Finance Bill

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The Chairman: Order. ''Daft'' is all right, particularly if you have an accent like mine.

Column Number: 212

Dawn Primarolo: The argument is unrealistic, considering the reality of how accounting currently operates. We are discussing a provision that is already in operation, and we will make it more generous. So why is it such a huge intellectual challenge? I am afraid that the hon. Gentleman has lost me. Child care in an appropriate, registered creche, playgroup or nursery is in the arrangements before us.

The hon. Gentleman asked about VAT. As he is probably aware, creches, playgroups and nurseries are VAT exempt under both UK and European law. That ensures that parents are not charged VAT on the care provided to their children.

Rob Marris: I take my right hon. Friend back to the point about intellectual challenge. Perhaps I misunderstand the tax system, but it seems to me that if an employer gives out vouchers for private health care, such that provided by BUPA, it should operate under a similar tax regime as that proposed for child care vouchers. If not, why not?

Dawn Primarolo: The provision of private health care is entirely different in that it does not qualify for tax relief.

The Chairman: Order. This is not within the scope of the clause.

Dawn Primarolo: Okay, I will not go down that path.

My hon. Friend asked a question about pay advantage for those with children. It does not occur here. This is not a tax relief for a selected group of employees, and it is not an allowance as an expense that does not directly result from employment. It is a ring-fenced exemption for child care benefits in kind meant to encourage employers to engage with the issue of child care and to offer some help to those employees who want it. My hon. Friend is right and his point goes to the heart of the issue.

How do we encourage employers, while ensuring that that encouragement is fair and equitable, as simple as possible and cash-limited in terms of the exposure of the Exchequer? After consultation on the issue, I contend that the clause and the schedule offer the best way forward: cautious but helpful, in broadening the amount of money and the child care facilities available. I commend the schedule to the Committee.

Question put and agreed to.

Schedule 13, as amended, agreed to.

Further consideration adjourned.—[Jim Fitzpatrick.]

        Adjourned accordingly at thirteen minutes past Five o'clock till Tuesday 18 May at half-past Nine o'clock.

The following Members attended the Committee:

Column Number: 213

McWilliam, Mr. John (Chairman)
Atkinson, Mr. Peter
Bacon, Mr.
Bryant, Chris
Burnett, Mr.
Cohen, Harry
Davies, Mr. Quentin
Ellman, Mrs.
Ennis, Jeff
Fitzpatrick, Jim
Flight, Mr.
Healey, John
Heyes, Mr.
Jack, Mr.
Laws, Mr.
MacDonald, Mr.
Marris, Rob
Pound, Mr.
Primarolo, Dawn
Prisk, Mr.
Purnell, James
Quinn, Lawrie
Todd, Mr.
Tyrie, Mr.

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