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Mr. Speaker: The hon. Member for Walsall, North (David Winnick) knows that the Commission meets in private. However, I reiterate what I said last week: I have asked the Commissioner to put her allegations to me in writing, so that I have an opportunity to investigate. I am awaiting word from Mrs. Filkin on that matter.
David Winnick: Can I ask about the minutes?
Mr. Speaker: Order. The hon. Gentleman asked about minutes and then went on to make a statement. That was unworthy of him. Making a statement has nothing to do with a point of order. I can tell him that the Commission meets in private and minutes will not be issued. He knows that.
Peter Bottomley: Further to that point of order, Mr. Speaker. I am grateful to you for reminding the House about the contents of last week's statement. Since then, a fresh series of whisperings have taken place which continue the campaign that the Leader of the House has known about since August, when it was referred to in the Financial Times. Did either he or the Commission act on that public notice of such whisperings? Do they intend to take direct action about the allegations in the Sunday Mirror or against Ministers on what has been going on since your statement last week as Chairman of the House of Commons Commission?
Mr. Speaker: The hon. Gentleman knows that the Speaker does not respond to press reports. If he did, he would be here all day.
Orders of the Day
Tax Credits Bill
Order for Second Reading read.
3.33 pm
The Paymaster General (Dawn Primarolo): I beg to move, That the Bill be now read a Second time.
The Government have made clear their commitment to increasing and improving the support available to families, to making work pay and to tackling poverty. That means providing financial help for all families with children, recognising the costs and responsibilities that come with parenthood, targeting help on those who need it most to help to achieve our long-term goal of halving child poverty by 2010 and eradicating it within a generation, and reforming the tax and benefits system to make sure that work pays.
During the last Parliament, we moved to tackle those problems on a number of fronts, and we worked within the constraints of the system that we inherited, trying to ensure that we maximised benefits to those in greatest need. We introduced the working families tax credit, which currently benefits nearly 1.3 million families, and the children's tax credit, which is a tax cut of up to £520 a year for around 5 million families. The introduction of new tax credits, as our next step, will allow us to make further progress in achieving our aims.
We will rationalise and streamline our systems of support to deliver more effective help to families with children and to working households. The Bill replaces numerous strands of support with two new targeted tax credits: the child tax credit to tackle child poverty and provide targeted support to parents, and the working tax credit to improve work incentives, tackle in-work poverty and remove barriers to work. We are not changing our objectives—they are the right objectives—but we are changing the way in which we deliver them. Our aim is to provide a seamless stream of support to parents, who will be able to apply at one point, the Inland Revenue.
Our reforms so far have been successful, but they do not go far enough. Existing forms of support can be divisive: support for children depends on whether the parents are in work; some people drop through the gaps in support; measures such as the children's tax credit can reach only taxpayers; and support for workers with disabilities focuses on their disability rather than on their working. Existing forms of support are inflexible. The working families tax credit and the disabled person's tax credit, beneficial as they have been, are fixed awards that cannot usually respond to changing circumstances. Existing forms of support overlap and can be an awkward fit with the tax system, increasing the hassle of applying for them and creating confusion for claimants.
We are now introducing a single inclusive credit to support families with children: one framework for income-related support for children that will reduce stigma, smooth the transition into work and broaden the scope of support. We are also introducing an inclusive credit for those in work, with the emphasis on work, so that workers with disabilities and households facing in-work poverty are within the single framework.
The new tax credits will be able to adjust to reflect changes as they happen—for example, when a child is born or when parents start or stop using paid child care.
They will be able to respond to changes in family income, so that support is better targeted, providing extra support when it is needed and helping people to stay in work. They will be a better fit with the tax system, improving transparency and fairness and making it easier for people, when they apply for their tax credits, to use the information that they already get for tax. Tax credits will be based on annual income before income tax and national insurance are deducted.This is a substantial change, and the Government have engaged in detailed and wide-ranging consultation with organisations outside the House that have the expertise to help us to develop and improve the system. The consultation document, published in July, received more than 170 written responses. A series of consultation meetings were held around the United Kingdom to discuss the issues, and many other formal and informal meetings with a range of groups also took place. The consultation has been widely welcomed. For instance, NCH Action for Children said:
- "We would like to thank the Revenue and Treasury for the very genuine efforts you have made to inform and engage organisations like the NCH in this consultation process—not only on paper but also through your programme of events."
- "We would like to place on record our appreciation of the extent and openness of the consultation."
- "Although it invited views on key issues, it provided no quantitative evidence on which one might base a sensible response"?
Dawn Primarolo: The Bill provides a framework for bringing together a range of benefits and support for families. The thresholds and tapers to which the Institute for Fiscal Studies referred will be made clear in the Budget statement by my right hon. Friend the Chancellor. Today, the House is considering the framework for delivering those benefits and whether those payments are clearer, more effective and more helpful for those who will receive them.
Mr. Steve Webb (Northavon): May I develop that point? Two people in a couple who are both on average earnings would get the full children's tax credit, but under joint assessment they might get nothing, the full amount or something in between. I sense that the Paymaster General's response to them is, "Wait and see". Can she give them any more reassurance today or will they have to wait until next year to find out whether they get all the £500 or nothing?
Dawn Primarolo: I can reassure individuals and families that the Government are committed to continue reforms that will benefit them. Unlike the previous Government, we continue to take serious steps to tackle poverty, particularly children's poverty. As the hon. Gentleman knows, and as my right hon. Friend the Chancellor and I have repeatedly said, thresholds and tapers will be announced in the 2002 Budget. The hon. Gentleman is an acknowledged expert on those matters. I hope that even he would agree that the framework that
we are putting in place will be more transparent, easier to understand and more effective in delivering support to families. That is what we are deciding today.
Ms Diane Abbott (Hackney, North and Stoke Newington): My hon. Friend knows that people who successfully claim those tax credits are extremely grateful. But is she also aware that take-up is significantly lower in London because of housing costs and the way in which the housing benefit system works? Will she look at circumstances in London to ensure that work can be made to pay for single mothers and poor families, via the tax credit system, just as it does in the rest of the country?
Dawn Primarolo: I thank my hon. Friend for her comments. I assure her that we will look closely at take-up by the most vulnerable people in our communities and the crucial interaction between the threshold, tapers and other benefits, such as housing benefit and council tax benefit.
The National Association of Citizens Advice Bureaux, in its submission for today's debate, said that measures that have already been introduced have made a significant impact on the lives of many people, including CAB clients. It said that the working families tax credit has proved extremely popular and that it is readily apparent that large numbers of lone parents, for example, have started working and are receiving it. The arrangements in the Bill seek to build on that success in the course of delivering our objectives.
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