§ Lords amendment: No. 1, in page 3, line 31, at beginning insert ("Subject to subsection (1A),")3.43 pm
§ The Paymaster General (Dawn Primarolo)
I beg to move, That this House disagrees with the Lords in the said amendment.
§ Dawn Primarolo
The amendments together would allow employers with fewer than 10 employees to elect that any tax credit payable to their employees should be paid by the Inland Revenue board. The amendments would also enable regulations to be made governing the making and revoking of such elections.
The amendments were introduced in Committee in another place. This House has, of course, debated and firmly rejected similar amendments seeking to exempt various categories of employers from paying tax credits through the payroll to their employees. I shall ask the House to reject amendments Nos. 1 and 3, because they are ill thought out, would be disastrous for the tax credit policy as a whole and would be an administrative nightmare.
There are two important points to make on the policy implications of the amendments. First, as their lordships are well aware, payment via the employer is central to our tax credit policy. It will be vital in showing unambiguously that work really does pay. Not only will the tax credits be much more generous than the benefits that they replace, but they will also be inextricably linked to the rewards of work because they will be shown on the employee's pay slip as an addition to the net take-home pay. Embedding the tax credits in the tax system will help to break the perceived link with benefits and will reduce the stigma which is often attached to claiming in-work support.
For those reasons, we should not be looking for ways of taking large numbers of employers out of the scheme, thereby depriving many thousands of employees of their right to receive their tax credit through the payroll. Payment through the pay packet will be the predominant method of payment from April 2000, and we want that to apply in every case where it is appropriate and practical.
§ Mr. Steve Webb (Northavon)
How many employees, not firms, would be taken out of payment through the pay packet by the amendments?
§ Dawn Primarolo
I shall answer the hon. Gentleman's point when I explain why I am asking the House to reject the amendments.
The second, more general, point of policy is that amendments Nos. 1 and 3 would give employers the right—
§ Dawn Primarolo
I am happy to give way, but will the hon. Gentleman confirm that the Opposition's policy is still as stated by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)—that a Conservative Government would abolish the working families tax credit and deprive millions of children of the benefits of that?
§ Mr. Pickles
The hon. Lady is most courteous, but I seek only to help her out. Can she confirm that the amendments would take out only 13 per cent. of people, and that 87 per cent. would still be able to receive the working families tax credit through the wage packet?
§ Dawn Primarolo
I am coming to my second point which deals specifically with the hon. Gentleman's question, and with the removal of so many employers from their responsibilities within the tax system.
Amendments Nos. 1 and 3 would give employers the right to opt out of their tax obligations. That is a novel idea. If it were a feature of the tax system generally, I wonder how many employers would, for example, voluntarily operate the pay-as-you-earn scheme.
To remove employers in such large numbers from their tax obligations—70 per cent. of all employers—is clearly unacceptable. Tax credits are part of the tax system, and it is completely unacceptable to say that employers can elect not to fulfil their tax administration responsibilities.
By accepting the amendments, the House would give in the region of 825,000 employers—70 per cent. of all employers—the ability to elect not to carry out their duties in relation to tax credits. That is not acceptable.
§ Mr. Webb
The hon. Lady will know that the Government have said that the smallest firms, those that do not have a PAYE or national insurance liability at present, do not have to deliver the tax credits directly through the payroll, and that they can be paid directly to the recipient. Those small firms are not giving up on their duties—rather, the Government have recognised that they are a burden on them, so why is the argument different?
§ Dawn Primarolo
If the hon. Gentleman will be a little more patient, I shall address those points, which were a feature of our debates in this House and in the other place.
I was making the point about the number of employers who would be removed from the scheme. In his first intervention, the hon. Gentleman asked about the number of employees involved. The figure is in the region of 100,000, which is a substantial number to remove from the scheme. His second intervention was about employer burdens and what will happen to those employers who are not required to be in the PAYE scheme. If I may go on to the next section of my remarks, I shall be able to deal with that point.
937 The main criticism of employer payment of the tax credit concerns the method of payment imposed and unacceptable burdens, although I note that today's Confederation of British Industry press release welcomes andsupports the Working Families Tax Credit which should play a key role in raising incentives to work by targeting additional resources on those people who are most likely to suffer from the poverty and unemployment traps".I am sure that we all have a copy of the press release, which points out thatthe CBI welcomes the government's recognitionof the issues in respect of the cost of compliance andlooks forward to working with the government to develop proposals to meet the needs of smaller firms.I should say that I will deal with that point during my speech, in case any hon. Members think that I might miss it out.
§ Dawn Primarolo
I am always pleased to give way to the hon. Gentleman, but I should be grateful if, in return, he would answer my question: does his party support the working families tax credit—yes or no?
§ Mr. Pickles
I am sure that it was for the sake of brevity that the hon. Lady missed out the paragraph of the CBI press release that states:We would have preferred smaller firms to have been exempt from administering the credit".Does she believe that Lord Haskins, who has been asked to look into this matter by the Prime Minister, is wrong when he says that the Government have underestimated the impact of the working families tax credit on small businesses?
§ Dawn Primarolo
Shall I take the hon. Gentleman's answer as yes—his party intends to repeal the working families tax credit, denying millions of children and families the support that it gives? He is quite right; I do not deny that the CBI would have preferred different action, but it is saying that, despite its concerns about employer compliance, it accepts that the Government recognise that something will need to be done in that area and that we will respond. It is not opposing the Bill; it welcomes the Bill. If employer compliance is such an overwhelming problem, one would have expected the CBI to feel unable to support the Bill.
§ Dawn Primarolo
As always, I am happy to give way to the hon. Gentleman, but then I must try to make progress, if he will permit me.
§ Mr. Bercow
I am exceptionally grateful to the Paymaster General for giving way. On the subject of opponents of Government policy in this area, is she aware that the National Farmers Union is resolutely opposed to the current position because the great majority of agricultural businesses would be adversely affected? Given that she is flagging up her willingness to consider means by which to alleviate the burden on small 938 businesses, is she prepared sympathetically to consider the NFU request that the new measure should be delayed for two years to allow agricultural businesses adequately to prepare themselves for it?
§ Dawn Primarolo
The Government are not prepared to delay the implementation of that policy because we are not prepared to stand by and watch as millions of children who could be assisted by the measure continue to be trapped in poverty. We have made it clear—and the CBI recognises this—that tackling compliance cost is being addressed; on that basis, it supports and welcomes the Bill.
The Government have recognised from the outset that employers will incur some extra costs in paying tax credits through the payroll, and we are doing everything possible to keep those extra costs to a minimum. Since May 1998, we have been consulting representatives of employers and payroll software suppliers on the details of the scheme, and significant changes have been made to meet their concerns.
We have also recognised that, whatever the advantages of employer payment of tax credits, that method of delivery may not be appropriate in all cases. As the hon. Member for Northavon (Mr. Webb) pointed out, some employers are so small that they are not required to comply with PAYE arrangements. We have already announced an exemption for certain very small employers, in whose case the advantages to employees of receiving their tax credit with pay would clearly be outweighed by the practical difficulties. A line must be drawn somewhere, and the Government have drawn it at that point, given that those employers will not be participating in the PAYE scheme.
Employers will normally offset tax credit payments against PAYE tax payments, national insurance contributions and student loan repayments that they are due to make to the Inland Revenue. If their liability to the Revenue is not enough to cover the tax credit payments that they are required to make, they will be able to apply to the Revenue in advance for funding. That was discussed extensively during earlier stages of the Bill's passage.
What are we to do about employers who do not operate a PAYE scheme, because they do not have to deduct tax or national insurance contributions from the pay of their employees? Employers in that category would include people who employ a cleaner or gardener for a few hours a week. They currently have no dealings with the Revenue in their role as employers. For those employers, the burden of paying tax credits with pay would be disproportionate, because they would be brought on to the Revenue's employer database simply through once having had tax credit recipients on their payroll. They would have to apply to the Revenue for funds on that basis, because they would not be able to make deductions from the payments that they were collecting on behalf of the Revenue.
In Committee, we announced that we had decided to exempt employers from paying tax credits through the payroll if they did not operate a PAYE scheme. That was an entirely reasonable move, and was welcomed as such. It is a targeted exemption, which will take about 80,000 employers out of the scheme. I am anticipating a possible further intervention from the hon. Member for 939 Northavon. The exemption will be relatively easy to operate, because the Revenue's PAYE database will quickly confirm whether a particular employer qualifies for it. In the vast majority of cases, employers will not need to be troubled in the first place.
Let me now deal with the practical implications of Lords amendments Nos. 1 and 3, which, by contrast, would be anything but easy to operate. As I said earlier, they would be an administrative nightmare. The central practical problem is how the Revenue will know which employers qualify for the opt-out. Inland Revenue information about the number of people employed by a particular employer is based on employers' end-of-year returns, so it could be up to a year out of date. A possible source of information could be the employees themselves, but employees filling in their tax credit application forms will, in many cases, not know how many other employees work for the same employer. They may send in the form without the information, make a guess, which may or may not be correct, or ask the employer for the information—thus adding a further element of employer involvement and possible delay in the application. Moreover, in all cases of doubt, the Revenue would have to investigate. The proposals would, therefore, increase compliance burdens on employers, to establish whether they should be able to opt out. The Government think that such a proposition is ridiculous.
Further problems would arise with employers who have about 10 employees, as they might be eligible to elect to opt out in one year, but not be eligible to do so the next. Some employers could move from the exempt to the non-exempt category several times in one year. Do hon. Members really think that employers should be relied on to opt back into the employer payment scheme if they take on additional staff? Again, the proposal would only add another unnecessary complication to the system.
I think that it will be clear to the House that the type of arrangements needed to make an employer opt-out work cannot possibly be in the best interests of employees entitled to tax credits. The award of tax credits could not be finalised until the Revenue and the employer had agreed who would make the payments. Therefore, needy families would be kept waiting for vital income to which they were entitled—and that would not be acceptable to the Government. Employees of employers who move in and out of the fewer-than-10-employees category would be thoroughly confused and would not know where they were from one award to the next.
I am sure that the Lords amendments were prompted by a concern to protect small businesses from damaging administrative burdens. However, the Opposition are not alone in wanting small businesses to flourish. The Government are committed to creating a climate in which small and medium-sized enterprises are able to thrive, and we are proud of the measures that we have introduced in the past two years to make that happen.
Since March 1997, we have lowered the small companies tax rate twice: the rate is now 20 per cent. Moreover, as the Chancellor announced in his March Budget, from April 2000, there will be a new 10p rate—which is the lowest rate of corporation tax for small 940 companies among major industrialised countries. The new small business service, which was also announced in the Budget, will provide better and more targeted support and assistance to small businesses. There will also be a new business guide, business tax starter pack and guidance for new employers, and a new helpline service for new employers, offering fast-track support. The Government are committed to assisting small employers and to ensuring that their compliance costs are reduced.
The Budget also raised the threshold for quarterly payment of PAYE tax from £600 to £1,000 per month, thus extending the quarterly scheme to an additional 130,000 employers—who could each save up to £100 annually. Since 1997, we have abolished advance corporation tax, bringing a £1 billion cash-flow advantage to business and benefiting many small businesses. We have also enhanced capital allowances for small companies, which have been in place since July 1997.
As part of the service for all new small businesses, we shall, from April 2000, be providing assistance with their payroll operation. The Department of Trade and Industry is consulting on the method of delivery of that service. We intend that the service should be delivered by means of a voucher scheme, whereby all eligible businesses will be able to redeem a voucher with any commercial provider on a list held by the small business service. The scheme should do much to ease the burdens on small businesses of running their payroll.
Specifically, in the coming months, and after April 2000, all employers will be given guidance to enable them to pay tax credits smoothly and with the least possible extra work. There will be a targeted publicity campaign involving all the media and there will be seminars across the country which will be of particular interest to small businesses.
Small employers have nothing to fear from paying tax credits through the payroll. Many of them will gain from the more satisfied and motivated work force who will result.
§ Miss Julie Kirkbride (Bromsgrove)
I have listened with interest to the hon. Lady's explanation of why she does not believe that the Government's proposals would be unfair on small businesses, but she knows that the working families tax credit cannot be paid through the tax code because of the distortions that would ensue. It will have to be a separate item, which means that the benefits that she is claiming for small businesses will not be so great. If she is serious about helping small businesses, why not compensate them for the administration of the scheme in line with the existing precedent of the payment of statutory maternity pay? That would be a welcome way forward for small businesses.
§ Dawn Primarolo
The hon. Lady cannot have been listening to the points that I have just made about the DTI's consultation on the voucher scheme and our services to small business. That point is addressed by the proposals. I do not intend to go back over the debate on tax credits that we have had in this and another House. If the hon. Lady informs herself, she will see that the requirements on business are no more onerous than under the family credit system.
§ Mr. Geraint Davies (Croydon, Central)
Does my hon. Friend agree that the amendments are not sincere, 941 but are wrecking amendments? There is no logic to choosing 10 employees as a threshold. Companies will vary between nine, 10 and 11 employees during a year. There is no linkage with turnover. The amendments are an incentive to small companies not to grow larger than 10 employees. The Opposition are using the amendments to hide the fact that they want to scrap the working families tax credit and give away the billions of pounds that they have been promising willy-nilly to smokers and others in debates on the Finance Bill.
§ Dawn Primarolo
I have made it clear that the amendments are wrecking amendments which would break the tax credits principle. The arrangements that the Government have made across many areas to support small businesses show that we are determined to deal with compliance costs while assisting small businesses to discharge their obligations in the tax system. The hon. Member for Chingford and Woodford Green made it clear when he was Opposition spokesman on social security that the Conservatives opposed the introduction of the working families tax credit. They are trying to use the issue of employers to conceal that opposition, which would be rejected by the electorate. The millions of families who will benefit will be horrified to hear that, for all the Conservatives' words about supporting families, they oppose a policy that will help families in poverty.
I hope that I have convinced the House that the amendments would involve red tape which would not be in the interests of tax credit recipients. The system would be time consuming and costly. Conservative Members claim to be concerned about compliance costs for small business, but the amendments would impose more compliance costs and burdens. The Government are already addressing the needs and concerns of all employers, large and small, through consultation on the detailed schemes that I have set out. The CBI has made clear its welcome for our policy. I urge the House to reject the amendments and support the Government's policy on the introduction of tax credits.
§ Mr. Pickles
I am most grateful to the hon. Lady. The Opposition will long remember her closing remark—that the CBI agrees with the measure so we must support it. I am not entirely sure what Mr. Monks and Lord Hattersley would have to say about that, but at least we know that, in the great debate within the Labour party, the hon. Lady is on the side of the toffs.
§ Dawn Primarolo
I hate to spoil the development of the hon. Gentleman's speech as he warms to his theme, but I am sure that he does not need reminding that the TUC also supports our policy, as do a large number of organisations, including the National Council for One Parent Families. Perhaps the hon. Gentleman could broaden his theme somewhat.
§ Mr. Pickles
At the moment I am trying not to broaden myself.
The hon. Lady is quite right, but she chose to refer to what she thought was most important—the praise of the CBI. I recognise that she is a creature of the current Labour party and wish her every success in the forthcoming reshuffle.
§ Mr. Pickles
We have had our reshuffle.
942 It seems to me that the hon. Lady was attempting to create a paper tiger in order to destroy it. Lords amendment No. 1 is not, by any stretch of the imagination, a wrecking amendment: it is a very narrow amendment that would help the general development of the Bill. The hon. Lady said that it would be disastrous to the Government's policy, as payments through the wage packet were central to the Government's scheme. Payments through the wage packet would remain central to the Government's scheme even if the amendment were accepted. The amendment would not affect that. Essentially, the Government have painted themselves into a corner.
§ Mr. Derek Twigg (Halton)
Will the hon. Gentleman answer the question that the Minister has asked him at least twice? If his party got back into government, would they scrap the working families tax credit and therefore take away money from 5.75 million children—yes or no?
§ Mr. Pickles
I am grateful for the opportunity to answer the hon. Gentleman, who has not participated in our proceedings so far and therefore cannot be blamed for relying too heavily on the briefing from the Government Whips. However, I am afraid that the Whips have let him down. I shall give the hon. Gentleman a full answer, as he deserves one.
My hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) said that we would not have introduced such a scheme. Frankly, the credit is very similar to family credit and it does not improve on it. As the right hon. Member for Birkenhead (Mr. Field) said, the working families tax credit will take money away from children. It will effectively transfer money from men to women. It will increase stigma. It will do little to help people at the lower end of the income scale—and it will significantly increase fraud.
My hon. Friend the Member for Chingford and Woodford Green said that we will probably have to follow Canada's example. Canada introduced a similar system a number of years ago and has effectively had to reverse it. If the hon. Member for Halton (Mr. Twigg) thinks that the party that introduced family credit would not provide some in-work benefit, I have to disabuse him. There is no question about that. However, the hon. Gentleman supports a more expensive mechanism for delivering in-work benefit. I am sorry to have shot the hon. Gentleman's fox, if he will forgive me the hunting metaphor, but this is a further example of the Government's creating a paper tiger in order to destroy it.
The Government apparently have two contradictory aims: to reduce the burden on business and to change people's attitude to in-work benefit. However, their chosen method in respect of the latter involves imposing burdens on business. The amendment seeks to square the circle that the Government have created.
If only the Government—who are desperate to appear tough on this measure after their battering by recent rebellions and their drubbings at the polls—would see reason. However, to give ground here might be portrayed as a U-turn, or as giving way to the middle-class values that the Paymaster General clearly embraces but about which some in her party have doubts. If the Government 943 gave way today, they might make this dreadful Bill work. The amendment would not only exempt those small firms who so elected but ensure that the overwhelming majority of workers were still paid the working families tax credit through their pay packets.
§ Mr. Geraint Davies
Is not the real reason why the Tories want to scrap the working families tax credit that they want to take billions of pounds from young children to pay for the promises made by Opposition Members in Committee; for instance, not to increase tax on cigarettes and fuel and not to abolish the married couples allowance for older people? Is not the Conservatives' policy to take money and food from poor children to subsidise cigarette smokers? Is that the basic strategy of the Opposition?
§ Mr. Pickles
The short answer to that is no.
The Government's own advisers have doubts about the working families tax credit. The Paymaster General was most careful not to answer my question about Lord Haskins. I know that Lord Haskins is on the Euro-enthusiast wing of the Labour party and that the hon. Lady may wish to distance herself from him. However, she will recall that Lord Haskins is the chairman of the better regulation task force, which was set up by the Prime Minister to cut red tape on business. It may be an embarrassment to the Government that the first thing that the noble Lord has picked on has been the Tax Credits Bill.
We know that the noble Lord has received a number of complaints about the Bill. The Financial Times on 29 May reported that the Treasury had seriously underestimated the burden that the working families tax credit would impose on small businesses. If the noble Lord has been seen to be kicking over the traces a little, he is in good company. The Minister of Agriculture, Fisheries and Food and the Secretary of State for Trade and Industry—as reported in The Sunday Telegraph on 25 February—have expressed worries about the effect of the policy on small businesses, and particularly on agriculture.
According to the same article, the Prime Minister is worried about the effect on middle England—again, something that the Paymaster General has embraced: she is clearly in favour of warm beer, and matrons cycling happily through the countryside. Were it not for the European elections, the Government might have accepted our proposals. Perhaps our victory has had the detrimental effect of preventing this sensible measure from proceeding.
§ Maria Eagle (Liverpool, Garston)
I have been trying to follow the hon. Gentleman's argument. Why does his party always seem to be against alleviating poverty? The Bill, along with the national minimum wage and certain other reforms, will lift 1.25 million people out of poverty, including 700,000 children. Why does his party oppose those measures?
§ Mr. Pickles
I cannot take credit for this point, because the hon. Member for Northavon (Mr. Webb) made it both on Second Reading and in Committee, but the working families tax credit does absolutely nothing for those in the 944 lower income deciles: it only helps people at the other extreme, earning up to £38,000. I am sure that it will come as a great surprise and disappointment to the hon. Lady, but the Government are not giving a penny piece extra to those on lower incomes but are supporting those higher up the income scale. She is clearly mystified and I am sure that she feels badly let down by the Government.
§ Mr. Pickles
First I must make a little progress, as I do not feel that I have done full justice to Lord Haskins and his views.
§ Mr. Pickles
I am here to please the Whips, and if they want to hear more about Lord Haskins, they will. I know how the system works.
Lord Haskins is understood to have concluded that payroll issues are one of the main regulatory problems facing small businesses. In reporting to the Treasury on competitiveness—I understand that the report is on the Chancellor's desk as we speak and will be published in July—he concluded that, in respect of companies employing fewer than 10 people, the working families tax credit should be processed by the Inland Revenue for at least two years. That is the very point that the Paymaster General has just rejected. Companies need time to prepare and, according to Lord Haskins, owner-managers may require Government help if they are not to be swamped by the regulatory burden.
What is the regulatory burden? The Paymaster General said that it was no different from that arising from family credit, but family credit claimants only have to produce a certificate of work, after which they can rely on the pay slip. The conduit for small businesses is not as simple as the Government seek to suggest. The overworked, over-stressed small businesses have to complete a series of steps.
First, the employer must calculate the amount of WFTC or disabled persons tax credit to be paid by multiplying the specified daily rate—to be supplied by the Inland Revenue—by the number of days in the payment period. Then the employee's net pay after the deduction of PAYE and national insurance must be added. Then the employer must enter the figure on the employee's pay slip and record it as an item entitled "tax credit".
Then the total must be calculated and a separate tax credit figure recorded on another form. Total tax credits must be recorded on Inland Revenue forms P14 and P60. At the end of the year, a further form, the P35, is needed for each employee, including the total amount of any Inland Revenue funding for the year. Employers must also produce certificates of payment for leavers. That strikes me as reasonably onerous.
In Committee, the Financial Secretary, whom we all respect for her fairness and honesty, characteristically admitted that there would be some extra costs. In characteristic fashion, she said:I do not deny that employers will face some extra work in connection with paying tax credits through the pay packet, and of course that will involve some costs".—[Official Report, Standing Committee D, 9 February 1999; c. 136.]
§ Dawn Primarolo
Will the hon. Gentleman accept that on application the requirements are no more onerous for 945 the employer? Does he accept what I have said this afternoon about all the measures that the Government have taken to reduce compliance costs for small businesses? I explicitly recognised the increased requirements in the operation of the working families tax credit and pointed out that the consultation that the DTI is now undertaking, in particular on the voucher scheme, would also address the issue. The hon. Gentleman's argument that we have not recognised and are not dealing with the increase in costs is simply not accurate.
§ Mr. Pickles
The hon. Lady has recognised the problem but she is not doing anything about it. It does not help that the regulatory assessment is so woefully inadequate. The hon. Lady will recall that, on Report, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) referred to the work of Mr. Roger Cockfield, Reader in taxation at De Montfort university, in which he demonstrated that the yearly impact on employers with fewer than five employees was not £35, as the Government suggest, but £342. The hon. Lady, who will have read the report of proceedings in the other place, will have seen that that issue was further explored by their lordships, who arrived at a similar figure. Neither the hon. Lady nor her hon. Friends have been able to knock down Mr. Cockfield's figures.
The burden will fall disproportionately on small businesses. It will affect their cash flow. The Social Security Committee recommended that, to ease the problem, advance payments should be made to employers with cash flow problems and that reimbursements of administrative costs should be paid to smaller firms. The Government have rejected both suggestions.
§ Dawn Primarolo
With regard to the question of reimbursement of employers, I made it clear that, if employers could not meet the costs of paying the tax credit because they could not deduct it from PAYE or NICs that they had collected on our behalf, they could apply for a grant from the Inland Revenue to cover those costs. That point has been specifically dealt with, and now that I have jogged the hon. Gentleman's memory, I am sure that he will acknowledge that.
§ Mr. Pickles
Of course I acknowledge the point. I would not wish to accuse the hon. Lady of feeling smug, but before she starts feeling too happy with herself she should bear in mind the views of the National Farmers Union, which said:We are also fearful that in a significant number of cases involving agricultural workers, tax credits are likely to exceed liabilities for PAYE and National Insurance Contributions which could cause cash flow problems for employers.The Minister in the other place put that point more simply when he said:There will be a reduction in the positive cash flow benefits of the employer's relationship with the Inland Revenue."—[Official Report, House of Lords, 26 April 1999; Vol. 600, c. 126.]The Government expect small firms not only to be their agent for paying benefits but to pay for the privilege. It is therefore surprising that the only help that the Minister in the other place offered was a potential reduction in software costs which might help to ease the burden on small employers. The Government want to change employees' attitude to in-work payments, but not the attitude of employers.
946 4.30 pm
At present, there are 1.17 million employers, of whom 825,000 are covered by the amendment. There are potentially 730,000 claimants of working families tax credit, of whom—according to the Minister's figures—100,000 are covered by the amendment. The amendment would thus affect 70 per cent. of firms, but 87 per cent. of those entitled to receive working families tax credit would continue to do so through their wage packet.
The amendment would preserve the principle of payment through the pay packet, and ensure that small firms did not have to go through an elaborate opt-out mechanism, as they could elect to opt out. I do not believe that payment directly from the Inland Revenue would in any way exclude the change of culture that the Government seek to achieve.
Today's CBI press release has been much quoted. It is only fair for me to refer to the only sentence that neither I nor the Minister have yet read out. It states thatdirect payment by the Revenue would reinforce the new status of the tax credit. Direct payment by the Revenue would not involve a significant additional burden on the Revenue as it will already be making direct payments to some employees.The Government can retain the principle behind the Bill while still exempting small businesses. We are in a strange position, in that the Opposition want to strengthen the Bill, while the Government seek to weaken it. This is a modest amendment, and deserves consideration.
§ Mr. Webb
It is a pleasure to follow the hon. Member for Brentwood and Ongar (Mr. Pickles), as I have done on a number of occasions. Our styles are rather different, but we are of one mind about the amendments, which were tabled by my noble Friend Lord Goodhart in another place and which received the support of Conservative peers.
I listened with interest to the Minister. I started with a blank sheet of paper as I tried to list the possible arguments against the amendments. I made notes about the defences that she presented, and shall take this opportunity to reflect on them.
The Minister argued that payment through the pay packet would reduce stigma, and that allowing small employers to opt out and their employees to receive payment from the Inland Revenue would somehow be a stigmatising experience. My noble Friend Earl Russell in another place said:From time to time, I have the pleasure of receiving refunds from the Inland Revenue. They have been known to come direct to me and not through my pay packet. When those refunds reach me, I do not suppose that they are social security benefits."—[Official Report, House of Lords, 4 May 1999; Vol. 600, c. 586.]In other words, people can distinguish between benefit payments and tax refunds. The difference is clear, regardless of whether such payments come through the pay packet or the post. The Government are patronising the prospective recipients of the tax credits. They assume that people cannot tell the difference between a social security payment and a tax credit, and that they cannot add up two numbers—the amount in the pay packet and the tax credit amount—if the tax credit is paid direct to their bank accounts. I do not feel able to support such patronising arguments.
The Minister said that we cannot have a system in which small firms opt out of their tax administration responsibilities, as though that were some grand, 947 sweeping point of principle, then listed the exceptions. She said that the very smallest firms with no PAYE employees will not be so burdened. However, she noted that a line has to be drawn somewhere, which suggests that it is a matter of pragmatism rather than principle.
The Minister explained that the smallest firms would be exempted from the requirement because, on the balance of benefits, it was more beneficial to allow them to opt out. The reason that she gave was that the burden would be so great that it would outweigh the benefit gained by getting the money to the employee through the pay packet. On the balance of arguments about costs and benefits, it was accepted that certain categories of firm should be exempted. The amendments merely seek to exempt a broader category.
In contrast to similar amendments that we have considered, the present amendments do not exempt all small firms—merely those that opt for exemption because they would find compliance particularly burdensome. Those with sophisticated payroll systems or who are at home with personal computers are not forced to opt out. The Minister mentioned 100,000 employees—one in seven of those covered by the tax credit—but that figure is a maximum. Many small firms that do not find the change a burden might not opt out, making the number of employees withdrawn even smaller. It is almost impossible to argue that amendment No. 1 is a wrecking amendment as it would remove from the scheme only a fraction of those covered by it.
The Minister said that the amendments would cause an administrative problem because information on the size of firms might be a year out of date. That is no great problem. Most small firms clearly and consistently fall within the threshold employing fewer than 10 people. Off the top of my head, I believe that more than 90 per cent. of small firms are always small, perhaps with one or two employees, and it is irrelevant that information on them is a year old.
Of course, some firms will move above and below the threshold, and that would create problems. The Minister said that the smallest firms—those without pay-as-you-earn liability—would be exempted, but the same problems would apply if such a firm went over the line one year and back under it the next. The Minister seems to believe that the problem can be satisfactorily resolved for those firms, so why is the same not true of firms with fewer than 10 employees? Discrimination and workplace legislation applies only to firms with specified numbers of employees; if that legislation can be implemented, why cannot the amendments?
The Minister said that recipients would face uncertainty about whether the employer would deliver the tax credit. There might be delays in payment. But the tax credit is paid directly to the employee, and the money will reach the employee while the question of who pays is being resolved. There will be no delay. Even under the Government's proposals, the money will be paid direct at the beginning of a claim and employers will not be involved at that stage.
The problems that the Minister raised are fig leaves intended to cover the fact that the Government are taking an ideological position. Many of their arguments about practicality simply do not stand up. The Minister 948 reassured us that employers would be able to attend seminars. Is she saying that hard-pressed business people, possibly sole traders with one employee, will be able to spend an afternoon at the local Inland Revenue office learning how to administer the system. The Minister cannot say that that is no burden on business. Small businesses should not have that obligation imposed on them.
The hon. Member for Brentwood and Ongar referred to the Minister's throwaway suggestion that the Bill's proposals are no more onerous than family credit. She may wish to set the record straight if that was not what she meant. It is certainly what we heard her say.
§ Dawn Primarolo
I am grateful to the hon. Gentleman for his seeking to assist me, but if he reads the record, he will find that I said specifically that the proposals would be no more onerous at the point at which an application is made. I referred clearly to compliance requirements on business, and I set out all the Government's points. The hon. Gentleman suggests—as did the hon. Member for Brentwood and Ongar (Mr. Pickles)—that we do not recognise the burdens. Let me remind of him of one item in the Budget. We moved quarterly PAYE payments from 600 to 1,000—
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. The Minister is making an intervention, which should be brief.
§ Mr. Webb
Thank you, Mr. Deputy Speaker. I am happy to accept the Minister's clarification. If she was merely making the point that earnings information must be verified in both cases, I am happy to accept that that is so. However, the regulatory impact assessment makes it clear that business will face costs of an aggregate £100 million or more, recurring every year. The Minister has failed to convince me that will not be onerous for small firms.
§ Mr. David Willetts (Havant)
Will the hon. Gentleman confirm that what the Minister has just said appears to admit that the method of paying the new working families tax credit is more onerous than the old method of family credit? Her defence was that she was referring only to the method of calculating entitlement to the benefit.
§ Mr. Webb
The hon. Gentleman is right that the regulatory impact assessment shows that the additional cost of more than £100 million relates to the cost of delivering the benefit, which does not feature in family credit.
There has been some discussion of what the burden of the tax credit on a small firm will be. Figures of £37 and £342 have been cited, but I suspect that the Minister would accept the figures advanced by Baroness Hollis in another place. In response to my noble Friend Lord Goodhart, she gave a figure for small firms and said:Where a small employer has a WFTC member of staff … it will typically cost £135 per year for an employer with up to five staff'.—[Official Report, House of Lords, 4 May 1999; Vol. 600, c. 560.]Those are Government figures. The hon. Member for Brentwood and Ongar gave some larger figures, which may or may not be correct, but even the Government admit to £135 every year for a small firm. The Minister 949 calls it the worst case scenario: £135 a year for a small business with one WFTC employee, using a manual payroll system, as must be the case with most such small firms. While £135 may not be much to the Minister, it is to small firms struggling to get by.
There is an inconsistency in the Government's approach. They argue that the burden on business and small business is so negligible that we should not allow small firms to opt out. However, schedule 3 provides protection for jobseekers turned down by employers who do not want to take on potential recipients of the WFTC. The Bill anticipates that employers may want to discriminate against such people. Why could that possibly be? It is because of the burden of administering their payroll.
The Lords amendments would reduce bureaucracy because one of the key bureaucratic elements of the scheme is that the Inland Revenue will have to pay small firms up-front so that they can pay the tax credit. The Minister would accept that it is small firms that will need to avail themselves of the facility. If the smallest firms could opt out, that central category of firms would no longer need to claim the money up-front, so a whole bureaucracy of advance payment to allow firms to pass the money on to their employees and reconcile the figures at the end would be done away with. All the difficult firms would be taken out of the system.
These are far from being wrecking amendments. They are helpful and constructive. They would leave 87 per cent. of employees in the existing regime but take the problem cases out of it. The CBI, in the full, unexpurgated version of its press release, expresses its concern. The Federation of Small Businesses, which includes a greater number of small firms, opposes the Government's proposals.
I disagree with the Conservatives in that I am clear that the principle of the tax credit and the extra resources are welcome, but the Liberal Democrats are concerned about the way in which they are being delivered. We are united in believing that small firms should not have to meet the cost of this piece of Government ideology.
§ Mr. Michael Fallon (Sevenoaks)
The Paymaster General has the House against her on this one, and I am not here to help her. The amendments are modest and, as the hon. Member for Northavon (Mr. Webb) rightly said, apply only to the very smallest businesses, and even they can opt out if they wish. I cannot see more than several thousand businesses taking advantage of that, but they are precisely the ones that the Government should be helping rather than imposing an extra burden on them.
We are dealing with the tiniest businesses in our economy but we are heaping more and more roles upon them and turning them into Government agencies. They are expected to be tax collectors, one-man benefit offices and the fraud squad. The Paymaster General told us of a new role: they are expected to be social engineers and to help the Government reduce stigma. I think she said that they would help advertise and promote the scheme. They are supposed to be part of the Government's public relations machine. That is not the function of a small business in our economy.
950 4.45 pm
Let me deal briefly with the main arguments that the Paymaster General made in opposing the amendments. First, she said that they would encourage businesses generally to opt out of their responsibilities. That completely misses the point. The amendments would allow the very smallest businesses to opt out of the extra responsibilities that have been placed on them. No one suggests that this is a kind of a thin end of the wedge for a wider attack on PAYE.
Secondly, the Paymaster General suggested that such an exemption would result in an administrative nightmare. She still does not understand that the administrative nightmare is this tax credit itself. It is coming and she ought to look at ways of minimising, not maximising, its impact. Thirdly, she suggested—the hon. Member for Northavon got there before me in pointing this out—that there would be lots of guidance and seminars. No small business man with three or four employees has time to travel across the country to some regional seminar. The Paymaster General ought to understand, from the experience of the working time directive and other regulations that have been introduced in the past two years, that the guidance itself is as much a burden as the original regulations. Will she undertake to make that guidance as simple and effective as possible when she replies to this or later debates?
Fourthly, the Paymaster General suggested that somehow the CBI, the TUC and the National Council for One Parent Families were all in favour of the proposal and would no doubt oppose the amendments. Those organisations do not represent small business. The CBI certainly does not. There cannot be an employer with fewer than 10 employees in the country who can afford to belong to the CBI dinner—[Laughter] I mean the CBI organisation; I was going to say that they cannot afford to attend the CBI dinner. The organisations mentioned are not small business organisations, and for the Paymaster General to pray them in aid does her cause a great disservice.
The Bill is discriminatory. It discriminates against the very businesses that we ought to be helping. I declare an interest as a director of a small business. Such businesses do not have big personnel or human resources departments to sort out all this stuff. The entrepreneur himself or herself will have to take time off to wade through the paperwork.
The Bill discriminates, as the hon. Member for Northavon correctly said, against employees. My fear is that, faced with the choice of employing someone who would qualify for the tax credit and someone who would not, and who therefore would not come with that extra burden of paperwork, small businesses will discriminate against those who come to them and are in receipt of the working families tax credit. That is recognised by the Government themselves elsewhere in the Bill.
In this House, we debate enterprise; we praise small businesses. Then, at the first opportunity, we chuck out an amendment that is designed to help them. The Government talk deregulation, yet here again, faced with a real example of how we might deregulate just for the very smallest of small businesses, they impose more regulation on them. I hope that even at this late hour the Paymaster General will think again.
§ Question put, That this House disagrees with the Lords in the said amendment:—
§ The House divided: Ayes 306, Noes 160.954
|Division No. 213]||[4.48 pm|
|Adams, Mrs Irene (Paisley N)||Dalyell, Tam|
|Ainger, Nick||Darling, Rt Hon Alistair|
|Ainsworth, Robert (Cov'try NE)||Darvill, Keith|
|Alexander, Douglas||Davey, Valerie (Bristol W)|
|Allen, Graham||Davidson, Ian|
|Anderson, Donald (Swansea E)||Davies, Rt Hon Denzil (Llanelli)|
|Armstrong, Rt Hon Ms Hilary||Davies, Geraint (Croydon C)|
|Ashton, Joe||Dawson, Hilton|
|Atkins, Charlotte||Dean, Mrs Janet|
|Austin, John||Denham, John|
|Barnes, Harry||Dismore, Andrew|
|Barron, Kevin||Dobbin, Jim|
|Bayley, Hugh||Donohoe, Brian H|
|Beard, Nigel||Doran, Frank|
|Begg, Miss Anne||Dowd, Jim|
|Bell, Stuart (Middlesbrough)||Drew, David|
|Benn, Hilary (Leeds C)||Drown, Ms Julia|
|Benn, Rt Hon Tony (Chesterfield)||Dunwoody, Mrs Gwyneth|
|Benton, Joe||Eagle, Angela (Wallasey)|
|Best, Harold||Eagle, Maria (L'pool Garston)|
|Betts, Clive||Edwards, Huw|
|Blackman, Liz||Efford, Clive|
|Blears, Ms Hazel||Ennis, Jeff|
|Blunkett, Rt Hon David||Fisher, Mark|
|Boateng, Paul||Fitzsimons, Lorna|
|Borrow, David||Flint, Caroline|
|Bradley, Keith (Withington)||Follett, Barbara|
|Bradley, Peter (The Wrekin)||Foster, Michael Jabez (Hastings)|
|Brinton, Mrs Helen||Foster, Michael J (Worcester)|
|Brown, Russell (Dumfries)||Foulkes, George|
|Browne, Desmond||Galloway, George|
|Buck, Ms Karen||Gapes, Mike|
|Burden, Richard||Gardiner, Barry|
|Burgon, Colin||George, Bruce (Walsall S)|
|Caborn, Rt Hon Richard||Gerrard, Neil|
|Campbell, Alan (Tynemouth)||Gibson, Dr Ian|
|Campbell, Mrs Anne (C'bridge)||Gilroy, Mrs Linda|
|Campbell, Ronnie (Blyth V)||Godman, Dr Norman A|
|Campbell-Savours, Dale||Godsiff, Roger|
|Cann, Jamie||Goggins, Paul|
|Casale, Roger||Golding, Mrs Llin|
|Cawsey, Ian||Gordon, Mrs Eileen|
|Chapman, Ben (Wirral S)||Griffiths, Jane (Reading E)|
|Chaytor, David||Griffiths, Win (Bridgend)|
|Clapham, Michael||Grogan, John|
|Clark, Rt Hon Dr David (S Shields)||Gunnell, John|
|Clark, Dr Lynda (Edinburgh Pentlands)||Hall, Mike (Weaver Vale)|
|Hall, Patrick (Bedford)|
|Clark, Paul (Gillingham)||Hamilton, Fabian (Leeds NE)|
|Clarke, Charles (Norwich S)||Hanson, David|
|Clarke, Rt Hon Tom (Coatbridge)||Healey, John|
|Clarke, Tony (Northampton S)||Henderson, Ivan (Harwich)|
|Clwyd, Ann||Hepburn, Stephen|
|Coaker, Vernon||Hesford, Stephen|
|Coffey, Ms Ann||Hewitt, Ms Patricia|
|Cohen, Harry||Hill, Keith|
|Coleman, Iain||Hinchliffe, David|
|Connarty, Michael||Hodge, Ms Margaret|
|Cook, Frank (Stockton N)||Home Robertson, John|
|Corbett, Robin||Hood, Jimmy|
|Corbyn, Jeremy||Hoon, Geoffrey|
|Corston, Ms Jean||Hope, Phil|
|Cousins, Jim||Hopkins, Kelvin|
|Cranston, Ross||Howarth, George (Knowsley N)|
|Crausby, David||Howells, Dr Kim|
|Cryer, John (Hornchurch)||Hoyle, Lindsay|
|Cummings, John||Hughes, Ms Beverley (Stretford)|
|Cunningham, Jim (Cov'try S)||Humble, Mrs Joan|
|Hurst, Alan||Norris, Dan|
|Hutton, John||O'Brien, Bill (Normanton)|
|Iddon, Dr Brian||O'Brien, Mike (N Warks)|
|Illsley, Eric||Olner, Bill|
|Jackson, Ms Glenda (Hampstead)||Organ, Mrs Diana|
|Jackson, Helen (Hillsborough)||Osborne, Ms Sandra|
|Jenkins, Brian||Palmer, Dr Nick|
|Johnson, Miss Melanie (Welwyn Hatfield)||Pearson, Ian|
|Jones, Barry (Alyn & Deeside)||Pickthall, Colin|
|Jones, Mrs Fiona (Newark)||Plaskitt, James|
|Jones, Helen (Warrington N)||Pollard, Kerry|
|Jones, Jon Owen (Cardiff C)||Pond, Chris|
|Jones, Dr Lynne (Selly Oak)||Pound, Stephen|
|Jones, Martyn (Clwyd S)||Powell, Sir Raymond|
|Keeble, Ms Sally||Prentice, Ms Bridget (Lewisham E)|
|Keen, Alan (Feltham & Heston)||Prentice, Gordon (Pendle)|
|Keen, Ann (Brentford & Isleworth)||Primarolo, Dawn|
|Kelly, Ms Ruth||Purchase, Ken|
|Kemp, Fraser||Quin, Rt Hon Ms Joyce|
|Kennedy, Jane (Wavertree)||Quinn, Lawrie|
|Khabra, Piara S||Radice, Giles|
|Kidney, David||Rammell, Bill|
|Kilfoyle, Peter||Raynsford, Nick|
|King, Andy (Rugby & Kenilworth)||Reed, Andrew (Loughborough)|
|Kumar, Dr Ashok||Reid, Rt Hon Dr John (Hamilton N)|
|Ladyman, Dr Stephen||Robinson, Geoffrey (Cov'try NW)|
|Lawrence, Ms Jackie||Roche, Mrs Barbara|
|Lepper, David||Rooker, Jeff|
|Leslie, Christopher||Rooney, Terry|
|Levitt, Tom||Ross, Ernie (Dundee W)|
|Lewis, Ivan (Bury S)||Rowlands, Ted|
|Lewis, Terry (Worsley)||Roy, Frank|
|Liddell, Rt Hon Mrs Helen||Ruane, Chris|
|Linton, Martin||Ruddock, Joan|
|Livingstone, Ken||Russell, Ms Christine (Chester)|
|Lloyd, Tony (Manchester C)||Ryan, Ms Joan|
|Lock, David||Salter, Martin|
|Love, Andrew||Sarwar, Mohammad|
|McAvoy, Thomas||Savidge, Malcolm|
|McCabe, Steve||Sawford, Phil|
|McDonagh, Siobhain||Sedgemore, Brian|
|Macdonald, Calum||Sheldon, Rt Hon Robert|
|McDonnell, John||Short, Rt Hon Clare|
|McGuire, Mrs Anne||Simpson, Alan (Nottingham S)|
|McIsaac, Shona||Singh, Marsha|
|McKenna, Mrs Rosemary||Skinner, Dennis|
|McNulty, Tony||Smith, Angela (Basildon)|
|Mactaggart, Fiona||Smith, Rt Hon Chris (Islington S)|
|McWalter, Tony||Smith, Jacqui (Redditch)|
|McWilliam, John||Smith, John (Glamorgan)|
|Mahon, Mrs Alice||Smith, Llew (Blaenau Gwent)|
|Mallaber, Judy||Snape, Peter|
|Mandelson, Rt Hon Peter||Soley, Clive|
|Marsden, Paul (Shrewsbury)||Spellar, John|
|Marshall, David (Shettleston)||Squire, Ms Rachel|
|Marshall, Jim (Leicester S)||Starkey, Dr Phyllis|
|Marshall-Andrews, Robert||Stewart, David (Inverness E)|
|Martlew, Eric||Stewart, Ian (Eccles)|
|Maxton, John||Stinchcombe, Paul|
|Meacher, Rt Hon Michael||Stoate, Dr Howard|
|Meale, Alan||Strang, Rt Hon Dr Gavin|
|Merron, Gillian||Stringer, Graham|
|Michie, Bill (Shef'ld Heeley)||Stuart, Ms Gisela|
|Miller, Andrew||Taylor, Rt Hon Mrs Ann (Dewsbury)|
|Moonie, Dr Lewis||Taylor, Ms Dari (Stockton S)|
|Moran, Ms Margaret||Thomas, Gareth (Clwyd W)|
|Morgan, Ms Julie (Cardiff N)||Thomas, Gareth R (Harrow W)|
|Morley, Elliot||Timms, Stephen|
|Mountford, Kali||Tipping, Paddy|
|Mudie, George||Todd, Mark|
|Mullin, Chris||Touhig, Don|
|Murphy, Denis (Wansbeck)||Trickett, Jon|
|Murphy, Jim (Eastwood)||Turner, Dennis (Wolverh'ton SE)|
|Naysmith, Dr Doug||Turner, Dr Desmond (Kemptown)|
|Twigg, Derek (Halton)||Winnick, David|
|Twigg, Stephen (Enfield)||Winterton, Ms Rosie (Doncaster C)|
|Vaz, Keith||Wise, Audrey|
|Walley, Ms Joan||Wood, Mike|
|Ward, Ms Claire||Woolas, Phil|
|Wareing, Robert N||Worthington, Tony|
|Watts, David||Wright, Anthony D (Gt Yarmouth)|
|White, Brian||Wright, Dr Tony (Cannock)|
|Wicks, Malcolm||Wyatt, Derek|
|Williams, Rt Hon Alan (Swansea W)|
|Williams, Alan W (E Carmarthen)||Tellers for the Ayes:|
|Wills, Michael||Mr. David Clelland and|
|Mr. Greg Pope.|
|Ainsworth, Peter (E Surrey)||Green, Damian|
|Amess, David||Greenway, John|
|Ancram, Rt Hon Michael||Grieve, Dominic|
|Arbuthnot, Rt Hon James||Hague, Rt Hon William|
|Atkinson, Peter (Hexham)||Hamilton, Rt Hon Sir Archie|
|Baldry, Tony||Harvey, Nick|
|Beggs, Roy||Hawkins, Nick|
|Bercow, John||Hayes, John|
|Beresford, Sir Paul||Heald, Oliver|
|Blunt, Crispin||Heath, David (Somerton & Frome)|
|Body, Sir Richard||Heathcoat-Amory, Rt Hon David|
|Boswell, Tim||Hogg, Rt Hon Douglas|
|Bottomley, Peter (Worthing W)||Howarth, Gerald (Aldershot)|
|Bottomley, Rt Hon Mrs Virginia||Hunter, Andrew|
|Brady, Graham||Jack, Rt Hon Michael|
|Brake, Tom||Jenkin, Bernard|
|Brazier, Julian||Johnson Smith, Rt Hon Sir Geoffrey|
|Brooke, Rt Hon Peter||Jones, Nigel (Cheltenham)|
|Browning, Mrs Angela||Key, Robert|
|Bruce, Ian (S Dorset)||King, Rt Hon Tom (Bridgwater)|
|Burnett, John||Kirkbride, Miss Julie|
|Burns, Simon||Kirkwood, Archy|
|Burstow, Paul||Lait, Mrs Jacqui|
|Butterfill, John||Lansley, Andrew|
|Campbell, Rt Hon Menzies (NE Fife)||Leigh, Edward|
|Cash, William||Lewis, Dr Julian (New Forest E)|
|Chope, Christopher||Lidington, David|
|Clappison, James||Livsey, Richard|
|Clark, Dr Michael (Rayleigh)||Lloyd, Rt Hon Sir Peter (Fareham)|
|Clifton-Brown, Geoffrey||Loughton, Tim|
|Collins, Tim||Luff, Peter|
|Cormack, Sir Patrick||MacKay, Rt Hon Andrew|
|Cotter, Brian||McLoughlin, Patrick|
|Cran, James||Madel, Sir David|
|Curry, Rt Hon David||Major, Rt Hon John|
|Dafis, Cynog||Malins, Humfrey|
|Davey, Edward (Kingston)||Maples, John|
|Davies, Quentin (Grantham)||Mates, Michael|
|Davis, Rt Hon David (Haltemprice)||Maude, Rt Hon Francis|
|Duncan, Alan||Mawhinney, Rt Hon Sir Brian|
|Duncan Smith, Iain||May, Mrs Theresa|
|Evans, Nigel||Michie, Mrs Ray (Argyll & Bute)|
|Faber, David||Moore, Michael|
|Fabricant, Michael||Moss, Malcolm|
|Fallon, Michael||Norman, Archie|
|Fearn, Ronnie||Öpik, Lembit|
|Flight, Howard||Ottaway, Richard|
|Forth, Rt Hon Eric||Page, Richard|
|Fowler, Rt Hon Sir Norman||Paice, James|
|Fox, Dr Liam||Paterson, Owen|
|Fraser, Christopher||Pickles, Eric|
|Gale, Roger||Prior, David|
|Garnier, Edward||Robathan, Andrew|
|George, Andrew (St Ives)||Robertson, Laurence (Tewk'b'ry)|
|Gibb, Nick||Roe, Mrs Marion (Broxbourne)|
|Gill, Christopher||Ross, William (E Lond'y)|
|Gillan, Mrs Cheryl||Ruffley, David|
|Gorman, Mrs Teresa||Russell, Bob (Colchester)|
|Gray, James||St Aubyn, Nick|
|Sanders, Adrian||Tredinnick, David|
|Sayeed, Jonathan||Trend, Michael|
|Shephard, Rt Hon Mrs Gillian||Tyler, Paul|
|Shepherd, Richard||Viggers, Peter|
|Simpson, Keith (Mid-Norfolk)||Walter, Robert|
|Smith, Sir Robert (W Ab'd'ns)||Waterson, Nigel|
|Smyth, Rev Martin (Belfast S)||Webb, Steve|
|Soames, Nicholas||Wells, Bowen|
|Spicer, Sir Michael||Whitney, Sir Raymond|
|Spring, Richard||Whittingdale, John|
|Stanley, Rt Hon Sir John||Widdecombe, Rt Hon Miss Ann|
|Steen, Anthony||Wilkinson, John|
|Streeter, Gary||Willetts, David|
|Swayne, Desmond||Willis, Phil|
|Syms, Robert||Winterton, Mrs Ann (Congleton)|
|Tapsell, Sir Peter||Winterton, Nicholas (Macclesfield)|
|Taylor, Ian (Esher & Walton)||Woodward, Shaun|
|Taylor, John M (Solihull)||Young, Rt Hon Sir George|
|Taylor, Matthew (Truro)|
|Taylor, Sir Teddy||Tellers for the Noes:|
|Thompson, William||Mrs. Eleanor Laing and|
|Tonge, Dr Jenny||Mr. Stephen Day.|
§ Question accordingly agreed to.
§ 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 from the Board rather than from the employer.")
§ Dawn Primarolo
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 955 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.
Therefore, the argument does not run. Lone parents are not being denied something that couples have been given. I hope that it is now crystal clear that couples have a choice about which one of them is to receive the credit because there are two in the family, and that, by definition, cannot apply to a lone parent.
Other arguments in support of the amendment are that it would protect lone parents from having to disclose their circumstances in some way to an employer, or that it would allow them to compete on an equal footing with other parents when looking for work.
Any fears about breaching confidentiality are unfounded. Single parents may need to ask an employer to certify likely wages, as happens now with family credit, once they have a job. That operates in the same way for couples. Single parents are treated no differently from anyone else. The form simply gathers information; it contains no clues about the employee's circumstances. Employers will just be told the amount to pay and will in no way be involved in computing the amount, as was recognised in the previous debate, when going through the steps they will be required to take in order to pay the tax credit.
§ Dawn Primarolo
In the previous debate, the hon. Gentleman repeatedly intervened, anticipating my speech. If he will allow me, I shall make my speech and, if necessary, I shall be more than happy to return to particular points.
There were concerns that an employee's circumstances could be inferred from the amount notified to the employer. I can assure hon. Members that, because of the number of separate elements, such as the effect of the taper and the child care tax credit, it will be almost impossible to relate the amount of tax credit directly to the elements upon which the award is based, and say that, because someone is receiving X in tax credits, they must have Y children or two other jobs. No doubt payment through the wage packet will mean that employers are aware of employees' eligibility for one of the two tax credits—the working families tax credit or the disabled persons tax credit, which is also part of this—but that is all.
Another concern expressed in this House and in the other place was that employers would be able to discriminate against groups of employees who might cause them administrative hassle by claiming tax credits. The Opposition spokesman was a little confused in the previous debate, on the one hand arguing that discrimination would occur, and on the other saying that the anti-discrimination clauses should not be in the Bill.
956 It is useful to remember—
§ Dawn Primarolo
I was not referring to the hon. Gentleman, but I am happy to give way on that point if he insists.
§ Mr. Deputy Speaker
Order. We will of course remember that we must not go over the arguments about the previous amendment, which has been disposed of.
§ Dawn Primarolo
The hon. Gentleman has decided not to intervene, but I look forward to hearing his comments.
It is useful to remember that employers are unlikely to know about a person when they take him on and will be unable to make an accurate judgment of whether he is likely to qualify for a tax credit. However, once the credit has been claimed and awarded, and if the employer administers the payment through the wage packet, it will of course become clear that the employee is receiving that credit. We included the relevant provisions in clause 7 because of the possibility of discrimination at that point, but I stress that we are absolutely confident that the overwhelming majority of employers are law abiding, that they will not discriminate in such a way against their employees and that they will recognise the benefits of the tax credit to their work force.
Giving single parents alone a choice of payment method would give employers who wanted to avoid their responsibilities under the tax credits legislation a new incentive to find out about lone parents so that they could persuade or pressure them into asking to receive the tax credit directly, perhaps on renewal. That option would identify lone parents.
If hon. Members are concerned that lone parents should not be identified, and certainly should not be identified as recipients of the tax credit payment, they should not support the amendment. There is no serious mileage in the argument that lone parents are somehow being discriminated against or being denied a right that is provided for other parents. Although the amendment may be an attempt to help lone parents, I do not think that it will do anything of the sort. I ask the House to reject the amendment.
§ Mr. Willetts
I apologise to the House for turning up rather late for proceedings on the Bill, which is about as far through its parliamentary process as one could imagine. I thank and congratulate my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), who so powerfully led for us in Committee. I also thank several of my hon. Friends who are in the Chamber and who served on the Committee, making telling criticisms of this profoundly misguided measure.
Perhaps I may reflect for a moment on the history that has brought us to this point. A keen young policy wonk thought that the way forward was to copy the American earned income tax credit. He got the ear of Ministers and the legislation was introduced. It passed through its stages in the House of Commons, but then it hit opposition in the House of Lords on two points: burdens on business, and whether the payment should be made through the benefits system—or directly to the claimant—or through the pay packet.
957 That is the point at which the history of the efforts made by a previous Government in 1986, to whom I was proud to be an adviser, and the recent history of this Bill, took rather divergent paths. The Government of Margaret Thatcher—who had had objections put to them in the House of Lords on behalf of businesses worried about the burdens on them, and on the so-called wallet-purse argument and whether groups such as single parents should be paid direct—concluded that the right thing to do was to listen to those objections.
All we are asking the Government to do—having gone through exactly the same process at exactly the same stage—is listen to the same arguments in the same way as the last Government did. What we hear, however, is what has rightly been described as pure ideology: the empty assertion that it is somehow better for working families tax credit to be paid through the pay packet, with absolutely no evidence to back it up.
In fact, it is worse than that. Not only have the Government no evidence to back up their assertion; every criticism that they made in opposition of what was then family credit applies in spades to the scheme that they are now introducing. In opposition, those who are now Ministers used to talk about something called benefit abuse. They claimed that employers were exploiting family credit, and using their knowledge of which people would receive it to hold down wages. I wonder whether the Paymaster General has compared notes with her colleagues in the Department of Trade and Industry, who still use that argument in defence of the minimum wage. They say that one of the reasons why the minimum wage is needed is the need to deal with the behaviour that they claim to have identified on the part of employers.
Now the Government are suddenly introducing a measure that is much more open to that line of criticism than family credit was. There is much more employer involvement in their proposal than there was in family credit. The boot is now firmly on the other foot. Suddenly Ministers are telling us not to worry, and saying that there is no reason for any concern about employers' knowing what is going on.
Leading for the Opposition when the Bill that we introduced years ago was in Committee, the current Leader of the House said:unfortunately, there are instances in which employers deliberately manipulate the system and withhold the benefits to which their employees are entitled. All Committee members would regret and oppose that, but we must recognise that it happens. For the Government to propose putting the whole weight of payments that are an important part of a family income on to a system which gives employers that freedom is a substantial risk to take."—[Official Report, Standing Committee B, 18 March 1986; c. 943.]We know that the charge made against family credit was entirely invalid. We know that because an independent body, the Institute for Employment Studies, conducted objective research into what employers knew about people who were receiving family credit. Research 958 study No. 32 from the Department of Social Security states:Employers did not have adequate knowledge of Family Credit or sufficient information about potential recruits to adopt such practices"—that is, exploiting the benefit to hold down wages. The research established thatonly 9 per cent. of employers agreed that the availability of Family Credit affected the wages they pay.The risk that the Opposition went on and on about when attacking family credit is now the basis for one of the charges that we make against working families tax credit. We regard it as a serious mistake. It takes the policy of helping people who are receiving low earnings in entirely the wrong direction. It is cumbersome, it is badly targeted, and it increases marginal rates for many families. It imposes a new burden on employers, and it poses the risk about which the Government, when in opposition, claimed to be worried in relation to family credit—the risk of benefit abuse by employers.
In supporting the Lords amendment and opposing the Government's attempt to reverse it, we are concentrating on one small aspect of the system. We want single parents receiving this benefit to have the option of receiving it directly, rather than through the pay packet.
The Paymaster General advanced a series of arguments in defence of the Government's position. She advanced them briefly just now, and she advanced them in Committee. One of the arguments is that there is a problem of stigma. We are told that it is important for people to be forced to receive the benefit through the pay packet, because otherwise it will be stigmatised and they will be reluctant to claim it.
If family credit suffers so badly from stigma, why is it that approximately 90 per cent. of single parents who are entitled to it are claiming it? If we are to be told that there is that problem of stigma, what evidence from the real world is the Minister able to offer that it exists as a problem? On the contrary: the evidence is that, if 90 per cent. of single parents are collecting family credit, there is no problem of stigma.
§ Dawn Primarolo
I congratulate the hon. Gentleman on his promotion to the Opposition Front Bench, and appreciate that he is formidable in his speeches. However, does he accept that families who are desperate for an income will take the money regardless of whether they are stigmatised by so doing, and that stigma will not therefore affect take-up? He is talking about two separate issues: the need to receive the money; and an attitude to how it is paid.
§ Mr. Willetts
I understand the point that the Minister is making, and had planned to deal with it later in my speech. Nevertheless, my response to the argument is that the best way of judging whether there is stigma—in the sense in which the Minister refers to it—is to give people the choice. If they are concerned in the way in which she describes, they will opt to be paid through the pay packet, as there would be absolutely nothing to stop them from doing so. Alternatively, they could be paid direct.
My hon. Friend the Member for Gainsborough (Mr. Leigh) is in the Chamber. I hope that he will not mind if I say that, on this occasion, the great advantage of our proposal is that it is a permissive measure: all it 959 would do is give people the option. It is the Government who are trying to force people to take one route rather than the other.
All we are saying is that we do not know what concerns people more. They may prefer to receive money through the pay packet, in which case they could choose that route; or they may prefer to receive the money direct, in which case they could choose that route. The onus is on the Minister to explain why she wants to compel them to take the money one way rather than the other.
§ Dawn Primarolo
As the hon. Gentleman said, we are reaching the end of our consideration of the Bill. Does he accept that the purpose of the tax credit is to provide a work incentive and to reinforce the rewards of work, and that, throughout our consideration of the Bill, that has been our central argument in support of the Bill?
§ Mr. Willetts
The argument that we have to boost in-work incentives does not mean that we have to compel people to receive the payment in a specific way. We could perfectly well create work incentives without simultaneously imposing on people the requirement that they must be paid the benefit in one way rather than another.
If the Government care so much about work incentives, it is a pity that they are increasing marginal rates by so much for so many families—as that could well have the perverse effect of reducing incentives to work among precisely the group whom Ministers are claiming they want to help: middle-income families.
The Opposition believe that the minimum the Government should do is give people the choice. If the Minister believes in what she is saying, she should have no problem with Lords amendment No. 2. If the Government were to accept it, they might find that, miraculously, everyone is perfectly happy to be paid through the Government's preferred route of the pay packet. However, if by any chance some single parents are not happy with that route, why not give them the option of being paid direct? That is all the amendment proposes allowing.
I should perhaps briefly comment on another point made by the Minister—that, in the amendment, we are making a special proposal for single parents, and that there are no proposals on how the benefit should be paid to couples that would provide any type of precedent. I felt that, on that, her argument was disingenuous. When a married couple decide whether payment should be made to the working partner or to the non-working partner, they are essentially also deciding whether the payment should be made through the pay packet or direct, as that will be one of the consequences of their decision.
§ Dawn Primarolo
The hon. Gentleman misunderstood the point that I was making. Lone parents—who are the only parent in the family and, by definition, the only working parent—should be compared with a family with two working parents. If both parents are working, either can receive the money through the wage packet. The only choice is which of them receives it. That choice is not necessary for lone parents. I am happy to send the 960 hon. Gentleman the references from the Rowntree research, which has been quoted on the record before, that identify the problem of stigma.
§ Mr. Willetts
For married couples with only one partner working, the choice of who receives the payment of the working families tax credit will effectively be a choice between the payment going through the pay packet or directly to the non-working partner. Although some two-earner couples will qualify as the working families tax credit is extended, most people receiving family credit or the working families tax credit are one-earner couples or single parents. There will not be many two-earner couples.
All we are asking for single parents is an option that is available to the other large category of recipients of the working families tax credit: the choice of whether it should be paid through the pay packet or not. The Paymaster General says that it is simply a decision between the working or the non-working partner, but in practice it is a decision on how the payment should be made. We are simply asking for single parents to have the same provision as—thanks to the effective parliamentary scrutiny of the Bill—already exists for couples where one partner is not working.
The Paymaster General has not explained why her preferred method of payment has to be compulsory. She has not explained why she wants to force people down one route rather than giving them the choice of two different routes. I am afraid that the explanation is simple. There are some pig-headed people in the Treasury who believe that they should impose what they think is the earned income tax credit model on Britain regardless of the practical evidence of the success of family credit and widespread concerns about the implications of the working families tax credit.
There are concerns about the marginal rate, burdens on businesses and the issue of wallet versus purse. It is deeply disappointing that the Government have not listened in the way we did when we introduced our measures. The Paymaster General will come to regret her refusal to consider our valid, pragmatic and sensible proposals to improve the current muddled policy.
§ Miss Kirkbride
It gives me great pleasure to follow my hon. Friend the Member for Havant (Mr. Willetts). I add my congratulations on his promotion to shadow Secretary of State for Social Security. He will offer great wisdom on the issues, following other honourable and wise contributions in the past.
I sat for many hours in Committee and throughout the Bill's proceedings in the House. The Government still have not explained why they believe that the working families tax credit will be an incentive to work. When the Select Committee on Social Security considered the issues, we took evidence from Martin Taylor, the architect of the Government's proposal and then chairman of Barclays bank. We closely cross-examined him on whether there would be added incentives to work if we transferred from the very successful family credit system that tops up low wages to a working families tax credit. He offered nothing more than his prejudices that there would be. The Government have offered no evidence on why a tax credit rather than a benefit will be an incentive to take a job. That of course is predicated on the idea that 961 single parents should be paid family credit by the Post Office instead of being forced to claim working families tax credit, which is paid through the wage packet.
There is a flaw in the argument which has not been addressed by the Minister or her colleagues. We are facing a fundamental reform of our tax and benefits system that is based on the prejudices of those who are introducing it, not on the serious empirical evidence that it will have a major impact on the low-paid sector.
As my hon. Friend the Member for Havant said, there is stigma on both sides. A huge number of people claim family credit. If the object of introducing a benefit is that people should take it up as it will improve their lives, family credit is extremely successful, as it has the highest take-up rate in the entire benefits system. I take issue with the Minister when she says that that does not mean that there is no stigma attached to it. The take-up rate would suggest otherwise.
My hon. Friend made a valid point when he was challenged on the matter. He said that introducing choice to the system would establish once and for all whether there was a stigma attached to family credit. The only pure experiment would be to give single parents the choice, as married couples may have a different incentive to take a benefit rather than a tax credit—involving wallet-versus-purse issues. We should give single parents the choice between family credit and working families tax credit and find out whether there is a stigma attached to family credit.
The reverse may also be true. Those claiming working families tax credit could suffer the stigma of being on benefit. At present, other employees in the workplace are unaware that someone is claiming family credit. In many instances, employers are similarly unaware, although some may need to be informed of a claim. If people are to be exposed in the workplace as being on benefit because of the method of payment of the working families tax credit, that would increase the possibility of stigma rather than detract from it.
§ Mr. Pickles
Does my hon. Friend agree that the principal difference between family credit and working families tax credit is that the employer is informed just once that an employee has claimed family credit and thereafter has no idea what the position is? Under working families tax credit, the position will be continually assessed. The amendments would allow single-parent claimants to retain some privacy.
§ Miss Kirkbride
My hon. Friend is right. The fact that he and I sat through the Committee's discussions on this point means that we are in unison on it. The employer will be aware of a claim for working families tax credit and, given the nature of these things, it is likely that other employees will be made aware of it. The employer will have to be aware of the situation continually, in a way that he or she is not with family credit.
The arguments about stigma are not as one-directional as Treasury Ministers believe. There is a strong argument that stigma will operate in a more profound way as a result of paying the benefit—that is what working families tax credit will always be, whatever language we use—via working families tax credit, rather than family credit.
962 There is also a question of fairness. If couples want to choose how the benefit is paid, that should not become a form of discrimination against single parents, whose options—by definition—are more limited in terms of their ability to operate their lives, their business and their finances. The measure is open to couples for reasons concerning wallet-versus-purse issues—an option that the Government do not like having to offer. Some Labour Back Benchers might have been upset had the wallet-versus-purse issues not been addressed by creating the opportunity for choice.
§ Dawn Primarolo
I am following the hon. Lady's argument closely. She appears to accept that there is not a transfer from purse to wallet, and that the Bill has dealt with the issue. Does she therefore disagree with her Front-Bench colleagues?
§ Miss Kirkbride
The short answer to that is no.
Another worry is that people may fear that they are less likely to get jobs or to be offered employment if they are likely to be beneficiaries of working families tax credit. Most employers will be capable of working out who among those applying for a job are likely to be recipients of family credit or working families tax credit. There are circumstances where, because of the administrative burden, some employers might prefer to take someone on who is less likely to become a recipient of working families tax credit.
If there is a choice of potential employees, that will become a form of discrimination against single parents, who do not have the option of taking up the benefit in the form of family credit paid by the Post Office, and are forced to take it as working families tax credit, paid via the employer. It would be difficult to prove a case of discrimination in circumstances where there had been, to all intents and purposes, a perfectly reasonable selection of candidates, but where those who were not likely to be recipients of working families tax credit—or who had the option of not being a recipient—were actually taken on.
We must remember that not all employers are model employers. There will be some who find it difficult to operate the scheme—they may wilfully find it difficult to operate. Some may even see fit to run off with the money that the Treasury gives them as a float to pay the working families tax credit.
Vulnerable people who are eligible for top-up on their wages, and who used to be able to rely on payments from the Post Office every week, will be completely reliant on their employer, so when there is uncertainty about the employer's probity or competence there could be a disincentive to work, through the fear of being left with nothing at the end of the week.
The Government are keen to get single parents out to work, and giving them the option of saying that they want their family credit to be paid as it has always been paid, so that they can rely on its being there when they need it and they will not be left vulnerable at the end of the week or month, would be a great service to them. It would keep them in the driving seat and leave open all the options available to them, by contrast with the rather patronising view of the Government, which forces them to go in one direction.
§ Mr. Webb
It is a pleasure to follow the hon. Member for Bromsgrove (Miss Kirkbride), who made an important 963 contribution to our scrutiny of this matter in the Social Security Committee, and the distinguished hon. Member for Havant (Mr. Willetts). Our paths have crossed in the sheltered world of academia, and I look forward to their crossing many more times. His first contribution in his new role showed clearly why he has such an enviable reputation.
The Minister has propounded a strange doctrine: that it is in lone parents' interest to be denied a choice, presumably because they might make the wrong choice and choose to have their money paid direct to them rather than being mediated through the employer. It is almost impossible to imagine any model of human behaviour in which that is true, other than when the individual concerned is stupid. Only in that case should the Government step in and insist that one option be taken rather than another.
I am sure that, in a different setting, the Minister would tell us that lone parents are far from stupid, that their role is often challenging and demanding as they juggle work and family responsibilities, and that many of them make a superb job of it. That being so, why cannot those able people be trusted to make the simple choice about how to get their money?
The Minister said that the point was to drive home the message about making work pay. That goes back to people being stupid, because if they want to they can have their family credit paid direct into their bank account, just as they can have their salary paid direct, and every month they will get a bank statement showing two elements that will not appear if they do not work: the pay and the tax credit. Unless they are as thick as two short planks they will notice that both appear when they work, and neither when they do not.
Forcing the two elements to appear as one figure on the bank statement does not in any sense demonstrate that work pays. Indeed, given that people may not scrutinise their pay slip as well as they scrutinise their bank statement, the presence of two separate entries on the bank statement might spell it out more clearly that the credit is a benefit of working.
The Minister gave two reasons why the argument for choice for lone parents should fall. She said that there was no issue of confidentiality involved in payment through the pay packet. We are dealing with lone parents, many of whom do not remain lone parents. Some of them, to use the jargon, re-partner; they do not necessarily marry, but become part of a new partnership. The new partner's income would have a bearing on the lone parent's family credit entitlement, so the employer would get a letter from the Inland Revenue saying that the amount payable had changed. The employer would know that the lone parent's income had not changed and the employer would also know—because they had not paid any maternity pay—that she had not had a child; so the employer would know that the she had experienced some other change, such as re-partnering.
What business is that of the employer? If family credit was being paid, the employer would not know, and if the lone parent could opt to have the tax credit paid direct, the employer would not know. It is only because payment has to be made in this doctrinaire way that employers will be aware of any change.
964 5.45 pm
The Minister also said that an employer could not work out from the amount of tax credit payable what the family circumstances of the lone parent were. The Minister will correct me if I am wrong, but I understand that in about a third of tax credit cases the maximum credit is paid. The Minister also mentioned tapers, but they would be irrelevant. She also mentioned child care costs, but she cannot have it both ways. Most of the time she tells us that the child care tax credit will not cost a fortune because not many people will take it up, but if lots of people do take it up, the cost will be much greater than the Government have budgeted for.
§ Dawn Primarolo
The hon. Gentleman is being unusually imprecise in his argument. I have every sympathy with lone parents and I was a lone parent myself for some time so I do not need the hon. Gentleman to instruct me on that issue. He knows that work incentives are at the heart of the Bill and are its purpose. It is thus entirely appropriate that the Government should ensure that that policy is delivered.
On the issue of choice, lone parents are capable of seeing exactly what their income is on their wage slip as easily as on their bank statement.
§ Mr. Webb
We should let those last words hang in the air for a moment. In other words, lone parents do not need to have the tax credit paid to them through their pay packets to demonstrate to them the benefits of working. In a fulsome intervention—which I hope presages a response to the debate, instead of nodding it through—the Minister said that she was a lone parent. I put a rhetorical question to her: when she was a lone parent, would she have needed the state to force her to take the tax credit through the pay packet to demonstrate to her the benefits of work? I put it to the House that she would not. As an intelligent woman, she would not have needed that, so why does she insist in forcing it on other lone parents?
My final point concerns discrimination by employers and whether lone parents, with no choice about how the tax credit is paid, might find themselves discriminated against as tax credit recipients. The Minister said that the majority of employers are good employers, and I am sure that that is true, but that does not mean that the Government will not create problems for lone parents who work for the minority of poor employers.
If a lone parent works for a poor employer or applies for a job with one, why should she not be able to exercise the choice? My noble Friend Lord Goodhart put that point well in the other place:Faced with the choice between two more or less equal potential employees, the employer will go for the one who will not cost the extra £370, or more time with a wet towel at the kitchen table."—[Official Report, House of Lords, 4 May 1999; Vol. 600, c. 553.]That resonates with an earlier debate, and so does the reference to the kitchen table—for the Conservatives.
The Minister pointed out that a provision had to be built into the Bill to prevent discrimination, so the Government must believe that it is a real threat. Why should lone parents be subject to it? It is pure sophistry to argue that married couples will not exercise a choice between the pay packet and direct payment. It is clear that that is exactly what they will do when they decide who is to get the money. Lone parents should not be denied that choice. 965 They are intelligent people and should be able to make intelligent choices about what is in their own interests. I support the Lords in their amendment.
§ Mr. Edward Leigh (Gainsborough)
I am grateful to my hon. Friend the Member for Havant (Mr. Willetts) for convincing me in his formidable speech that occasionally a permissive society is to be preferred. I also have sympathy for the Minister, who has been given an impossible case to argue by her masters. A good Minister can argue such a case, and the hon. Lady has done her best. It is an impossible task, however, as all we are arguing for is a degree of choice.
There has been much debate about the alleged element of stigma. I need not repeat the cogent arguments that have been made but, as my hon. Friend the Member for Bromsgrove (Miss Kirkbride) said, Martin Taylor, one the scheme's architects, was unable to produce any evidence to the Select Committee on Social Security that stigma was a factor militating against the take-up of child benefit. He told the Committee that hard-and-fast evidence in non-financial and psychological matters such as stigma was difficult to come by.
That is a very honest statement and cannot be bettered. No one knows how much stigma is involved in take-up of family credit. However, we know that those who are entitled to take it up are not put off by considerations of stigma.
The Minister has said that desperate people have no choice but to take up the benefit as it is currently paid, but my hon. Friend the Member for Havant responded that they should have a choice, and my hon. Friend the Member for Bromsgrove said that the market should decide. The reality is that the Government are imposing this method of take-up as part of a wider political agenda. They want to move towards some type of negative income tax system, in which no one receives benefits.
The stigma does not apply to people who take up benefits under the current system, but to the Government. They are stigmatised by political observers, who see that an ever-increasing proportion of the population receives benefits. The Government's response to that undoubted social and economic problem is to say, "We will ensure that people receive the same money, but not as a benefit. It will now be paid as a tax credit. We have solved the problem of poverty. We have ensured that the many millions of people who have come off the unemployment or poverty registers have been encouraged to take low-paid or part-time work and receive their benefit through the pay packet."
I understand why that is good for the Government's reputation, but I am not convinced that it is good for the people receiving the benefit, who include some of the most vulnerable in society. As we know, 79 per cent. of lone parents take up family credit.
My secondary point has not been addressed by the Government, and has to do with the position of very small employers. The measure will present no problem for large companies, but many lone parents' work is part time or variable. Their circumstances change and they often work for very small employers. I understand the Government's argument that people in regular employment whose circumstances do not change—or people working for a large employer who knows nothing about their circumstances—present a problem for employers, in that it 966 may be impossible to work out the details of their life styles from the tax code. However, people's circumstances often change, and very small employers may be very familiar with aspects of their employees' lives.
I once stood behind a clerk handing out family credit in a social security office. We know that people, in order to receive family credit, already underclaim deliberately or pretend to be getting less money than is in fact the case. The worry is that there will be more collusion between employees and employers.
That collusion is evident in the rag trade in the east midlands. A case with which I am familiar provides a good example. A person with a large number of children filled in a benefit application form. Although that person worked 40 or 50 hours a week, the figure given for earnings seemed absurdly low. Such collusion already goes on to a large extent, but it would be made worse if lone parents are to be enmeshed ever tighter in the grip of employers.
So it is not a question merely of the stigma or unfairness suffered by the employee, but of the society that the Government want to create. There is one way out of the impossible position in which they have placed themselves—they should accept the amendments.
§ Mr. Tim Collins (Westmorland and Lonsdale)
I welcome the chance to contribute to what has been an excellent debate. One of the most pleasant features has been the gentle way in which the Minister has sought to engage in the argument and to respond to points made in interventions. I pay tribute to her and look forward to what she has to say later. If her response is made in the same spirit as her earlier contributions, I hope that we shall get a more genuine reply than has been the case with other Ministers and other debates that I have witnessed in the past year or so.
However, I very much regret three things about this debate. The first is that we are having it at all, as my hon. Friend the Member for Gainsborough (Mr. Leigh) noted. The amendment is quite justified, and the Government should have accepted that it represented an opportunity to think again and to accept that the revising Chamber had improved the Bill. There would then have been no need for this debate.
The second cause for regret is that there has been no contribution from Government Back-Bench Members, even though the Government have said consistently that this was a flagship Bill. It was announced last autumn, and was said to be the centrepiece of the Queen's Speech and the Budget. As I speak, there are four times as many hon. Members on the Conservative Back Benches than there are on the Government Back Benches. That is an odd way to launch a flagship. Perhaps the Mary Rose was launched in that way, but the Paymaster General will recall what happened to that vessel. I hope that archaeologists 500 years in the future will not be salvaging the record of this flagship.
§ Miss Kirkbride
Given what he has just said, my hon. Friend may be interested to know that, although the Whip ensured that Labour Members physically attended the Committee deliberations, their audible presence was non-existent. I do not recall any of them contributing to our deliberations.
§ Mr. Collins
I am grateful to my hon. Friend, whose contribution to the Committee's proceedings was as 967 distinguished as her contribution this afternoon. I was the Whip on that Committee. I employed the gentle, laissez-faire touch that is typical of the Conservative party and its Whips Office, and it is with great pleasure that I can confirm that it was not necessary to gag any Conservative Member. The Government Whip seemed to gag Labour Members, but they may simply have had nothing to say in support of the Bill.
My third regret about the debate is that I find myself in the uncomfortable and unusual position of having to disagree with my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles). That is very sad, and deserves a rapid explanation. I disagree with my hon. Friend because he said that the only real difference between family credit and the working families tax credit was continuous assessment and its affect on stigma. In fact, the principal difference is that family credit is a benefit, which pretends to be nothing else, while the working families tax credit is a benefit pretending to be a tax cut, which it patently is not.
WFTC should be administered by the Department of Social Security. We have been graced by the presence of the Paymaster General, to whom I pay tribute, but she should not be here. A Social Security Minister should answer for the Government.
§ Mr. Deputy Speaker
Order. The amendment is more narrow than the hon. Gentleman's point as it relates to whether the credit should be paid through the wage packet or in some other way. Perhaps the hon. Gentleman would talk about that.
§ Mr. Collins
I am most grateful, Mr. Deputy Speaker, and shall do as you say.
The Paymaster General said that the amendment should be rejected because employers would not exploit or abuse employees. She engaged seriously in the argument about stigma, but said emphatically that it did not hold water and that there was no likelihood of employers using information gained from the working families tax credit against single parents or other employees.
§ Dawn Primarolo
I said that the majority of employers were law abiding and would discharge their duties under the Bill. However, the Bill includes provisions to deal with any who do not.
§ Mr. Collins
I am delighted by that clarification, which gives me yet another opportunity to agree with the Paymaster General. The vast majority of employers are wholly law abiding. Good employers recognise that their prospects are much enhanced if employees are treated well, even if it is odd to hear that said by a member of a Government who are imposing a raft of requirements on employers, such as the minimum wage and the social chapter.
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 968 say that there is a possibility that that will happen. It follows that some single parents fear that it will, and it would be sensible to give them the option of relieving their fear. Information can never be used against them if it never comes to the attention of their employers.
§ Mr. Leigh
No one knows for sure whether my hon. Friend is correct, but every CBI survey suggests that up to a third of employees who claim family credit do so without their employers' knowledge. Many employers have no idea that their employees receive family credit, but all of them will know under the new system.
§ Mr. Collins
My hon. Friend is entirely right, once again displaying his knowledge and commitment on these matters.
There is every reason why the Government should grant the concession contained in the amendment to allow single parents the ability to choose.
§ Mr. Pickles
I am afraid that my hon. Friend misreported me a few moments ago. When he was a Whip, I thought of nominating him for the Rin Tin Tin award for the quality of his speeches. I did not suggest that continuous assessment was the only difference, but that it was the only difference as far as the employer would be concerned.
My hon. Friend has talked about bad or unscrupulous employers, but honest mistakes can happen regarding benefit. What tension will exist between employers and employees when the wrong amount of benefit is paid or where benefit is withheld? What kind of reaction—
§ Mr. Collins
Perhaps Rin Tin Tin might reply to my hon. Friend. My misquotation of his views was entirely unintentional and I appreciate that he was referring only to one of the many reasons why family credit is superior to the working families tax credit. My hon. Friend's point is a good one. Difficulties may arise from disclosure of information by an employer. Honest mistakes may be made, leading to wrong payment, underpayment or overpayment.
It is conceivable that the financial records or circumstances of a business or employer could be inadvertently disclosed to others. Often, a small and growing business, started by a husband and wife, will expand slowly, employing a few people—friends of the family perhaps. Even businesses that employ six to 10 people process financial information on the kitchen table belonging to the principal partner or director, and papers could easily be left lying around to be seen by people who, in a splendid multinational corporation, would not have access to such personal financial information.
The amendments would prevent the possibility—rare, but not impossible—of financial information being seen by someone who goes into the kitchen for a cup of tea or a bacon and egg sandwich at the end of the day. Having spilt his or her coffee over paper work, that person might find financial data that would enable him or her to work 969 out the financial circumstances of someone who works for the company. The amendments would remove the anxiety that arises from the existence of such a possibility.
§ Mr. Willetts
My hon. Friend makes valid points about the effect of the Bill on the employer. However, single parents are also affected. A single parent may work for several employers on short-term contracts, and it would be reasonable for that person to ask for direct payment rather than face the hassle of payment through several employers.
§ Mr. Collins
I agree with my hon. Friend. The circumstances that he described, with a single parent working for several different employers, are precisely those in which single parents could be defensive and worried about having to tell Uncle Tom Cobbleigh and all personal details about their private lives. That would be especially true if they all lived in the same village or small area. There is an important requirement for privacy. The matter may even be covered by the European convention on human rights.
§ Miss Kirkbride
My hon. Friend raises an interesting point. Could it be a criminal offence to pass on personal information about wages given to employees? It is true in this place, and in every place that I have worked, that some of the more entertaining conversations concern one's colleagues. Their pay and family circumstances might be interesting factors. Would it be improper, or even an offence, for a wife or husband to pass on such personal details?
§ Mr. Collins
I am grateful to my hon. Friend. As a former Whip, I assure her that there has never been any tittle-tattle in this House. The very suggestion is outrageous. I see that the Government Front Benchers are nodding vigorously. One can only hope that that is noted outside. I am not a lawyer and so cannot tell her whether criminal offences might arise. Most of the single parents affected are unlikely to be lawyers and may not know the legal position. They will be confused and might prefer to have the option that we propose.
It is that option that leads me to my next point. Our society is moving into an era in which the Prime Minister and other senior Ministers have told us that the nature of our economy will mean that more and more things will depend on individuals being able to exercise more and more choice about their personal lives. If the Prime Minister means that, I welcome it. The Conservative party has always believed in choice and that individuals should be treated as adults.
I welcome what the hon. Member for Northavon (Mr. Webb) said about the presumption that seems to lie behind the Government's intentions—that single parents should be treated as incapable of making correct choices about their lives. I prefer to think that this is an oversight by the Prime Minister, like many other things that he has not been able to notice recently, such as the European election campaign. As his attention returns to domestic policy, he will realise that the amendments would give him the opportunity to turn his rhetoric into reality and demonstrate that he is really committed to free choice and individual liberty.
The Paymaster General once again made a delightful contribution but there may be a Government reshuffle, so the Conservatives are seeking to rescue her from what 970 might be a devastating personal mistake in going against the direction in which the Prime Minister says that he wants to lead his party and Government. She is seeking to close options and perhaps she should not be. I give her that free career advice for what it is worth.
We should move on to discuss some of the other sadnesses reflected in this debate. One that has caused me particular pain is the fact that the Government did not give the minimum commitment that it seems reasonable to ask: that they will review the matter. It is conceivable, I put it no higher, that the Government may have the numbers tonight to prevail. I do not know. If they do, they are not sitting here. They may be elsewhere so when the Division bell rings, they will flood in to give the Government another narrow victory. In the earlier Division, barely 300 Labour Members bothered to turn up. More than 25 per cent. of Labour Members withheld their support for the Government's position. These things snowball. Their majority might slump even further.
Let us presume that the Government will prevail. Why have they not said that they would seek to review the matter after five or 10 years so that we could see whether our arguments or theirs had stood the test of time? It is possible—we should all admit this in politics—that we are wrong. I openly concede it. After 10 years, it is possible that the Government will prove to have been correct and single parents will dance happily around the streets.
§ Dawn Primarolo
I thank the hon. Gentleman for all his kind comments and advice, of which I take note. I am delighted that he expects the Government to be here for at least 10 years. I am sure that at the end of that time, we will be able to demonstrate that our policy is correct. I look forward to giving him some advice then.
§ Mr. Collins
That is very sweet of the hon. Lady, but perhaps 25 per cent. of her parliamentary colleagues were not here for the earlier vote because they are desperately going round the constituencies that they lost in the European election.
§ Mr. Collins
It was, but before you admonish me, Mr. Deputy Speaker, I will not follow the hon. Lady down the seductive path of considering the thumping majority that my party will secure at the next general election. I shall return to the narrow points that we are discussing. If she is so confident about winning the next general election and letting her policies stand the test of time, why will she not say that she is prepared to review the matter?
§ Miss Kirkbride
I thank my hon. Friend for being so generous in giving way. Another reason why the Government might want to review the matter crossed my mind. The post office network may be in difficulty soon because of the cancellation of the main contract for paying benefits through a computerised system. We all know from representations from our sub-postmasters and others that they are concerned about their future business. The 971 payment of family credit, when people choose to collect it from local post offices, is one way in which their business could be promoted.
§ Mr. Collins
My hon. Friend introduces an important dimension into the debate. She is right that if the legislation is passed, the post office network would suffer yet another blow from the Government on top of the many delivered to it since May 1997. As she rightly says, the introduction of the working families tax credit, which will be paid through the wage packet, to replace family credit, which is often paid through the post office, will hit the rural post office network in particular. I represent a very rural constituency in south Cumbria, and my constituents would deeply regret yet another withdrawal of rural services by a Government who, despite their rhetoric, have repeatedly demonstrated that they have little understanding and less sympathy for rural issues and areas.
§ Mr. Leigh
As a former Whip, will my hon. Friend confirm that there is not the slightest chance of the Minister accepting the excellent arguments that have been adduced this afternoon, not least because—ironically—Labour spent much time in opposition criticising the Government for allegedly massaging the employment figures but is now massaging people off benefits into so-called tax cuts?
§ Mr. Collins
My hon. Friend is right and brings me to another point. What is the motivation behind the legislation and the Government's determination to resist these very fine Lords amendments? It is simply that they wish to transfer several billion pounds of expenditure from the expenditure side of the column to the tax reduction side. Then they hope that they can claim to be a tax-cutting Government, when all that they are is a spending-shuffling Government. That is the underlying motivation. The reason why they are resisting the attempt by their lordships to improve the legislation is that they do not want any scrutiny of this dodgy piece of work. They want it to sail through with the minimum of publicity and they simply do not want anyone to inquire into the detail.
The Government have demonstrated in the debates on Second Reading, in Committee and at various other stages, including today, that they are not very focused on anything other than the so-called big picture. All that they have really said is, "Well, the Bill is about providing incentives to work. If you are not in favour of the Bill, you are not in favour of incentives to work so therefore you are in favour of unemployment." That, albeit in the most charming of ways, has been the only argument that the Paymaster General or anyone else has advanced in our proceedings. I am afraid that that will not do. Legislation has to be examined in detail.
I come to what is perhaps the clinching argument in favour of the amendments made by the other House. During the debates in this Chamber in the past year we have heard time and again how the other place needed to be reformed because it was out of touch, arrogant and ancient; that it was a Chamber composed of people who had no sympathy for the way in which society was changing; that it was loaded on one side of industry 972 because it was composed of people who sympathised with business rather than with employees. Yet the other place, unreformed as it is up to this time, has made amendments that would strengthen the hand of single parents—that group in society that has evolved and grown in recent years—against that of unscrupulous employers, while this democratic Chamber will be whipped by the Government to vote against single parents and for the opportunity of unscrupulous employers to take information away from them.
This afternoon, the Government have completely, wholly and unapologetically demolished not only their case for the Bill but their case for reform of the House of Lords.
§ Mr. Pickles
It is a pleasure to see the Financial Secretary here with us, no doubt to defend what she sees as the phantom menace that the proposals represent to her Bill. As my hon. Friend the Member for Westmorland and Lonsdale—and all the nice bits of the lake district—(Mr. Collins) said, there is a real irony in the way in which the House of Lords has stood up for amendments Nos. 1 and 2. There were lots of things that could have been sent back to this House, but the Lords were more sparing and more precise. They gave us an opportunity to rethink on business, and we did not do so, to our cost. It is important that we rethink on lone parents because the amendments will give them an opportunity to exercise choice about how they are paid.
We recognise that people in receipt of the working families tax credit, especially those working in small businesses, may be discriminated against because of the additional cost that businesses will have to bear. Lone parents are particularly vulnerable to loss of employment, in the same way as a single-earner couple is vulnerable. When an employer is faced with the prospect of someone in receipt of the working families tax credit or someone who is not, he may plump for the person who is not. That is why in schedule 2—I am sure that you have taken a great interest in schedule 2, Mr. Deputy Speaker—we make it an offence for someone to discriminate against people in receipt of the credit.
The Bill will give employers almost the ownership that 19th century mill-owners had of their work force. Like in the 19th century, they will have a clear view of what is happening in each family. The hon. Member for Northavon (Mr. Webb) made a number of valid points on that, which I will not repeat.
There is another aspect of privacy. Many people, especially those on low incomes, have more than one job. They may have a full-time job and a part-time job. They do not necessarily want their employer to know that they are engaged in a different job in the evening. Under the Bill and the regulations, the employer who pays the largest sum will be responsible for administering the working families tax credit, so employers will know at a glance whether the employee is receiving additional income. That is why the amendment is so important. It would give the lone parent the opportunity to say that they would like to receive the credit directly from the Revenue.
We heard earlier that the CBI—an organisation that the Paymaster General slavishly follows and is pleased to receive help from—considered that the amendment would strengthen the Revenue because the cheque would come from it in the same way as people receive rebates. 973 The hon. Lady has a number of points to respond to in the few remaining moments of the debate and I look forward to hearing what she has to say.
§ Dawn Primarolo
I thank the hon. Gentleman for welcoming back my hon. Friend the Financial Secretary to the Treasury, who has been released from the Finance Bill Committee on its completion. It is a bit like "The Return of the Jedi", or should I say, "May the force be with me."
I am sure that the hon. Member for Westmorland and Lonsdale (Mr. Collins) will enjoy reading his speech as much as we enjoyed hearing it, although the direct relevance to the amendment I struggled at times to see. I know that he was always in order, Mr. Deputy Speaker, because otherwise he would have been reprimanded. I am grateful for the number of times that he said what a nice person I was. I do not know whether that damages his career or mine.
The hon. Gentleman made a number of points about discrimination. As I said in my speech and in an intervention in his, the majority of employers behave properly now and will continue to do so. It is difficult to see how discrimination could be in advance, but discrimination against someone who is employed has been referred to several times in the debates in this and the other House. Clause 7 specifically deals with that. Those are exceptional circumstances and we are by no means implying that every employer will behave in that way, but there is, quite rightly, protection in the exceptions which would result—
§ 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 161.976
|Division No. 214]||[6.29 pm|
|Abbott, Ms Diane||Bradley, Peter (The Wrekin)|
|Adams, Mrs Irene (Paisley N)||Brinton, Mrs Helen|
|Ainger, Nick||Brown, Rt Hon Gordon (Dunfermline E)|
|Allen, Graham||Brown, Russell (Dumfries)|
|Anderson, Donald (Swansea E)||Browne, Desmond|
|Armstrong, Rt Hon Ms Hilary||Buck, Ms Karen|
|Ashton, Joe||Burden, Richard|
|Atkins, Charlotte||Burgon, Colin|
|Austin, John||Campbell, Alan (Tynemouth)|
|Banks, Tony||Campbell, Mrs Anne (C'bridge)|
|Barnes, Harry||Campbell, Ronnie (Blyth V)|
|Barron, Kevin||Campbell-Savours, Dale|
|Bayley, Hugh||Cann, Jamie|
|Beard, Nigel||Casale, Roger|
|Beckett, Rt Hon Mrs Margaret||Cawsey, Ian|
|Begg, Miss Anne||Chapman, Ben (Wirral S)|
|Bell, Stuart (Middlesbrough)||Chaytor, David|
|Benn, Hilary (Leeds C)||Clapham, Michael|
|Benn, Rt Hon Tony (Chesterfield)||Clark, Rt Hon Dr David (S Shields)|
|Benton, Joe||Clark, Dr Lynda (Edinburgh Pentlands)|
|Blackman, Liz||Clark, Paul (Gillingham)|
|Blears, Ms Hazel||Clarke, Charles (Norwich S)|
|Blunkett, Rt Hon David||Clarke, Rt Hon Tom (Coatbridge)|
|Boateng, Paul||Clarke, Tony (Northampton S)|
|Borrow, David||Clelland, David|
|Bradley, Keith (Withington)||Clwyd, Ann|
|Coaker, Vernon||Hood, Jimmy|
|Coffey, Ms Ann||Hoon, Geoffrey|
|Cohen, Harry||Hope, Phil|
|Coleman, Iain||Hopkins, Kelvin|
|Colman, Tony||Howarth, George (Knowsley N)|
|Connarty, Michael||Howells, Dr Kim|
|Cook, Frank (Stockton N)||Hoyle, Lindsay|
|Corbett, Robin||Hughes, Ms Beverley (Stretford)|
|Corbyn, Jeremy||Humble, Mrs Joan|
|Corston, Ms Jean||Hurst, Alan|
|Cousins, Jim||Hutton, John|
|Cranston, Ross||Iddon, Dr Brian|
|Crausby, David||Illsley, Eric|
|Cryer, John (Hornchurch)||Jackson, Ms Glenda (Hampstead)|
|Cummings, John||Jackson, Helen (Hillsborough)|
|Cunningham, Jim (Cov'try S)||Jamieson, David|
|Dalyell, Tam||Jenkins, Brian|
|Darvill, Keith||Johnson, Alan (Hull W & Hessle)|
|Davey, Valerie (Bristol W)||Johnson, Miss Melanie (Welwyn Hatfield)|
|Davies, Rt Hon Denzil (Llanelli)||Jones, Barry (Alyn & Deeside)|
|Davies, Geraint (Croydon C)||Jones, Mrs Fiona (Newark)|
|Dawson, Hilton||Jones, Helen (Warrington N)|
|Dean, Mrs Janet||Jones, Jon Owen (Cardiff C)|
|Denham, John||Jones, Dr Lynne (Selly Oak)|
|Dismore, Andrew||Jones, Martyn (Clwyd S)|
|Dobbin, Jim||Jowell, Rt Hon Ms Tessa|
|Donohoe, Brian H||Keeble, Ms Sally|
|Doran, Frank||Keen, Alan (Feltham & Heston)|
|Drew, David||Keen, Ann (Brentford & Isleworth)|
|Drown, Ms Julia||Kelly, Ms Ruth|
|Eagle, Angela (Wallasey)||Kemp, Fraser|
|Eagle, Maria (L'pool Garston)||Kennedy, Jane (Wavertree)|
|Edwards, Huw||Khabra, Piara S|
|Efford, Clive||Kidney, David|
|Ennis, Jeff||Kilfoyle, Peter|
|Fisher, Mark||King, Andy (Rugby & Kenilworth)|
|Fitzsimons, Lorna||King, Ms Oona (Bethnal Green)|
|Flint, Caroline||Kumar, Dr Ashok|
|Follett, Barbara||Ladyman, Dr Stephen|
|Foster, Rt Hon Derek||Lawrence, Ms Jackie|
|Foster, Michael Jabez (Hastings)||Lepper, David|
|Foster, Michael J (Worcester)||Leslie, Christopher|
|Foulkes, George||Levitt, Tom|
|Galloway, George||Lewis, Ivan (Bury S)|
|Gapes, Mike||Lewis, Terry (Worsley)|
|Gardiner, Barry||Liddell, Rt Hon Mrs Helen|
|George, Bruce (Walsall S)||Linton, Martin|
|Gerrard, Neil||Livingstone, Ken|
|Gibson, Dr Ian||Lloyd, Tony (Manchester C)|
|Gilroy, Mrs Linda||Lock, David|
|Godman, Dr Norman A||Love, Andrew|
|Godsiff, Roger||McAvoy, Thomas|
|Goggins, Paul||McCabe, Steve|
|Golding, Mrs Llin||McDonagh, Siobhain|
|Gordon, Mrs Eileen||Macdonald, Calum|
|Griffiths, Jane (Reading E)||McDonnell, John|
|Griffiths, Nigel (Edinburgh S)||McGuire, Mrs Anne|
|Griffiths, Win (Bridgend)||McIsaac, Shona|
|Grocott, Bruce||McKenna, Mrs Rosemary|
|Grogan, John||McNulty, Tony|
|Gunnell, John||Mactaggart, Fiona|
|Hall, Patrick (Bedford)||McWalter, Tony|
|Hamilton, Fabian (Leeds NE)||McWilliam, John|
|Hanson, David||Mahon, Mrs Alice|
|Harman, Rt Hon Ms Harriet||Mallaber, Judy|
|Healey, John||Mandelson, Rt Hon Peter|
|Henderson, Ivan (Harwich)||Marsden, Paul (Shrewsbury)|
|Hepburn, Stephen||Marshall, David (Shettleston)|
|Heppell, John||Marshall, Jim (Leicester S)|
|Hesford, Stephen||Marshall-Andrews, Robert|
|Hewitt, Ms Patricia||Martlew, Eric|
|Hill, Keith||Maxton, John|
|Hinchliffe, David||Meacher, Rt Hon Michael|
|Hodge, Ms Margaret||Meale, Alan|
|Home Robertson, John||Merron, Gillian|
|Michie, Bill (Shef'ld Heeley)||Short, Rt Hon Clare|
|Milburn, Rt Hon Alan||Simpson, Alan (Nottingham S)|
|Miller, Andrew||Singh, Marsha|
|Mitchell, Austin||Skinner, Dennis|
|Moonie, Dr Lewis||Smith, Angela (Basildon)|
|Moran, Ms Margaret||Smith, Rt Hon Chris (Islington S)|
|Morgan, Ms Julie (Cardiff N)||Smith, Jacqui (Redditch)|
|Morley, Elliot||Smith, John (Glamorgan)|
|Mountford, Kali||Smith, Llew (Blaenau Gwent)|
|Mudie, George||Snape, Peter|
|Mullin, Chris||Soley, Clive|
|Murphy, Denis (Wansbeck)||Squire, Ms Rachel|
|Murphy, Jim (Eastwood)||Starkey, Dr Phyllis|
|Naysmith, Dr Doug||Steinberg, Gerry|
|Norris, Dan||Stewart, David (Inverness E)|
|O'Brien, Bill (Normanton)||Stewart, Ian (Eccles)|
|O'Brien, Mike (N Warks)||Stinchcombe, Paul|
|Olner, Bill||Stoate, Dr Howard|
|Organ, Mrs Diana||Strang, Rt Hon Dr Gavin|
|Osborne, Ms Sandra||Stringer, Graham|
|Palmer, Dr Nick||Stuart, Ms Gisela|
|Pearson, Ian||Taylor, Rt Hon Mrs Ann (Dewsbury)|
|Pickthall, Colin||Taylor, Ms Dari (Stockton S)|
|Plaskitt, James||Thomas, Gareth (Clwyd W)|
|Pollard, Kerry||Thomas, Gareth R (Harrow W)|
|Pope, Greg||Timms, Stephen|
|Pound, Stephen||Tipping, Paddy|
|Powell, Sir Raymond||Todd, Mark|
|Prentice, Ms Bridget (Lewisham E)||Touhig, Don|
|Prentice, Gordon (Pendle)||Trickett, Jon|
|Primarolo Dawn||Turner, Dennis (Wolverh'ton SE)|
|Primarolo, Dawn||Turner, Dr Desmond (Kemptown)|
|Purchase, Ken||Twigg, Derek (Halton)|
|Quinn, Rt Hon Ms Joyce||Twigg, Stephen (Enfield)|
|Quinn, Lawrie||Vaz, Keith|
|Radice, Giles||Walley, Ms Joan|
|Rammell, Bill||Ward, Ms Claire|
|Raynsford, Nick||Wareing, Robert N|
|Reed, Andrew (Loughborough)||Watts, David|
|Reid, Rt Hon Dr John (Hamilton N)||White, Brian|
|Robinson, Geoffrey (Cov'try NW)||Wicks, Malcolm|
|Roche, Mrs Barbara||Williams, Rt Hon Alan (Swansea W)|
|Rooney, Terry||Williams, Alan W (E Carmarthen)|
|Ross, Ernie (Dundee W)||Wills, Michael|
|Rowlands, Ted||Winnick, David|
|Roy, Frank||Winterton, Ms Rosie (Doncaster C)|
|Ruane, Chris||Wise, Audrey|
|Ruddock, Joan||Wood, Mike|
|Russell, Ms Christine (Chester)||Woolas, Phil|
|Ryan, Ms Joan||Worthington, Tony|
|Salter, Martin||Wright, Anthony D (Gt Yarmouth)|
|Sarwar, Mohammad||Wright, Dr Tony (Cannock)|
|Savidge, Malcolm||Wyatt, Derek|
|Sedgemore, Brian||Tellers for the Ayes:|
|Sheerman, Barry||Mr. Mike Hall and|
|Sheldon, Rt Hon Robert||Mr. Jim Dowd.|
|Ainsworth, Peter (E Surrey)||Bottomley, Rt Hon Mrs Virginia|
|Allan, Richard||Brady, Graham|
|Amess, David||Brazier, Julian|
|Ancram, Rt Hon Michael||Breed, Colin|
|Arbuthnot, Rt Hon James||Brooke, Rt Hon Peter|
|Atkinson, Peter (Hexham)||Browning, Mrs Angela|
|Baldry, Tony||Bruce, Ian (S Dorset)|
|Beggs, Roy||Burnett, John|
|Beith, Rt Hon A J||Burns, Simon|
|Bercow, John||Burstow, Paul|
|Beresford, Sir Paul||Butterfill, John|
|Blunt, Crispin||Campbell, Rt Hon Menzies (NE Fife)|
|Body, Sir Richard|
|Boswell, Tim||Cash, William|
|Bottomley, Peter (Worthing W)||Chope, Christopher|
|Clappison, James||McLoughlin, Patrick|
|Clark, Dr Michael (Rayleigh)||Madel, Sir David|
|Clarke, Rt Hon Kenneth (Rushcliffe)||Major, Rt Hon John|
|Clifton-Brown, Geoffrey||Maples, John|
|Collins, Tim||Mates, Michael|
|Cormack, Sir Patrick||Mawhinney, Rt Hon Sir Brian|
|Cran, James||Michie, Mrs Ray (Argyll & Bute)|
|Curry, Rt Hon David||Moore, Michael|
|Dafis, Cynog||Moss, Malcolm|
|Davey, Edward (Kingston)||Norman, Archie|
|Davies, Quentin (Grantham)||Öpik, Lembit|
|Davis, Rt Hon David (Haltemprice)||Ottaway, Richard|
|Duncan, Alan||Page, Richard|
|Duncan Smith, Iain||Paice, James|
|Emery, Rt Hon Sir Peter||Paterson, Owen|
|Evans, Nigel||Pickles, Eric|
|Faber, David||Redwood, Rt Hon John|
|Fabricant, Michael||Robathan, Andrew|
|Fallon, Michael||Robertson, Laurence (Tewk'b'ry)|
|Fearn, Ronnie||Roe, Mrs Marion (Broxbourne)|
|Flight, Howard||Ross, William (E Lond'y)|
|Forth, Rt Hon Eric||Ruffley, David|
|Fowler, Rt Hon Sir Norman||Russell, Bob (Colchester)|
|Fox, Dr Liam||St Aubyn, Nick|
|Fraser, Christopher||Sanders, Adrian|
|Gale, Roger||Sayeed, Jonathan|
|Garnier, Edward||Shephard, Rt Hon Mrs Gillian|
|George, Andrew (St Ives)||Simpson, Keith (Mid-Norfolk)|
|Gibb, Nick||Smith, Sir Robert (W Ab'd'ns)|
|Gill, Christopher||Smyth, Rev Martin (Belfast S)|
|Gillan, Mrs Cheryl||Soames, Nicholas|
|Gorman, Mrs Teresa||Spicer, Sir Michael|
|Gray, James||Spring, Richard|
|Green, Damian||Stanley, Rt Hon Sir John|
|Greenway, John||Steen, Anthony|
|Grieve, Dominic||Streeter, Gary|
|Gummer, Rt Hon John||Swayne, Desmond|
|Hamilton, Rt Hon Sir Archie||Syms, Robert|
|Hammond, Philip||Tapsell, Sir Peter|
|Harris, Dr Evan||Taylor, Ian (Esher & Walton)|
|Hawkins, Nick||Taylor, John M (Solihull)|
|Hayes, John||Taylor, Matthew (Truro)|
|Heald, Oliver||Taylor, Sir Teddy|
|Heath, David (Somerton & Frome)||Thompson, William|
|Hogg, Rt Hon Douglas||Tonge, Dr Jenny|
|Howard, Rt Hon Michael||Tredinnick, David|
|Howarth, Gerald (Aldershot)||Trend, Michael|
|Hunter, Andrew||Tyler, Paul|
|Jack, Rt Hon Michael||Viggers, Peter|
|Jenkin, Bernard||Walter, Robert|
|Johnson Smith, Rt Hon Sir Geoffrey||Wardle, Charles|
|Jones, Nigel (Cheltenham)||Webb, Steve|
|Key, Robert||Wells, Bowen|
|King, Rt Hon Tom (Bridgwater)||Whitney, Sir Raymond|
|Kirkbride, Miss Julie||Whittingdale, John|
|Kirkwood, Archy||Widdecombe, Rt Hon Miss Ann|
|Laing, Mrs Eleanor||Wilkinson, John|
|Lansley, Andrew||Willetts, David|
|Leigh, Edward||Willis, Phil|
|Letwin, Oliver||Winterton, Mrs Ann (Congleton)|
|Lewis, Dr Julian (New Forest E)||Winterton, Nicholas (Macclesfield)|
|Lidington, David||Woodward, Shaun|
|Lloyd, Rt Hon Sir Peter (Fareham)||Young, Rt Hon Sir George|
|Luff, Peter||Tellers for the Noes:|
|MacKay, Rt Hon Andrew||Mrs. Jacqui Lait and|
|Maclean, Rt Hon David||Mr. Stephen Day.|
§ Question accordingly agreed to.
§ Lords amendment disagreed to.