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House of Commons

Thursday 16 December 1999

The House met at half-past Eleven o'clock


[Madam Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked--

Working Families Tax Credit

1. Mr. Derek Twigg (Halton): How many people he estimates will be eligible for the working families tax credit in the north-west in the next 12 months. [101765]

8. Dr. Nick Palmer (Broxtowe): How many people have contacted the working families tax credit response line in the east midlands. [101772]

9. Mrs. Louise Ellman (Liverpool, Riverside): What assessment he has made of the number of people benefiting from the working families tax credit in Liverpool, Riverside. [101773]

The Paymaster General (Dawn Primarolo): I understand, Madam Speaker, that my right hon. Friend the Chancellor of the Exchequer has informed you and the shadow Chancellor that he is at the G20 meeting in Berlin and therefore is not with us today. He is representing the Government at the Finance Ministers meeting.

It is estimated that in 2000-01--the first full year of the working families tax credit--about 200,000 families in the north-west will be in receipt of the credit.

The response line for the working families tax credit and disabled person's tax credit had handled 780,000 inquiries nationally up to 30 November. In the Central and Anglia TV regions, the response lines have handled about 162,000 calls. A more detailed breakdown is not available.

Reliable estimates for the number currently in receipt of the working families tax credit in Liverpool, Riverside are not yet available, but, on the basis of the known family credit figures for that constituency and expected eligibility nationally for the working families tax credit, the estimated number who may be eligible is 2,600 families.

Mr. Twigg: Is my hon. Friend aware that almost half a million children in the north-west live in households that earn less than half the national income, and that thousands

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in my constituency live in poverty? My constituency has the highest child mortality rate in England, so poverty is an important issue to me. Is there not a sharp contrast in the approach of the Government and that of the Opposition, who did nothing during their 18 years in office, whereas we have made a start on attacking poverty with the working families tax credit, the new deal for lone parents and a record rise in child benefit? Will my hon. Friend give me a guarantee that the Government will give the highest priority to the attack on poverty?

Dawn Primarolo: As my hon. Friend may know, the combination of the rises in child benefit, the working families tax credit and the minimum wage will lift 800,000 families out of poverty. The Government have declared their aim of eradicating child poverty over the next two decades. That is in stark contrast to the approach of the official Opposition, who say that they will abolish the working families tax credit and take all that money away from those families.

Dr. Palmer: All those with whom I have discussed the working families tax credit are extremely positive. The main reservation is whether we will succeed in reaching the great majority of those who are entitled to it. Is my hon. Friend satisfied that we are doing all that we can in that respect, or could we use Inland Revenue records to contact people who may not yet have claimed, or undertake other activities for that purpose?

Dawn Primarolo: As I said, the response line has taken 780,000 calls. The number of calls to the tax credit office is 1.5 million, the number of applications issued is 450,000, and the number of claims returned by 30 November 1999 for working families tax credit is 320,000. I can assure my hon. Friend that the Government will be watching closely to ensure that all the families entitled to the working families tax credit receive it.

Mrs. Ellman: I welcome my hon. Friend's answer. It is clear that the working families tax credit, together with employment opportunities, allows individual families a way out of poverty and boosts local economies at the same time. What additional support may be available through child care support offered by the Government? Can my hon. Friend make an assessment of the implications for my constituents in Liverpool if the Conservatives and Liberal Democrats continue with their opposition to the working families tax credit, which they displayed by voting against it at various stages?

Dawn Primarolo: As my hon. Friend knows, the working families tax credit is linked to a child tax credit to pay for child care arrangements. That has been hugely welcomed by families who want to return to work and by employers, who see that as an advantage to them in the recruitment and retention of valued staff. The official Opposition condemn the working families tax credit and announce that they will withdraw it, but they will have to explain to those people affected why they will force on them a tax rise averaging £24 a week, and why they will deny women access to paid child care so that they can stay in the labour market.

Miss Julie Kirkbride (Bromsgrove): Labour Members do not seem to understand that the working families tax

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credit merely replaces family credit, which was a successful benefit doing exactly what the Government claim that the working families tax credit will do--make work pay. One of the reasons why the Opposition dislike the working families tax credit is that it extends the benefit far too high up the income scale and includes people on top rate tax. Will the hon. Lady tell us how many people in the north-west who pay top rate tax will receive the working families tax credit, including the number of people earning £38,000 a year, which is the highest income on which one can still be eligible for the working families tax credit?

Dawn Primarolo: There we have it: the official Opposition now confirm that they will abolish the working families tax credit. As the hon. Lady knows, the total number of people eligible to claim family credit was 800,000; working families tax credit will go to 1.4 million families. Of those families claiming the working families tax credit, 70 per cent. have a total income of £17,000 or less a year. She will need to explain to them why she wants to put their tax up and take that credit away from them.

Mr. Desmond Swayne (New Forest, West): What estimate has the hon. Lady made of the impact on the average level of wages in the north-west, the east midlands and Liverpool, Riverside of the working families tax credit? Has she given any consideration to the possible increase in the level of informal cash payments between employer and employee?

Dawn Primarolo: As the hon. Gentleman knows, the minimum wage has had the biggest impact on poverty pay in Britain--another policy that the Opposition opposed and say that they will revoke if they are ever elected. The hon. Gentleman should concentrate on how to deal with poverty wages and support families. [Hon. Members: "Answer."] The answer is that the Opposition do not want to support families or tackle poverty.

Mr. David Heathcoat-Amory (Wells): Could the Paymaster General explain why the working families tax credit is shown as a tax cut in the national accounts even though all the national and international accounting conventions and the Office for National Statistics insist that it should be shown not as a tax cut but as an item of public expenditure? Will she confirm--I see her hastily conferring with her right hon. Friend the Chief Secretary--that, if those fiddled figures are corrected, the increase in the tax burden since the general election, to which the Chancellor, although he is absent today, has finally admitted this week, would be even higher than has been recorded, both now and by the end of the Parliament?

Dawn Primarolo: The right hon. Gentleman knows full well that the calculation for the tax credit follows the same procedure as, for instance, mortgage interest relief at source did under the Conservative Government. Instead of arguing and pursuing something that he knows to be incorrect, he will need to explain to working families in his constituency why he wants to take the credit away from them, increasing their tax burden by an average of £24 a week.

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Employment (West Midlands)

2. Mr. Michael J. Foster (Worcester): What assessment he has made of the impact of his macro-economic policies on levels of employment and unemployment in the west midlands. [101766]

The Chief Secretary to the Treasury (Mr. Andrew Smith): In the west midlands region, as in the rest of the United Kingdom, we have created a sound and credible platform of economic stability that will help us attain our objective of high and stable levels of growth and employment. Since the election, employment in the west midlands has risen by 53,000 and unemployment has fallen by 14,000, both broadly in line with UK trends.

Mr. Foster: I thank my right hon. Friend for that answer. Is he aware that, in Worcester, unemployment has fallen by 38 per cent. since April 1997? Would he put that down solely to the stability brought about by giving the Bank of England independence, or would he, like me, agree that positive contributions have also been made by the national minimum wage, the working families tax credit, the new deal for the unemployed and the £40 billion extra money to be spent on our schools and hospitals?

Mr. Smith: Yes indeed. On the platform of stability that we have created by the decision to which my hon. Friend refers, 193,000 people in the west midlands have benefited from the national minimum wage, 125,000 families have benefited from the working families tax credit, and 36,000 young people have been helped off the dole and into jobs thanks to the new deal. Let us also applaud the businesses in the west midlands and their work forces for making a success of that region's crucially important economy.

Mr. Owen Paterson (North Shropshire): Table B9 of the pre-Budget report shows that, despite recent reassurances, the take from fuel duty will increase dramatically from £21.6 billion this year to a massive £23.5 billion--

Madam Speaker: Order. I do not have the material before me, but is it related to the west midlands?

Mr. Paterson: Yes.

Madam Speaker: As a west midlands Member, I know where the boundaries are, and I wanted to make quite sure.

Mr. Paterson: I am delighted to share the same region as you, Madam Speaker. Can the Minister name one business in the west midlands that the Government's vicious attack on all road users has made more competitive; and will he cite the number of people who have been made unemployed in the west midlands haulage industry?

Mr. Smith: Last month, Johnson Automotive announced another 500 jobs and a new manufacturing plant in the west midlands to produce parts for the new Mini. That is only one of many firms that have extra confidence in the west midlands. I am sure that the

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hon. Gentleman's constituents, like others in the region, will welcome my right hon. Friend the Chancellor's decision to end the fuel duty escalator that the hon. Gentleman's party introduced, and to ensure that any increases above inflation will be dedicated to public transport and road building, for the benefit of his constituents and the success of a critically important economy.

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