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7.30 pm
Many people have completed the forms quite satisfactorily. As I said, 3.5 million claims have been made, encompassing 85 per cent. of the eligible PAYE population. The hon. Member for Croydon, South probably does not want me to remind him of the fact that, despite years of work in trying to improve take-up, family credit had a much lower take-up rate than the children's tax credit has had.
The Government would like take-up to be even higher. As my hon. Friend the Member for Denton and Reddish (Mr. Bennett) said when commenting on publicity, the Government will do everything that we can to ensure that those who, for one reason or another, are not aware of the credit or have not yet claimed it do so. We are working on that, and the forms are continuing to come in.
Mr. Ottaway: The Minister makes it sound as though complaints about the form's complexity are being made only by the Opposition. I was quoting the Association of Chartered Certified Accountants, which presumably knows what it is talking about. It said that the application
- "form is very complex. For those not used to filling in tax forms, the task may prove to be too arduous and some will lose out on an allowance altogether."
Mr. Flight: The Minister made a similar point when I spoke about this issue in a previous debate. I think that the form that is being referred to--I remember receiving one myself--is the one sent out a year earlier to determine whether people would qualify for the credit. That form went to the heart of the problem about how much each partner earned and whether they would be ineligible for the credit because one partner was earning too much. It was extremely difficult to complete, and if one did not complete it correctly one did not receive the instant form. Half a million people, including several of my constituents, never got round to submitting their claim promptly in April because they had not completed the previous pre-qualification form.
Miss Johnson: As I said, 85 per cent. of the eligible PAYE population have satisfactorily sent in their forms, we have had a very high response rate, and the forms are still coming in. The hon. Gentleman may be referring to another form, but the fact is that anyone claiming the children's tax credit has only to supply some very basic information. The tax office will take that information, assess the tax credit and make it available to claimants as a tax cut in their pay packet.
The hon. Member for Croydon, South made the remarkable allegation that the Government have shown a lack of support in addressing the issue of child poverty.
I simply remind him that the previous Conservative Government not only cut the married couples allowance, but froze child benefit and increased taxes.The hon. Member for Croydon, South also talked about the £8 billion worth of "adjustments", which seems to be more Conservative spin for cuts, that a future Conservative Government would make to our spending plans. We do not accept the £8 billion figure simply because we are working from the figures given by the right hon. Member for Kensington and Chelsea (Mr. Portillo) in a press notice that he issued last summer. The notice described a cuts guarantee of £16 billion, which would entail a £25 million public expenditure reduction for every constituency in the country, massively hitting schools, hospitals and other services.
Mr. Edward Davey: I am intervening to try to be helpful to the Minister. The mass unemployment of the 1980s over which the then Conservative Government presided caused the greatest damage to the fight against child poverty. If the Government have achieved only one thing by adopting the Liberal Democrats' policy of an independent central bank, thus ensuring stable economic growth, it has been to reduce unemployment by 1 million. That has constituted the Government's most effective attack on child poverty. I therefore congratulate them on being sensible enough to adopt Liberal Democrat policies.
Mr. Deputy Speaker: Order. Before the Minister responds to that, I point out that there is a grave danger of this debate developing into a general economics debate. Will the Minister and all other hon. Members please focus on new clause 2?
Miss Johnson: I shall certainly do my best to do that, Mr. Deputy Speaker.
I believe that the hon. Member for Kingston and Surbiton has made a valuable point about the Government's contribution in getting people into work and making work pay. Both of those achievements have made very valuable contributions. I am puzzled by Liberal Democrat Members' lack of support for the new deal, which has certainly played a crucial role in cutting unemployment and addressing the issue of child poverty.
I should like finally to outline the Government's record on those issues. Families with children will be on average £1,000 a year better off from all the measures introduced in this Parliament. A family with two children now faces the lowest tax burden since 1972. A single-earner family on average earnings of £25,000 a year with two young children will be £520 a year better off, and a single-earner family on half average earnings of £12,700 a year with two young children will be £3,000 a year better off. A family on income support with two young children will be £1,670 a year better off.
We have addressed the issue of child poverty in all those ways. We have also, as I said, focused some of those resources specifically on under-fives. We must not forget what we have done to address the issue, including introducing the working families tax credit--which, on average, compared with the previous family credit system, is worth £35 a week more. By such measures, we have succeeded in lifting 1.2 million children out of poverty.
The policies being advocated by the hon. Member for Croydon, South are set within the context of an absence of a fiscal framework and fiscal rules. He does not answer the question of where the spending cuts that are necessary to fund tax cuts will fall or address the issue of continuing economic stability. We are able to support families and children because of economic stability and the fact that we have so many more people in work and have cut unemployment to its lowest levels for many years.
I therefore urge the House to reject new clause 2.
Mr. Ottaway: In her final remarks, the Minister said that new clause 2 was set outside any framework and any rules, but it is set within the context of the Government's own framework and rules. As I said at the beginning of the debate, the new clause is part of an £8 billion tax reduction package. There has been much childish merriment among Labour Members about the nature of that £8 billion, but I make it clear that the Government's plans as outlined in the Red Book are to increase public expenditure by £72 billion by 2003-04. A future Conservative Government would increase spending by £64 billion by 2003-04, thereby creating the £8 billion difference.
To prevent the Minister from continually repeating the mistaken figure of £16 billion over the next four weeks, after the debate I shall give her the precise figures supporting the £8 billion figure. That is what we stand on, and that is what we intend to do. There is no need for her to repeat the figure of £16 billion again, because that figure is wrong.
The most important thing that has happened today is that the Minister has singularly failed to say why this proposal, designed to help the children most in need of assistance, the under-fives, should not be accepted. She says that she stands on her record, and that the Government are doing what they can to help that group of children. That is complacent, inadequate and unacceptable. If we were not working to a timetable motion I would seek to divide the House, but time is short and there are other new clauses to be debated. I therefore beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
New Clause 3
Exemption from Capital Gains Tax
'--. In section 271(1) of the Taxation of Chargeable Gains Act 1992 (concerning exemption from CGT) after subsection (j) insert--
"(k) any gain accruing to a UK resident company, or to a non-resident company chargeable to UK corporation tax under section 10 of this Act, in respect of the disposal of a substantial shareholding in a trading company or a member of a trading group. For the purposes of this subsection a substantial shareholding is a shareholding of 20% or more held for a period of a year or more.".'.--[Mr. Flight.]
Brought up, and read the First time.
Mr. Flight: I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker: With this we may take new clause 4--Substantial shareholdings: deferral of capital gains tax--
'.--In section 155 of the Taxation of Chargeable Gains Act 1992 (concerning classes of assets for roll-over relief) Class 9, after Head B, insert new subsection.
"CLASS 9
Substantial shareholdings in trading companies or members of a trading group. For the purposes of this section, a substantial shareholding is a shareholding of 20 per cent. or more held for a period of a year or more.".'.
Mr. Flight: The two new clauses would provide alternative measures to complete the correction of the major mistake in the Government's original Budget proposals last year. The House will remember that the Chancellor came to the House with proposals to tax the offshore mixing companies used by multinationals based in Britain.
The original proposals would have made Britain one of the most unattractive places for multinationals to be based, whereas it has been, after Holland and the United States, one of the most attractive. They would have led, in due course, to companies setting up elsewhere and moving abroad, causing jobs and tax revenue to be lost.
Fortunately, after many--not only the Opposition but businesses and accountants--had spoken out against the proposals, the Government were forced to accept the objections and change their proposals. Last year's Finance Act corrected the error by introducing the practical and sensible arrangements for onshore pooling.
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