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27 Mar 2003 : Column 446—continued
Working Tax Credit
10. Mrs. Anne Campbell (Cambridge): How many people in the eastern region will benefit from the working tax credit. [105159]
The Economic Secretary to the Treasury (John Healey): Some 90,000 low-income families in the eastern region are expected to receive the new working tax credit and almost half a million in the region are expected to benefit from the new child tax credit. I am sure that my hon. Friend will recognise that no Government have given so much support to so many families as this Labour Government will from next month.
Mrs. Campbell : I thank my hon. Friend for that reply. It is certainly good news that working people without children or a disability will be able to claim the new working tax credit for the first time. Will my hon. Friend tell me whether there are any estimates of the number of likely non-claimants among those who are eligible? Will he describe the strategy that he is adopting to ensure that there is a good take-up of the working tax credit?
John Healey: My hon. Friend is absolutely right. In addition to the half a million people in the eastern region whom we expect to benefit from new tax credits, 6 million people will benefit throughout the UK as a whole. On take-up, I confirm that by the end of February, 3 million people had registered for the new tax credits, and a third of a million had done that online. The Inland Revenue is doing everything possible to ensure that those eligible get their claim in and benefit from the credit from day one.
Mr. Richard Bacon (South Norfolk): Does the Economic Secretary agree with Sir John Bourn that tax credits are public expenditure, and if not, why not?
John Healey: We operate to conventional accounting rules and so the credits are not counted as public expenditure. We do not take the same view as Sir John Bourn.
Mr. Bob Blizzard (Waveney): Many people in my constituency will welcome the new tax credits that are coming into force. For too long, so many people who were in work suffered due to low pay, and there were many people in my constituency for whom work would not pay and so they were caught in the benefits trap. I congratulate my hon. Friend on the new system that will bring more money to more people and iron out some anomalies in the previous system. Will he do even more to encourage take-up by producing more publicity?
John Healey: We are doing all that we can to encourage take-up, as I explained to my hon. Friend the Member for Cambridge (Mrs. Campbell). Any family with children that has an income lower than £58,000 a year is eligible for some support under the new child tax credit. We are introducing the system because it allows us finally to align the tax credit system with the tax system itself, which will make claiming simpler. We want to keep work incentives while ensuring that most income is paid to the main carer, which is what we are doing.
ISA Tax Credit
11. Mr. Bill Wiggin (Leominster): What estimate he has made of the effect on the stock market of the removal of dividend tax credit. [105160]
The Paymaster General (Dawn Primarolo): It is not possible to attribute movements in share prices to the effect of particular Government tax changes.
Mr. Wiggin : This Government have taken some £80 billion from the United Kingdom stock market—£5 billion a year through their pension taxes. They now intend to withdraw the individual savings account tax credit. Does the hon. Lady not think that her answer was extraordinarily complacent?
Dawn Primarolo: The hon. Gentleman will be aware that the removal of tax credit as part of the reform of corporate tax in 1997 was part of a long-term plan to tackle the distortions in investment. He will also be aware that ISAs retain the 10 per cent. protection until April 2004. I remind him that when his Government cut tax credits, they paid no compensation to the corporate sector or anyone else.
Mr. Jim Cousins (Newcastle upon Tyne, Central): Will my right hon. Friend consider extending the ISA tax credit beyond 2004? It is a difficult time for people who have equity ISAs and it is the wrong moment to encourage them to switch to bond funds. In all other respects, I support my right hon. Friend in taking a long-term view of shareholder value that does not depend on the volatility of asset values in the stock market at any given time and does not encourage financial engineering.
Dawn Primarolo: As my hon. Friend is aware, the 10 per cent. of payable tax credit for ISAs was a transitional measure to allow investors to adjust their portfolios. I listened carefully to his comments on what might happen in future, although he would not expect me to announce anything from the Dispatch Box now. However, I shall certainly reflect on his concerns.
Mr. Howard Flight (Arundel and South Downs): First, the stock market value of companies represents a multiple of their earnings, so a £5 billion reduction from aggregate dividend income at a price earnings multiple of 20 reduces stock market values by £100 billion per annum, which is roughly equal to pension fund deficits. Secondly, on the demand for UK equities driving prices, the Chancellor and the Paymaster General know well that the Chancellor's pension tax resulted in an acceleration of the closure of final salary pension schemes and a rebalancing of their portfolios, causing their equity holdings to fall from 53 to 39 per cent. Will the Paymaster General admit that the Chancellor's £5 billion pension tax has contributed materially both to the fall in the UK stock market and to the fact that the US stock market has outperformed the UK market by 50 per cent. since 1997?
Dawn Primarolo: First, the hon. Gentleman again completely misses the point about the package of reforms undertaken by the Government, including cuts in corporation tax and numerous measures to help investment in the economy; and secondly, he completely ignores the Government's Green Paper on occupational pension funds and our continued support of those funds, which he continues to undermine. Thirdly, he is entirely wrong to assert that the UK stock market has fallen to a greater extent than European stock markets. That is simply not true and he knows it.
Child Tax Credit (Watford)
12. Claire Ward (Watford): How many families in Watford he expects will benefit from the children's tax credit. [105161]
The Paymaster General (Dawn Primarolo): From April, the children's tax credit will be replaced by a new child tax credit. No figures are available for Watford. However, 460,000 families in the east of England are expected to benefit from the new child tax credit.
Claire Ward : I thank my right hon. Friend for that reply. It is a shame that we are unable to have the figures for my constituency, but I believe that a number of families will benefit from the new tax credit. I am concerned, however, that we monitor how many take up that option because a lot of people will not realise that they are entitled to it. What does she plan to do to ensure that there is a larger take-up campaign and that it is monitored over the coming months?
Dawn Primarolo: My hon. Friend raises an important point. I am pleased to be able to tell her that the Inland Revenue will monitor the take-up of the child tax credit
and the working tax credit, and will publish statistics quarterly showing the numbers benefiting from one or both of the new tax credits. Those statistics will be published as part of the national statistics, which will enable us to see where the take-up is and whether any further steps need to be taken.Euro
13. Mr. Win Griffiths (Bridgend): If he will make a statement on the publication of his reports on the five tests for euro membership. [105162]
14. Mr. Gordon Prentice (Pendle): If his assessment of the five tests for euro entry is going according to the timetable he has set. [105163]
The Chancellor of the Exchequer (Mr. Gordon Brown): As I said to the Treasury Committee in February, we are
on course to complete the assessment within two years of the start of this Parliament. When the assessment is completed, it will be published.
Mr. Griffiths: May I press my right hon. Friend to give some indication as to whether we can expect to be campaigning on the referendum before the end of the year?
Mr. Brown: That is a matter for the assessment. The assessment will be published and my hon. Friend can make his own judgment.
Mr. Prentice : But if the assessment is no, will we have another assessment in six months or a year? Will we have rolling assessments? There is a big void there. No one knows what is going to happen.
Mr. Brown: My hon. Friend is once again trying to jump the gun. There will be an assessment, it will be published in full, and people will be able to make their judgment.
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