Tax Credits Bill — 22 Jun 1999

Lords amendment disagreed to.

Lords amendment: No. 2, in page 3, line 35, at end insert--

("( ) The Board shall ensure that any single parent can decide to receive payment of any tax credit direct from the Board rather than from the employer.")

I beg to move, That this House disagrees with the Lords in the said amendment.

The amendment would give one group of applicants--lone parents--a choice not available to other applicants. It would allow them to choose whether to be paid a tax credit by their employer through the pay packet, or to receive it direct from the Revenue.

I make it plain at the start that, whatever the reason for the amendment, accepting it would mean a major policy change. It is not a matter of tinkering at the margins. The Government have said repeatedly that paying tax credits through the wage packet is one of the key elements of our policy on tax credits. It is designed to drive home the message that work pays, and to reinforce the crucial link between tax credits and work.

Single parents are not just a small peripheral part of the 1.4 million households expected to get the working families tax credit. They make up half of the family credit case load now, and we expect that to be roughly the same for the working families tax credit. Lone parents are precisely the families who should be able to benefit from the help that the working families tax credit can give, so that they can go back to work if they want to do so.

Our policy is to provide families with extra help and to do it through the wage packet if they are employed. Tax credits send the clearest message to those families that what they get is not a handout but an extra reward for work. That has been discussed at length in both Houses during consideration of the Bill. It allows families who would otherwise be better off on benefit the opportunity to re-enter the labour market and properly see the rewards of working. Against that background, I am not at all sure why single parents should be singled out for this special extra choice of payment method.

One argument is that, in practice, couples have a choice because they can choose which of them receives the tax credit; but the choice is not how it is paid, but who should

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receive it. That choice exists in order to avoid involuntary transfer from the woman's purse to the man's wallet, and it has been widely welcomed by those who had concerns about that in the early stages of the design of the working families tax credit. If both parents work, the choice is not whether the parents receive it through the wage packet, but which parent receives it. If there is only one parent, there is only one person to whom the tax credit can be paid.

The Financial Times --not exactly the in-house journal of the anti-capitalist league and hardly renowned for its anti-employer sentiments--has opined that the Bill poses the risk that some employers will use information about their employees unscrupulously. I go no further than to

It being half past Six o'clock, MR. DEPUTY SPEAKER put the Question already proposed from the Chair, pursuant to Order.

Question put, That this House disagrees with the Lords in the said amendment:--

The House divided: Ayes 317, Noes 161.

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