Select Committee on Treasury Minutes of Evidence

Examination of witnesses (Questions 380 - 399)



  380. It is one of the indications, yes.
  (Mr Brown) We would have to look at that.

  381. What we have said is that there is a range of options that one could have.
  (Mr Brown) Which one are you suggesting then?

  382. I am asking you what your view would be about Parliament having something similar to that operation in the United States.
  (Mr Brown) As I said, Sir Michael, I find it quite surprising that you have had an investigation into the role of the Treasury and you did not think of inviting a Minister to give evidence, but that is a matter for you, obviously. As far as your recommendations are concerned, we will reply to your recommendations but I think you have misunderstood some of the changes that are taking place in the Treasury. Perhaps if you had had a Minister before you as you undertook your work you might have seen that we have devolved a very substantial amount of our work, and rightly so, including the independence of the Bank of England which I believe you support.

  383. In that case presumably there is a case for you giving an answer to this report as quickly as possible.
  (Mr Brown) Obviously the priority over the last few weeks has been the completion of the Budget and we will look at these matters and deal with them as quickly as possible.

  384. Within the next week or so?
  (Mr Brown) I do not know about the next week, Sir Michael, but as soon as practicable. We reinforce the view that I have put to you that there are substantial numbers of things in this report that appear to be wrongly based because you have not asked us in advance before you have made your recommendations.

  385. That is a matter of judgment and view. So far as parliamentary accountability is concerned you would, from what I have just heard you saying, approve of recommendations in principle which would strengthen parliamentary accountability of the Treasury?
  (Mr Brown) In general terms yes, but obviously you have now got a range of proposals rather than simply one and we would have to look at them in detail and give you our views if that was the right thing to do.

Judy Mallaber

  386. Chancellor, I would quite like to return to the details of the Budget, although it has been an interesting diversion.
  (Mr Brown) I thought I was here to talk about the Budget actually.

  387. You have already answered a number of my points that I was going to ask on tax credits but I do have a couple of other questions. Mr Macpherson told us that 3.3 million have already claimed the children's tax credit. That leaves 700,000 eligible families who have not. Do you regard that as a good take-up rate or are you concerned about it and what are you going to do to catch those other 700,000 families?
  (Mr Brown) We do not have all the detailed information about family finances. Our estimate is in the order of four million. The take-up campaign has been successful in getting quite a lot of people applying where they previously have not done so. There is a history in Britain of people applying anyway for these things at the last minute, so I expect there to be more applications as we start the financial year. Generally speaking we are introducing a new benefit. It does take time for people to understand this tax credit and how it works because it is not simply a benefit; it is a tax credit and therefore over time I believe that there will be a greater take-up.

  388. A number of MPs like myself have made suggestions about how to make the arrangements for other tax credits, particularly the working families tax credit and the children's tax credit, more flexible. Are you able to confirm what I thought was Mr Macpherson's extremely helpful statement that you are shortly going to be looking very concretely at how to do this and how to make it easier to claim those benefits?
  (Mr Brown) Yes indeed. I think the integration of tax and benefits, once it is understood that a tax credit system works in such a way that you could receive money as well as pay money, there will be a greater public understanding there of it as we move forward. As far as the working families tax credit is concerned, we are making it easier for people to claim it. For example, where there is a new birth in the family and where the numbers of employees become one instead of two, we are making it easier for people to claim that benefit.

  389. What about the eligibility for child care tax credit, for example, proposals that were maybe too limited in the range of child care arrangements that were eligible?
  (Mr Brown) The numbers of people claiming child care tax credit from the original scheme under the last government have risen from something of the order of 40,000 to 50,000 to 125,000, so there has been a substantial increase in take-up, but obviously, as we said in the Budget documents, we are consulting on the precise definition of child care, particularly this issue of whether, if the child is being cared for in your own home, that could classify as child care for the purposes of the credit.

  390. I am very conscious, previously being on the Employment Select Committee, of the detail of the evaluation that has gone on with New Deal. What priority are you giving to evaluation and independent evaluation of how the tax credit systems are working both in terms of their take-up and of their impact?
  (Mr Brown) As we introduce it we have been listening to what people have said. There has been a 30 per cent or more increase in the take-up of working families tax credit compared with family credit. I think that is a significant figure. We are listening to what people are saying and to what employers are saying as well, because obviously it is a new system for them. I believe there are substantial benefits for employers in this system but we have got to help them make that work. We will listen to what people say. We have a group of people who are specialists in issues relating to children which meets regularly, as we do in relation to issues affecting women, so again we will listen to the representations that are made.

  391. What mechanisms do you have for detailed evaluation and is any of that going to be conducted independently of Treasury?
  (Mr Brown) There are studies being done but perhaps Mr Macpherson could say a few words about it.
  (Mr Macpherson) As I said the other day, the Inland Revenue have commissioned a really quite far-ranging programme of evaluation using independent experts. Inevitably it takes time for the results to come on stream because you have to analyse precisely what is going on. That requires surveys and so on. The Government is committed to publishing independent results.

  392. Moving on to broad maternity arrangements, what do you think the net effect of those reforms is going to be on participation in the labour market, and in particular, as part of that, do you think it is going to assist where we have areas of labour shortage and has any evaluation been done on this?
  (Mr Brown) I do not know about the independent evaluation and perhaps Mr Macpherson could mention that. I can give you my view.
  (Mr Macpherson) On the evaluation there has been a lot of work around the consultation process which has tended to confirm that the better the maternity pay arrangements the more likely it is that women will remain in contact with the labour market and therefore labour market activity will be higher than if you did not have these arrangements.
  (Mr Brown) I would agree with that. We are now seeing through the participation rates, particularly for lone parents, that the numbers of people taking up job offers is rising. Since 1997 the numbers have risen from 42 per cent to nearly 50 per cent. We anticipate these figures rising quite substantially in the years to come. In fact, we have set an objective of 70 per cent but that is over a long period of time. I believe the combination of the working families tax credit and the help for child care that is available is making it possible for people to have real choices. You will know, having been on the Employment Committee, that the new programme, New Deal for Lone Parents, and the choices are coming in in April on a nationwide basis, and the experience of the original pilot suggests that there will be quite a marked take-up in job opportunities.

  393. Would you accept that there is an argument for either tapering the small employer's relief or extending the limit for that so that you can scotch the suggestion that the new arrangements will actually deter firms from taking that link?
  (Mr Brown) We are happy to look at these things as we see the effects of the introduction of the measure. I would say that for a small or medium sized firm trying to attract new employees for the working families tax credit to be related to the wage packet, in other words the money that people receive at the end of the week or month, is an additional incentive that they can offer employees as they start work.

Mr Davey

  394. Chancellor, how much Treasury financial support, cash from central government, will there be next year, 2001-02, for the London Underground?
  (Mr Brown) We are in discussions at the moment through the Department of Trade and Industry's negotiations with the new London authority.

  395. Trade and Industry?
  (Mr Brown) It is DETR, sorry, who are in discussions at the moment. It would be wrong to give figures that are part of our discussions.

  396. How much was previously planned before these discussions?
  (Mr Brown) What I can say is that the figures that we have set aside are not going to change and have not changed.

  397. The figures you have set aside have not changed and are not going to change. Can you show me where these figures are?
  (Mr Brown) These are market sensitive figures. We are in negotiation that involves private companies at the end of the line.

  398. You publish for the Budget for public spending in some detail, as you remind us, so somewhere in this vast number of statistics presumably you have made some arrangements. Is it a contingency fund? Where would I find it if I were looking through the Budget Book? You are interested in parliamentary scrutiny. Where would I find it?
  (Mr Brown) If you are interested in getting the best arrangement for the taxpayer at the end of the day you will respect the fact that these are market sensitive issues. But of course the funding for the DETR is in the departmental expenditure limit.

  399. So somewhere in the Departmental Expenditure Limit for the DETR you have made some provision, some money that is not yet allocated, that you have not identified yet, which will go to London Underground for next year. Is that right?
  (Mr Brown) The allocations are in the end a matter for the DETR themselves. I know that this Committee has normally in the past respected issues where there is market sensitivity. I think you would understand yourself that when you are in negotiation these matters need to be recognised to be market sensitive.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 9 April 2001