remarks, but I remind him and the Committee that the amendment is specifically about the date of implementation, not the wider issues.
Mr. Leigh: I can deal in a moment with the introduction of the children's tax credit because that is particularly relevant to this amendment. The married couples allowance will be repealed in April 2000 and the children's tax credit will be introduced a year later. In the previous debate, the Minister made it clear that she was hoping to use this debate to discuss the children's tax credit. Let us see how much effect the children's tax credit will have. I do not believe that much will be achieved by having a year's delay between the repeal of the married couples allowance and the introduction of the children's tax credit.
The children's tax credit is a recognition, for the first time since the mid-1970s, of the lower taxable capacity of taxpayers with families. That is a welcome step. However, if we look at it in greater detail, we see not only that it is being introduced a year too late but that it does not solve all the problems that the Treasury would have us believe that it will solve. The children's tax credit will give families £416 a year, which, I agree, compares favourably with the cash value of the married couples allowance. In 1999-2000, the married couples allowance will be £197, but if one looks back to what the value of the married couples allowance was when it was introduced in 1990, one can calculate that it would be worth, in today's money, about £522.
Mr. Geraint Davies:
It is not £522 because the previous Conservative Government cut it. It is ridiculous to make those suggestions when the Conservative party made the cuts that bring us to the position that we are in now.
Mr. Leigh:
First, we are entitled to look at what is being proposed. Secondly, there is a great deal of difference between cutting something and abolishing it entirely. That is what we are faced with today. It does not help us, when we are dealing with serious matters, if hon. Members trade petty party political points across the Chamber. We are entitled to debate the married couples allowance and to advocate it as a benefit that helps married couples. We should not get too fixed on who reduced it when. Had the hon. Gentleman listened to my remarks, he would have known that I was trying to be fair to the Government. I was not attacking them from the word go, but was congratulating them on what they were trying to achieve by the introduction of the children's tax credit. We do not advance our arguments much by dwelling on the past.
Mr. Brazier:
Was not that intervention characteristic of attacks made by Labour Members? Is it not possible that some of the people who voted for them, including traditional Conservative voters, might have wished to see
Mr. Leigh:
Exactly. Hon. Members are entitled to put their point of view. We all know that, in the real world in which we operate, there are party disciplines and sometimes one has to vote not necessarily according to one's conscience, but that still allows one to speak up for what one believes in the Chamber. If we cannot speak up in this Chamber, where else can we do so?
The Minister must explain the delay between the abolition of one tax benefit and the introduction of another. I hope that she will not regale the Committee with comments about how marvellous the CTC is without explaining that fundamental unfairness. The proposal is grossly unfair and shows no regard for the needs of children. It will also discriminate against marriage, as couples who are co-habiting in a loose arrangement could, through ignorance, misunderstanding or fraud, fail to recognise when liability arises.
In the Budget, the Chancellor is not only ignoring marriage, but is structuring his proposals in a way that disadvantages married couples, especially those who sacrifice income to care for their children or elderly dependants. For the reasons that I have given, I believe that the proposals will encourage fraud. Surely a fairer solution would be to provide for the credit to go to the caring spouse or to allow married couples to pool their allowances and reliefs. This measure does not permit that.
Why is this issue important? The Chancellor of the Exchequer said:
The Home Secretary's consultation document "Supporting Families" recognises that marriage is still the surest foundation for raising children. In the Budget, the
Chancellor highlighted the fact that £4 billion of new money was being made available to families. Much of that new money is tied up in the children's tax credit and the working families tax credit, which no doubt the Minister will make a great deal of when she replies tothe debate. I do not pretend to know what is in her briefing documents, but I am sure that that will be the nature of her defence against this attack.
Dawn Primarolo:
The hon. Gentleman will know that the creation of the children's tax credit is dealt with in clause 27, which we are not discussing. We are discussing the abolition of the married couples allowance. Although I shall do my best to respond to the hon. Gentleman, I am sure that Mr. Lord will keep me in order. I plead with the hon. Gentleman not to give me an impossible task. If he stays in order, I can deal with everything.
Mr. Leigh:
I assure the hon. Lady that I certainly do not want to place so courteous a Minister in an impossible situation.
Whatever is said in defence of the figures in the Budget, the reality is that families, particularly married couples, will receive much less than we were led to believe on 9 March. The Red Book reveals that there is only £400 million of new money for families in 1999-2000, and that there will be a cut of £125 million in 2000-01 and £940 million in2001-02. That is why the date when the married couples allowance is to be phased out is important.
The Government are shuffling money around. They are taking more from some families and giving it to others. The Government will say that they are taking money from better-off families and giving it to poorer families. That is the nature of their defence. However, research has shown that many families who will lose out as a result of these Budget measures will be worse off than families who will benefit. It is difficult to make one's way through the complexities of the proposals to phase out the married couples allowance and to introduce the children's tax credit and the working families tax credit, but that will be the result.
We were told that the saving in a full year from the withdrawal of the married couples allowances would be sufficient to fund a children's tax credit of £10 a week--not £8 a week as proposed in the Red Book. So families lose out again. Where is that missing £2, and what is being done with it?
The Chancellor and the Paymaster General are claiming that, as a result of the Budget policies, including the scrapping of the married couples allowance, all families will have a minimum income of £200 a week, and that no net income tax will be paid until earnings exceed £235 a week. In his Budget speech, the Chancellor said:
Although those statements are correct for the majority of families, they are not correct for all families. The Government must deal with that point. They assume that the family will get the working families tax credit. Families do not receive any working families tax credit if they have savings--for instance, following redundancy--of £8,000. Why are we discriminating against families who happen to have modest savings?
"The tax system sends critical signals about . . . activities that a society wishes to promote or deter."--[Official Report, 2 July 1997; Vol. 297, c. 311.]
As the Chancellor has said that, the Government must explain to the Committee why there is a year's delay. I can conclude only that, by their decision to end the married couples allowance in the year that it is being ended, the Government are sending a clear signal that there is no value in marriage--certainly in the tax system--for children or for anyone else. That is completely contrary to what other people in the Government are saying.
"Every working family will be guaranteed a minimum income. It will be introduced in October . . . at £200 a week--more than £10,000 a year. No income tax will be paid until earnings reach £235 a week."--[Official Report, 9 March 1999; Vol. 327, c. 187.]
That statement was repeated in the Red Book, which said that
"no family earning less than £235 a week (over £12,000 a year) will pay any income tax from October 1999."
It was also repeated in the Treasury's Budget press release on Budget day, which spoke about
"a minimum income guarantee of £200 a week for every family with a full-time earner."
It was repeated by the Paymaster General in her speech on Third Reading of the Tax Credits Bill.
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