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Dawn Primarolo: First, does the hon. Gentleman recognise that where the taxpayer pays for child care, our preoccupation should be the quality of care and the safety of the child, which must be paramount before we agree to pay for the care? Secondly, does he accept that the whole point of the child care payment is to remove a barrier for parents to whom no form of support is available, which means that they cannot return to work? That proposition is quite different from his suggestion that we should pay relatives to care for their nieces, nephews or grandchildren.
Mr. Hoban: On the first point, the reason why many parents place their children in the care of mothers, grandmothers or grandfathers is that they believe that they will provide the best and most appropriate care for their children. That is the choice that they make and we should respect it. Of course, they will have considered the options that are available. One reason why informal child care is used is that parents cannot afford other child care even with the help that the Government have offered. The hon. Member for Regent's Park and Kensington, North (Ms Buck) referred to the problem in her constituency, where child care costs are very high and cannot be met by the child care tax credit as it stands. In such a situation,
Phil Hope: The hon. Gentleman suggests that the child care tax credit may not be generous enough, but the hon. Member for Arundel and South Downs (Mr. Flight) said that it was too generous and that we should cut some of these benefits. Does he stand by his remarks or those of his Front-Bench colleague?
Mr. Hoban: I was not disagreeing with my hon. Friend the Member for Arundel and South Downs (Mr. Flight) or saying that the rate was too high or low, but trying to respond to the Paymaster General's intervention and to set out the reasons why people may decide to place their children with parents and grandparents rather than in formal child care arrangements for which they will receive the benefit provided by the tax credit. That was the point that I wanted to make; I was not arguing about whether the rate should be higher or lower. Of course, we will know about the rate only when the Chancellor deigns to inform us of it in March in the Budget.
The second point of detail that I want to raise relates to qualifying hours. I think that clause 11 ensures that couples' working hours will be aggregated to achieve the current 30-hour limit in respect of receiving additional tax credit. The couple can decide how to work those hours. For example, the husband could work 10 hours and the wife 20, and they would get additional credit for working 30 hours. They could, therefore, sort out their domestic child care arrangements to suit their working pattern. However, the problem for single parents is that the 30-hour limit remains and they will be forced to find alternative child care arrangements. I hope that hon. Members will have the opportunity to explore in Committee whether it would be appropriate to prorate the 30 hours for single parent families, to ensure that they are not put at a disadvantage in comparison with married or cohabiting couples. Of course, that debate should not take place without some consideration of clause 39, which relates to polygamous marriages. I wonder how the 30-hour limit will interact with such marriages. Perhaps the Paymaster General wants to intervene now to expand on that point.
The Bill tries to address two worthwhile objectives. They are goals that we all share: the alleviation of poverty and the encouragement of people to move from welfare to work. Few would criticise those aims. I am concerned, however, that the Bill lacks the definition that we would like. Some 16 regulations have yet to be laid before us and we have not seen the rate or taper in relation to the 14 elements of the two tax credits. We do not know how many winners and losers there will be as a consequence of the Bill. Thus, notwithstanding our earlier discussion, we do not know what the full burden on business will be. The goals of the Bill are generous, but the generosity of the Government in providing information to us has been very limited on this occasion. I regret that we have not had the opportunity to discuss the Bill in more detail on the Floor of the House. Before supporting it, we need to know a great deal more about the details in terms of the rates and tapers, the winners and losers and the people who will benefit from it.
Mr. Colin Challen (Morley and Rothwell): This has been a very complex debate on a very complex subject. I am trying desperately to keep up with some of the technical detail, on which, I must admit, I am not an expert. So far, it has struck me that some of that complexity seems to be adding to confusion on the Opposition Benches. We began by hearing about the Opposition's view that the legislation would be an open cheque book and would lead to a rise in public expenditure comparable to the acknowledged increase in respect of health and all the other Government programmes. Later on, however, we heard about the idea that it would impose a Brownian stealth tax, which seemed to suggest that they held the opposite view. So, while the debate might be complex, I cannot say that I am very much wiser about some of the aspects on which the Opposition have chosen to focus. In general, I can see that their approach would be to salami-slice away all the complexity until there was no Bill left. Where would we be then in terms of our stated aim of trying further to tackle the poverty trap?
I welcome the changes to the tax credit system that the Government are making in the Bill. They will build on the successes of the children's tax credit and the working families tax credit in tackling child poverty, ensuring that the transition from welfare to work is easier. I think that that is what the Bill is all about. The simplicity should lie in making it easier to climb out of the poverty trap. One matter that has not been discussed at any length is the Bill's extension of the system of tax credits to people without children, which is wholly correct. It will also make the whole tax credits procedure simpler, which has been a focus of the debate.
I believe that the Bill will lead to greater simplicity in general. Simplification may not be its overarching aim, but it is a very important part of it. I speak as somebody who ran small businesses for about 15 years, mostly under the aegis of a Conservative Government, and operated PAYEa rather unenviable task. Trying to understand the tax system and at the same time to run a small business with only a handful of employees is not easy. Every March, the nightmare package would arrive from the Inland Revenue, filled with the extensive information that all employers need in order to pay their staff. Sometimes, that information felt like a job lot of European treatiesessential reading, no doubt, but not many people's cup of tea. In the end, I would carefully file the information awayI imagine that many small employers would do the samehoping never to have to read all of it. I was, therefore, very pleased to hear my hon. Friend the Paymaster General make it clear that employers will not have to face extra costs in calculating payments. There seems to be cross-party agreement that £10 million will be saved to employers and that perhaps the savings will be even greater.
Employers may take a dangerous attitude when they have to cope with all the information. That was shown by one of the first cases that I tackled after my election. A constituent was told by her employer that if she took time off sick and thereby reduced her hours in any week to less than 16the qualifying number for working families tax creditshe would lose her entitlement and have to reapply. That information was clearly wrong, but
Given the increase in the number of small businesses, I hope that the Government are alert to the problem; I believe that they are. Before the Bill is enacted, I hope that there will be a review of the means whereby employers and employees can gain easyI emphasise "easy"access to accurate information about tax credits. Employers sometimes have to ring round and speak to different people; employees have the same problem. That needs attention.
Another WFTC case that arose last week illustrates the difficulty. A single mother of four young children had waited 12 weeks for a decision about her WFTC. That is three monthsfar too long. She works part-time and had previously received the tax credit for 18 months. She was told that her renewal claim was caught in a backlog and that her employer had filled in the form incorrectly. Her employer does not know what extra information is required. She has telephoned daily those responsible for her employment and for the WFTC. Every time she phones, she speaks to a different person. She now faces financial difficulties and is consequently clearly suffering considerable stress.
People trapped in such circumstances must feel as if they are undergoing a Kafkaesque trial. Someone who is merely trying to speed up the system ends up feeling treated like a nuisance. When dealing with such cases on behalf of my constituents, it would be useful as a Member of Parliament to have a dedicated number to ring. I have been told that there is currently no such number, but perhaps I am wrong about that.
The Bill will help to alleviate the difficulties that I described by lengthening the period between applications from six months to one year. That will be a relief to thousands of people, perhaps the majority. It certainly applies to the hundreds or thousands of people in my constituency who currently benefit from the WFTC without problems. It may not be the Bill's overarching aim, but we cannot overestimate the significance of simplification to anyone who has to claim. I hope that simplification will ensue.
In moving towards more flexibility whereby a family's tax credits can be reviewed as and when their circumstances change significantly, we need to be sure that we will be geared up to providing a service that can cope with the changes. If it does not already exist, a telephone hotline should be available for claimants out of normal working hours at weekends and on week nights as well as week days. We must acknowledge that people's working hours are far more varied nowadays.
It could be argued that the best way to simplify the system would be to revert to the days when as many payments as possible were paid universally. The TUC, which is a critical friend of the Government's, was one of the respondents to the Inland Revenue's consultation on tax credits. It has voiced its anxieties about the increase in the means-testing that the Bill proposes especially for child dependency awards. I share those worries, although my anxiety is mitigated by the simple fact that, since coming to office in 1997, the Government have placed more money in the hands of poorer families than any Government for at least a generation.
Only this morning, The Guardian included an article entitled "Research throws doubt on child poverty claim". It claimed that in 2000 only 300,000 fewer children were classed as being below the poverty line than in 1997. The article was based on research by the Joseph Rowntree Foundation. It states that the foundation
We must sometimes read behind the headlines. Research is crucial, and we should consider the research that is carried out when the measures are in place and the WFTC has had time to take effect. Those who oppose our anti-child poverty strategythey do not oppose our objective openly, but vote against the means of achieving itwill have to wear their Scrooge-like smiles elsewhere on their anatomy in the not-too-distant future.