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Roger Casale: I am grateful to my right hon. Friend for that intervention. I am sure that she, like me, will need much more convincing about the sincerity of Opposition Members, including the hon. Member for Havant, in their new-found support for such measures. What I remember, and what my constituents remember—
Mr. Willetts: The hon. Gentleman has mentioned me for a second time, so I am grateful to him for giving way again. We introduced the family credit in 1988. If I may say so, I played a modest role in its creation—[Hon. Members: "It was not modest."] Okay, it was a very important role—it was central. The family credit of 1988 was a device precisely aimed to boost the incomes of families in low-paid work. It was the great Keith Joseph
who introduced the original family income supplement, which was the first example of such a scheme, so I do not know why the hon. Gentleman is so baffled that Conservatives believe in it. We have a solid track record of proposing such arrangements.
Roger Casale: It is very clear to me that, however many times I mention the hon. Member for Havant, it will never top the number of times that he mentions himself.
At least one other hon. Member is waiting to speak, so I shall conclude by saying that the Conservatives would be a lot more credible if they told the House how they see their support for tax credits as part of the wider vision, which the Government have, for improving the condition of people in this country, alongside the national minimum wage and many other measures that have been opposed by the Conservatives. If the Conservatives want to be more credible in their support for tax credits, which they say that they would continue if they were ever returned to power, they also have to explain to the House how they would pay for them. That has not been mentioned in the debate. The tax credits involve a major redistribution of wealth and income, but the cost to the Exchequer is £13 billion, and the Conservative party has to explain where it would find the money to continue with the current tax credits, given that it aims to cut expenditure on public services by 20 per cent.
Tim Loughton (East Worthing and Shoreham): The hon. Gentleman said that there was a teething problem with the child tax credit. What does he have to say to one of my constituents, who has had to give up her part-time job working for a local authority, because there was a complete Horlicks over the payment of her child tax credit, which had an impact on her child minder, who also did not receive her child tax credit and did not get paid by the original person, so there was a double whammy? That does not sound like a teething problem to me; it sounds like serious root canal damage, courtesy of the Government. Will he apologise for it?
Roger Casale: If the hon. Gentleman's constituent is in receipt of tax credits, I would invite her to consider whether her tax credit would be safe if the Conservative party were ever returned to power.
In the brief time remaining to me in the debate, let me explain why I support tax credits. First and foremost, tax credits are already transforming people's lives; lifting families, especially those with children, out of poverty; and lifting the stigma of benefits by integrating credits with the tax system, thus rewarding and incentivising work. Secondly, as well as being better in principle, tax credits will represent a better way to deliver benefits in practice. More money will go to more families. The system will be more flexible and more likely to generate the kind of dynamic gains that we want in our economy, by rewarding work.
When I was first elected in 1997, social security spending in this country had increased from £45 billion to £90 billion; child benefit had been frozen for three years, cutting it in real terms; and record numbers of families and children lived in poverty. The damage done
by that economic and social policy will take many years to repair, but I am proud to support the Government and the introduction of tax credits, under which, today—six years later—families with children are £1,200 per annum better off in real terms; households with children in the poorest fifth of the population are £2,500 a year better off in real terms; and a single-earner family on half average earnings, with two young children, is £3,400 better off.We will overcome the difficulties. There is always a human side to any administrative problem. We all want to fight for our constituents, but tax credits are already making an enormous difference to people in this country, and I am delighted to speak in the debate to show my support for them.
9.34 pm
Hywel Williams (Caernarfon): We know that millions of people have been awarded tax credits and that it has been a great help to them. I have no problem with commending the Government for that, and nor do I have a problem with commending them for the operation of the Welsh language call centre, which has been a great boon to my constituents. But many people, through no fault of their own, are not getting the tax credits. Real hardship persists, which has been caused, let us be clear, by the botched introduction of the system. It was a botch foretold.
Like all hon. Members, I have come across many tax credit cases, some of which I outlined in the debate in Westminster Hall on 4 June. I will be brief, but those cases concerned such familiar matters as simple mistakes as to material facts, mistakes in the level of awards and applications disappearing from the electronic records. When EDS was mentioned earlier, I wondered whether it might stand for "every decision a shambles," although that would be unkind and probably untrue. There have been difficulties with mechanical reading of forms, extreme difficulties in getting through on the helplines, and, interestingly to me, a claim held back because the address was "wrong"—in fact, the address was in Welsh.
I will not elaborate further; rather, I refer hon. Members to the debates of 4 June—although perhaps you will indulge me, Mr. Speaker, if I repeat just one short anecdote. I wrote to a constituent about her problems with a straightforward claim for tax credits. That letter was in Welsh. When I printed it out, I pressed the spell checker by mistake—the English spell checker. The first correction suggested to me was to replace the Welsh word "credyd"—credit—with the English word "cruddy". That was indeed a flash of brilliant insight by an inanimate object, and an insight that sometimes seems to elude the Government.
The proof of the tax credit system to my constituents is that it is got right for 4.2 million people but that it is got wrong for many others. We want to know what is the extent of getting it wrong. What is being done to get it right? Who is responsible for the mistakes? Are they being held to account? If they are external to the Revenue, are they making recompense for their mistakes? What lessons are being learned for the introduction of the pension credit?
For some people at least, the tax credit system is not proving to be a means of getting back into work: it is proving to be yet another obstacle to getting back to
work and staying in work. Those people have not been getting the money on which they depend. In effect, they are having to subsidise the Government's failings, which they should not have to do. They cannot afford to subsidise the Government's failings. Children in lower-income families cannot afford to subsidise the Government's failings. I have asked the Paymaster General how many claims are still pending that were submitted before 4 April. I have had no answer.Briefly, on compensation, the Inland Revenue publishes a code of practice entitled, "Putting things right when we make mistakes"—fascinating reading.
Sir Patrick Cormack (South Staffordshire): In Welsh or English?
Hywel Williams: Both. It states that it will pay back reasonable costs that a taxpayer or tax credit claimant incurs as a direct result of its mistake or unreasonable delay. The document also says that extra compensation will be paid for distress, and states:
- "If our actions have affected you particularly badly, please let us know"—
- "We may be able to pay you an amount of compensation to acknowledge and apologise for the way we have treated you. These payments, which are not intended"—
- "to put a value on the distress you have suffered, will usually range from £25 to £500."
9.39 pm
Mr. Mark Prisk (Hertford and Stortford): It is fair to say that after an excellent speech by my hon. Friend the Member for Havant (Mr. Willetts), we have had a useful and instructive debate. Despite what Labour Members have said, we have of course been trying to review the implementation of the tax credit system and consider how it works in the real world rather than in the minds of some Labour Members.
Despite the entertaining though largely irrelevant rant from the Secretary of State at the beginning, we had a number of positive contributions. As usual, the hon. Member for Northavon (Mr. Webb) brought his forensic approach to complicated subject, and he was accurately supported by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). The hon. Member for Aberdeen, South (Miss Begg) made a typically positive speech, although it was disappointing that her colleague, the hon. Member for Glasgow, Cathcart (Mr. Harris), was untypically churlish.
The way in which my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) tried to describe the problem from a constituent's point of view was especially accurate, and we heard a typically loyal speech from the hon. Member for Wimbledon (Roger Casale). [Interruption.] I am delighted that the hon. Member for Glasgow, Cathcart has finally joined us in the Chamber. We heard a strong and amusing yet important speech from the hon. Member for
Caernarfon (Hywel Williams). It is important to know about the way in which the system works on the ground—that is the real issue. The theory, statistics and the attempt to distract us from the real issue are not important because we need to know how the system affects real people.The Chancellor boasted in a speech last year how the new tax system would "modernise welfare". The Paymaster General promised us a "seamless system" that would "respond to people's needs" and provide "continuous support". Indeed, a fascinating tome from the Treasury, which I suspect that J.K. Rowling would regard as being as fictional as her own, says that the Government would
- "facilitate a smooth transition to the new system".
- "minimise the disturbance caused to families".
We have heard about the gap between the Government's words and actions and how the gap has become a chasm. Instead of a seamless system, the whole policy has unravelled causing heartache and distress to millions of families. Of the 6.5 million eligible families, more than 1 million have not claimed or been paid. According to Sir Nicholas Montagu, even eight weeks on, up to 250,000 families have applied yet are still waiting for the money that they are owed. Where is the seamless system for them? Where is their continuous support?
Hon. Members will know of many constituents who have lost out and, indeed, several examples have been outlined in the debate. I have received letters from dozens of worried families who live in my constituency who found that the system and the Government failed them. One of my constituents, a working single mum from Bishop's Stortford, made a correct claim on 5 September 2002 but received an incorrect award notice on 18 February 2003—a nought had been added to her income. She wrote back and she wrote again. She started calling the hotline and had to call again. Two months later, she had still not received an answer. She wrote a letter to me on 17 April and explained her situation in this straightforward way:
- "As a working single parent . . . I have no financial cushion to see me through until my next Tax Credit claim is processed. I am unable to pay my childminder and have had to terminate the contract . . . Without child-care I am unable to work and continue my studies. I am therefore unable to pay my mortgage and maintain house and home for my two children and myself."
The roots of the fiasco lie not only in poor administration but bad Government policy. Motivated in part by a desire to massage away the welfare budget, the Chancellor forced the tax credits policy forward without thinking through how it would work in practice. The first set of credits failed, so they had to be replaced—not once but twice. Indeed, since October 1999, the Government have introduced five new tax credits, scrapped four and introduced two new ones. That is an average of one new tax credit for families
every six months. Given the appalling failure rate, did it never occur to the Paymaster General that there might be something wrong with the policy?The way in which the Government have failed on implementation has affected most people. It is increasingly clear that the Government have dumped the overly complex operation on to the Revenue with too little time and too little thought. Why did the Revenue fail to anticipate the scope or pattern of claims? What training was provided for staff? Why did the Paymaster General go ahead with a system when the computer software had not been fully tested?
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