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Mr. Swayne: No, I will not give way. The matter is fairly straightforward.
Mr. Taylor: On that very point.
Mr. Swayne: No, not on that point. I will not give way.
Mr. Deputy Speaker: Order. The hon. Gentleman has said that he is not giving way.
Mr. Swayne: I want to draw my remarks to a conclusion. For those of us who disapprove of the new penalty on marriage, the clause would provide a speedy remedy. It is obvious that the Government will shortly be sent packing, and my right hon. and hon. Friends on the Front Bench will take their place. They will readily use this new clause to remedy the matter.
Dawn Primarolo: Those who watch and listen to the debates in the House will be greatly saddened by some of the contributions that have been made this evening. Value judgments have been made on those who choose to marry, whether in a civil ceremony or a church service, and on those couples who make a lifelong commitment to each other as partners, but who do not choose to marry. The debate is not about whether we are in favour of marriage or a commitment of individuals to each other: it is about a tax relief, and it needs to be set in that context.
I applaud the honesty of the hon. Member for Macclesfield (Mr. Winterton) in saying that he opposed everything that the Conservative Government did when they were in power--[Interruption.] The hon. Gentleman is too keen; I was not going to make a sweeping claim on his behalf. He opposed the Conservative Government when they reduced the married couples allowance. In all honesty, I cannot remember how he voted on that issue. When the Conservative Government were in power, the number of children living in families in poverty rose to 3 million; that is what his party presided over. It now tells us that it is committed to marriage and to stable relationships, whether in a legal or a church ceremony.
Mr. Nicholas Winterton: I want to clarify my position. I am sure that the Paymaster General will accept that during my short speech, I said that additional steps could be taken if it were necessary to help children in families in difficult financial circumstances. I wanted both the married couples allowance and, if necessary, additional help for children from families in difficult financial circumstances.
Dawn Primarolo: I noted the hon. Gentleman's bid for more money, and I shall come back to that. He is quite right; he acknowledged that point.
I want to put it clearly on the record that in my opinion, a commitment to a stable relationship or a marriage is reward in its own right, as the hon. Member for Kingston and Surbiton (Mr. Davey) said. The idea that a financial incentive in the tax system would encourage people to marry and would provide a good, sound basis for a stable
relationship shows little respect for the institution of marriage, because it does not fully recognise the commitment that is made.
Mr. Burnett: Will the hon. Lady give way?
Dawn Primarolo: I shall give way, but if the hon. Gentleman will allow me, I shall then explain why this allowance has never been about marriage: it is about taxable capacity.
Mr. Burnett: I sincerely hope that the Paymaster General will assure the House that this measure is not a precursor to the abolition of inter-spouse exemption for inheritance tax purposes, which was established by the Labour party when it introduced capital transfer tax in the Finance (No. 2) Act 1975.
Dawn Primarolo: The hon. Gentleman is ever vigilant about the Government's possible future plans. I shall not stray beyond the new clause before us.
We need to be reminded that the origin of the married couples allowance was the married man's allowance, which was meant to recognise a reduced taxable capacity when a man acquired a wife to support. Marriage is no longer the point at which taxable capacity is reduced; many couples continue to work. Taxable capacity is now reduced when children arrive and one partner reduces or gives up work, or the marriage or partnership faces the challenge of funding child care. It is right that the Government should shift support to the point at which that occurs, and should concentrate on the existence of children in that family unit. That is what the children's tax credit does. It is right to support the family with a child whatever their circumstances. It is important to invest in children, and to improve their life chances.
We need to provide equivalent relief to one-parent families for many reasons. The parent may be bereaved or may have been deserted by the partner. A child needs to be fed whatever the circumstances of his or her conception. The old married couples allowance recognised that, as did the additional personal allowance. The children's tax credit recognises unmarried couples, as did the additional personal allowance introduced by the Conservative party. This is not about political correctness: it is a practical matter of preventing unmarried couples from getting more generous treatment than married couples. That can be avoided by using tapers and by preventing them from having two credits.
The rules for additional personal allowance introduced by the Conservatives in 1988 covered exactly the same point as is now covered by the children's tax credit. The argument that this proposal is a departure in our tax rules from recognising only married couples to recognising unmarried couples is spurious.
Mr. Ottaway: The Minister annunciated the benefits of the children's tax credit. Will she acknowledge that, in calculating that credit, housing benefit and council tax benefit are deducted?
Dawn Primarolo: The children's tax credit is a tax relief and it is paid within the tax system. The hon. Gentleman is confusing it with working families tax credit.
Mr. Ottaway: I am not confused in the least. It is a fact that a lone parent working for 12 hours at £15 an
hour, which is a perfectly normal situation, faces a loss of £5.33 in housing benefit and £1.70 in council tax benefit when he or she receives £8.50 of children's tax credit. In other words, that person is only £1.27 a week better off, not £8.50, as the Minister claims.
Dawn Primarolo: I think that the hon. Gentleman is referring to the position when the couple have an increased income because the amount of tax has gone down and there is a taper on any housing or council tax benefit. If they are on those benefits, they will have an income that is low enough to qualify them for working families tax credit, so the changes in the premiums in that credit will address those points.
Conservative Members who were in the previous Government have selective amnesia about how much they reduced the value of the married couples allowance. For instance, in 1994-95, they reduced it by £83.25; in 1995-96, by £83.75; and in 1996-97, by £85.25. They removed it from the position in which it affected whether reliefs were given.
Under the previous Administration, the married couples allowance was cut first to 20 per cent. and then to 15 per cent. Some taxpayers began to pay an extra £8 a week as a result of those changes. The right hon. Member for Kensington and Chelsea (Mr. Portillo), who was then Chief Secretary, said that the married couples allowance was the "most anomalous of allowances" with "no on-going justification".
We agree with the right hon. Gentleman, although he apparently no longer agrees with himself. We have abolished the married couples allowance for under-65s from 6 April 2000, not because we do not support marriage, but because the allowance was not supporting marriage. When a couple can get twice the tax relief for splitting up that they could get for staying together, Opposition Members must explain how that is support for marriage.
We have a better approach. We are investing in our future by providing more financial support for all families with children. Families face their greatest financial pressure when they have children. We have made record increases in child benefit--35 per cent.--which the Conservative party froze. We have introduced the working families tax credit to support hard-working families. We have increased the credits by another £4.35 a week from last month. We have increased income support for the poorest families. The working families tax credit will give families more money, and over the lifetime of this Parliament, about 1.2 million children will be lifted out of poverty.
The hon. Member for Croydon, South (Mr. Ottaway) spoke about the claim form. The form is clear and expressed in neutral terms to cover both married and unmarried couples. The children's tax credit covers both, to ensure that married couples do not get less relief. It was the Conservative party that introduced, in the additional personal allowance, the rules to cover unmarried couples.
8.15 pm
The hon. Gentleman went on to say that the form is overkill. The Inland Revenue does not hold details of children in families, so we needed to send the forms out to get to the people who had received married couples allowance and the additional personal allowance and who
might be eligible. We wanted to ensure that they understood their entitlement and were alerted that they should claim it.The hon. Gentleman said that the children's tax credit was unfair to single-earner families. That is the effect of independent taxation. Single-earner couples will tend to pay more than two-earner couples on the same family income, because one uses one set of allowances and rate bands. We are trying to address that anomaly, which the Conservative party helped to create, in the integrated child credit.
Now Conservative Members say that the taper is unfair, but we think that it is right that we should get the maximum benefit to those on the lowest incomes. They then say that 100,000 people will pay higher rate tax as a result of the changes. That is simply not true. Nobody will be brought into a higher rate of tax as a result of the abolition of the married couples allowance--unlike the 200,000 people who became higher rate taxpayers when the Conservative party cut the value of the married couples allowance to 20 per cent. in 1994-95.
The hon. Member for Croydon, South says that the benefits of the children's tax credit do not get through to the families that really need them, such as those on working families tax credit. Again, he is wrong. It is not true. He ignores the fact that the child rate in the working families tax credit was raised in October 1999 to take account of the interaction between that credit and the children's tax credit, and the child credit for under-16s was raised again, by £4.35, from June 2000, on top of the indexation from April 2000. It is simply wrong to create the illusion that the money is not going to those who really need it.
The new clause asks for rather odd things. It asks for powers to make regulations. Why does the Chancellor need powers to make regulations about tax allowances when he has at least an annual opportunity, in the Finance Bill, to make any changes that he wants, with the proper scrutiny of the House? In any case, what is to stop the Chancellor introducing another Finance Bill in a year? The Chancellor already has the power to make regulations.
Conservative Members have revealed how out of touch and confused they are about how people organise their lives and bring up their children. I urge my hon. Friends to reject the new clause and ensure that the Government's sound policies for tackling child poverty, directing resources to the families who need it most, can continue.
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